Exhibit 1.1
82,402,850 Shares in the Form of American Depositary Shares
CHINA GRENTECH CORPORATION LIMITED
UNDERWRITING AGREEMENT
July __, 2007
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
As Representative of the
several Underwriters named in
Schedule I attached hereto (the "Representative")
c/o Bear, ▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies/Gentlemen:
The shareholders of China GrenTech Corporation Limited, an exempted company
incorporated with limited liability existing under the laws of the Cayman
Islands (the "Company"), listed on Schedule II hereto (the "Selling
Shareholders") severally and not jointly propose, subject to the terms and
conditions stated herein, to sell to the several underwriters named in Schedule
I hereto (the "Underwriters") an aggregate of 3,296,114 American Depositary
Shares (the "ADSs") representing 82,402,850 ordinary shares of the Company, par
value US$0.00002 per share (the "Ordinary Shares"). The Ordinary Shares
represented by the ADSs are hereinafter called the "Shares". The ADSs are more
fully described in the Registration Statement and the Pricing Prospectus
referred to below. Bear, ▇▇▇▇▇▇▇ & Co. Inc. is acting as Representative of the
Underwriters in connection with the offering and sale of the ADSs contemplated
herein (the "Offering").
The ADSs are to be issued pursuant to a Deposit Agreement dated as of April
4, 2006 (the "Deposit Agreement") among the Company, Citibank, N.A., as
Depositary (the "Depositary"), and all Holders and Beneficial Owners (each as
defined therein) from time to time of ADSs which may be evidenced by American
Depositary Receipts (the "ADRs") issued by the Depositary.
Each ADS will initially represent the right to receive 25 Ordinary Shares
deposited pursuant to the Deposit Agreement.
1. Representations and Warranties of the Company.
The Company represents and warrants to, and agrees with, each of the
Underwriters that:
(a) The Company has filed with the U.S. Securities and Exchange
Commission (the "Commission") a registration statement under the U.S. Securities
Act of 1933, as amended (the "Securities Act"), relating to the Shares, on Form
F-3 (No. 333-_____) (the initial
filing and all pre-effective amendments thereto collectively being referred to
as the "Initial Registration Statement"); and such Initial Registration
Statement, and any post-effective amendment thereto, each in the form previously
delivered to the Representative, have been declared effective by the Commission,
in such form. No other document with respect to the Initial Registration
Statement has heretofore been filed with the Commission. The various parts of
the Initial Registration Statement including all exhibits thereto and including
(i) the information contained in the form of final prospectus filed with the
Commission pursuant to Rule 424(b) under the Securities Act in accordance with
Section 4(a) hereof and deemed by virtue of Rule 430A or 430C under the
Securities Act to be part of the Initial Registration Statement at the time it
became effective under the Securities Act with respect to the Underwriters, and
(ii) the documents incorporated by reference in the prospectus contained in the
Initial Registration Statement at the time such part of the Initial Registration
Statement became effective, each as amended at the time such part of the Initial
Registration Statement became or hereafter becomes effective under the
Securities Act with respect to the Underwriters, are hereafter collectively
referred to as the "Registration Statement." Any reference to any amendment to
the Registration Statement shall be deemed to refer to and include any annual
report of the Company filed pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), after the effective date
of the Initial Registration Statement that is incorporated by reference therein.
No stop order suspending the effectiveness of the Initial Registration
Statement, any post-effective amendment thereto has been issued and no
proceeding for that purpose has been initiated or threatened by the Commission.
The final prospectus relating to the ADSs, in the form first filed
with the Commission pursuant to Rule 424(b) under the Securities Act, is
hereafter referred to as the "Prospectus". Any preliminary prospectus included
in the Initial Registration Statement or filed with the Commission pursuant to
Rule 424 under the Securities Act is hereafter referred to as a "Preliminary
Prospectus;" and the Preliminary Prospectus, as amended or supplemented
immediately prior to the Applicable Time (as defined below), is hereafter
referred to as the "Pricing Prospectus". Any "issuer free writing prospectus"
(as defined in Rule 433 under the Securities Act) relating to the ADSs and
delivered to investors prior to the time of sale is hereafter referred to as an
"Issuer Free Writing Prospectus"; and the Pricing Prospectus, as supplemented by
the public offering price of the ADSs and the Issuer Free Writing Prospectuses,
if any, attached and listed in Schedule IV hereto, taken together, are hereafter
referred to collectively as the "Pricing Disclosure Package". Any reference
herein to any Preliminary Prospectus or the Prospectus shall be deemed to refer
to and include the documents incorporated by reference therein pursuant to Item
6 of Form F-3 that were filed under the Exchange Act on or before the date of
such Preliminary Prospectus or Prospectus, as the case may be; and any reference
herein to any "amendment" or "supplement" to any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include (i) the filing of any
document under the Exchange Act after the date of such Preliminary Prospectus or
Prospectus, as the case may be, which is incorporated therein by reference and
(ii) any such document so filed.
The Company was not an "ineligible issuer" (as defined in Rule 405
under the Securities Act) as of the eligibility determination date for purposes
of Rules 164 and 433 under the Securities Act with respect to the Offering.
2
All references in this Agreement to the Registration Statement, the
ADS Registration Statement (as defined below), any Preliminary Prospectus, any
Issuer Free Writing Prospectus, the Pricing Prospectus or the Prospectus, or any
amendments or supplements to any of the foregoing, shall be deemed to include
any copy thereof filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval System.
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.
(b) The Registration Statement complies and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will comply in all material respects with the applicable provisions
of the Securities Act, the Exchange Act and the rules and regulations of the
Commission thereunder (the "Rules and Regulations"), and do not and will not, as
of the applicable effective date as to each part of the Registration Statement
and as of the applicable filing date as to the Prospectus and any amendment
thereof or supplement thereto, contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading; provided, however, that
this representation and warranty shall not apply to any information contained in
or omitted from the Registration Statement or the Prospectus or any amendment
thereof or supplement thereto in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of any
Underwriter through the Representative specifically for use therein. The parties
hereto agree that such information provided by or on behalf of any Underwriter
through the Representative consists solely of the material referred to in
Section 15 hereof.
(c) No order preventing or suspending the use of any Preliminary
Prospectus or any Issuer Free Writing Prospectus has been issued by the
Commission, and each Preliminary Prospectus, at the time of filing thereof,
complied in all material respects with the applicable provisions of the
Securities Act, the Exchange Act and the Rules and Regulations, and did not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading; provided,
however, that this representation and warranty shall not apply to any
information contained in or omitted from any Preliminary Prospectus in reliance
upon and in conformity with information furnished in writing to the Company by
or on behalf of any Underwriter through the Representative specifically for use
therein. The parties hereto agree that such information provided by or on behalf
of any Underwriter through the Representative consists solely of the material
referred to in Section 15 hereof.
(d) For purposes of this Agreement, the "Applicable Time" is the time
of first sale of the ADSs in connection with the Offering. The Pricing
Disclosure Package, as of the Applicable Time, did not, and as of the Closing
Date (as hereinafter defined), will not, include 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 light of the circumstances under
which they were made, not misleading. Each Issuer Free Writing Prospectus
complies in all material respects with the applicable provisions of the
Securities Act and the Rules and Regulations, and does not
3
include information that conflicts with the information contained in the
Registration Statement, the Pricing Prospectus or the Prospectus, and each
Issuer Free Writing Prospectus not listed in Schedule IV hereto, as supplemented
by and taken together with the Pricing Disclosure Package, as of the Applicable
Time, did not, and as of the Closing Date will not, include 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 light of the
circumstances under which they were made, not misleading. No representation and
warranty is made in this Section 1(d) with respect to any information contained
in or omitted from the Pricing Disclosure Package or any Issuer Free Writing
Prospectus in reliance upon and in conformity with information furnished in
writing to the Company by or on behalf of any Underwriter through the
Representative specifically for use therein. The parties hereto agree that such
information provided by or on behalf of any Underwriter through the
Representative consists solely of the material referred to in Section 15 hereof.
(e) The Company and the Depositary have filed with the Commission a
registration statement, and amendments thereto, on Form F-6 (No. 333-132385) for
the registration under the Securities Act of the ADSs, which registration
statement, as so amended, has been declared effective by the Commission and
copies of which have heretofore been delivered to the Underwriters. Such
registration statement, as amended at the time it became effective is
hereinafter referred to as the "ADS Registration Statement." No stop order
suspending the effectiveness of the ADS Registration Statement has been issued
and no proceeding for that purpose has been initiated or, to the Company's
knowledge, threatened by the Commission. At the time of the effectiveness of the
ADS Registration Statement and at the Closing Date, the ADS Registration
Statement complied or will comply in all material respects with the applicable
provisions of the Securities Act and the Rules and Regulations and did not and
will not contain an untrue statement of a material fact and did not and will not
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading.
(f) KPMG, independent registered public accounting firm ("KPMG"), who
have audited the financial statements and supporting schedules and information
of the Company and its subsidiaries that are included or incorporated by
reference in the Registration Statement, the Pricing Prospectus or the
Prospectus, and whose reports appear in the Registration Statement, the Pricing
Prospectus or the Prospectus, are independent public accountants as required by
the Securities Act, the Exchange Act and the Rules and Regulations.
(g) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Pricing Prospectus, except as
disclosed in the Pricing Prospectus, (i) the Company has not declared or paid
any dividends, or made any other distribution of any kind, on or in respect of
its capital stock, (ii) there has not been any change in the capital stock or
long-term or short-term debt of the Company or any of its subsidiaries listed in
Exhibit A hereto (each, a "Subsidiary" and, collectively, the "Subsidiaries")
which would reasonably be expected to have a material adverse effect on (A) the
business, general affairs, management, condition (financial or otherwise),
results of operations, shareholders' equity, properties or prospects of the
Company; or (B) the ability of the Company to consummate the Offering or any
other transaction contemplated by this Agreement, the Deposit Agreement, the
Registration Statement, the Pricing Prospectus or the Prospectus (any such
effect being a "Material Adverse Effect") and
4
(iii) neither the Company nor any Subsidiary has sustained any loss or
interference with its business or properties from fire, explosion, flood,
hurricane, accident or other calamity, whether or not covered by insurance, or
from any labor dispute or any legal or governmental proceeding which would
reasonably be expected to have a Material Adverse Effect, and there has not been
any material adverse change or any development involving a prospective material
adverse change, whether or not arising from transactions in the ordinary course
of business, in or affecting the business, general affairs, management,
condition (financial or otherwise), results of operations, stockholders' equity,
properties or prospects of the Company and the Subsidiaries, individually or
taken as a whole (a "Material Adverse Change"). Since the date of the latest
balance sheet included or incorporated by reference in the Registration
Statement and the Pricing Prospectus, neither the Company nor any Subsidiary has
incurred or undertaken any liabilities or obligations, whether direct or
indirect, liquidated or contingent, matured or unmatured, or entered into any
transactions, including any acquisition or disposition of any business or asset,
which are material to the Company and the Subsidiaries, individually or taken as
a whole, except for liabilities, obligations and transactions which are
disclosed in the Pricing Prospectus.
(h) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Pricing Prospectus and the Prospectus under the
caption "Capitalization". All of the issued and outstanding shares of capital
stock of the Company are fully paid and non-assessable and have been duly and
validly authorized and issued, in compliance with all applicable state, federal
and foreign laws and not in violation of or subject to any preemptive or similar
right that does or will entitle any person, upon the issuance or sale of any
security, to acquire from the Company or any Subsidiary (i) any Ordinary Shares
or other security of the Company, (ii) any security convertible into, or
exercisable or exchangeable for, Ordinary Shares or any other security of the
Company, (iii) any capital stock or other security of any Subsidiary or (iv) any
security convertible into, or exercisable or exchangeable for, such capital
stock or any other security of any Subsidiary (any "Relevant Security"), except
for such rights as may have been fully satisfied or waived prior to the
effectiveness of the Registration Statement, or as otherwise disclosed in the
Pricing Prospectus or the Prospectus.
(i) The Shares have been duly and validly authorized and, when
delivered in accordance with this Agreement, will be duly and validly issued,
fully paid and non-assessable, will have been issued in compliance with all
applicable state, federal and foreign laws and will not have been issued in
violation of or subject to any preemptive or similar right that does or will
entitle any person to acquire any Relevant Security from the Company or any
Subsidiary upon issuance or sale of the ADSs or the Shares in the Offering. The
Ordinary Shares and the Shares conform to the descriptions thereof contained in
the Registration Statement, the Pricing Prospectus and the Prospectus. Except as
disclosed in the Pricing Prospectus, neither the Company nor any Subsidiary has
outstanding warrants, options to purchase, or any preemptive rights or other
rights to subscribe for or to purchase, or any contracts or commitments to issue
or sell, any Relevant Security.
(j) ADSs, when issued by the Depositary against the deposit of Shares
in respect thereof in accordance with the provisions of the Deposit Agreement,
will be duly authorized and validly issued and the persons in whose names such
ADSs are registered will be entitled to the rights of registered holders of ADSs
specified therein and in the Deposit Agreement.
5
(k) The Deposit Agreement, the ADSs and the ADRs conform to the
description thereof contained in the Prospectus and the Pricing Prospectus.
(l) The Shares and the ADSs are freely transferable by the Company to
or for the account of the several Underwriters and (to the extent described in
the Pricing Prospectus and the Prospectus) the initial holders thereof; and,
except as disclosed in the Pricing Prospectus and the Prospectus, there are no
restrictions on subsequent transfers of the Shares or the ADSs under the laws of
the Cayman Islands, the British Virgin Islands, the People's Republic of China
(solely for the purpose of this Agreement, excluding Hong Kong, Macau and
Taiwan, the "PRC") or the United States. No holder of the Shares or ADSs is or
will be subject to personal liability solely by reason of being such a holder.
(m) The Subsidiaries are the only subsidiaries of the Company within
the meaning of Rule 405 under the Securities Act. Except for the Subsidiaries,
the Company holds no ownership or other interest, nominal or beneficial, direct
or indirect, in any corporation, partnership, joint venture or other business
entity. All of the issued shares of capital stock of or other ownership
interests in each Subsidiary have been duly and validly authorized and issued
and are fully paid and non-assessable and are owned directly or indirectly by
the Company in the respective percentages set forth in the Registration
Statement and the Pricing Prospectus, free and clear of any lien, charge,
mortgage, pledge, security interest, claim, equity, trust or other encumbrance,
preferential arrangement, defect or restriction of any kind whatsoever (any
"Lien"). None of the issued shares of capital stock or other ownership interest
in any Subsidiary listed on Exhibit A was issued in violation of preemptive or
similar rights of any securityholder of such Subsidiary.
(n) The Company has been duly organized and validly exists as an
exempted limited liability company under the laws of the Cayman Islands. The
Company has all requisite power and authority to carry on its business as it is
currently being conducted and as described in the Registration Statement, the
Pricing Prospectus and the Prospectus, and to own, lease and operate its
properties. The Company 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 and in the aggregate) could not reasonably be expected to
have a Material Adverse Effect.
(o) The Memorandum of Association and Articles of Association of the
Company comply with the requirements of Cayman Islands law and are in full force
and effect.
(p) GrenTech (BVI) Limited, a company organized and existing under the
laws of the British Virgin Islands (the "Overseas Subsidiary"), has been duly
organized and validly exists as an exempted limited liability company under the
laws of the British Virgin Islands. The Overseas Subsidiary has all requisite
power and authority to carry on its business as it is currently being conducted
and as described in the Pricing Prospectus and the Prospectus, and to own, lease
and operate its properties. The Overseas Subsidiary 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
6
nature or conduct of its business makes such qualification necessary, except for
those failures to be so qualified or in good standing which (individually and in
the aggregate) could not reasonably be expected to have a Material Adverse
Effect.
(q) Except for the entities incorporated in the PRC as listed on
Exhibit A (each, a "PRC Subsidiary"), the Company has no direct or indirect
subsidiaries or any other company over which it has direct or indirect effective
control incorporated or operating in the PRC. 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 Pricing Prospectus and the
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 and 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.
(r) Each of the Company and each Subsidiary has all necessary
consents, approvals, authorizations, orders, registrations, qualifications,
licenses, filings and permits of, with and from all judicial, regulatory and
other legal or governmental agencies and bodies and all third parties, foreign
and domestic (collectively, the "Consents"), to own or lease and operate its
properties and conduct its business as it is now being conducted and as
disclosed in the Registration Statement, the Pricing Prospectus and the
Prospectus except in each case as would not reasonably be expected to have a
Material Adverse Effect, and each such Consent is valid and in full force and
effect, and neither the Company nor any Subsidiary has received notice of any
investigation or proceedings which resulted in or, if decided adversely to the
Company or any Subsidiary, could reasonably be expected to result in, the
revocation of, or imposition of a materially burdensome restriction on, any
Consent. None of the current businesses, activities, agreements or commitments
of the Company or any Subsidiary is unauthorized or exceeds the business scope
of its business licenses. Each of the Company and each Subsidiary is in
compliance with all applicable laws, rules, regulations, ordinances, directives,
judgments, decrees and orders, foreign and domestic, except where failure to be
in compliance could not reasonably be expected to have a Material Adverse
Effect. No Consent contains a materially burdensome restriction not adequately
disclosed in the Registration Statement, the Pricing Prospectus and the
Prospectus.
(s) The Company has full right, power and authority to execute and
deliver this Agreement and the Deposit Agreement, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated by this
Agreement, the Deposit Agreement, the Registration Statement, the Pricing
Prospectus and the Prospectus. This Agreement, the Deposit Agreement and the
transactions contemplated by this Agreement, the Deposit
7
Agreement, the Registration Statement, the Pricing Prospectus and the Prospectus
have been duly and validly authorized by the Company. Each of this Agreement and
the Deposit Agreement has been duly and validly executed and delivered by the
Company and constitutes the legal, valid and binding obligation of the Company,
enforceable in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally and except as enforceability
may be subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(t) The execution, delivery and performance of this Agreement and the
Deposit Agreement and the consummation of the transactions contemplated by this
Agreement, the Deposit Agreement, the Registration Statement, the Pricing
Prospectus and the Prospectus do not and will not (i) conflict with, require
consent under or result in a breach or violation of any of the terms and
provisions of, or constitute a default (or an event which with notice or lapse
of time, or both, would constitute a default) under, or result in the creation
or imposition of any Lien upon any property or assets of the Company or any
Subsidiary pursuant to any indenture, mortgage, deed of trust, loan agreement or
other agreement, instrument, franchise, license or permit to which the Company
or any Subsidiary is a party or by which the Company or any Subsidiary or their
respective properties, operations or assets may be bound, (ii) violate or
conflict with any provision of the certificate or articles of incorporation or
association, by-laws, certificate of formation, limited liability company
agreement, partnership agreement or other organizational documents of the
Company or any Subsidiary, or (iii) violate or conflict with any statute, law,
rule, regulation, ordinance, directive, judgment, decree or order of any
judicial, regulatory or other legal or governmental agency or body, domestic or
foreign except (in the case of clauses (i) and (iii) above), as could not
reasonably be expected to have a Material Adverse Effect.
(u) No Consent of, with or from any judicial, regulatory or other
legal or governmental agency or body or any third party, foreign or domestic, is
required for the execution, delivery and performance of this Agreement and the
Deposit Agreement or consummation of the transactions contemplated by this
Agreement, the Deposit Agreement, the Registration Statement, the Pricing
Prospectus and the Prospectus, including the sale and delivery of the Shares to
be sold and delivered hereunder and the issuance, sale and delivery of the ADSs
to be issued, sold and delivered hereunder, except (i) the registration under
the Securities Act of the Shares and the ADSs, which have become effective, and
(ii) such Consents as may be required under state or foreign securities or blue
sky laws or 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 distribution of the Shares and the ADSs by the Underwriters.
