CONSORTIUM AGREEMENT Abax Global Capital (Hong Kong) Limited Two International Finance Centre Suite 6708, 8 Finance Street, Central Hong Kong
EXHIBIT
7.03
Abax
Global Capital (Hong Kong) Limited
Two
International Finance Centre
Suite
6708, ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇
▇▇▇▇
November
3, 2010
▇▇. ▇▇
Fu
TYG
Center Tower B, Suite 2601
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▇▇▇ ▇▇, ▇▇▇▇ ▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇
Dear Mr.
Fu:
Abax
Global Capital (Hong Kong) Limited, on behalf of funds managed by it and its
nominee entities and its and their affiliates (collectively “Abax”) is interested
in pursuing with you a possible acquisition (the “Transaction”) of
Fushi Copperweld, Inc. (the “Company”) through a
special purpose vehicle (“Bidco”) to be owned
by Abax, and you and your nominees (collectively, the “Shareholder”). As
a condition to the delivery of a preliminary non-binding proposal letter to the
Company (the “Proposal
Letter”, the form of which is set forth in Exhibit A hereto) and
to further our discussions relating to the Transaction, the Shareholder and Abax
agree to the following:
1. Certain
Definitions.
“Competing
Transaction” shall mean (i) any direct or indirect acquisition by
any person or entity of 10% or more of the securities of the Company or any of
its material subsidiaries or all or substantially all of its assets, and
(ii) a recapitalization, restructuring, merger, consolidation or other
business combination involving the Company or any of its material subsidiaries,
in either case other than the Transaction.
“Exclusivity Period”
shall mean the period beginning on the date hereof and ending on the first to
occur of: (i) the date nine months after the date hereof, (ii) the date of
execution and delivery of definitive documentation providing for the Transaction
(“Definitive
Agreements”) and (iii) the mutually agreed termination of this letter
agreement; provided that if
Definitive Agreements are not entered into prior to the date six months after
the date hereof, the Exclusivity Period shall be terminated, unless with your
written consent.
“Representatives”
shall mean, with respect to a person, such person’s employees, directors,
officers, partners, members, affiliates, agents, advisors (including but not
limited to legal counsel, accountants, consultants and financial advisors), and
any representatives of the foregoing. The Representatives shall
include the Advisors as defined in Section 3(c).
“Shareholder Shares”
shall mean all capital stock of the Company owned by the Shareholder as of the
date hereof either directly or through a holding vehicle.
2.
Commitment to the Consortium.
(a) Within
the Exclusivity Period and subject to Section 2(b), the Shareholder and Abax
agree to deal exclusively with each other with respect to the Transaction, and
neither the Shareholder nor Abax will (and the Shareholder and Abax will cause
Bidco and their Representatives not to) without the written consent of the other
or otherwise in the context of pursuing the Transaction: (i) directly or
indirectly initiate, solicit, encourage or otherwise engage in discussions,
negotiations or related activities with any third party with respect to a
Competing Transaction, (ii) provide any information to any third party with a
view to the third party or any other person pursuing or considering to pursue a
Competing Transaction, or (iii) enter into any written or oral agreement,
arrangement or understanding (whether legally binding or not) regarding, or do
or omit to do, anything which is directly inconsistent with the Transaction as
contemplated under this letter agreement; provided that nothing in this letter
agreement shall restrict or prevent Mr. Fu from conducting such activities in
his capacity as Chief Executive Officer, Chairman or a member of the Board of
the Company insofar as he takes no action in that connection in his capacity as
a holder of securities of the Company.
(b) The
Shareholder agrees that, within the Exclusivity Period, it will not, and will
not permit any of its Representatives to, directly or indirectly: (i)
sell, offer to sell, give, pledge, encumber, assign, grant any option for the
sale of or otherwise transfer or dispose of, or enter into any agreement,
arrangement or understanding to sell, any Shareholder Shares (“Transfer”), or enter
into any contract, option or other arrangement or understanding with respect to
a Transfer or limitation on voting rights of the Shareholder Shares, or any
right, title or interest thereto or therein, (ii) deposit any Shareholder Shares
into a voting trust or grant any proxies or enter into a voting agreement, power
of attorney or voting trust with respect to any Shareholder Shares, (iii) take
any action that would make have the effect of preventing, disabling or delaying
the Shareholder from performing its obligations under this letter agreement or
(iv) agree (whether or not in writing) to take any of the actions referred to in
the foregoing clauses (i), (ii) or (iii) of this Section 2(b).