(v) There is no judicial, regulatory, arbitral or other legal or
governmental proceeding or other litigation or arbitration, domestic or foreign,
pending to which the Company or any Subsidiary is a party or of which any
property, operations or assets of the Company or any Subsidiary is the subject
which, individually or in the aggregate, if determined adversely to the Company
or any Subsidiary, could reasonably be expected to have a Material Adverse
Effect; to the Company's knowledge, no such proceeding, litigation or
arbitration is threatened or contemplated; and the defense of all such
proceedings, litigation and arbitration against or
8
involving the Company or any Subsidiary could not reasonably be expected to have
a Material Adverse Effect.
(w) The financial statements, including the notes thereto, and the
supporting schedules included or incorporated by reference in the Registration
Statement, the Pricing Prospectus and the Prospectus present fairly the
financial position as of the dates indicated and the cash flows and results of
operations for the periods specified of the Company and its consolidated
subsidiaries; said financial statements have been prepared in conformity with
United States generally accepted accounting principles ("U.S. GAAP") applied on
a consistent basis throughout the periods involved; and the supporting schedules
included in the Registration Statement, the Pricing Prospectus and the
Prospectus present fairly, in all material respects, the information required to
be stated therein. No other financial statements or supporting schedules are
required to be included in the Registration Statement, the Pricing Prospectus or
the Prospectus by the Securities Act, the Exchange Act or the Rules and
Regulations. The other financial and statistical information included or
incorporated by reference in the Registration Statement, the Pricing Prospectus
and the Prospectus present fairly the information included therein and have been
prepared on a basis consistent with that of the financial statements that are
included or incorporated by reference in the Registration Statement, the Pricing
Prospectus and the Prospectus and the books and records of the respective
entities presented therein.
(x) There are no pro forma or as adjusted financial statements which
are required to be included in the Registration Statement, the Pricing
Prospectus and the Prospectus in accordance with Regulation S-X which have not
been included as so required.
(y) Statistical, industry-related and market-related data included or
incorporated by reference in the Registration Statement, the Pricing Prospectus
and the Prospectus are based on or derived from sources which the Company
reasonably and in good faith believes are reliable and accurate, and such data
agree with the sources from which they are derived.
(z) The Company and the Subsidiaries maintain a system of internal
accounting and other controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management's general or
specific authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with U.S. GAAP and to maintain
accountability for assets, (iii) access to assets is permitted only in
accordance with management's general or specific authorization, and (iv) the
recorded accounting for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(aa) The Company maintains a system of internal control over financial
reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act)
that complies with the requirements of the Exchange Act and has been designed by
the Company's principal executive officer and principal financial officer, or
under their supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting
principles. The Company's internal control over financial reporting is effective
and the Company is not aware of any material weaknesses in its internal control
over financial reporting. Since the date
9
of the latest audited financial statements included or incorporated by reference
in the Registration Statement, the Pricing Prospectus and the Prospectus, there
has been no change in the Company's internal control over financial reporting
that has materially affected, or is reasonably likely to materially affect, the
Company's internal control over financial reporting.
(bb) The Company maintains disclosure controls and procedures (as such
term is defined in Rule 13a-15(e) under the Exchange Act) that comply with the
requirements of the Exchange Act; such disclosure controls and procedures have
been designed to ensure that material information relating to the Company and
its subsidiaries is made known to the Company's principal executive officer and
principal financial officer by others within those entities; and such disclosure
controls and procedures are effective.
(cc) There is and has been no failure on the part of the Company or
any of its directors or officers, in their capacities as such, to comply with
any provision of the U.S. ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the rules and
regulations promulgated in connection therewith, including, without limitation,
Section 402 related to loans and Sections 302 and 906 related to certifications.
(dd) Neither the Company nor any of its affiliates (within the meaning
of Rule 144 under the Securities Act) has taken, 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 or the ADSs.
(ee) Neither the Company nor any of its affiliates has, prior to the
date hereof, made any offer or sale of any securities which could be
"integrated" for purposes of the Securities Act or the Rules and Regulations
with the offer and sale of the Shares underlying the ADSs and the ADSs pursuant
to the Registration Statement. Except as disclosed in the Registration
Statement, the Pricing Prospectus and the Prospectus, neither the Company nor
any of its affiliates has sold or issued any Relevant Security during the
six-month period preceding the date of the Prospectus, including but not limited
to any sales pursuant to Rule 144A, Regulation D or Regulation S under the
Securities Act.
(ff) No holder of any Relevant Security has any rights to require
registration of any Relevant Security as part or on account of, or otherwise in
connection with, the offer and sale of the Shares and the ADSs contemplated
hereby except as disclosed in the Pricing Prospectus and the Prospectus, and any
such rights so disclosed have either been fully complied with by the Company or
effectively waived by the holders thereof, and any such waivers remain in full
force and effect.
(gg) The Company is subject to the reporting requirements of Section
13 or 15(d) of the Exchange Act and files periodic reports with the Commission,
and the conditions for use of Form F-3 to register and offer the ADSs under the
Securities Act have been satisfied. The documents incorporated or deemed to be
incorporated by reference in the Pricing Prospectus and the Prospectus, at the
time they were or hereafter are filed with the Commission, complied and will
comply in all material respects with the requirements of the Securities Act, the
Exchange Act and the Rules and Regulations and, when read together with the
other information in the
10
Pricing Prospectus or the Prospectus, as applicable, do 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 light of the
circumstances under which they were made, not misleading.
(hh) The Company is not and, at all times up to and including
consummation of the transactions contemplated by this Agreement, the Deposit
Agreement, the Registration Statement, the Pricing Prospectus and the
Prospectus, will not be, subject to registration as an "investment company" or a
"business development company" under the U.S. Investment Company Act of 1940, as
amended, and is not and will not be an entity "controlled" by an "investment
company" or a "business development company" within the meaning of such act.
(ii) There are no current or pending judicial, regulatory or other
legal or governmental proceedings that are required to be described in the
Registration Statement, the Pricing Prospectus and the Prospectus and that are
not so described or any statutes, regulations, contracts or other documents
(including, without limitation, any voting agreement) which are required under
the Securities Act, the Exchange Act or the Rules and Regulations to be
described in the Registration Statement, the Pricing Prospectus or the
Prospectus or to be filed as exhibits to the Registration Statement that are not
so described or filed.
(jj) No relationship, direct or indirect, exists between or among any
of the Company or any affiliate of the Company, on the one hand, and any
director, officer, shareholder, customer or supplier of the Company or any
affiliate of the Company, on the other hand, which is required by the Securities
Act, the Exchange Act or the Rules and Regulations to be described in the
Registration Statement, the Pricing Prospectus or the Prospectus which is not so
described as required. There are no outstanding loans, advances (except normal
advances for business expenses in the ordinary course of business) or guarantees
of indebtedness by the Company to or for the benefit of any of the officers or
directors of the Company or any of their respective family members, except as
disclosed in the Registration Statement, the Pricing Prospectus and the
Prospectus.
(kk) Except for this Agreement and the Deposit Agreement, there are no
contracts, agreements or understandings between the Company and any person that
would give rise to a valid claim against the Company or any Underwriter for a
brokerage commission, finder's fee or other like payment in connection with the
transactions contemplated by this Agreement, the Deposit Agreement, the
Registration Statement, the Pricing Prospectus and the Prospectus or, to the
Company's knowledge, any arrangements, agreements, understandings, payments or
issuance with respect to the Company or any of its officers, directors,
shareholders, partners, employees, subsidiaries or affiliates that may affect
the Underwriters' compensation as determined by the NASD.
(ll) Each of the Company and the Subsidiaries owns or leases all such
properties as are necessary to the conduct of its business as presently operated
and as proposed to be operated as described in the Registration Statement, the
Pricing Prospectus and the Prospectus. The Company and the Subsidiaries have
good and marketable title in fee simple to all real property and good and
marketable title to all personal property owned by them, in each case free and
clear of any and all Liens except such as are described in the Registration
Statement, the Pricing Prospectus and the Prospectus or such as do not
(individually or in the
11
aggregate) materially affect the value of such property or interfere with the
use made or proposed to be made of such property by the Company and the
Subsidiaries; and any real property and buildings held under lease or sublease
by the Company and the Subsidiaries are held by them under valid, subsisting and
enforceable leases or subleases with such exceptions as are not material to, and
do not interfere with, the use made and proposed to be made of such property and
buildings by the Company and the Subsidiaries. Neither the Company nor any
Subsidiary has received any notice of any claim adverse to its ownership of any
real or personal property or of any claim against the continued possession of
any real property, whether owned or held under lease or sublease by the Company
or any Subsidiary.
(mm) Each of the Company and the Subsidiaries (i) owns or possesses
adequate right to use all patents, patent applications, trademarks, service
marks, domain names, trade names, trademark registrations, service ▇▇▇▇
registrations, copyrights, licenses, formulae, customer lists, and know-how and
other intellectual property (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures,
"Intellectual Property") necessary for the conduct of their respective
businesses as being conducted and as described in the Registration Statement,
the Pricing Prospectus and the Prospectus and (ii) has no reason to believe that
the conduct of their respective businesses does or will conflict with, and have
not received any notice of any claim of conflict with, any such right of others.
To the Company's knowledge, all material technical information developed by and
belonging to the Company or any Subsidiary which has not been patented has been
kept confidential. Neither the Company nor any Subsidiary has granted, licensed
or assigned to any other person or entity any right to manufacture, have
manufactured, assemble or sell the current products and services of the Company
and the Subsidiaries or those products and services described in the
Registration Statement, the Pricing Prospectus and the Prospectus. There is no
infringement by third parties of any such Intellectual Property; there is no
pending or, to the Company's knowledge, threatened action, suit, proceeding or
claim by others challenging the Company's or any Subsidiary's rights in or to
any such Intellectual Property, and the Company is unaware of any facts which
would form a reasonable basis for any such claim; and there is no pending or, to
the Company's knowledge, threatened action, suit, proceeding or claim by others
that the Company or any Subsidiary infringes or otherwise violates any patent,
trademark, copyright, trade secret or other proprietary rights of others, and
the Company is unaware of any other fact which would form a reasonable basis for
any such claim.
(nn) The Company and the Subsidiaries maintain insurance in such
amounts and covering such risks as the Company reasonably considers adequate for
the conduct of its business and the value of its properties and as is customary
for companies engaged in similar businesses in similar industries, all of which
insurance is in full force and effect, except where the failure to maintain such
insurance could not reasonably be expected to have a Material Adverse Effect.
There are no material claims by the Company or any Subsidiary under any such
policy or instrument as to which any insurance company is denying liability or
defending under a reservation of rights clause. The Company reasonably believes
that it will be able to renew its existing insurance as and when such coverage
expires or will be able to obtain replacement insurance adequate for the conduct
of the business and the value of its properties at a cost that would not have a
Material Adverse Effect.
12
(oo) Each of the Company and the Subsidiaries has accurately prepared
and timely filed all tax returns that are required to be filed by it and has
paid or made provision for the payment of all taxes, assessments, governmental
or other similar charges, including without limitation, all sales and use taxes
and all taxes which the Company or any Subsidiary is obligated to withhold from
amounts owing to employees, creditors and third parties, with respect to the
periods covered by such tax returns (whether or not such amounts are shown as
due on any tax return). No deficiency assessment with respect to a proposed
adjustment of the Company's or any Subsidiary's taxes is pending or, to the
Company's knowledge, threatened. The accruals and reserves on the books and
records of the Company and the Subsidiaries in respect of tax liabilities for
any taxable period not finally determined are reasonably adequate to meet any
assessments and related liabilities for any such period and, since the date of
the most recent audited financial statements, the Company and the Subsidiaries
have not incurred any liability for taxes other than in the ordinary course of
business. There is no tax lien imposed by any taxing authority, outstanding
against the assets, properties or business of the Company or any Subsidiary.
(pp) No labor disturbance by the employees of the Company or any
Subsidiary exists or, to the best of the Company's knowledge, is imminent and
the Company is not aware of any existing or imminent labor disturbances by the
employees of any of its or any Subsidiary's principal suppliers, manufacturers,
customers or contractors, which, in either case (individually or in the
aggregate), could reasonably be expected to have a Material Adverse Effect.
(qq) There has been no storage, generation, transportation, handling,
use, treatment, disposal, discharge, emission, contamination, release or other
activity involving any kind of hazardous, toxic or other wastes, pollutants,
contaminants, petroleum products or other hazardous or toxic substances,
chemicals or materials ("Hazardous Substances") by, due to, on behalf of, or
caused by the Company or any Subsidiary (or, to the Company's knowledge, any
other entity for whose acts or omissions the Company is or may be liable) upon
any property now or previously owned, operated, used or leased by the Company or
any Subsidiary, or upon any other property, which would be a violation of or
give rise to any liability under any law, rule, regulation, order, judgment,
decree or permit, common law provision or other legally binding standard
relating to pollution or protection of human health and the environment
("Environmental Law") applicable to the Company or any Subsidiary, except for
violations and liabilities which, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect. There has been no
disposal, discharge, emission, contamination or other release of any kind at,
onto or from any such property or into the environment surrounding any such
property of any Hazardous Substances with respect to which the Company or any
Subsidiary has knowledge, except as could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. Neither the Company
nor any Subsidiary has agreed to assume, undertake or provide indemnification
for any liability of any other person under any Environmental Law, including any
obligation for cleanup or remedial action, except as could not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.
There is no pending or, to the best of the Company's knowledge, threatened,
administrative, regulatory or judicial action, claim or notice of noncompliance
or violation, investigation or proceedings relating to any Environmental Law
against the Company or any Subsidiary. No property of the Company or any
Subsidiary is subject to any Lien under any Environmental Law. Neither the
13
Company nor any Subsidiary is subject to any order, decree, agreement or other
individualized legal requirement related to any Environmental Law.
(rr) The operations of the Company and each Subsidiary are and have
been conducted at all times in compliance with financial record-keeping and
reporting requirements of all applicable jurisdictions and the money laundering
statutes of all applicable 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
Subsidiary with respect to the Money Laundering Laws is pending or, to the best
knowledge of the Company, threatened.
(ss) None of the Company or the Subsidiaries, nor, to the Company's
knowledge, any of their respective officers, directors, managers, agents or
employees have, directly or indirectly, made or authorized any contribution,
payment or gift of funds or property to any official, employee or agent of any
governmental agency, authority or instrumentality in the United States, the PRC,
the Cayman Islands or the British Virgin Islands or any other jurisdiction where
either the payment or gift or the purpose of such contribution, payment or gift
was, is, or would be, after the registration of the Shares and ADSs under the
Securities Act, prohibited under applicable law, rule or regulation of any
relevant locality, including, but not limited to, the U.S. Foreign Corrupt
Practices Act of 1977, as amended, or the rules and regulations promulgated
thereunder.
(tt) Neither the Company, any Subsidiary nor any of its employees or
agents has at any time during the last five years (i) made any unlawful
contribution to any candidate for foreign office, or failed to disclose fully
any contribution in violation of law, or (ii) made any payment to any federal or
state governmental officer or official, or other person charged with similar
public or quasi-public duties, other than payments required or permitted by the
laws of the United States of any jurisdiction thereof.
(uu) Neither the Company, any Subsidiary, nor any director, officer,
agent, employee or affiliate thereof is currently subject to any U.S. sanctions
administered by the Office of Foreign Assets Control of the U.S. Treasury
Department ("OFAC"); and neither the Company nor a Subsidiary will, directly or
indirectly, use the proceeds of this 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 in violation of any
such OFAC-related regulation, enabling legislation or executive order.
(vv) Neither the Company nor any of the Subsidiaries (i) is in
violation of its certificate or articles of incorporation or association,
by-laws, certificate of formation, limited liability company agreement,
partnership agreement or other organizational documents, (ii) is in default
under, and no event has occurred which, with notice or lapse of time or both,
would constitute a default under or result in the creation or imposition of any
Lien upon any of its property or assets pursuant to, any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to which it is a
party or by which it is bound or to which any of its property or assets is
subject or (iii) is in violation in any respect of any law, rule, regulation,
14
ordinance, directive, judgment, decree or order of any judicial, regulatory or
other legal or governmental agency or body, foreign or domestic, except (in the
case of clauses (ii) and (iii) above), for violations or defaults that could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(ww) The section entitled "Item 5. Operating and Financial Review and
Prospects -- Critical Accounting Policies" in the annual report on Form 20-F
(No. 000-51839) filed by the Company on May 4, 2007 (the "Form 20-F") and
incorporated by reference in the Registration Statement, the Pricing Prospectus
and the Prospectus accurately and fully describes (i) accounting policies which
the Company believes are the most important in the portrayal of the financial
condition and results of operations of the Company and its consolidated
subsidiaries and which require management's most difficult, subjective or
complex judgments ("Critical Accounting Policies"); (ii) judgments and
uncertainties affecting the application of critical accounting policies; and
(iii) the likelihood that materially different amounts would be reported under
different conditions or using different assumptions.
(xx) 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 their legal advisers and
independent accountants with regard to such disclosure.
(yy) The section entitled "Item 5. Operating and Financial Review and
Prospects - Liquidity and Capital Resources" in the Form 20-F incorporated by
reference in the Registration Statement, the Pricing Prospectus and the
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.
(zz) Except as disclosed in the Pricing Prospectus and the 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.
(aaa) Except as set forth in the Pricing Prospectus and the
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.
(bbb) Except as set forth in the Pricing Prospectus and the
Prospectus, none of the Company or any Subsidiary is engaged in any transactions
that are material (or that would otherwise require disclosure pursuant to Item
404 of Regulation S-K under the Securities Act) with its directors, officers,
management, shareholders, or any other person, including persons formerly
holding such positions, on terms that are not available from unrelated third
parties on an arm's-length basis.
(ccc) 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,
except as disclosed in the Pricing Prospectus and the Prospectus; except as
disclosed in the Pricing Prospectus and the Prospectus, all dividends and
15
other distributions declared and payable upon the equity interests in the
Company, the PRC Subsidiaries and the Overseas Subsidiary may be converted into
foreign currency that may be freely transferred out of the British Virgin
Islands, the Cayman Islands or the PRC (after complying with applicable
procedural requirements described in the Pricing Prospectus and the Prospectus)
as the case may be, and all such dividends and other distributions are not and,
except as disclosed in the Pricing Prospectus and the Prospectus, will not be,
subject to withholding or other taxes under the laws and regulations of the
British Virgin Islands, the Cayman Islands or the PRC and, except as disclosed
in the Pricing Prospectus and the Prospectus, are otherwise free and clear of
any other tax, withholding or deduction in the British Virgin Islands, the
Cayman Islands and the PRC, in each case without the necessity of obtaining any
Consent in the British Virgin Islands, the Cayman Islands or the PRC, except
such as have been obtained.
(ddd) 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 and the Deposit Agreement not to plead or claim any such
immunity in any legal action, suit or proceeding based on this Agreement and the
Deposit Agreement is valid and binding under the laws of the PRC, the Cayman
Islands and the British Virgin Islands.
(eee) No stamp or other issuance or transfer taxes or duties are
payable by or on behalf of the Underwriters to the PRC, the British Virgin
Islands, the Cayman Islands or any political subdivision or taxing authority
thereof in connection with (i) the sale or delivery of the Shares or the
issuance, sale or delivery of the ADSs to the Underwriters or (ii) the deposit
with the Depositary of any Shares against the issuance of the corresponding ADSs
and related ADRs.
(fff) The Company is a "foreign private issuer" as defined in Rule 405
under the Securities Act.
(ggg) The Company was not for the year ended December 31, 2006, and
based on the projected composition of the Company's income and valuation of its
assets, the Company does not expect to be, a passive foreign investment company
("PFIC") within the meaning of Section 1297 of the U.S. Internal Revenue Code of
1986, as amended, for the year ending December 31, 2007.
(hhh) 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 Cayman
Islands, the British Virgin Islands and the PRC and will be honored by courts in
the Cayman Islands, the British Virgin Islands and the PRC. The Company has the
power to submit, and, pursuant to Section 17 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
▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ (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 empower, and pursuant to Section 17 of this Agreement has
legally, validly, effectively and irrevocably designated, appointed and
empowered, an authorized agent for service of process in any action arising out
of or relating to this Agreement, the Deposit Agreement, the Prospectus, the
Registration Statement, the ADS Registration Statement or the offering of the
Shares or the ADSs 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 17 hereof.
(jjj) Each of this Agreement and the Deposit Agreement is in proper
form to be enforceable in the Cayman Islands, the British Virgin Islands and the
PRC in accordance with its terms; to ensure the legality, validity,
enforceability or admissibility into evidence in the Cayman Islands, the British
Virgin Islands or the PRC of this Agreement or the Deposit Agreement, it is not
necessary that this Agreement or the Deposit Agreement be filed or recorded with
any court or other authority in the Cayman Islands, the British Virgin Islands
or the PRC (other than court filings in the ordinary course of proceedings) or
that any stamp or similar tax in the Cayman Islands, the British Virgin Islands
or the PRC (other than nominal stamp or similar tax payable in the ordinary
course of proceedings) be paid on or in respect of this Agreement, the Deposit
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 or the Deposit Agreement and any instruments or agreements
entered into for the consummation of the transactions contemplated herein and
therein would be declared enforceable against the Company without re-examination
or review 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 (i) by the courts of the
Cayman Islands, 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 the Cayman Islands; (C) such judgment was not obtained by
fraud; (D) the enforcement of the judgment would not be contrary to the public
policy of the Cayman Islands; (E) no new admissible evidence relevant to the
action is submitted prior to the rendering of the judgment by the courts of the
Cayman Islands; and (F) there is due compliance with the correct procedures
under the laws of the Cayman Islands, (ii) by the courts of the British Virgin
Islands, 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 the British Virgin Islands, (C) such judgment was not
obtained by fraud, (D) the enforcement of the judgment would not be contrary to
the public policy of the British Virgin Islands, (E) no new admissible evidence
relevant to the action is submitted prior to the rendering of the judgment by
the courts of the British Virgin Islands and (F) there is due compliance with
the correct procedures under the laws of the British Virgin Islands and (iii) 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
17
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 the Cayman Islands, the British
Virgin Islands or the PRC of such a New York Court judgment would be, as of the
date hereof, contrary to public policy of the Cayman Islands, public policy of
the British Virgin Islands or contrary to the public policy, state sovereignty
or security of the PRC.
(lll) The Company has complied with the requirements of Rule 433 under
the Securities Act with respect to each Issuer Free Writing Prospectus
including, without limitation, all prospectus delivery, filing, record retention
and legending requirements applicable to any such Issuer Free Writing
Prospectus. The Company has not (i) distributed any offering material in
connection with the Offering other than any Preliminary Prospectus, the
Prospectus, and any Issuer Free Writing Prospectus set forth in Schedule IV
hereto, or (ii) filed, referred to, approved, used or authorized the use of any
"free writing prospectus" as defined in Rule 405 under the Securities Act with
respect to the Offering or the Shares, except for any Issuer Free Writing
Prospectus set forth in Schedule IV hereto and any electronic road show
previously approved by the Representative and identified on Schedule V hereto.
(mmm) The Company has taken, or is in the process of taking, all
reasonable steps to comply with, and to ensure compliance by all of the
Company's shareholders, option holders, directors and officers 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, option holder, director and
officer 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.
(nnn) The ADSs are quoted on the National Association of Securities
Dealers Automated Quotations Global Market System ("NASDAQ Global Market"), and
the Company has taken no action designed to, or likely to have the effect of,
terminating the registration of the ADSs under the Exchange Act or de-listing
the ADSs from the NASDAQ Global Market, nor has the Company received any
notification that the Commission or the NASDAQ Global Market is contemplating
terminating such registration or listing.
(ooo) None of the Company or any of the Subsidiaries is engaged in any
trading activities involving commodity contracts or other trading contracts
which are not currently traded on a securities or commodities exchange and for
which the market value cannot be determined.
(ppp) The statements set forth in the Registration Statement, the
Pricing Prospectus and the Prospectus under the captions "Description of Share
Capital" and "Description of American Depositary Shares", insofar as they
purport to constitute a summary of the terms of the Ordinary Shares and the
ADSs, respectively, and under the captions "Taxation"
18
and "Underwriting", insofar as they purport to describe the provisions of the
laws and documents referred to therein, are accurate, complete and fair in all
material respects.
Any certificate signed by or on behalf of the Company and delivered to the
Representative or to counsel for the Underwriters shall be deemed to be a
representation and warranty by the Company to each Underwriter as to the matters
covered thereby.
2. Representations and Warranties of the Selling Shareholders. Each
Selling Shareholder severally but not jointly represents and warrants to, and
agrees with, each of the Underwriters that:
(a) Such Selling Shareholder has been duly organized, is validly
existing, and is in good standing in its jurisdiction of organization.
(b) Such Selling Shareholder has full right, power and authority to
execute and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated by this Agreement, the Registration
Statement, the ADS Registration Statement, the Pricing Prospectus and the
Prospectus, in each case, relating to it. This Agreement and the transactions
contemplated by this Agreement relating to it, the Deposit Agreement, the
Registration Statement, the Pricing Prospectus and the Prospectus have been duly
and validly authorized by such Selling Shareholder. This Agreement has been duly
and validly executed and delivered by such Selling Shareholder and constitutes
the legal, valid and binding obligation of such Selling Shareholder, enforceable
in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally and except as enforceability may be
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and to ensure
the legality, validity, enforceability or admissibility into evidence in the
Cayman Islands, the British Virgin Islands or the PRC of this Agreement, it is
not necessary that this Agreement be filed or recorded with any court or other
authority in the Cayman Islands, the British Virgin Islands or the PRC or that
any stamp or similar tax in the Cayman Islands, the British Virgin Islands or
the PRC be paid on or in respect of this Agreement or any other documents to be
furnished hereunder.
(c) Such Selling Shareholder agrees that the Shares to be sold by such
Selling Shareholder are subject to the interests of the Underwriters to the
extent as stated herein and that the obligations of such Selling Shareholder
hereunder shall not be terminated, except as provided in this Agreement by any
act of such Selling Shareholder, by operation of law or by the occurrence of any
other event. If such Selling Shareholder should die or become incapacitated, or
if any other event should occur affecting the legal status or capacity of such
Selling Shareholder before its delivery of the Shares to be sold hereunder, the
documents evidencing the Shares to be sold by such Selling Shareholder shall be
delivered by or on behalf of such Selling Shareholder in accordance with the
terms and conditions of this Agreement as if such event had not occurred.
(d) Such Selling Shareholder has or will have, and on the Closing Date
will have, good and valid title to and is the lawful owner of the Shares to be
sold by such Selling Shareholder hereunder (provided however, that in the case
of Actis China Investment Holdings No. 1 Limited, under a Declaration of Trust
entered into between Actis China Investment
19
Holdings No. 1 Limited and Actis Executive Co-Investment Plan L.P. (the
"Declaration of Trust"), Actis Executive Co-Investment Plan L.P. is the
beneficial owner of 1.9% of the Shares to be sold by Actis China Investment
Holdings No. 1 Limited pursuant to this Agreement), and upon sale and delivery
of, and payment for, such Shares as provided herein, such Selling Shareholder
will convey to the Underwriters good and marketable title to such Shares, free
and clear of all Liens.
(e) No consent of, from or with any judicial, regulatory or other
legal or governmental agency or body or any third party, foreign or domestic, is
required for the deposit of the Shares being deposited with the Depositary by
such Selling Shareholder against issuance of the ADRs evidencing the ADSs to be
delivered at the Closing Date, for the sale and delivery of the ADSs to be sold
by such Selling Shareholder hereunder and for the execution and delivery by such
Selling Shareholder of this Agreement, and for the sale and delivery of the ADSs
to be sold by such Selling Shareholder hereunder, except (i) such consents as
have been obtained under the Securities Act or otherwise and (ii) such as may be
required under the foreign securities laws, the blue sky laws of any state, the
NASD or NASDR in connection with the purchase and distribution of such Selling
Shareholder's Shares and the corresponding ADSs by the Underwriters.
(f) No consent, approval, authorization or order is required to be
obtained by such Selling Shareholder for the execution and delivery by such
Selling Shareholder of this Agreement and the sale and delivery of such Selling
Shareholder's Shares under this Agreement other than, at the time of the
execution hereof (if the Registration Statement has not yet been declared
effective by the Commission), the issuance of the order of the Commission
declaring the Registration Statement effective and such consents, approvals,
authorizations or orders as may be necessary under state or other securities or
blue sky laws and such other approvals as have been obtained and are in full
force and effect.
(g) The execution, delivery and performance of this Agreement by such
Selling Shareholder and consummation of any of the transactions contemplated
herein and therein by such Selling Shareholder or the fulfillment of the terms
hereof by the Selling Shareholder will not (i) conflict with, result in a breach
or violation of, or constitute a default (or an event that with notice or lapse
of time, or both, would constitute a default) under, or result in the creation
or imposition of any lien, charge or encumbrance upon any property or assets of
the Selling Shareholder pursuant to any law, statute, rule or regulation or the
terms of any indenture or other agreement or instrument to which such Selling
Shareholder is party or bound, or to which any of the property or assets of such
Selling Shareholder is subject, (ii) result in any violation of the provisions
of any charter or bylaws or certificate of formation, trust agreement,
partnership agreement, articles of partnership or other organizational
documents, as applicable, of such Selling Shareholder, or (iii) result in any
violation or breach of any judgment, order, decree statute, rule or regulation
applicable to such Selling Shareholder of any court or arbitration tribunal or
any public, governmental or regulatory agency or body or administrative agency
having jurisdiction over such Selling Shareholder.
(h) Such Selling Shareholder has, and immediately prior to the Closing
Date 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
20
sold by such Selling Shareholder hereunder on such Date, free and clear of all
liens, encumbrances, equities or claims, except for any liens, encumbrances,
equities or claims arising, in the case of Shares held by Actis China Investment
Holdings No. 1 Ltd. under the Declaration of Trust.
(i) Upon delivery of the Shares to be sold by such Selling Shareholder
and payment therefor pursuant hereto (i) the Underwriters shall be "protected
purchasers" of such Shares within the meaning of Section 8-303 of the UCC, (ii)
under Section 8-501 of the UCC, the Underwriters will acquire good and valid
title or a valid security entitlement in respect of such Shares and (iii) no
action based on any "adverse claim," within the meaning of Section 8-102 of the
UCC, to such Shares may be asserted against the Underwriters with respect to
such security entitlement.
(j) Other than as disclosed in the Pricing Prospectus and the
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 the Offering.
(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 or any other Selling Shareholder 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 stock, right, warrants, options or other securities from
the Company, other than those described in the Registration Statement, the
Pricing Prospectus and the Prospectus.
(l) Except as disclosed in the 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
the Offering.
(m) The ADSs delivered at the Closing 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 Pricing
Prospectus and the Prospectus) to the initial purchasers thereof.
(n) Except as set forth in the Pricing Prospectus, no stamp or other
issuance or transfer taxes or duties and no capital gains, income, withholding
or other taxes are payable by or on behalf of the Underwriters to the government
of the Cayman Islands, the British Virgin Islands or the PRC, or any political
subdivision or taxing authority thereof or therein, in connection with (A) the
deposit with the Depositary of the Shares by such Selling Shareholder against
the issuance of ADRs evidencing the ADSs, (B) the sale and delivery by such
Selling Shareholder of the Shares and the ADSs to or for the respective accounts
of the Underwriters or (C) the sale and delivery by the Underwriters of the
Shares and the ADSs to the initial purchasers thereof.
21
(o) There are no taxes imposed in the Cayman Islands, the British
Virgin Islands or the PRC on, or by virtue of the execution or delivery of, this
Agreement.
(p) Such Selling Shareholder has not taken and will not take, directly
or indirectly, any action designed to, or that could be reasonably expected to,
cause or result in stabilization or manipulation of the price of the Ordinary
Shares to facilitate the sale or resale of the Shares or the ADSs.
(q) Such Selling Shareholder has not distributed and will not
distribute, prior to the later of the Closing Date and the completion of the
Underwriters' distribution of the Shares, any offering material in connection
with the offering and sale of the Shares and the ADSs by the Selling
Shareholders, including any free writing prospectus.
(r) Such Selling Shareholder is not in possession of material
non-public information regarding the Company.
(s) The information in the Registration Statement, the Pricing
Prospectus and the Prospectus which relates to such Selling Shareholder does
not, and will not on the Closing Date, contain an untrue statement of a material
fact and did not and will not omit to state any material fact required to be
stated therein or necessary in order to make the statements therein relating to
such Selling Stockholder, not misleading.
Any certificate signed by or on behalf of such Selling Shareholder and
delivered to the Representative or to counsel for the Underwriters shall be
deemed to be a representation and warranty by such Selling Shareholder to each
Underwriter as to the matters covered thereby.
3. Purchase, Sale and Delivery of the Shares.
(a) On the basis of the representations, warranties, covenants and
agreements herein contained, but subject to the terms and conditions herein set
forth, each Selling Shareholder, severally and not jointly, agrees to sell to
the Underwriters and each Underwriter, severally and not jointly, agrees to
purchase from the Selling Shareholders, at a purchase price per share of $_____,
the number of Shares set forth opposite their respective names on Schedule I
hereto together with any additional number of Shares which such Underwriter may
become obligated to purchase pursuant to the provisions of Section 10 hereof.
(b) Payment of the purchase price for the Shares shall be made at the
office of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP ("Underwriters' Counsel"), ICBC Tower,
▇▇▇ ▇▇▇▇▇, ▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇, or at such other place as shall be agreed
upon by the Representative and the Company, at 10:00 a.m., New York City time,
on the third or (as permitted under Rule 15c6-1 under the Exchange Act) fourth
business day (unless postponed in accordance with the provisions of Section 10
or 11 hereof) following the date of the effectiveness of the Registration
Statement (or, if the Company has elected to rely upon Rule 430A under the
Securities Act, the third or (as permitted under Rule 15c6-1 under the Exchange
Act) fourth business day after the determination of the public offering price of
the Shares), or such other time not later than ten business days after such date
as shall be agreed upon by the Representative and the Company (such time and
date of payment and delivery being herein called the "Closing Date").
22
Payment of the purchase price for the Shares shall be made by wire
transfer in same day funds to or as directed by each Selling Shareholder upon
delivery of the Shares to the Representative through the facilities of The
Depository Trust Company for the respective accounts of the several
Underwriters. Each Selling Shareholder, severally and not jointly, hereby agrees
that it will pay all stock transfer taxes, stamp duties and other similar taxes,
if any, payable upon the sale or delivery of the Shares to be sold by such
Selling Shareholder to the several Underwriters in connection with the
performance of such Selling Shareholder's obligations hereunder. Certificates
for the Shares shall be registered in such name or names and shall be in such
denominations (not less than the minimum denomination of such Shares, as the
case may be, as set forth in the Registration Statement or the Prospectus) as
the Representative may request at least two business days before the Closing
Date. The Selling Shareholders will permit the Representative to examine and
package such certificates for delivery at least one full business day prior to
the Closing Date.
(c) Each of the Company and each Selling Shareholder acknowledges and
agrees that (i) the terms of this Agreement and the Offering (including the
price of the Shares) were negotiated at arm's length between sophisticated
parties represented by counsel; (ii) no fiduciary, advisory or agency
relationship between the Company or the Selling Shareholders, on the one hand,
and the Underwriters, on the other hand, has been created as a result of any of
the transactions contemplated by this Agreement or the process leading to such
transactions, irrespective of whether any Underwriter has advised or is advising
any such party on other matters; (iii) the Underwriters' obligations to the
Company and the Selling Shareholders in respect of the Offering are set forth in
this Agreement in their entirety; and (iv) it has obtained such legal, tax,
accounting and other advice as it deems appropriate with respect to this
Agreement and the Deposit Agreement and the transactions contemplated hereby and
thereunder and any other activities undertaken in connection therewith, and it
is not relying on the Underwriters with respect to any such matters.
4. Offering. Upon authorization of the release of the Shares by the
Representative, the Underwriters propose to offer the Shares and the
corresponding ADSs for sale to the public upon the terms and conditions set
forth in the Prospectus.
5. Covenants of the Company, the Selling Shareholders and the
Underwriters.
(a) The Company covenants and agrees with the Underwriters that:
(i) The Company shall prepare the Prospectus in a form approved
by the Representative and file such Prospectus pursuant to, and within the
time period specified in, Rule 424(b) and Rule 430A or 430C under the
Securities Act; prior to the Closing Date, the Company shall file no
further amendment to the Registration Statement or amendment or supplement
to the Prospectus to which the Representative shall object in writing after
being furnished in advance a copy thereof and given a reasonable
opportunity to review and comment thereon; the Company shall notify the
Representative promptly (and, if requested by the Representative, confirm
such notice in writing) (i) when the Registration Statement, the ADS
Registration Statement and any amendments thereto become effective, (ii) of
any request by the Commission for any amendment of or
23
supplement to the Registration Statement, the ADS Registration Statement or
the Prospectus or for any additional information, (iii) of the Company's
intention to file, or prepare any supplement or amendment to, the
Registration Statement, the ADS Registration Statement, any Preliminary
Prospectus, the Prospectus or any Issuer Free Writing Prospectus, (iv) of
the mailing or the delivery to the Commission for filing of any amendment
of or supplement to the Registration Statement, the ADS Registration
Statement, or the Prospectus, including but not limited to Rule 462(b)
under the Securities Act, (v) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement, the ADS
Registration Statement, or any post-effective amendment thereto, or
suspending the use of any Preliminary Prospectus, the Prospectus or any
Issuer Free Writing Prospectus or, in each case, of the initiation or
threatening of any proceedings therefore, (vi) of the receipt of any
comments from the Commission, and (vii) of the receipt by the Company of
any notification with respect to the suspension of the qualification of the
Shares or the ADSs for sale in any jurisdiction or the initiation or
threatening of any proceeding for that purpose. If the Commission shall
propose or enter a stop order at any time, the Company will make every
reasonable effort to prevent the issuance of any such stop order and, if
issued, to obtain the lifting of such order as soon as possible.
(ii) The Company shall comply with the Securities Act and the
Exchange Act to permit completion of the distribution as contemplated in
this Agreement, the Deposit Agreement, the Registration Statement, the ADS
Registration Statement and the Pricing Prospectus. If at any time when a
prospectus relating to the Shares (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, any event shall have occurred as a result of
which the Pricing Disclosure Package (prior to the availability of the
Prospectus) or the Prospectus as then amended or supplemented would, in the
judgment of the Underwriters or the Company, include an untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances existing at the time of delivery of such Pricing Disclosure
Package or Prospectus (or, in lieu thereof, the notice referred to in Rule
173(a) under the Securities Act) to the purchaser, not misleading, or if to
comply with the Securities Act, the Exchange Act or the Rules and
Regulations it shall be necessary at any time to amend or supplement the
Pricing Disclosure Package, the Prospectus or the Registration Statement,
or to file any document incorporated by reference in the Registration
Statement or the Prospectus or in any amendment thereof or supplement
thereto, the Company will notify the Representative promptly and prepare
and file with the Commission an appropriate amendment, supplement or
document (in form and substance satisfactory to the Representative) that
will correct such statement or omission or effect such compliance, and will
use its best efforts to have any amendment to the Registration Statement
declared effective as soon as possible.