(c) Subject
to Section 2(a), the Shareholder will, and will cause its Representatives to,
immediately cease and terminate any existing activities, discussions and
negotiations in connection with any Competing Transaction other than with Abax
or its affiliates. During the Exclusivity Period, the Shareholder shall provide
Abax notice of any unsolicited offer or proposal received in relation to any
Competing Transaction, including the terms of any such offer or proposal, and
any written communications with respect thereto, which it may receive in its
capacity as a holder of securities of the Company.
3.
Process.
(a) Upon
signing of this letter agreement, Abax and Mr. Fu will promptly deliver the
Proposal Letter to the Board of Directors of the Company. The
Shareholder intends to prepare and submit a joint filing with the U.S.
Securities and Exchange Commission to amend existing Schedule 13Ds as applicable
and to disclose the execution of this letter agreement and the delivery of the
Proposal Letter.
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(b) Within
the Exclusivity Period and as permitted by the Board of the Company, Abax and
the Shareholder shall as promptly as reasonably practicable conduct a joint
assessment of the Company, and shall in good faith and with mutual cooperation
use their reasonable best efforts to work together to structure, negotiate and
do all things necessary or desirable, subject to Company approval, to enter into
the Definitive Agreements. This letter does not constitute any
binding commitment with respect to a Transaction. Such a commitment
will result only from the execution of Definitive Agreements, and then will be
on the terms provided in such documentation. Abax shall coordinate
with the Shareholder in performing due diligence, securing debt (as applicable)
and equity financing, and structuring and negotiating the Transaction; provided, however, that in no
event will either party hereto be obligated without such party’s consent to
enter into or otherwise be a party to any Definitive Agreements. This
letter constitutes only a preliminary arrangement relating to a Transaction, and
does not constitute any binding commitment with respect to a
Transaction.
(c) Skadden,
Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP (“Skadden”) is acting
as legal advisor, to the consortium in connection with the
Transaction. A financial and placement advisor and any other advisors
to the consortium (collectively with Skadden, the “Advisors”) shall be
jointly selected by Abax and the Shareholder. ▇▇▇▇ ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇ (“▇▇▇▇”)
is acting as legal advisor to Abax in connection with the establishing the
consortium between Abax on one hand and the other parties, including
Shareholder, on the other.
4.
Confidentiality. Each
of the Shareholder and Abax shall, and shall direct its Representatives to, keep
this letter agreement and the Transaction confidential and shall not make any
public statement or announcement concerning or disclose to any third party the
fact that discussions or negotiations are taking place concerning the
Transaction or any of the terms, conditions or other facts with respect thereto,
including the status thereof, other than as mutually agreed in writing by the
Shareholder and Abax or as required by applicable laws, rules or
regulations. Each of Abax and the Shareholder will coordinate in good
faith all press releases and other public relation matters relating to the
Transaction.
5.
Shareholders
Agreement. The Shareholder and a special purpose subsidiary of
an investment fund advised by Abax shall, and shall cause Bidco to, enter into a
shareholders agreement (the “Shareholders
Agreement”) at or prior to the completion of the Transaction, on terms
and conditions mutually agreed by Abax and the Shareholder.
6.
Certain Fees and
Expenses.
(a) If
the Transaction is not eventually consummated without any breach by either Abax
or the Shareholder of this letter agreement, the parties agree: (I) to share,
ratably based on such party’s planned equity participation in the Transaction,
fees and out-of-pocket expenses payable by them in connection with the
Transaction incurred prior to the termination of this letter agreement,
including any fees and expenses (A) subject to sub-clause (II) of this
paragraph, payable to the Advisors, (B) payable to any lenders and other
financing sources, and (C) incurred in the defense, pursuit or settlement of any
disputes or litigation relating to the Transaction (whether incurred prior to
the termination of this letter agreement or not); and (II) that Mr. Fu shall pay
all fees and out of pocket expenses incurred by Skadden and any other legal
Advisors solely in connection with their representation of the Shareholder but
not the Consortium, and Abax shall pay all fees and out of pocket expenses
incurred by Weil solely in connection with its representation of Abax but not
the Consortium.
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(b) Upon
consummation of the Transaction, Bidco shall reimburse each party hereto for all
fees and out-of-pocket expenses incurred by them in connection with the
Transaction.