(iii) The Company will not, without the prior consent of the
Representative, (i) make any offer relating to the Shares that would
constitute a "free writing prospectus" as defined in Rule 405 under the
Securities Act, except for any Issuer Free Writing Prospectus set forth in
Schedule IV hereto and any electronic road show previously approved by the
Representative and identified in Schedule V hereto, or (ii)
24
file, refer to, approve, use or authorize the use of any "free writing
prospectus" as defined in Rule 405 under the Securities Act with respect to
the Offering or the Shares. If at any time any event shall have occurred as
a result of which any Issuer Free Writing Prospectus as then amended or
supplemented would, in the judgment of the Underwriters or the Company,
conflict with the information in the Registration Statement, the ADS
Registration Statement, the Pricing Prospectus or the Prospectus as then
amended or supplemented or would, in the judgment of the Underwriters or
the Company, include an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances existing at the time
of delivery to the purchaser, not misleading, or if to comply with the
Securities Act or the Rules and Regulations it shall be necessary at any
time to amend or supplement any Issuer Free Writing Prospectus, the Company
will notify the Representative promptly and, if requested by the
Representative, prepare and furnish without charge to each Underwriter
(subject to Sections 8(b) and 9 hereof) an appropriate amendment or
supplement (in form and substance satisfactory to the Representative) that
will correct such statement, omission or conflict or effect such
compliance. The Company has complied and will comply with the requirements
of Rule 433 under the Securities Act 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.
(iv) The Company will promptly deliver to each of the
Representative and the Underwriters' U.S. Counsel a signed copy of each of
the Registration Statement and the ADS Registration Statement, as initially
filed and all amendments thereto, including all consents and exhibits filed
therewith, and will maintain in the Company's files manually signed copies
of such documents for at least five years after the date of filing. The
Company will promptly deliver to each of the Underwriters such number of
copies of any Preliminary Prospectus, the Prospectus, the Registration
Statement, all Issuer Free Writing Prospectuses, and all amendments of and
supplements to such documents, if any, and all documents incorporated by
reference in the Registration Statement and Prospectus or any amendment
thereof or supplement thereto, as the Representative may reasonably
request. Prior to 10:00 a.m., New York City time, on the business day next
succeeding the date of this Agreement and from time to time thereafter, the
Company will furnish the Underwriters with copies of the Prospectus in New
York City in such quantities as the Representative may reasonably request.
(v) 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.
(vi) The Company will use its best efforts, in cooperation with
the Representative, at or prior to the time of effectiveness of the
Registration Statement, to
25
qualify the Shares and the ADSs for offering and sale under the securities
laws relating to the offering or sale of the Shares and the ADSs of such
jurisdictions, domestic or foreign, as the Company and the Representative
may agree upon and to maintain such qualification in effect for so long as
required for the distribution thereof; except that in no event shall the
Company be obligated in connection therewith to qualify as a foreign
corporation or to execute a general consent to service of process.
(vii) The Company will make generally available to its security
holders and to the Underwriters as soon as practicable, but in any event
not later than twelve months after the effective date of the Registration
Statement (as defined in Rule 158(c) under the Securities Act), an earnings
statement of the Company and the 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).
(viii) During the period of 90 days from the date of the
Prospectus (the "restricted period"), without the prior written consent of
the Representative, the Company (A) will not, directly or indirectly,
issue, offer, sell, agree to issue, offer or sell, solicit offers to
purchase, grant any call option, warrant or other right to purchase,
purchase any put option or other right to sell, pledge, borrow or otherwise
dispose of any Relevant Security, or make any announcement of any of the
foregoing, (B) will not establish or increase any "put equivalent position"
or liquidate or decrease any "call equivalent position" (in each case
within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder) with respect to any Relevant Security,
and (C) will not otherwise enter into any swap, derivative or other
transaction or arrangement that transfers to another, in whole or in part,
any economic consequence of ownership of a Relevant Security, whether or
not such transaction is to be settled by delivery of Relevant Securities,
other securities, cash or other consideration; and the Company will obtain
an undertaking in substantially the form of Annex VII hereto of each of its
officers, directors and shareholders listed on Schedule III attached hereto
not to engage in any of the aforementioned transactions on their own
behalf, other than (i) the sale by the Selling Shareholders of Shares as
contemplated by this Agreement and (ii) the grant of options under employee
stock option plans in effect on the date hereof, in each case as described
in the Registration Statement, the Preliminary Prospectus and the
Prospectus. The Company will not file a registration statement under the
Securities Act in connection with any transaction by the Company or any
person that is prohibited pursuant to the foregoing, except for
registration statements on Form S-8 relating to stock option plans, without
the prior written consent of the Representative.
Notwithstanding the foregoing, if (A) during the last 17 days of the
restricted period the Company issues an earnings release or material news
or a material event relating to the Company occurs or (B) prior to the
expiration of the restricted period, the Company announces that it will
release earnings results during the 16-day period beginning on the last day
of the restricted period, the restrictions imposed by the immediately
preceding paragraph shall continue to apply until the expiration of the
18-day period beginning on the issuance of the earnings release or the
occurrence of the material news or material event, as applicable, unless
the Representative waives, in
26
writing, such extension. The Company will provide the Representative and
each officer, director and shareholder of the Company listed on Schedule
III attached hereto with prior notice of any such announcement that gives
rise to an extension of the restricted period.
(ix) During the period of five 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 security holders 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).
(x) The Company will use its best efforts to maintain the listing
of the ADSs on the NASDAQ Global Market.
(xi) 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.
(xii) If the Company elects to rely upon Rule 462(b) under the
Securities Act, the Company shall file a registration statement with the
Commission in compliance with Rule 462 (a "Rule 462(b) Registration
Statement") by 10:00 p.m. (New York City 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.
(xiii) 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 the Closing Date and to satisfy all conditions precedent
to the delivery of the Shares.
(xiv) 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 or the ADSs.
(xv) The Company will not, without the prior written consent of
the Representative, make any offer relating to the Shares or the ADSs that
would constitute
27
an Issuer Free Writing Prospectus. Prior to the Closing 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 IV
hereto.
(xvi) 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 execution and delivery of this Agreement
and the Deposit 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 and the ADSs by any
Underwriter in a manner other than that as is customary in such
transactions.
(xvii) The Company shall comply with the SAFE Rules and
Regulations, and shall use best efforts to cause its directors, officers,
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,
option holder, director and officer 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.
(xviii) Upon the Closing Date, the Company will purchase (in the
event it has not previously done so) insurance covering the Company, its
directors, officers and the Underwriters for liabilities or losses arising
in connection with the Offering, including, without limitation, liabilities
or losses arising under the Securities Act, the Exchange Act and the Rules
and Regulations.
(b) Each Selling Shareholder, severally and not jointly, covenants and
agrees with the Underwriters:
(i) To deliver to the Representative prior to the Closing Date a
properly completed and executed United States Treasury Department Form W-8,
which may be replaced by any other applicable form or statement specified
by Treasury Department regulations in lieu thereof.
(ii) To notify promptly the Company and the Representative if, at
any time prior to the date on which the distribution of the Shares and ADSs
as contemplated herein and in the Prospectus has been completed, as
determined by the Representative, 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 relating to such Selling Shareholder or omit to state any
material fact relating to such Selling Shareholder necessary to make the
statements therein not misleading.
28
(iii) 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 creation, allotment, issuance, offer and distribution
of the Shares and the ADSs to be sold by the Selling Shareholder and the
execution and delivery of this Agreement; provided, however, that the
Selling Shareholder shall not be responsible for any such taxes, duties,
fees, levies or charges that arise as a result of the distribution of the
Shares and the ADSs by any Underwriters in a manner other than that as is
customary in such transactions.
(iv) To cooperate to the extent necessary to cause the
Registration Statement or any post-effective amendment thereto to become
effective at the earliest practical time and to do and perform all things
to be done and performed under this Agreement prior to the Closing 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.
(v) To deliver to the Representative on or prior to the date of
this Agreement each lock-up agreement referenced in Section 7(l) hereof.
(c) Each Underwriter severally and not jointly covenants and agrees
with the Company that such Underwriter will not use or refer to any "free
writing prospectus" (as defined in Rule 405 under the Securities Act) without
the prior written consent of the Company where the use or reference to such free
writing prospectus would require the filing of any "issuer information" (as
defined in Rule 433 under the Securities Act) with the Commission.
6. Payment of Expenses.
(a) Whether or not the transactions contemplated by this Agreement,
the Registration Statement and the Pricing Prospectus are consummated or this
Agreement is terminated, the Company hereby agrees to pay all costs and expenses
incident to the performance of its obligations and the obligations of the
Selling Shareholders hereunder, including the following: (i) all expenses in
connection with the preparation, printing and filing of the Registration
Statement, any Preliminary Prospectus, the Pricing Prospectus, any Issuer Free
Writing Prospectus, the Prospectus and any and all amendments and supplements
thereto and the mailing and delivering of copies thereof to the Underwriters and
dealers; (ii) the fees, disbursements and expenses of the Company's counsel and
accountants in connection with the registration of the Shares and the ADSs under
the Securities Act and the Offering; (iii) the cost of producing this Agreement
and any agreement among Underwriters, blue sky survey, closing documents and
other instruments, agreements or documents (including any compilations thereof)
in connection with the Offering; (iv) all expenses in connection with the
qualification of the Shares and the ADSs for offering and sale under state or
foreign securities or blue sky laws as provided in Section 5(a)(vi) hereof,
including the fees and disbursements of counsel for the Underwriters in
connection with such qualification and in connection with any blue sky survey;
(v) the filing fees incident to, and disbursements in connection with, securing
any required review by the NASD of the terms of the Offering; (vi) all fees and
expenses in connection with listing the ADSs on the NASDAQ Global Market; (vii)
all travel expenses of the Company's
29
officers and employees and any other expense of the Company incurred in
connection with attending or hosting meetings with prospective purchasers of the
Shares; (viii) all costs and expenses related to the transfer and delivery of
the Shares, in the form of Ordinary Shares or ADSs, to the Underwriters,
including any transfer or other taxes payable thereon; and (ix) the fees of the
Custodian and other fees and expenses related to the offering of the Shares by
the Selling Shareholders. The Company also will pay or cause to be paid: (x) the
cost of preparing certificates representing the Shares; (y) the cost and charges
of any transfer agent, registrar or depositary for the Shares and ADSs; and (z)
all other costs and expenses incident to the performance of its obligations
hereunder which are not otherwise specifically provided for in this Section 6.
Notwithstanding the foregoing, nothing herein shall affect any agreement that
the Company and the Selling Shareholders may make or may have made for the
sharing or allocation of such expenses. Notwithstanding anything to the contrary
in this Section 6, in the event that this Agreement is terminated pursuant to
Section 7 or 13(b) hereof, or subsequent to a Material Adverse Change, the
Company will pay all out-of pocket expenses of the Underwriters (including but
not limited to fees and disbursements of counsel to the Underwriters) incurred
in connection herewith.
(b) Whether or not the transactions contemplated by this Agreement,
the Registration Statement and the Pricing Prospectus are consummated or this
Agreement is terminated, the Selling Shareholders hereby agree to pay (i) the
fees and disbursements of their counsel, if any, (ii) the fees and expenses of
the agent for service of process appointed by the Selling Shareholders in
accordance with Section 17 hereof, (iii) any applicable share transfer, stamp
duties or other taxes related to the offering of the Shares and (iv) all other
costs and expenses incident to the performance of their obligations hereunder
which are not otherwise specifically provided for in this Section 6.
Notwithstanding the foregoing, nothing herein shall affect any agreement that
the Company and the Selling Shareholders may make or may have made for the
sharing or allocation of such costs and expenses.
7. Conditions of Underwriters' Obligations. The several obligations of
the Underwriters to purchase and pay for the Shares, as provided herein, shall
be subject to the accuracy of the representations and warranties of the Company
and the Selling Shareholders herein contained, as of the date hereof and as of
the Closing Date, to the absence from any certificates, opinions, written
statements or letters furnished to the Representative or to the Underwriters'
Counsel pursuant to this Section 7 of any misstatement or omission, to the
performance by the Company and the Selling Shareholders of their respective
obligations hereunder, and to each of the following additional conditions:
(a) The Prospectus shall have been filed with the Commission in a
timely fashion in accordance with Section 5(a) hereof; no stop order suspending
the effectiveness of the Registration Statement, the ADS Registration Statement
or any post-effective amendment thereto, and no stop order suspending or
preventing the use of any Preliminary Prospectus, any Issuer Free Writing
Prospectus or the Prospectus, shall have been issued by the Commission and no
proceedings therefor shall have been initiated or threatened by the Commission;
all requests for additional information on the part of the Commission shall have
been complied with to the Representative's reasonable satisfaction; if the
Company has elected to rely on Rule 462(b) under the Securities Act, the Rule
462(b) Registration Statement shall have become effective by
30
10:00 p.m. (Washington, D.C. time) on the date of this Agreement; and all
necessary regulatory or stock exchange approvals shall have been received.
(b) At the Closing Date the Representative shall have received the
written opinion of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, special U.S. counsel for the
Company, dated the Closing Date addressed to the Underwriters substantially in
the form attached hereto as Annex I.
(c) At the Closing Date the Representative shall have received the
written opinion of ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇, Cayman Islands counsel for the
Company, dated the Closing Date addressed to the Underwriters in the form
attached hereto as Annex II.
(d) At the Closing Date the Representative shall have received the
written opinion of GFE Law Office, PRC counsel for the Company, dated the
Closing Date addressed to the Underwriters in the form attached hereto as Annex
III.
(e) At the Closing Date the Representative shall have received the
written opinion of ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇, British Virgin Islands counsel for
the Company, dated the Closing Date addressed to the Underwriters in the form
attached hereto as Annex IV.
(f) At the Closing Date the Representative shall have received the
written opinion of such counsel for each of the Selling Shareholders as
specified in Annex V, dated the Closing Date addressed to the Underwriters in
the form attached hereto as Annex V.
(g) At the Closing Date the Representative shall have received the
written opinion of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP, counsel for the
Depositary, dated the Closing Date addressed to the Underwriters in the form
attached hereto as Annex VI.
(h) All proceedings taken in connection with the sale of the Shares as
herein contemplated shall be satisfactory in form and substance to the
Representative and to the Underwriters' Counsel, and the Underwriters shall have
received from each of the Underwriters' Counsel and ▇▇▇ ▇▇ Law Offices (the
"Underwriters' PRC Counsel") a favorable written opinion, dated as of the
Closing Date, with respect to the sale of the Shares and the issuance and sale
of the ADSs, the Registration Statement, the Prospectus and the Pricing
Disclosure Package and such other related matters as the Representative may
require, and the Company shall have furnished to the Underwriters' Counsel and
the Underwriters' PRC Counsel such documents as they may reasonably request for
the purpose of enabling them to pass upon such matters.
(i) (A) Neither the Company nor any Subsidiary shall have sustained,
since the date of the latest audited financial statements included or
incorporated by reference in the Pricing Prospectus, any material loss or
interference with its business or properties from fire, explosion, flood,
hurricane, accident or other calamity, whether or not covered by insurance, or
from any labor dispute or any legal or governmental proceeding, other than as
set forth in the Pricing Prospectus (exclusive of any supplement thereto); and
(B) subsequent to the dates as of which information is given in the Registration
Statement (exclusive of any amendment thereto subsequent to the date hereof) and
the Pricing Prospectus (exclusive of any supplement thereto), there shall not
have been any change in the capital stock or long-term or short-term debt of the
Company or any Subsidiary or any change or any development involving a change,
whether or not arising from transactions in the ordinary course of business, in
the business, general affairs,
31
management, condition (financial or otherwise), results of operations,
stockholders' equity, properties or prospects of the Company and the
Subsidiaries, individually or taken as a whole, the effect of which, in any such
case described above, is, in the judgment of the Representative, so material and
adverse as to make it impracticable or inadvisable to proceed with the Offering
on the terms and in the manner contemplated in the Pricing Prospectus (exclusive
of any such supplement).
(j) At the Closing Date the Representative shall have received a
certificate of the Chief Executive Officer and the Chief Financial Officer of
the Company, dated the Closing Date, in form and substance satisfactory to the
Representative, as to the accuracy of the representations and warranties of the
Company set forth in Section 1 hereof as of the date hereof and as of the
Closing Date, as to the performance by the Company of all of its obligations
hereunder to be performed at or prior to the Closing Date, as to the matters set
forth in subsections (a) and (i) of this Section 7, and as to such other matters
as the Representative may reasonably request.
(k) At the time this Agreement is executed and at the Closing Date,
the Representative shall have received a comfort letter from KPMG, independent
registered public accounting firm for the Company, dated as of the date of this
Agreement and as of the Closing Date addressed to the Underwriters and in form
and substance satisfactory to the Underwriters and the Underwriters' Counsel.
(l) The Representative shall have received a duly executed lock-up
agreement from each director, officer and shareholder of the Company listed on
Schedule III hereto, in each case substantially in the form attached hereto as
Annex VII.
(m) At the Closing Date, the NASD shall have confirmed that it has not
raised any objection with respect to the fairness and reasonableness of the
underwriting terms and arrangements.
(n) No action shall have been taken and no statute, rule, regulation
or order shall have been enacted, adopted or issued by any federal, state or
foreign governmental or regulatory authority that would, as of the Closing Date,
prevent the sale of the Shares or the issuance or sale of the corresponding
ADSs; and no injunction or order of any federal, state or foreign court shall
have been issued that would, as of the Closing Date, prevent the sale of the
Shares or the issuance or sale of the corresponding ADSs.
(o) The Company shall have furnished the Underwriters, the
Underwriters' Counsel and the Underwriters' PRC Counsel with such other
certificates, opinions or other documents as they may have reasonably requested.
(p) At the Closing Date, the Representative shall have received a
certificate of an authorized representative of each Selling Shareholder, dated
the Closing Date, to the effect that the representations and warranties of such
Selling Shareholder set forth in Section 2 hereof are accurate and that such
Selling Shareholder has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied hereunder at or prior to the
Closing Date.
32
(q) Each Selling Shareholder shall have completed the transactions
contemplated by this Agreement.
(r) On or prior to the Closing Date, the Representative shall have
received a properly completed and executed United States Treasury Department
Form W-8 or other applicable form from each Selling Shareholder.
(s) No Issuer Free Writing Prospectus, Prospectus or amendment or
supplement to the Registration Statement, the ADS Registration Statement or the
Prospectus shall have been filed to which the Representative has objected in a
timely fashion in writing.
(t) The Depositary shall have delivered to the Company at the Closing
Date certificates satisfactory to the Underwriters evidencing the deposit with
the Depositary or its nominee of the Shares being so deposited against issuance
of ADRs evidencing the ADSs to be delivered by the Selling Shareholders at the
Closing Date, and the execution, countersignature (if applicable), issuance and
delivery of ADRs evidencing such ADSs pursuant to the Deposit Agreement.
If any of the conditions specified in this Section 7 shall not have been
fulfilled when and as required by this Agreement, or if any of the certificates,
opinions, written statements or letters furnished to the Representative, the
Underwriters' Counsel or the Underwriters' PRC Counsel pursuant to this Section
7 shall not be satisfactory in form and substance to the Representative, the
Underwriters' Counsel or the Underwriters' PRC Counsel, all obligations of the
Underwriters hereunder may be cancelled by the Representative at, or at any time
prior to, the Closing Date. Notice of such cancellation shall be given to the
Company in writing, or by telephone. Any such telephone notice shall be
confirmed promptly thereafter in writing.
8. Indemnification.
(a) The Company shall indemnify and hold harmless each Underwriter and
each person, if any, who controls any Underwriter within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act, and each affiliate
of any Underwriter within the meaning of Rule 405 of the Securities Act from and
against any and all losses, liabilities, claims, damages and expenses whatsoever
as incurred (including but not limited to attorneys' fees and any and all
expenses whatsoever incurred in investigating, preparing or defending against
any litigation, commenced or threatened, or any claim whatsoever, and any and
all amounts paid in settlement of any claim or litigation), joint or several, to
which they or any of them may become subject under the Securities Act, the
Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages
or expenses (or actions in respect thereof) arise out of or are based upon (i)
any untrue statement or alleged untrue statement of a material fact contained
(A) in the Registration Statement, as originally filed or any amendment thereof,
or in any Preliminary Prospectus or the Prospectus, or in any supplement thereto
or amendment thereof, or in any Issuer Free Writing Prospectus, or in any
"issuer information" (as defined in Rule 433(h)(2) under the Securities Act)
filed or required to be filed pursuant to Rule 433(d) under the Securities Act,
or (B) in any other materials or information provided to investors by, or with
the approval of, the Company in connection with the Offering, including in any
"road show" (as defined in Rule 433 under the Securities Act) for the Offering
("Marketing Materials"), or (ii) the
33
omission or alleged omission to state (A) in the Registration Statement, as
originally filed or any amendment thereof, a material fact required to be stated
therein or necessary to make the statements therein not misleading, or (B) in
any Preliminary Prospectus or the Prospectus, or in any supplement thereto or
amendment thereof, or in any Issuer Free Writing Prospectus, or in any "issuer
information" (as defined in Rule 433(h)(2) under the Securities Act) filed or
required to be filed pursuant to Rule 433(d) under the Securities Act, or in any
Marketing Materials, a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading; provided, however, that the Company shall not be
liable in any such case to the extent but only to the extent that any such loss,
liability, claim, damage or expense arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with written information
furnished to the Company by or on behalf of any Underwriter through the
Representative expressly for use therein. The parties agree that such
information provided by or on behalf of any Underwriter through the
Representative consists solely of the material referred to in Section 15 hereof.
This indemnity agreement will be in addition to any liability which the Company
may otherwise have, including but not limited to other liability under this
Agreement.
(b) Each Underwriter, severally and not jointly, shall indemnify and
hold harmless the Company, each Selling Shareholder, each of the directors of
the Company, each of the officers of the Company who shall have signed the
Registration Statement, and each other person, if any, who controls the Company
or any Selling Shareholder within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act, against any losses, liabilities, claims,
damages and expenses whatsoever as incurred (including but not limited to
attorneys' fees and any and all expenses whatsoever incurred in investigating,
preparing or defending against any litigation, commenced or threatened, or any
claim whatsoever, and any and all amounts paid in settlement of any claim or
litigation), joint or several, to which they or any of them may become subject
under the Securities Act, the Exchange Act or otherwise, insofar as such losses,
liabilities, claims, damages or expenses (or actions in respect thereof) arise
out of or are based upon (i) any untrue statement or alleged untrue statement of
a material fact contained in the Registration Statement, as originally filed or
any amendment thereof, or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the statements
therein not misleading or (ii) any untrue statement or alleged untrue statement
of a material fact included in any Preliminary Prospectus or the Prospectus, or
in any amendment thereof or supplement thereto, or the omission or alleged
omission to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, in each case to the extent, but only to the extent, that
any such loss, liability, claim, damage or expense arises out of or is based
upon any such untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of any
Underwriter through the Representative specifically for use therein; provided,
however, that in no case shall any Underwriter be liable or responsible for any
amount in excess of the underwriting discount applicable to the Shares to be
purchased by such Underwriter hereunder. The parties agree that such information
provided by or on behalf of any Underwriter through the Representative consists
solely of the material referred to in the last sentence of Section 15 hereof.
34
(c) Each of the Selling Shareholders shall, severally and not jointly,
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act, and each affiliate of any Underwriter within
the meaning of Rule 405 of the Securities Act from and against any and all
losses, liabilities, claims, damages and expenses whatsoever as incurred
(including but not limited to reasonable attorneys' fees and any and all
expenses whatsoever incurred in investigating, preparing or defending against
any litigation, commenced or threatened, or any claim whatsoever, and any and
all amounts paid in settlement of any claim or litigation), joint or several, to
which they or any of them may become subject under the Securities Act, the
Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages
or expenses (or actions in respect thereof) arise out of or are based upon (i)
any untrue statement or alleged untrue statement of a material fact relating to
such Selling Shareholder contained in the Registration Statement, as originally
filed or any amendment thereof, or any related Preliminary Prospectus or the
Prospectus, or in any amendment thereof, or any related Preliminary Prospectus
or the Prospectus, or in any amendment thereof or supplement thereto or (ii) the
omission or alleged omission to state (A) in the Registration Statement, as
originally filed or any amendment thereof, a material fact relating to such
Selling Shareholder required to be stated therein or necessary to make the
statements therein not misleading, or (B) in any Preliminary Prospectus or the
Prospectus, or in any supplement thereto or amendment thereof, a material fact
relating to such Selling Shareholder required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading; provided, however, that such Selling Shareholder will
not be liable in any such case to the extent but only to the extent that any
such loss, liability, claim, damage or expense arises out of or is based upon
any untrue statement or alleged omission made in the Registration Statement, as
originally filed or any amendment thereof, or any related Preliminary Prospectus
or the Prospectus, or in any supplement thereto or amendment thereof, in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of any Underwriter through the Representative expressly
for use therein. The parties agree that such information provided by or on
behalf of any Underwriter through the Representative consists solely of the
material referred to in the last sentence of Section 15 hereof. This indemnity
agreement will be in addition to any liability which each of the Selling
Shareholders may otherwise have, including but not limited to other liability
under this Agreement; provided, however, that in no case shall any Selling
Shareholder be liable or responsible for any amount in excess of the proceeds
(net of the underwriting discounts and commissions but before deducting other
expenses) applicable to the Shares sold by such Selling Shareholder pursuant to
the transactions contemplated hereby.
Promptly after receipt by an indemnified party under subsection (a), (b) or
(c) above of notice of any claims or the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify each party against whom
indemnification is to be sought in writing of the claim or the commencement
thereof (but the failure so to notify an indemnifying party shall not relieve
the indemnifying party from any liability which it may have under this Section 8
to the extent that it is not materially prejudiced as a result thereof or
otherwise has notice of any such action, and in any event shall not relieve it
from any liability that such indemnifying party may have otherwise than on
account of the indemnity agreement hereunder). In case any such claim or action
is brought against any indemnified party, and it notifies an indemnifying party
of the
35
commencement thereof, the indemnifying party will be entitled to participate at
its own expense in the defense of any such claim or action, and to the extent it
may elect by written notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, to assume the
defense thereof with counsel satisfactory to such indemnified party; provided,
however, that counsel to the indemnifying party shall not (except with the
written consent of the indemnified party) also be counsel to the indemnified
party. Notwithstanding the foregoing, the indemnified party or parties shall
have the right to employ its or their own counsel in any such case, but the fees
and expenses of such counsel shall be at the expense of such indemnified party
or parties unless (i) the employment of such counsel shall have been authorized
in writing by one of the indemnifying parties in connection with the defense of
such action, (ii) the indemnifying parties shall not have employed counsel to
have charge of the defense of such action within a reasonable time after notice
of commencement of the action, (iii) the indemnifying party does not diligently
defend the action after assumption of the defense, or (iv) such indemnified
party or parties shall have reasonably concluded that there may be defenses
available to it or them which are different from or additional to those
available to one or all of the indemnifying parties (in which case the
indemnifying parties shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties), in any of which events
such fees and expenses shall be borne by the indemnifying parties. No
indemnifying party shall, without the prior written consent of the indemnified
parties, effect any settlement or compromise of, or consent to the entry of
judgment with respect to, any pending or threatened claim, investigation, action
or proceeding in respect of which indemnity or contribution may be or could have
been sought by an indemnified party under this Section 8 or Section 9 hereof
(whether or not the indemnified party is an actual or potential party thereto),
unless such settlement, compromise or judgment (i) includes an unconditional
release of the indemnified party from all liability arising out of such claim,
investigation, action or proceeding and (ii) does not include a statement as to
or an admission of fault, culpability or any failure to act, by or on behalf of
the indemnified party. If at any time an indemnified party shall have requested
an indemnifying party to reimburse the indemnified party for fees and expenses
of counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by subsections (a), (b) or (c), as
applicable, effected without its written consent if (A) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (B) such indemnifying party shall have received notice of the
terms of such settlement at least 30 days prior to such settlement being entered
into and (C) such indemnifying party shall not have reimbursed such indemnified
party in accordance with such request prior to the date of such settlement.
9. Contribution. In order to provide for contribution in circumstances
in which the indemnification provided for in Section 8 hereof is for any reason
held to be unavailable from any indemnifying party or is insufficient to hold
harmless a party indemnified thereunder, the Company and the Selling
Shareholders on the one hand and the Underwriters on the other hand shall
contribute to the aggregate losses, claims, damages, liabilities and expenses
(or actions in respect thereof) of the nature contemplated by such
indemnification provision (including any investigation, legal and other expenses
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claims asserted, but after deducting in the case of
losses, claims, damages, liabilities and expenses suffered by the Company and
any Selling Shareholder, any contribution received by the Company and any
Selling Shareholder from persons, other than the Underwriters, who may also be
liable for
36
contribution, including persons who control the Company or any Selling
Shareholder within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act, officers of the Company who signed the Registration
Statement and directors of the Company) as incurred to which the Company, any
Selling Shareholder and one or more of the Underwriters may be subject, (A) in
such proportions as is appropriate to reflect the relative benefits received by
the Company and the Selling Shareholders on the one hand and the Underwriters on
the other hand from the Offering or, (B) if such allocation is not permitted by
applicable law, in such proportions as are appropriate to reflect not only the
relative benefits referred to above but also the relative fault of the Company
and the Selling Shareholders on the one hand and the Underwriters on the other
hand in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or expenses, 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 hand
shall be deemed to be in the same proportion as (x) the total proceeds from the
Offering (net of underwriting discounts and commissions but before deducting
expenses) received by the Company and the Selling Shareholders bears to (y) the
underwriting discount or commissions received by the Underwriters, in each case
as set forth in the table on the cover page of the Prospectus. The relative
fault of each of the Company and the Selling Shareholders on the one hand and of
the Underwriters on the other hand shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or a Selling Shareholder on the one hand or
the Underwriters on the other hand and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. In determining the liability of each Selling Shareholder as compared
to that of the Company pursuant to (A) and (B) above, no Selling Shareholder
shall be considered liable for any losses, claims, damages, liabilities and
expenses (or actions in respect thereof) of the nature contemplated by Section
8(c), except those that arise out of or are based on (i) any untrue statement or
alleged untrue statement of a material fact relating to such Selling Shareholder
contained in the Registration Statement, as originally filed or any amendment
thereof, or any Preliminary Prospectus or the Prospectus, or in any amendment
thereof or supplement thereto or (ii) the omission or alleged omission to state
(A) in the Registration Statement, as originally filed or any amendment thereof,
a material fact relating to such Selling Shareholder required to be stated
therein or necessary to make the statements therein not misleading, or (B) in
any Preliminary Prospectus or the Prospectus, or in any supplement thereto or
amendment thereof, a material fact relating to such Selling Shareholder required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. The Company, the
Selling Shareholders and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 9 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section. The aggregate amount
of losses, liabilities, claims, damages and expenses incurred by an indemnified
party and referred to above in this Section 9 shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any judicial, regulatory or other legal or
governmental agency or body, commenced or threatened, or any claim whatsoever
based upon any such untrue or alleged untrue statement or
37
omission or alleged omission. Notwithstanding the provisions of this Section 9,
(i) no Underwriter shall be required to contribute any amount in excess of the
amount by which the discounts and commissions applicable to the Shares
underwritten by it and distributed to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission, (ii) 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 and (iii) no Selling
Shareholder shall be required to contribute an amount in excess of the proceeds
(net of the underwriting discounts and commissions but before deducting other
expenses) applicable to the Shares sold by the Selling Shareholder pursuant to
the transactions contemplated hereby. For purposes of this Section 9, each
person, if any, who controls an Underwriter within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act and each affiliate of any
Underwriter within the meaning of Rule 405 under the Securities Act shall have
the same rights to contribution as such Underwriter, and each person, if any,
who controls the Company or any Selling Shareholder within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, each officer
of the Company who shall have signed the Registration Statement and each
director of the Company and any Selling Shareholder shall have the same rights
to contribution as the Company and any Selling Shareholder, as applicable,
subject in each case to clauses (i), (ii) and (iii) of the immediately preceding
sentence. Any party entitled to contribution will, promptly after receipt of
notice of commencement of any action, suit or proceeding against such party in
respect of which a claim for contribution may be made against another party or
parties, notify each party or parties from whom contribution may be sought, but
the omission to so notify such party or parties shall not relieve the party or
parties from whom contribution may be sought from any obligation it or they may
have under this Section 9 or otherwise. The obligations of the Underwriters to
contribute pursuant to this Section 9 are several in proportion to the
respective number of Shares to be purchased by each of the Underwriters
hereunder and not joint.
10. Underwriter Default.
(a) If any Underwriter or Underwriters shall default in its or their
obligation to purchase Shares hereunder, and if the Shares with respect to which
such default relates (the "Default Shares") do not (after giving effect to
arrangements, if any, made by the Representative pursuant to subsection (b)
below) exceed in the aggregate 10% of the number of Shares, each non-defaulting
Underwriter, acting severally and not jointly, agrees to purchase from the
Selling Shareholders that number of Default Shares that bears the same
proportion of the total number of Default Shares then being purchased as the
number of Shares set forth opposite the name of such Underwriter in Schedule I
hereto bears to the aggregate number of Shares set forth opposite the names of
the non-defaulting Underwriters, subject, however, to such adjustments to
eliminate fractional shares as the Representative in its sole discretion shall
make.
(b) In the event that the aggregate number of Default Shares exceeds
10% of the number of Shares, the Representative may in its discretion arrange
for itself or for another party or parties (including any non-defaulting
Underwriter or Underwriters who so agree) to purchase the Default Shares on the
terms contained herein. In the event that within five calendar days after such a
default the Representative does not arrange for the purchase of the Default
Shares as provided in this Section 10, this Agreement shall thereupon terminate,
without liability
38
on the part of the Selling Shareholders with respect thereto (except in each
case as provided in Sections 6, 8, 9, 12 and 13(d)) or the Underwriters, but
nothing in this Agreement shall relieve a defaulting Underwriter or Underwriters
of its or their liability, if any, to the other Underwriters and the Selling
Shareholders for damages occasioned by its or their default hereunder.
(c) In the event that any Default Shares are to be purchased by the
non-defaulting Underwriters, or are to be purchased by another party or parties
as aforesaid, the Representative or the Company shall have the right to postpone
the Closing Date for a period not exceeding five business days, in order to
effect whatever changes may thereby be made necessary in the Registration
Statement or the Prospectus or in any other documents and arrangements, and the
Company agrees to file promptly any amendment or supplement to the Registration
Statement or the Prospectus which, in the opinion of Underwriters' Counsel, may
thereby be made necessary or advisable. The term "Underwriter" as used in this
Agreement shall include any party substituted under this Section 10 with like
effect as if it had originally been a party to this Agreement with respect to
such Shares.
11. Selling Shareholder Default.
(a) If any Selling Shareholder or Selling Shareholders shall default
in its or their obligation to sell and deliver any Shares hereunder, then the
Representative may, by notice to the Company, terminate this Agreement without
any liability on the part of any non-defaulting party except that the provisions
of Sections 1, 2, 6, 8, 9, 12 and 13 hereof shall remain in full force and
effect. No action taken pursuant to this Section 11 shall relieve any Selling
Shareholder so defaulting from liability, if any, in respect of such default.
(b) In the event that such default occurs and the Company and
Underwriters agree to proceed with the Offering, then the Underwriters may, at
the option of the Representative, or the Company shall have the right, in each
case by notice to the other, to postpone the Closing Date for a period not
exceeding five business days, in order to effect whatever changes may thereby be
made necessary in the Registration Statement or the Prospectus or in any other
documents and arrangements, and the Company agrees to file promptly any
amendment or supplement to the Registration Statement or the Prospectus which,
in the opinion of Underwriters' Counsel, may thereby be made necessary or
advisable.
39
12. Survival of Representations and Agreements. All representations
and warranties, covenants and agreements of the Underwriters, the Company and
the Selling Shareholders contained in this Agreement or in certificates of
officers of the Company or any Subsidiary or of the Selling Shareholders
submitted pursuant hereto, including the agreements contained in Section 6, the
indemnity agreements contained in Section 8 and the contribution agreements
contained in Section 9, shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any Underwriter or any
controlling person thereof or by or on behalf of the Company or any Selling
Shareholder, any of their officers and directors or any controlling person
thereof, and shall survive delivery of and payment for the Shares to and by the
Underwriters. The representations contained in Sections 1 and 2 and the
agreements contained in Sections 6, 8, 9, 12 and 13 hereof shall survive any
termination of this Agreement, including termination pursuant to Section 10, 11
or 13 hereof.
13. Effective Date of Agreement; Termination.
(a) This Agreement shall become effective upon the later of (i)
receipt by the Representative and the Company of notification of the
effectiveness of the Registration Statement or (ii) the execution of this
Agreement. Notwithstanding any termination of this Agreement, the provisions of
this Section 13 and of Sections 1, 2, 6, 8, 9, 12 and 14 through 22, inclusive,
shall remain in full force and effect at all times after the execution hereof.
(b) The Representative shall have the right to terminate this
Agreement at any time prior to the Closing Date if, at or after the Applicable
Time, (i) any domestic or international event or act or occurrence has
materially disrupted, or in the opinion of the Representative will in the
immediate future materially disrupt, the market for the Company's securities or
securities in general; (ii) a suspension or material limitation in trading in
securities in general on The New York Stock Exchange or the NASDAQ Global Market
shall have occurred; (iii) a suspension or material limitation in trading in the
ADSs on the NASDAQ Global Market shall have occurred; (iv) a banking moratorium
has been declared by any state or federal authority or if any material
disruption in commercial banking or securities settlement or clearance services
shall have occurred; (v) (A) there shall have occurred any outbreak or
escalation of hostilities or acts of terrorism involving the United States or
there is a declaration of a national emergency or war by the United States or
(B) there shall have been any other calamity or crisis or any change in
political, financial or economic conditions if the effect of any such event in
(A) or (B), in the judgment of the Representative, makes it impracticable or
inadvisable to proceed with the offering, sale and delivery of the Shares on the
terms and in the manner contemplated by the Pricing Prospectus; or (vi) in the
judgment of the Representative, any Material Adverse Change shall have occurred
since the respective dates as of which information is given in the Pricing
Prospectus (exclusive of any amendment or supplement thereto since the date
hereof).
(c) Any notice of termination pursuant to this Section 13 shall be in
writing specifying the provision of this Agreement that was invoked for the
termination.
(d) If this Agreement shall be terminated pursuant to any of the
provisions hereof (other than pursuant to Section 10(b) hereof), or if the sale
of the Shares provided for herein is not consummated because any condition to
the obligations of the Underwriters set forth
40
herein is not satisfied or because of any refusal, inability or failure on the
part of the Company to perform any agreement herein or comply with any provision
hereof, the Company will, subject to demand by the Representative, reimburse the
Underwriters for all out-of-pocket expenses (including the fees and expenses of
their counsel), incurred by the Underwriters in connection herewith.