(c) Each
of the Shareholder and Abax shall share, ratably based on such party’s planned
equity participation in the Transaction, any termination, topping, break-up or
other fees or amounts (including amounts paid in settlement of any dispute or
litigation relating to the Transaction) payable by the Company or Bidco (or one
or more of its affiliates or designees), net of the expenses required to be
borne by them pursuant to Section 6(a).
7.
Remedies. It
is understood and agreed that money damages may not be a sufficient remedy for a
breach of this letter agreement by any party hereto and that each party hereto
shall be entitled to seek equitable relief, including injunction and specific
performance, as a remedy for any such breach by the other party. Such
remedies shall not be deemed to be the exclusive remedies for a breach by a
party of this letter agreement but shall be in addition to all other remedies
available at law or equity to the other party hereto. Each of the
parties hereto further agrees not to raise as a defense or objection to the
request or granting of such relief that any breach of this letter agreement is
or would be compensable by an award of money damages, and each party hereto
agrees to waive any requirements for the securing or posting of any bond in
connection with such remedy.
8.
Governing Law;
Arbitration. This letter agreement and all matters arising out
of or relating to this letter agreement shall be governed by and construed in
accordance with the laws of Hong Kong, without reference to conflict of laws
principles. Any dispute, controversy or claim arising out of or
relating to this letter agreement, including the validity, invalidity, breach or
termination thereof, shall be settled by arbitration in Hong Kong under the Hong
Kong International Arbitration Centre Administered Arbitration Rules (the “Rules”) in force when
the notice of arbitration is submitted in accordance with these
Rules. There shall be three arbitrators. The arbitration proceedings
shall be conducted in English.
9.
No
Modification. No provision in this letter agreement can be
waived, modified or amended except by written consent of the parties, which
consent shall specifically refer to the provision to be waived, modified or
amended and shall explicitly make such waiver, modification or
amendment.
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10. No Waiver of
Rights. It is understood and agreed that no failure or delay
by any party hereto in exercising any right, power or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege hereunder.
11. Counterparts; Entire
Agreement. This letter agreement may be signed and delivered
by facsimile or portable document format via electronic mail and in one or more
counterparts, each of which shall be deemed an original but all of which shall
be deemed to constitute a single instrument. This Agreement sets
forth the entire agreement and understanding among the parties and supersedes
all prior agreements, discussions and documents relating thereto. No
party hereto will be entitled to punitive, exemplary, special, unforeseen,
incidental, indirect or other consequential damages.
12. Severability. If
any provision of this letter agreement is found to violate any statute,
regulation, rule, order or decree of any governmental authority, court, agency
or exchange, such invalidity shall not be deemed to affect any other provision
hereof or the validity of the remainder of this letter agreement, and such
invalid provision shall be deemed deleted herefrom to the minimum extent
necessary to cure such violation.
13. Successors. This
letter agreement shall inure to the benefit of, and be binding upon, the parties
and their respective successors and assigns. Neither party may assign
or transfer, directly or indirectly, its rights or obligations under this letter
agreement without the prior written consent of the other except as provided
herein. No assignment will relieve the assignor of its obligations
hereunder.
14. No Third Party
Beneficiaries. Unless otherwise specifically provided herein,
the parties hereto each agree and acknowledge that nothing herein expressed or
implied is intended to confer upon or give any rights or remedies to persons not
party to this agreement under or by reason of this letter
agreement.
15. Term. This
letter agreement shall terminate on the earlier of (i) the first anniversary of
the date hereof and (ii) the execution and delivery of the Definitive
Agreements; provided that Sections 5 through 14 shall survive any termination of
this letter agreement.
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Please
confirm your agreement with the foregoing by having a duly authorized officer of
your organization sign and return one copy of this letter to the undersigned,
whereupon this letter agreement shall become a binding agreement among Mr. Fu
and Abax.
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Very
truly yours,
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Abax Global Capital (Hong
Kong) Limited
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By:
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/s/ ▇▇▇▇▇▇ ▇▇▇▇
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Name: ▇▇▇▇▇▇
▇▇▇▇
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Title:
Managing Partner
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CONFIRMED
AND AGREED
as of the
date written above:
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/s/ Li ▇▇
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▇▇
Fu
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Signature
Page to Consortium Agreement
6
Exhibit
A
Proposal
Letter
7