14. Notices. All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing, and:
(a) if sent to any Underwriter, shall be mailed, delivered, or faxed
and confirmed in writing, to such Underwriter c/o Bear, ▇▇▇▇▇▇▇ & Co. Inc., ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ Parish, Senior
Managing Director, Equity Capital Markets, Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇, with a
copy to Underwriters' Counsel at ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, 7/F, ICBC
Tower, ▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇: ▇▇▇▇▇ ▇▇▇, Facsimile: (852)
2869-7694; provided, however, that any notice to an Underwriter pursuant to
Section 8 shall be delivered or sent by mail or facsimile transmission to such
Underwriter at its address set forth in its acceptance facsimile to the
Representative, which address will be supplied to any other party hereto by the
Representative upon request. Any such notices and other communications shall
take effect at the time of receipt thereof;
(b) if sent to the Company, shall be mailed, delivered, or faxed and
confirmed in writing to the Company at China GrenTech Corporation Limited, 16th
Floor, Zhongyin Tower, Caitian North Road, Futian District, Shenzhen 518026,
PRC, Attention: ▇▇▇▇▇▇▇ ▇▇▇, Chairman, Facsimile: (▇▇) ▇▇▇-▇▇▇▇-▇▇▇▇, with a
copy to its special U.S. counsel at ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ Tower, The Landmark, ▇▇ ▇▇▇▇▇'▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇:
▇▇▇▇ ▇▇▇▇▇, Facsimile: (▇▇▇) ▇▇▇▇-▇▇▇▇;
(c) if sent to Actis China Investment Holdings No.1 Limited, shall be
mailed, delivered or faxed and confirmed in writing to International Management
(Mauritius) Ltd, Les Cascades Building, ▇▇▇▇▇ ▇▇▇▇▇▇ Street, Port Louis,
Attention: Yannick Roussety, Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇; and
(d) if sent to Standard Chartered Private Equity Limited, shall be
mailed, delivered or faxed and confirmed in writing to Standard Chartered
Private Equity Limited, ▇ ▇▇▇▇▇▇▇ ▇▇▇▇, #▇▇-▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Attention:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Facsimile: (▇▇) ▇▇▇▇-▇▇▇▇.
15. The parties acknowledge and agree that, for purposes of this
Agreement the information provided by or on behalf of any Underwriter consists
solely of the material included in (i) the third, fourth, fifth, sixteenth,
seventeenth and eighteenth paragraphs, and (ii) the second sentence of the
nineteenth paragraph, under the caption "Underwriting" in the Prospectus.
16. Parties. This Agreement shall inure solely to the benefit of, and
shall be binding upon, the Underwriters, the Company and the Selling
Shareholders and the controlling persons, directors, officers, employees and
agents referred to in Sections 8 and 9 hereof, and their respective successors
and assigns, and no other person shall have or be construed to have
41
any legal or equitable right, remedy or claim under or in respect of or by
virtue of this Agreement or any provision herein contained. This Agreement and
all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the parties hereto and said controlling persons and their
respective successors, officers, directors, heirs and legal representatives, and
it is not for the benefit of any other person, firm or corporation. The term
"successors and assigns" shall not include a purchaser, in its capacity as such,
of Shares or ADSs from any of the Underwriters.
17. Governing Law and Jurisdiction; Waiver of Jury Trial. This
Agreement shall be governed by and construed in accordance with the laws of the
State of New York. Each of the Company and each Selling Shareholder irrevocably
(a) submits to the jurisdiction of any New York Court for the purpose of any
suit, action, or other proceeding arising out of this Agreement, or any of the
agreements or transactions contemplated by this Agreement, the Deposit
Agreement, the Registration Statement, the Pricing Prospectus and the Prospectus
(each, a "Proceeding"), (b) agrees that all claims in respect of any Proceeding
may be heard and determined in any such court, (c) waives, to the fullest extent
permitted by law, any immunity from jurisdiction of any such court or from any
legal process therein, (d) agrees not to commence any Proceeding other than in
such courts, and (e) waives, to the fullest extent permitted by law, any claim
that such Proceeding is brought in an inconvenient forum. Each of the Company
and each Selling Shareholder hereby irrevocably designates CT Corporation System
Inc., ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, as agent upon whom process
against the Company or any Selling Shareholder may be served. EACH OF THE
COMPANY (ON BEHALF OF ITSELF AND, TO THE FULLEST EXTENT PERMITTED BY LAW, ON
BEHALF OF ITS RESPECTIVE EQUITY HOLDERS AND CREDITORS), THE SELLING SHAREHOLDERS
AND UNDERWRITERS HEREBY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY CLAIM BASED UPON, ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, THE REGISTRATION
STATEMENT, THE ADS REGISTRATION STATEMENT, THE PRICING PROSPECTUS AND THE
PROSPECTUS.
18. Judgment Currency. If for the purposes of obtaining judgment in
any court it is necessary to convert a sum due hereunder into any currency other
than United States dollars, the parties hereto agree, to the fullest extent
permitted by law, that the rate of exchange used shall be the rate at which in
accordance with normal banking procedures the relevant party or parties could
purchase United States dollars with such other currency in The City of New York
on the business day preceding that on which final judgment is given. The
obligation of each party hereto with respect to any sum due from it to any other
party hereto or any person controlling any such other party shall,
notwithstanding any judgment in a currency other than United States dollars, not
be discharged until the first business day following receipt by such other party
or controlling person of any sum in such other currency, and only to the extent
that such other party or controlling person may in accordance with normal
banking procedures purchase United States dollars with such other currency. If
the United States dollars so purchased are less than the sum originally due to
such other party or controlling person hereunder, the first-mentioned party
agrees as a separate obligation and notwithstanding any such judgment, to
indemnify such other party or controlling person against such loss. If the
United States dollars so purchased are greater than the sum originally due to
such other party or controlling person
42
hereunder, such other party or controlling person agrees to pay to the
first-mentioned party an amount equal to the excess of the United States dollars
so purchased over the sum originally due to such other party or controlling
person hereunder.
19. Foreign Taxes. All payments made by the Company or any of the
Selling Shareholders under this Agreement will be made without withholding or
deduction for or on account of any present or future taxes, duties, assessments
or governmental charges of whatever nature imposed or levied by or on behalf of
the Cayman Islands, the PRC or the British Virgin Islands or any political
subdivision or any taxing authority thereof or therein unless the Company or any
Selling Shareholder is or becomes required by law to withhold or deduct such
taxes, duties, assessments or other governmental charges. In such event, the
Company or such Selling Shareholder will pay such additional amounts as will
result, after such withholding or deduction, in the receipt by each Underwriter
and each person controlling any Underwriter, as the case may be, of the amounts
that would otherwise have been receivable in respect thereof, except to the
extent such taxes, duties, assessments or other governmental charges are imposed
or levied by reason of such Underwriter's or controlling person's being
connected with the Cayman Islands, the PRC or the British Virgin Islands other
than by reason of its being an Underwriter or a person controlling any
Underwriter under this Agreement.
20. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same instrument. Delivery of
a signed counterpart of this Agreement by facsimile transmission shall
constitute valid and sufficient delivery thereof.
21. 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.
22. Time is of the Essence. Time shall be of the essence of this
Agreement. As used herein, the term "business day" shall mean any day when the
Commission's office in Washington, D.C. is open for business.
[signature page follows]
43
If the foregoing correctly sets forth your understanding, please so
indicate in the space provided below for that purpose, whereupon this letter
shall constitute a binding agreement among us.
Very truly yours,
CHINA GRENTECH CORPORATION LIMITED
By:
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇
Title: Chairman and Chief Executive
Officer
ACTIS CHINA INVESTMENT HOLDINGS NO. 1
LIMITED
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
STANDARD CHARTERED PRIVATE EQUITY
LIMITED
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Accepted as of the date first above
written
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
On behalf of itself and the other
Underwriters named in Schedule I
hereto.
[signature page]
SCHEDULE I
Total Number of Shares
Underwriter to be Purchased
----------- ----------------------
Bear, ▇▇▇▇▇▇▇ & Co. Inc. __________
CIBC World Markets __________
----------
Total 82,402,850
I-1
SCHEDULE II
Selling Shareholder Total Number of Shares to be Sold
------------------- ---------------------------------
Actis China Investment Holdings No. 1 Limited 46,207,425
Standard Chartered Private Equity Limited 36,195,425
----------
Total 82,402,850
==========
II-1
SCHEDULE III
▇▇▇▇▇▇▇ ▇▇▇
Kunjie Zhuang
▇▇▇▇ ▇▇
▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇
Xiaohu You
▇▇▇ ▇▇▇▇▇ Mak
Tianwen Ding
▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
Guoren Industrial Developments Limited
Heng Xing Yue Investments Limited
Drag Investments Limited
III-1
SCHEDULE IV
None.
IV-1
SCHEDULE V
None.
IV-1
EXHIBIT A
Subsidiaries
Subsidiaries Incorporated in the PRC ("PRC Subsidiaries")
Shenzhen GrenTech Co., Ltd.
Shenzhen Lingxian Technology Co., Ltd.
Quanzhou Lake Communication Co., Ltd.
Quanzhou Lake Microwave Co., Ltd.
Subsidiary Incorporated Outside the PRC ("Overseas Subsidiary")
GrenTech (BVI) Limited
A-1
ANNEX I
Form of Opinion of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
1. Assuming the Underwriting Agreement has been duly authorized,
executed and delivered by the Company in accordance with the laws of the Cayman
Islands, the Underwriting Agreement has been duly executed and delivered by the
Company under the laws of the State of New York.
2. Assuming the Deposit Agreement has been duly authorized, executed
and delivered by the Company in accordance with the laws of the Cayman Islands,
the Deposit Agreement has been duly executed and delivered by the Company under
the laws of the State of New York and, assuming the Deposit Agreement has been
duly authorized, executed and delivered by the Depositary and that each of the
Company and the Depositary has the full power, authority and legal right to
enter into and perform its respective obligations thereunder, the Deposit
Agreement constitutes a valid and legally binding obligation of the Company,
enforceable in accordance with its terms, except that the enforcement thereof
may be subject to (a) bankruptcy, insolvency, fraudulent transfer,
reorganization and other laws of general applicability now or hereinafter in
effect relating to or affecting creditors' rights generally, (b) general equity
principles and the discretion of the court before which any proceeding therefor
may be brought (regardless of whether such enforceability is considered in a
proceeding in equity or at law), and (c) an implied covenant of good faith and
fair dealing.
3. Assuming the due authorization, execution, issuance and delivery by
the Depositary of ADRs evidencing the ADSs against the deposit of Shares by each
of the Selling Shareholders in accordance with the Deposit Agreement and payment
therefor in accordance with this Agreement, the ADSs will be duly and validly
issued and persons in whose names such ADRs are duly registered will be entitled
to the rights specified therein and in the Deposit Agreement.
4. The sale of the ADSs by each of the Selling Shareholders and the
performance by the Company and each of the Selling Shareholders of this
Agreement, and by the Company of the Deposit Agreement, (i) will not violate any
U.S. federal or New York state statute, rule or regulation applicable to
transactions of the type contemplated by the Underwriting Agreement and the
Deposit Agreement and (ii) will not result in the breach of or a default under
any agreement filed or incorporated by reference as an exhibit to the
Registration Statement.
5. To the knowledge of such counsel, there are no legal or
governmental proceedings pending or threatened before any U.S. federal or New
York State court or governmental agency, authority or body which are required to
be described in the Prospectus that are not described as required.
6. Based on a telephone conversation with a member of the staff of the
Commission on July [__], 2007, the Registration Statement is effective under the
Securities Act and, to the knowledge of such counsel, no stop order suspending
the effectiveness of the Registration Statement has been issued under the
Securities Act and no proceedings therefor have been instituted or threatened by
the Commission; and any required filing of the Prospectus
A-I-1
pursuant to Rule 424(b) under the Securities Act has been made in accordance
with Rule 424(b) under the Securities Act.
7. The Registration Statement, as of the date it was declared
effective, and the Prospectus, as of its date, complied as to form in all
material respects with the requirements for registration statements on Form F-3
under the Securities Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder, except that in each case such counsel
shall express no opinion with respect to the financial statements, the notes
thereto and other financial data included therein or incorporated by reference
in the Registration Statement, the Pricing Prospectus or the Prospectus.
8. The statements set forth in the Prospectus under the caption
"Description of American Depositary Shares", insofar as they purport to
summarize the provisions of the agreements, statutes or regulations referred to
therein, fairly summarize such matters in all material respects.
9. The information in the Prospectus under "Taxation--United States
Federal Income Taxation", to the extent that such information constitutes
matters of U.S. federal or New York state laws or legal conclusions based on
such laws, is a fair and accurate summary of such matters and conclusions in all
material respects.
10. No consent, approval, authorization, order, registration or
qualification of or with any U.S. federal or New York State governmental agency
or body or, to our knowledge, any U.S. federal or New York State court is
required for the compliance by the Company with all of the provisions of the
Underwriting Agreement and the Deposit Agreement, except for (a) such as have
been obtained under the Securities Act and the Securities Exchange Act of 1934,
as amended, (b) such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or Blue Sky laws or
securities laws of jurisdictions outside the United States in connection with
the purchase and distribution of the ADSs by the Underwriters as contemplated in
the Underwriting Agreement, and (c) such as are required by the National
Association of Securities Dealers.
11. The Company is not required to register as an "investment company"
under the Investment Company Act of 1940, as amended.
12. Under the laws of the State of New York relating to personal
jurisdiction, (a) the Company has, under the Underwriting Agreement and the
Deposit Agreement, validly and irrevocably submitted to the non-exclusive
personal jurisdiction of any state or federal court located in the State of New
York, County of New York in any action arising out of or relating to the
Underwriting Agreement and the Deposit Agreement and the transactions
contemplated therein and has validly and effectively waived any objection to the
venue of a proceeding in any such court as provided in Section 17 of the
Underwriting Agreement and Section 7.6 of the Deposit Agreement, (b) its
appointment thereunder of CT Corporation System as its authorized agent for
service of process is valid, legal and binding, and (c) service of process in
the matter set forth in Section 17 of the Underwriting Agreement and Section 7.6
of the Deposit Agreement is effective to confer valid personal jurisdiction over
the Company.
A-I-2
13. There are no contracts known to such counsel of a character
required to be filed as exhibits to the Registration Statement or incorporated
by reference therein that are not filed or incorporated by reference as
required.
14. In addition, although such counsel does not make any
representation as to, and is not passing upon or assuming responsibility for,
the accuracy, completeness or fairness of the statements included in the
Registration Statement, the Pricing Prospectus or the Prospectus, except for
those made under (8) and (9) above, such opinion shall also contain a statement
that such counsel has participated in conferences with officers and
representatives of the Company, representatives of the independent public
accountants for the Company and the Underwriters and their counsel at which the
contents of the Registration Statement, the Pricing Prospectus and the
Prospectus and related matters were discussed and no facts have come to the
attention of such counsel which caused such counsel to believe that (A) the
Registration Statement (including the documents incorporated or deemed
incorporated by reference therein), at the time it became effective (including
the information deemed to be part of the Registration Statement at the time of
effectiveness pursuant to Rule 430A, or any amendment thereof made prior to the
Closing Date, as of the date of such amendment, 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, or (B) the
Prospectus (including the documents incorporated or deemed incorporated by
reference therein), as of its date (or any amendment thereof or supplement
thereto made prior to the Closing Date as of the date of such amendment or
supplement) and as of the Closing Date, 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 light of the circumstances under
which they were made, not misleading; or (C) the Pricing Disclosure Package
(including the documents incorporated or deemed incorporated by reference
therein), as of the Applicable Time, contained an untrue statement of a material
fact or omitted to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading (it being understood that such counsel need express no belief or
opinion with respect to the financial statements and schedules and other
financial data included or incorporated by reference therein or omitted
therefrom).
A-I-3
ANNEX II
Form of Opinion of ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇
Cayman Islands counsel to the Company
1. As at the Certificate Date, the Company has been duly incorporated and is
validly existing under the laws of the Cayman Islands as an exempted
company and in good standing (meaning solely that it has not failed to make
any filing with any Cayman Islands government authority or to pay any
Cayman Islands government fee or tax which would make it liable to be
struck off the Register of Companies and thereby cease to exist under the
laws of the Cayman Islands) and has the corporate power and authority
required to carry on its business and to own, lease and operate its
properties in accordance with its memorandum of association and as
described in the Prospectus.
2. The Company has the authorised and issued share capital set forth in the
Share Registration Statement and the Prospectus. Based solely upon our
review of the Register of Members, [625,000,000] ordinary shares are in
issue as at [__], 2007 and such issued shares of the Company have been duly
authorised and validly issued and are fully paid and non-assessable
(meaning that no further sums are payable to the Company on such shares)
and on closing of the Offering will not be subject to any pre-emptive or
similar rights under Cayman Islands law or the articles of association of
the Company.
3. Based solely on our review of the Register of Members, (1) the Selling
Shareholders are the registered holders of such number of Ordinary Shares
set out in the Schedule hereto immediately prior to the transfer of the
Sale Shares to the Depositary and (2) all Ordinary Shares to be deposited
by the Selling Shareholders (the "Sale Shares") with the Depositary by way
of share transfers pursuant to the terms of the Underwriting Agreement and
the Deposit Agreement have been duly authorized, are validly issued, fully
paid and non-assessable (meaning that no further sums are payable to the
Company on such Shares) and on closing of the Offering such Sale Shares
will not be subject to any transfer or voting restrictions made in
compliance with the articles of association of the Company or to any
pre-emptive or similar rights under the articles of association of the
Company.
4. The Company has the necessary corporate power and authority to enter into
and perform its obligations under the Transaction Documents. The sale and
delivery of the Shares in the form of ADSs, the filing of the Registration
Statement, the execution and delivery of the Transaction Documents by the
Company and the performance by the Company and the Selling Shareholders of
their obligations thereunder will not violate the memorandum or articles of
association of the Company nor any applicable law, regulation, order or
decree in the Cayman Islands.
5. The Company has taken all corporate action required to authorise its
execution, delivery and performance of the Transaction Documents. The
Transaction Documents have been duly executed and delivered by or on behalf
of the Company, and constitute valid and binding obligations of the Company
enforceable in accordance with the terms thereof.
A-II-1
6. No order, consent, approval, licence, authorisation or validation of or
exemption by any government or public body or authority of the Cayman
Islands or any sub-division thereof is required to authorise or is required
in connection with the issue, sale and delivery of the Shares in the form
of ADSs, the deposit of the Shares with the Depositary against issuance of
the ADSs, the filing of the Registration Statements with the SEC, the
execution, delivery, performance and enforcement of the Transaction
Documents and the payment of any amount under the Underwriting Agreement
and the Deposit Agreement (other than court filings if legal proceedings
are brought in the Cayman Islands).
7. It is not necessary or desirable to ensure the enforceability, legality,
validity or admissibility in evidence in the Cayman Islands of the
Transaction Documents that they be registered in any register kept by, or
filed with, any governmental authority or regulatory body in the Cayman
Islands (other than court filings in the ordinary course of proceedings) or
that any stamp or similar tax be paid under the laws of the Cayman Islands
(other than nominal stamp or similar tax payable in the ordinary course of
proceedings). However, to the extent that any of the Transaction Documents
creates a charge over assets of the Company, the Company and its Directors
are under an obligation to enter such charge in the Register of Mortgages
and Charges of the Company in accordance with section 54 of the Companies
Law. While there is no exhaustive definition of a charge under Cayman
Islands law, a charge normally has the following characteristics:
(i) it is a proprietary interest granted by way of security which entitles
the chargee to resort to the charged property only for the purposes of
satisfying some liability due to the chargee (whether from the chargor or a
third party); and
(ii) the chargor retains an equity of redemption to have the property
restored to him when the liability has been discharged.
However, as the Transaction Documents are governed by the Foreign Laws, the
question of whether they would possess these particular characteristics
would be determined under the Foreign Laws.
8. There is no stamp, registration or similar tax or duty to be paid on or in
relation to any of the Transaction Documents provided that they are
executed and remain outside the Cayman Islands. If it becomes necessary to
bring any of the Transaction Documents into the Cayman Islands for
enforcement or otherwise, nominal stamp duty will be payable on such
Transaction Documents. In the case of any Transaction Documents creating
security over movable property granted by an exempted company, an ordinary
non-resident company or a foreign company, stamp duty will be payable on an
ad valorem basis to a maximum of CI$500.00 (US$600.00). Apart from the
payment of stamp duty, there are no acts, conditions or things required by
the laws and regulations of the Cayman Islands to be done, fulfilled or
performed in order to make any of the Transaction Documents admissible in
evidence in the Cayman Islands.
A-II-2
9. The statements in the Prospectus under the captions "Risk Factors - Risks
Relating to This Offering", "Description of Our Share Capital",
"Enforcement of Civil Liabilities" and "Taxation" and in the Registration
Statement under the caption "Item 8. Indemnification of Directors and
Officers", insofar and to the extent that they constitute a summary or
description of the laws and regulations of the Cayman Islands and the
memorandum and articles of association of the Company, are true and correct
in all respects and nothing has been omitted from such statements which
would make them misleading in any material respect.
10. The Registration Statement, the Prospectus and the filing of the
Registration Statement, the Prospectus and the ADS Registration Statement
with the SEC have been duly authorised by and on behalf of the Company, and
the Registration Statement and the ADS Registration Statement have been
duly executed pursuant to such authorisation by and on behalf of the
Company.
11. Except as described in the Prospectus, no taxes, imposts or duties of any
nature (including, without limitation, stamp or other issuance or transfer
taxes or duties and capital gains, income, witholding or other taxes) are
payable by or on behalf of the Underwriters to the Cayman Islands or any
political subdivision or taxing authority thereof or therein in connection
with (i) the allotment, issuance, and initial sale and delivery of the
Shares in the form of ADSs; (ii) the initial sale of the Shares in the form
of ADSs to the Underwriters in the manner contemplated in the Transaction
Documents; (iii) the resale and delivery of the Shares and ADSs by the
Underwriters in the manner contemplated in the Prospectus; (iv) the
declaration and payment of dividends on the Shares; (v) the entering of the
Depositary (or its designee) as the registered holder of the Shares; (vi)
the deposit with the Depositary (or its designee) of Shares by the Company
and the Selling Shareholders against the issuance of ADSs; or (vii) the
filing of the Registration Statements and the Prospectus with the SEC.
12. All dividends and other distributions declared and payable on the Shares of
the Company may under the current laws and regulations of the Cayman
Islands be paid to the Depositary and where they are to be paid from the
Cayman Islands are freely transferable out of the Cayman Islands.
13. The choice of the Foreign Laws as the governing law of the Transaction
Documents is a valid choice of law and would be recognised and given effect
to in any action brought before a court of competent jurisdiction in the
Cayman Islands, except for those laws (i) which such court considers to be
procedural in nature, (ii) which are revenue or penal laws or (iii) the
application of which would be inconsistent with public policy, as such term
is interpreted under the laws of the Cayman Islands. The submission in the
Transaction Documents to the exclusive jurisdiction of the Foreign Courts
is valid and binding upon the Company. The Company can ▇▇▇ and be sued in
its own name under the laws of the Cayman Islands.
14. The courts of the Cayman Islands would recognise as a valid judgment, a
final and conclusive judgment in personam obtained in the Foreign Courts
against the Company
A-II-3
based upon the Transaction Documents (other than the Custody Agreements)
under which a sum of money is payable (other than a sum of money payable in
respect of multiple damages, taxes or other charges of a like nature or in
respect of a fine or other penalty) and would give a judgment based thereon
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 the Cayman Islands; (c) such judgment was not obtained
by fraud; (d) the enforcement of the judgment would not be contrary to the
public policy of the Cayman Islands; (e) no new admissible evidence
relevant to the action is submitted prior to the rendering of the judgment
by the courts of the Cayman Islands; and (f) there is due compliance with
the correct procedures under the laws of the Cayman Islands.
15. Based solely upon a search of the Register of Writs and other Originating
Process of the Grand Court of the Cayman Islands conducted at [__] on [__],
2007 (which would not reveal details of matters which have been filed but
not actually entered in the Register of Writs and other Originating Process
of the Grand Court of the Cayman Islands at the time of our search), there
are no judgements against the Company, nor any legal or governmental
proceedings, nor any petitions to wind up the Company pending in the Grand
Court of the Cayman Islands to which the Company is subject.
16. The Transaction Documents are in an acceptable legal form under the laws of
the Cayman Islands for enforcement thereof against the Company in the
Cayman Islands in accordance with its terms.
17. There is no exchange control legislation under Cayman Islands law and
accordingly there are no exchange control regulations imposed under Cayman
Islands law.
18. The Company is not entitled to any immunity under the laws of the Cayman
Islands, whether characterised as sovereign immunity or otherwise, from any
legal proceedings to enforce the Transaction Documents in respect of itself
or its property.
19. Neither the Underwriters nor the Depositary will be deemed to be resident,
domiciled or carrying on business in the Cayman Islands by reason only of
the execution, performance and/or enforcement of the Transaction Documents
(other than the Custody Agreements) by the Underwriters or the Depositary,
as the case may be.
20. The Underwriters have standing to bring an action or proceedings before the
appropriate courts in the Cayman Islands for the enforcement of the
Transaction Documents (other than the Custody Agreements). It is not
necessary or advisable in order for the Underwriters to enforce their
rights under the Transaction Documents (other than the Custody Agreements),
including the exercise of remedies thereunder, that any of them be
licensed, qualified or otherwise entitled to carry on business in the
Cayman Islands.
21. We believe that in the event of any legal proceedings being brought in the
Cayman Islands courts in respect of a monetary obligation expressed to be
payable in a currency other than Cayman Islands dollars, a Cayman Islands
court would give judgment
A-II-4
expressed as an order to pay such currency or its Cayman Islands dollar
equivalent at the time of the payment or pursuant to enforcement of the
judgment. In respect of winding up proceedings, Cayman Islands law may
require that all claims or debts are converted either into Cayman Islands
dollars or the company's functional currency of account at the exchange
rate ruling at the date of commencement of the winding up.
22. There is nothing contained in the law of the Cayman Islands or the
memorandum and articles of association of the Company which prevents the
exercise of any right or the enjoyment of any benefit to which an ADS
holder is entitled as a result of owning an ADS issued under the terms of
the Deposit Agreement and which has not been disclosed in the Deposit
Agreement and the form of receipt attached to the Deposit Agreement.
23. There are no reporting obligations under the laws of the Cayman Islands on
holders of the ADSs that have not been disclosed in the Deposit Agreement
and the form of receipt attached to the Deposit Agreement.
24. The Depositary will not be required by any law of the Cayman Islands to
make any report to any Cayman Islands governmental authority or regulatory
body with respect to the ADSs or the Shares by virtue of it being a party
to the Deposit Agreement and exercising its rights and performing its
obligations thereunder.
25. The appointment of CT Corporation System to accept service of process in
the Foreign Courts and the waiver by the Company of any objection to the
venue of a proceeding in the Foreign Courts pursuant to the Deposit
Agreement and Underwriting Agreement is legal, valid and binding on the
Company.
26. The form of share certificate in respect of the Company attached to Exhibit
4.1 of the Registration Statement is in an acceptable legal form under the
laws of the Cayman Islands and the memorandum and articles of association
of the Company.
A-II-5
ANNEX III
Form of Opinion of GFE Law Offices
A. CORPORATE ORGANIZATION
(i) Organization and Good Standing -- PRC Subsidiaries. Shenzhen GrenTech
Co., Ltd. is a wholly foreign-owned enterprise duly organized under PRC law with
limited liability. Quanzhou Lake Microwave Co., Ltd. is a sino-foreign equity
joint venture duly organized under PRC law with limited liability. Each of
Shenzhen Lingxian Technology Co., Ltd. and Quanzhou Lake Communication Co., Ltd.
is a domestic invested enterprise duly organized under PRC law with limited
liability. Each of Shenzhen GrenTech Co., Ltd., Shenzhen Lingxian Technology
Co., Ltd., Quanzhou Lake Communication Co., Ltd. and Quanzhou Lake Microwave
Co., Ltd. is validly existing, in good standing in the PRC and its business
license is in full force and effect. The liability of the Company and any
Subsidiary in respect of equity interests held in a PRC Subsidiary is limited to
its investment therein. All of the registered capital of a PRC Subsidiary has
been duly authorized and fully paid and [all equity of each PRC Subsidiary is
owned directly or indirectly by the Company and/or the Subsidiaries, free and
clear of any security interest, mortgage, pledge, lien, charge, restriction upon
voting or transfer, or any other encumbrance, equity, claim or third party right
(an "Encumbrance").] As at [*], there are no outstanding rights, warrants or
options to acquire, or instruments convertible into or exchangeable for, any
shares of share capital of, or direct interest in, any PRC Subsidiary. As at
[*], no steps have been or are being taken and no order or resolution has been
made or passed to appoint a receiver, liquidator or similar officer of, or to
wind up or dissolve, any PRC Subsidiary. All approvals in the PRC required for
the establishment and the maintenance of the enterprise legal person status of
each PRC Subsidiary have been duly issued and obtained and all such approvals
are in full force and effect, have not been revoked, withdrawn, suspended or
cancelled and are not subject to any condition. Each PRC Subsidiary 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. Shenzhen GrenTech Co., Ltd., Shenzhen Lingxian Technology Co.,
Ltd., Quanzhou Lake Communication Co., Ltd. and Quanzhou Lake Microwave Co.,
Ltd. have been duly qualified as foreign invested enterprises or domestic
invested enterprises.
(ii) Articles of Association. The Articles of Association of each PRC
Subsidiary complies with the requirements of PRC law, including the PRC Company
Law, and are in full force and effect.
(iii) No Restrictions on Dividends, Distributions or Transfers. No PRC
Subsidiary is currently prohibited, directly or indirectly, from making any
payments, dividends or distributions on its equity interests, or transferring
its property to holders of its equity interests, the Company or a Subsidiary,
except as described in the Prospectus; any dividend or other distribution
declared and payable upon the equity interest in a PRC Subsidiary may be
converted into foreign currency that may be freely transferred out of the PRC
and any such dividend or distribution is not and will not be subject to
withholding or other taxes under PRC law and will be free and clear of any other
tax, withholding or deduction in the PRC, in each case without the necessity of
obtaining any governmental authorization in the PRC, except such authorizations
as have already been obtained and remain in full force and effect.
A-III-1
B. COMPLIANCE
(i) No Violation or Default. As confirmed by the PRC Subsidiaries and to
the best of our knowledge, no PRC Subsidiary is (A) in violation of its Articles
of Association, business or other license or any other constitutive document;
(B) in default, and no event has occurred that with the giving of notice or
lapse of time would constitute a default, in the due performance or observance
of any term, covenant or condition contained in any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which it is a party or
by which it is bound or to which any of its property or assets is subject; or
(C) in violation of any law or statute or any judgment, order, rule or
regulation of any court or arbitrator or governmental or regulatory authority,
except, in the case of clause (C) above, for any such default or violation that
could not reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect.
(ii) Licenses. Each PRC Subsidiary has all licenses, consents,
authorizations, approvals, orders, certificates and permits of and from, and has
made all necessary declarations and filings with, all Governmental Agencies
required to conduct its business in the manner described in the Prospectus,
except to the extent that not having such licenses, consents, authorizations,
approvals, orders, certificates or permits and not making such declarations and
filings would not have a Material Adverse Effect, and such licenses, consents,
authorizations, approvals, orders, certificates or permits contain no materially
burdensome restrictions or conditions not described in the Prospectus; and
except as described in the Prospectus, no PRC Subsidiary has received notice of
any revocation or modification of any such license, certificate, permit or
authorization or has any reason to believe that any such license, certificate,
permit or authorization will not be renewed in the ordinary course of its
business.
(iii) Environmental Laws. As confirmed by the PRC Subsidiaries and to the
best of our knowledge, the PRC Subsidiaries are (A) in compliance with the
Environmental Laws, (B) have obtained all permits, licenses or other approvals
required of them under the Environmental Laws to conduct their respective
businesses, (C) are in compliance with all terms and conditions of any such
permit, license or approval, and (D) not subject to pending or threatened legal
or governmental proceedings under any Environmental Law.
(iv) Taxes. As confirmed by the PRC Subsidiaries and to the best of our
knowledge, the PRC Subsidiaries have paid all PRC national, provincial,
municipal and local taxes and filed all tax returns required to be paid or filed
through the date hereof; and except as otherwise disclosed in the Prospectus,
there is no tax deficiency that has been, or could reasonably be expected to be,
asserted against the Company or any of its Subsidiaries or PRC Subsidiaries, or
any of their respective properties or assets, that could reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.
C. BUSINESS OF THE COMPANY
(i) Title to Real and Personal Property. As confirmed by the PRC
Subsidiaries and to the best of our knowledge, except as disclosed in the
Prospectus and each PRC Subsidiary has good and marketable title to, or a valid,
existing and enforceable leasehold interest in, each of its material real and
personal properties, in each case free and clear of any Encumbrance.
A-III-2
(ii) No Guarantees. As confirmed by the PRC Subsidiaries and to the best of
our knowledge, there are no outstanding guarantee or contingent payment
obligations of a PRC Subsidiary in respect of the indebtedness of a third party.
None of the PRC Subsidiaries is subject to any material actual liabilities.
(iii) Intellectual Property. As confirmed by the PRC Subsidiaries and to
the best of our knowledge, the PRC Subsidiaries own or have valid licenses in
full force and effect or otherwise have the legal right to use, or can acquire
on reasonable terms, all material patents, patent rights, licenses, inventions,
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 in connection with the
business currently operated by them and none of the PRC Subsidiaries, whether
knowingly or unknowingly, is infringing, has infringed or has received any
notice of infringement of or conflict with the asserted rights of others with
respect to any of the foregoing.
(iv) No Legal Proceedings. As confirmed by the PRC Subsidiaries and to the
best of our knowledge, except as disclosed in the Prospectus, there are no
legal, governmental or arbitrative proceedings before any Governmental Agency
pending or threatened against, or involving the properties, assets or business
of, a PRC Subsidiary.
(v) Changes in Law. There is no proposed or contemplated PRC regulatory,
administrative or other governmental initiative which, if implemented or adopted
in the manner proposed or contemplated, could be reasonably expected to have a
Material Adverse Effect.
(vi) PRC Taxes. (A) The PRC tax laws and regulations applicable to the
activities of the Company, the Subsidiaries and the PRC Subsidiaries in the PRC
(including regulatory fees, capital gain, income, sales, withholding or other
taxes and stamp or other issuance or transfer taxes or duties to which the
Company or the Subsidiaries may become subject due to the conduct of activities
in the PRC) are assessed or apply to the Company, the Subsidiaries and the PRC
Subsidiaries in substantially the same manner as are currently applicable to any
enterprise engaging in the similar business and activities in the PRC and (B)
there are no material PRC fees or taxes that are or will become applicable to
the Company, the Subsidiaries and the PRC Subsidiaries as a consequence of
completion of the Offering that have not been described in the Prospectus.
D. UNDERWRITING AND DEPOSIT AGREEMENTS
(i) No Consents Required. No Governmental Approval is required for the
performance by the Company or any Subsidiary or PRC Subsidiary of its
obligations under this Agreement or the Deposit Agreement.
(ii) Submission to Jurisdiction. The Company and each Subsidiary and PRC
Subsidiary, and each of their respective equity holders, can ▇▇▇ and be sued in
its own name under the laws of the PRC; the irrevocable submission of the
Company to the exclusive jurisdiction of a New York Court, the waiver by the
Company of any objections to the venue of a proceeding of a New York Court and
the agreement of the Company that this Agreement and the Deposit Agreement shall
be governed by and construed in accordance with the laws of the State
A-III-3
of New York are valid and legally binding in the PRC; service of process
effected in the manner set forth in this Agreement and in the Deposit Agreement
will be effective, insofar as the law of the PRC is concerned, to confer valid
personal jurisdiction over the Company; any judgment obtained in a New York
Court arising out of or in relation to the obligations of the Company under this
Agreement or the Deposit Agreement would be enforceable against the Company, the
Subsidiaries and the PRC Subsidiaries in the courts of the PRC in accordance
with the Civil Procedures Law of the PRC; neither the Company nor any Subsidiary
or PRC Subsidiary is entitled to any immunity in the PRC on the basis of
sovereignty or otherwise in respect of its obligations under this Agreement or
the Deposit Agreement and could not successfully interpose any such immunity as
a defense to any suit or action brought or maintained in respect of its
obligations under this Agreement or the Deposit Agreement; and the waiver by the
Company of immunity to jurisdiction, pre-judgment attachment, post-judgment
attachment and execution in any suit, action or proceeding against it arising
out of or based on this Agreement or the Deposit Agreement is the valid and
legally binding obligation of the Company under the laws of the PRC.
(iii) Indemnification. The indemnification and contribution provisions set
forth in this Agreement and the Deposit Agreement do not contravene PRC law,
regulation or public policy and constitute the legal, valid and binding
obligations of the Company under PRC law, enforceable in accordance with the
terms therein, subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or affecting
creditors' rights.
(iv) No Tax on Dividends. All amounts payable by the Company in respect of
the ADRs evidencing the ADSs or the underlying Offer Shares pursuant to this
Agreement, including all dividends and other distributions declared and payable
on the Offer Shares, shall be made free and clear of and without deduction for
or on account of any withholding or other taxes imposed, assessed or levied by a
PRC Governmental Agency.
(v) Right to Commence Proceedings. The Underwriters would be permitted to
commence proceedings in PRC courts of competent jurisdiction based on this
Agreement for claims related to a PRC Subsidiary, and such courts would accept
jurisdiction over any such action or proceeding.
(vi) Proper Legal Form. Each of this Agreement, the Deposit Agreement and
any other document required to be furnished hereunder or thereunder is in proper
legal form under the current laws of the PRC for the enforcement thereof against
the Company, the Subsidiaries and the PRC Subsidiaries in the PRC without
further action on the part of the Underwriters or the Depositary, and to ensure
the legality, validity, enforceability or admissibility in evidence of this
Agreement, the Deposit Agreement and any other document required to be furnished
hereunder or thereunder in the PRC, it is not necessary that any such document
be filed or recorded with any court or other authority in the PRC or that any
stamp or similar tax be paid on or in respect of any such document.
(vii) No License Required. The entry into, and performance or enforcement
of this Agreement in accordance with its terms will not subject the Underwriters
to a requirement to be licensed or otherwise qualified to do business in the
PRC, nor will any Underwriter be deemed to
A-III-4
be resident, domiciled, carrying on business through an establishment or place
in the PRC or in breach of PRC law by reason of entry into, performance or
enforcement of the this Agreement.
E. THE OFFERING
(i) No Consent. No Governmental Approval of or with any Governmental Agency
is required for (A) the issue and sale of the Offer Shares and ADSs at the
relevant Closing Date by the Company and the Selling Shareholders pursuant to
this Agreement, (B) the deposit of the Offer Shares with the Depositary against
issuance of the ADRs evidencing the ADSs pursuant to the Deposit Agreement, (C)
the compliance by the Company and the Selling Shareholders with all of the
provisions of this Agreement and the Deposit Agreement, (D) the consummation by
the Company and the Selling Shareholders of the transactions contemplated herein
and in the Prospectus, and (E) the execution and delivery by the Company and the
Selling Shareholders of this Agreement and the Deposit Agreement, except such
Governmental Approvals as have been obtained and are in full force and effect,
copies of which have been furnished to the Representative.
(ii) Absence of Stamp and Other Taxes. 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 any political subdivision or taxing authority thereof or therein in
connection with (A) the issuance of the ADRs by the Depositary and the sale of
ADSs by the Company and the Selling Shareholders to the Underwriters in
accordance with this Agreement and the Deposit Agreement, (B) the delivery of
the ADSs to or for the respective accounts of the Underwriters in the manner
contemplated in this Agreement or (C) the resale and delivery by the
Underwriters of the ADSs to the initial purchasers thereof as contemplated in
the Prospectus.
(iii) No Conflicts. The execution, delivery and performance by the Company
and the Selling Shareholders of each of this Agreement and the Company of the
Deposit Agreement, the issuance of the Offer Shares, the deposit of the Offer
Shares with the Depositary against issuance of the ADRs evidencing the ADSs, the
sale by the Company and the Selling Shareholders of the ADSs hereunder, and the
consummation by the Company and the Selling Shareholders of the transactions
contemplated by this Agreement and the Company of the Deposit Agreement will not
(A) conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the
Company or any Subsidiary or PRC Subsidiary pursuant to, any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which the Company or any Subsidiary or PRC Subsidiary is a party or by which the
Company or any Subsidiary or PRC Subsidiary is bound or to which any of the
property or assets of the Company or any Subsidiary or PRC Subsidiary is
subject, (B) result in any violation of the provisions of the charter, by-laws
or other organizational documents of the PRC Subsidiary or (C) result in the
violation of any law or statute or any judgment, order, rule or regulation of
any PRC Governmental Agency.
(iv) Use of Proceeds. The application of the net proceeds from the offering
of the Offer Shares and ADSs, as contemplated by the Prospectus, will not
contravene any provision of PRC law or the articles of association, other
constitutive documents or the business license of
A-III-5
any PRC Subsidiary or the terms or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, loan agreement, note, lease or other
agreement or instrument binding upon the PRC Subsidiary, or any judgment, order
or decree of any PRC Governmental Agency.
F. REGISTRATION STATEMENT
(i) Disclosure as to Legal Matters. After due inquiry, we do not know of
any PRC legal or governmental proceedings pending or threatened to which the
Company or any Subsidiary or PRC Subsidiary is a party or to which any of the
properties or assets of the Company or any Subsidiary or PRC Subsidiary is
subject that is required to be disclosed in the Prospectus and is not so
disclosed, or of any statutes, regulations, contracts or other documents that
are required to be disclosed in the Registration Statement or the Prospectus or
to be filed as exhibits to the Registration Statement that are not disclosed or
filed as required.
(ii) Accurate Summaries. Statements in the Prospectus, insofar as such
statements constitute summaries of legal matters, documents or proceedings
governed by PRC law, constitute fair and accurate summaries of such legal
matters, documents or proceedings.
(iii) No Misstatement or Omission. Nothing has come to our attention that
causes it to believe that the ADS Registration Statement and the Registration
Statement (except for financial statements, as to which we need not express any
belief), as of their respective effective dates, contained any 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 or that
(except as aforesaid) the Prospectus as of its date and as of any Closing Date
contained or contains any untrue statement of a material fact or omitted or
omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
A-III-6
ANNEX IV
Form of Opinion of ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇
British Virgin Islands counsel to the Company
1. The Overseas Subsidiary is duly incorporated and existing under the laws of
the British Virgin Islands in good standing (meaning solely that it has not
failed to make any filing with any British Virgin Islands governmental
authority or to pay any British Virgin Islands government fee or tax which
would make it liable to be struck off the Register of Companies and thereby
cease to exist under the laws of the British Virgin Islands) with full
corporate power and authority to own property and assets and to carry on
business in accordance with its memorandum and articles of association and
as described in the Prospectus.
2. The execution and delivery of the Documents by China GrenTech and the
performance by China GrenTech of its obligations thereunder will not
violate the memorandum of association or articles of association of the
Overseas Subsidiary nor any applicable law, regulation, order or decree in
the British Virgin Islands.
3. Based solely on a search of the public records in respect of the Overseas
Subsidiary maintained at the offices of the Registrar of Corporate Affairs
at [__ a.m./p.m.] on [__], 2007 (which would not reveal details of matters
which have not been lodged for registration or have been lodged for
registration but not actually registered at the time of our search) and a
search of the Index of Civil Suits maintained at the Supreme Court
Registry, Road Town, Tortola British Virgin Islands conducted at
[__ a.m./p.m.] on [__], 2007 (which would not reveal details of proceedings
which have been filed but not actually entered in the Index of Civil Suits
at the time of our search), there are no judgments against the Overseas
Subsidiary, nor any legal or governmental proceedings pending in the
British Virgin Islands to which the Overseas Subsidiary is subject.
Further, based solely on the search of the public records in respect of the
Overseas Subsidiary maintained at the offices of the Registrar of Corporate
Affairs mentioned above, no details have been lodged of any steps taken in
the British Virgin Islands for the appointment of a receiver, administrator
or liquidator to, or for the winding-up, dissolution, reconstruction or
reorganisation of the Overseas Subsidiary (however, it should be noted that
(i) failure to file notice of appointment of a receiver does not invalidate
the receivership but only gives rise to penalties on the part of the
receiver and (ii) in the case of the appointment of a liquidator, notice of
the appointment of a liquidator may be filed up to 14 days after the actual
appointment).
4. Based solely upon a review of the register of members of the Overseas
Subsidiary certified by a director of the Overseas Subsidiary on [__],
2007, all the shares of the Overseas Subsidiary are held by China GrenTech
and are validly issued, fully paid and non-assessable (which term when used
herein means that no further sums are required to be paid by the holders
thereof in connection with the issue thereof).
5. The Overseas Subsidiary is free to acquire, hold and sell foreign currency
and securities without restriction.
A-IV-1
6. Based solely upon a review of the register of members of the Overseas
Subsidiary certified by a director of the Overseas Subsidiary on [__],
2007, no notice of the existence of a mortgage or charge has been entered
on the share register of the Overseas Subsidiary. It should be noted that
such notice is not mandatory under British Virgin Islands law.
7. By virtue of paragraph 28, Part IV Schedule 2 of the BVI Business
Companies Act, dividends of the Overseas Subsidiary shall only be declared
and paid out of surplus. No dividend shall be declared and paid unless the
directors of the Overseas Subsidiary determine that immediately after the
payment of the dividends:
(a) the Overseas Subsidiary will be able to satisfy its liabilities as they
become due in the ordinary course of its business; and
(b) the realisable value of the assets of the Overseas Subsidiary will not
be less than the sum of its total liabilities, other than deferred taxes,
as shown in the books of account, and its capital;
and, in the absence of fraud, the decision of the directors as to the
realisable value of the assets of the Overseas Subsidiary is conclusive,
unless a question of law is involved.
8. All payments of dividends in respect of the shares of the Overseas
Subsidiary may be made free and clear of, and without withholding or
deduction for or on account of, any taxes, duties, assessments or
governmental charges of whatsoever nature imposed, levied, collected,
withheld or assessed by the British Virgin Islands or any political
subdivision or authority thereof or therein having power to tax and, where
paid out of the British Virgin Islands, may be freely transferred out of
the British Virgin Islands without the necessity of obtaining any consent
of the British Virgin Islands or any political subdivision or authority
thereof or therein.
9. Neither the Underwriters nor the Depositary will be deemed to be resident,
domiciled or carrying on business in the British Virgin Islands by reason
only of the execution, performance and/or enforcement of the Documents by
the Underwriters or the Depositary as the case may be.
10. The courts of the British Virgin Islands would recognise as a valid
judgment, a final and conclusive judgment in personam obtained in the
Foreign Courts against the Overseas Subsidiary based upon the Documents
under which a sum of money is payable (other than a sum of money payable in
respect of multiple damages, taxes or other charges of a like nature or in
respect of a fine or other penalty) and would give a judgment based thereon
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 the British Virgin Islands, (c) such judgment was not
obtained by fraud, (d) the enforcement of the judgment would not be
contrary to the public policy of the British Virgin Islands, (e) no new
admissible evidence relevant to the action is submitted prior to the
rendering
A-IV-2
of the judgment by the courts of the British Virgin Islands and (f) there
is due compliance with the correct procedures under the laws of the British
Virgin Islands.
A-IV-3
ANNEX V
Forms of Opinion of Counsel to the Selling Shareholders
Opinion to be provided by local counsel for the Selling Shareholder
(a) So far as is discoverable from the Searches, [Selling Shareholder] was duly
incorporated with limited liability under the laws of [jurisdiction];
(b) [Selling Shareholder] has the necessary corporate power and authority to
enter into, execute and deliver the Underwriting Agreement and perform its
obligations under the Underwriting Agreement. The execution and delivery of
the Underwriting Agreement by [Selling Shareholder] and the performance by
[Selling Shareholder] of its obligations under the Underwriting Agreement
will not violate any laws of [jurisdiction];
(c) [Selling Shareholder] has taken all corporate action required to authorise
its execution, delivery and performance of the Underwriting Agreement. The
Underwriting Agreement constitutes the valid and binding obligations of
[Selling Shareholder], which will be recognised, and enforceable in, the
[jurisdiction] courts;
(d) no order, consent, approval or authorisation with any governmental or other
authority or agency in [jurisdiction] is required under [jurisdiction] law
in connection with the execution, delivery and performance of the
Underwriting Agreement, the deposit of the Shares with the Depositary and
the offer, sale and delivery of the Shares in the form of ADSs pursuant to
the Underwriting Agreement by [Selling Shareholder];
(e) so far as is discoverable from the Searches, (i) [Selling Shareholder] was
not, as at July [__], 2007, a party to any High Court action commenced in
[jurisdiction], and (ii) there are no records of any petition for the
winding up of [Selling Shareholder], or any notice for the appointment of a
receiver of [Selling Shareholder];
(f) no filing or registration of any of the Underwriting Agreement with any
governmental or other regulatory authority or agency in [jurisdiction] is
necessary under [jurisdiction] law to ensure its validity, enforceability
or admissibility into evidence (other than court filings in the ordinary
course of proceedings);
(g) based solely on our review of a copy of the Register of Charges, such
register does not disclose any charge, mortgage or other security interest
or encumbrance having been registered in respect of any Shares being
offered, sold and delivered, in the form of ADSs, by, or on behalf of,
[Selling Shareholder];
A-V-1
(h) the choice of the laws of the State of New York as the governing law of the
Underwriting Agreement will be recognized and upheld by the [jurisdiction]
courts. The submission in the Underwriting Agreement to the jurisdiction of
any court of the State of New York or the United States District Court for
the Southern District of New York (the "New York Courts") is valid and
binding upon [Selling Shareholder] under [jurisdiction] law; and
(i) the appointment of CT Corporation System to accept service of process in
the New York Courts and the waiver by [Selling Shareholder] of any
objection to the venue of a proceeding in the New York Courts pursuant to
the Underwriting Agreement is valid and binding on [Selling Shareholder]
under [jurisdiction] law.
Opinion to be provided by O'Melveny & ▇▇▇▇▇ LLP, U.S. counsel,
with respect to the laws of the State of New York.
(i) No order, consent, permit or approval of any New York or U.S. federal
governmental authority that we have, in the exercise of customary professional
diligence, recognized as applicable to the Selling Shareholder or to
transactions of the type contemplated in the Underwriting Agreement is required
on the part of the Selling Shareholder for the performance of its obligations
under the Underwriting Agreement, the sale of the Securities to be sold by the
Selling Shareholder or the execution and delivery and consummation of the
transactions contemplated by the Selling Shareholder under the Underwriting
Agreement, except such as have been obtained under the Securities Act of 1933,
as amended, the Securities Exchange Act of 1934, as amended, and such consents,
approvals, authorizations, registrations or qualifications as may be required
under the state securities or Blue Sky laws or NASD in connection with the
purchase and distribution of the ADSs by the Underwriters.
(ii) The execution, delivery and performance of the Underwriting Agreement
have been duly authorized, and the Underwriting Agreement has been duly executed
and delivered by or on behalf of the Selling Shareholder.
(iii) The sale of the Securities to be sold by the Selling Shareholder, the
execution and delivery by the Selling Shareholder of the Underwriting Agreement,
the sale of the ADSs being delivered at Applicable Time, the performance by the
Selling Shareholder of its obligations under the Underwriting Agreement, and the
consummation of the transactions contemplated to be performed by the Selling
Shareholder under the Underwriting Agreement will not violate any current New
York or U.S. federal statute, rule or regulation that we have, in the exercise
of customary professional diligence, recognized as applicable to the Selling
Shareholder or to transactions of the type contemplated in the Underwriting
Agreement, except that we express no opinion regarding any securities or blue
sky laws of the various states of the United States.
(iv) Assuming the validity of such actions under the laws of the Republic
of Mauritius, under the laws of the state of New York relating to personal
jurisdiction, the Selling Shareholder has, pursuant to Section 17 of the
Underwriting Agreement, validly submitted to the personal jurisdiction of any
court of the State of New York or the United States District Court for the
Southern District of New York (each a "New York Court") in any action arising
out of or based
A-V-2
on the Underwriting Agreement or the transactions contemplated thereby, has
validly waived any objection to the venue of a proceeding in any such court, and
has validly appointed CT Corporation System Inc. as its authorized agent for the
purpose described in Section 17 of the Underwriting Agreement, and service of
process effected on such agent as set forth in Section 17 of the Underwriting
Agreement will be effective to confer valid personal jurisdiction over the
Selling Shareholder.
(v) When the ADSs are credited by The Depository Trust Company ("DTC") to
the Underwriters' securities accounts with DTC, and the Underwriters have paid
for such ADSs pursuant to the Underwriting Agreement, the Underwriters will have
a "security entitlement" (within the meaning of Section 8-501 of the New York
Uniform Commercial Code (the "NYUCC")) to such ADSs, and no action based on an
"adverse claim" (as defined in NYUCC Section 8-102) may be successfully asserted
against the Underwriters with respect to such security entitlement if, at the
time of such purchase, the Underwriters do not have notice of any adverse claim
within the meaning of NYUCC Section 8-105.
A-V-3
ANNEX VI
Form of Opinion of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP
1. The Deposit Agreement has been duly authorized, executed and delivered
by the Depositary and constitutes the valid and legally binding agreement of the
Depositary, enforceable against the Depositary in accordance with its terms
except to the extent that (a) enforcement thereof may be limited by (1)
bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws now or
hereafter in effect relating to or affecting creditors' rights generally, and
(2) general principles of equity (regardless of whether enforceability is
considered in a proceeding in law or in equity), and (b) rights to indemnity and
contribution may be limited by United States federal or state securities laws or
public policy; and
2. The Depositary has full power and authority and legal right to execute
and deliver the Deposit Agreement and to perform its obligations thereunder; and
3. Upon the issuance by the Depositary of the Sale ADSs against deposit of
the requisite Sale Shares with the Custodian in accordance with the terms and
conditions of the Deposit Agreement and the Registration Statement, the Sale
ADSs will be duly and validly issued and will entitle the Holders thereof (as
defined in the Deposit Agreement) to the rights specified in the American
Depositary Receipt(s) evidencing the Sale ADSs and in the Deposit Agreement; and
4. The Registration Statement has been declared effective under the United
States Securities Act of 1933, as amended, and, to our knowledge, no stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceeding for that purpose has been initiated or threatened. The
Registration Statement complies as to form in all material respects with the
requirements of the United States Securities Act of 1933, as amended, and the
rules and regulations adopted by the Securities and Exchange Commission
thereunder, in each case as known to us to be interpreted by the Staff of the
Securities and Exchange Commission at this time.
A-VI-1
ANNEX VII
Form of Lock-Up Agreement
[Date]
Bear, ▇▇▇▇▇▇▇ & Co. Inc.
As Representative of the several Underwriters
referred to below
c/o Bear, ▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Equity Capital Markets
China GrenTech Corporation Limited Lock-Up Agreement
Ladies and Gentlemen:
This letter agreement (this "Agreement") relates to the proposed public
offering (the "Offering") by China GrenTech Corporation Limited, an exempted
company incorporated with limited liability under the laws of the Cayman Islands
(the "Company") of its ordinary shares, US$0.00002 par value per share (the
"Stock") in the form of American depositary shares ("ADSs").
In order to induce you and the other underwriters for which you act as
representative (the "Underwriters") to underwrite the Offering, the undersigned
hereby agrees that, without the prior written consent of Bear, ▇▇▇▇▇▇▇ & Co.
Inc. ("Bear ▇▇▇▇▇▇▇"), during the period from the date hereof until ninety (90)
days from the date of the final prospectus for the Offering (the "Lock-Up
Period") the undersigned (A) will not, directly or indirectly, issue, offer,
sell, agree to issue, offer or sell, solicit offers to purchase, grant any call
option, warrant or other right to purchase, purchase any put option or other
right to sell, pledge, borrow or otherwise dispose of any Relevant Security, or
make any announcement of any of the foregoing, (B) will not establish or
increase any "put equivalent position" or liquidate or decrease any "call
equivalent position" (in each case within the meaning of Section 16 of the U.S.
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder) with respect to any Relevant Security, and (C) will not
otherwise enter into any swap, derivative or other transaction or arrangement
that transfers to another, in whole or in part, any economic consequence of
ownership of a Relevant Security, whether or not such transaction is to be
settled by delivery of Relevant Securities, other securities, cash or other
consideration. As used herein "Relevant Security" means ADSs, the Stock, any
other equity security of the Company or any of its subsidiaries and any security
convertible into, or exercisable or exchangeable for, any ADSs, the Stock or
other such equity security.
[In the case of Guoren Industrial, HXY Investments and Drag Investments:
Notwithstanding the foregoing, the undersigned shall be entitled to sell ADSs at
any time at a price of not less than $18.00 per ADS pursuant to a so-called
"10b5-1" ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ plan that the undersigned has established or may
establish, provided that any such sales must also be conducted in accordance
with Rule 144 under the Securities Act.]
The undersigned hereby authorizes the Company during the Lock-Up Period to
cause any transfer agent for the Relevant Securities to decline to transfer, and
to note stop transfer restrictions on the stock register and other records
relating to, Relevant Securities for which the undersigned is the record holder
and, in the case of Relevant Securities for which the
A-VII-1
undersigned is the beneficial but not the record holder, agrees during the
Lock-Up Period to cause the record holder to cause the relevant transfer agent
to decline to transfer, and to note stop transfer restrictions on the stock
register and other records relating to, such Relevant Securities. The
undersigned hereby further agrees that, without the prior written consent of
Bear ▇▇▇▇▇▇▇, during the Lock-up Period the undersigned will not file or
participate in the filing with the U.S. Securities and Exchange Commission of
any registration statement, or circulate or participate in the circulation of
any preliminary or final prospectus or other disclosure document with respect to
any proposed offering or sale of a Relevant Security.
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, the
restrictions imposed by this Agreement shall continue to apply until the
expiration of the 18-day period beginning on the issuance of the earnings
release or the occurrence of the material news or material event, unless Bear
▇▇▇▇▇▇▇ waives, in writing, such extension. The undersigned acknowledges that
the Company has agreed in the underwriting agreement for the Offering to provide
notice to the undersigned of any event that would result in an extension of the
Lock-Up Period pursuant to this paragraph, and the undersigned agrees that any
such notice properly delivered will be deemed to have been given to, and
received by, the undersigned.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Agreement and that this Agreement
constitutes the legal, valid and binding obligation of the undersigned,
enforceable in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally and except as enforceability
may be subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law). Upon request,
the undersigned will execute any additional documents necessary in connection
with enforcement hereof. Any obligations of the undersigned shall be binding
upon the successors and assigns of the undersigned from the date first above
written.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York. Delivery of a signed copy of this letter by
facsimile transmission shall be effective as delivery of the original hereof.
Very truly yours,
By:
------------------------------------
[Print Name]
A-VII-2