AXT, INC. Item 1.01 Entry into a Material Definitive Agreement.
The information set forth under the heading "STAR Market Listing and IPO-AXT Undertaking Agreements" in Item 8.01 of this report is incorporated by reference into this Item 1.01.
Item 7.01. Regulation FD Disclosure.
On
A copy of the press release, dated
The information in this Item 7.01 of this report is being furnished and shall not be deemed filed for purposes of Section 18 of the Exchange Act of 1934, as amended (the "Exchange Act"), nor will it be incorporated by reference in any filing under the Securities Act of 1933, amended (the "Securities Act"), or the Exchange Act, except as expressly set forth by specific reference in such filing.
There have not been any decisions made regarding the timing or terms of the STAR
Market listing and the IPO or whether the proposed actions will ultimately be
approved by the
The Tongmei shares referred to in the PID and this Item 7.01 have not been, and
will not be, registered under the Securities Act or any state securities laws
and may not be offered or sold in
Item 8.01. Other Events. STAR Market Listing and IPO
Background; Certain STAR Market Listing Requirements
On
date when Tongmei withdraws its IPO application. Tongmei would be required to
sell a minimum of 10% of its equity in the IPO. The process of going public on
the STAR Market includes several periods of review and is therefore a lengthy
process. Tongmei does not expect to complete the IPO until mid-2022. The listing
of Tongmei on the STAR Market will not change the status of AXT as a
An additional step in the STAR Market IPO process involves certain entity
reorganizations and alignment of assets under Tongmei. In this regard, our two
consolidated raw material companies,
We are neither a
The board of directors of Tongmei (the "Tongmei Board") consists of nine
members, eight of whom are nominated by AXT and one of whom is nominated by
Consistent with STAR Market listing requirements and applicable law, Tongmei has adopted a dividend distribution policy, which generally contemplates that it will pay dividends, typically annually, based on its then-existing situation by fully considering and accepting the opinions of shareholders (especially small and medium shareholders), independent directors and supervisors through a variety of channels. In the absence of major investment plans or major cash expenditures, if Tongmei is profitable and has met the statutory reserve, surplus reserve and similar legal requirements with respect to a year, the annual cash dividend amount will be at least 10% of any profits for that year, but any profit distribution established by the Tongmei Board will be subject to shareholder approval. We do not expect Tongmei to pay dividends under this policy for the foreseeable future because of its business strategy and growth plans.
Certain Proposed IPO Terms
Tongmei currently proposes to offer at least 10% of its shares in the IPO. The net proceeds of the IPO are expected to be used for capital expenditures to grow the business and general working capital.
There have not been any decisions made regarding the timing or terms of the STAR
Market listing and the IPO or whether the proposed actions will ultimately be
approved by the
The Tongmei shares referred to in the PID and this Item 7.01 have not been, and
will not be, registered under the Securities Act or any state securities laws
and may not be offered or sold in
AXT Undertaking Agreements
In connection with Tongmei's submission of the PID, AXT, as the controlling
shareholder of Tongmei, was required to enter into certain agreements with the
STAR Market, which became effective upon acceptance of the PID by the
Letter of Commitment on Share Lock-up, pursuant to which AXT has agreed to a
three-year lockup of its shares in Tongmei, including a prohibition against
directing Tongmei to repurchase any of its shares following the closing of the
? IPO. The lockup period will be extended for six additional months if the daily
closing price of Tongmei shares for 20 consecutive trading days during the
first six months following the IPO is lower than the issue price of shares in
the IPO or if the closing price at the end of six months after the listing is
lower than the issue price of shares in the IPO.
Letter of Commitment on the Shareholding Intention and Share Reduction
Intention, pursuant to which AXT is allowed to sell its shares of Tongmei in
the secondary market. AXT has agreed that the sale of Tongmei shares will be
accordance with the regulations of the
? the two-year period following the expiration of the lock-up period (as
described above), AXT has agreed that any sales will be made at a price no
lower than the issue price of shares in the IPO, as adjusted according to
applicable regulations, and shall be announced by Tongmei within three trading
days before the sales occur or the term stipulated in relevant laws and
regulations.
Letter of Commitment on Plan for Stabilizing Tongmei's Stock Price within Three
Years upon the Listing and the Restraint Measures, pursuant to which Tongmei,
AXT, directors of Tongmei (excluding independent directors) and senior
executives of Tongmei have agreed to stabilize Tongmei's stock. If the closing
? stock price is lower than the audited net assets per share of Tongmei in the
previous accounting year for 20 consecutive trading days during the three-year
period following the IPO, then Tongmei will take one or more of the measures as
follows in sequence to stabilize Tongmei's stock price: (a) Tongmei repurchases
shares of Tongmei; (b) AXT purchases additional shares of Tongmei; and (c) the
directors and senior executives purchase additional shares of Tongmei.
Letter of Commitment on Share Repurchase for Fraudulent Listing, pursuant to
which Tongmei and AXT have guaranteed that there has been no fraud in the IPO
? and, if Tongmei did not meet the listing conditions, but fraudulently obtained
the issuance registration and has been listed, Tongmei and AXT have agreed to
repurchase shares of Tongmei issued pursuant to the IPO within five business
days upon a determination by the CSRC that the repurchase should occur.
Letter of Commitment on No False Records, Misleading Statements or Major
Omissions in the Prospectus, pursuant to which AXT has agreed that there are no
false records, misleading statements or major omissions in the PID and other
information disclosure materials for the IPO, and, if the CSRC, Shanghai Stock
? Exchange or other authorities affirms that there is a circumstance of false
records, misleading statements or major omissions in the PID and that such
circumstance has a major and material impact on judging whether Tongmei
complied with the issuance conditions stipulated by law, then AXT has agreed to
repurchase shares of Tongmei issued pursuant to the IPO.
Letter of Commitment, pursuant to which AXT has agreed to participate in
? Tongmei's operations and management activities within the scope of its
authority.
Letter of Commitment on Restraint Measures for Nonperformance of the
Commitments, pursuant to which AXT has agreed to perform all of its obligations
and responsibilities set forth in the PID and has agreed to take certain
? corrective actions for failure to do so, including publicly disclosing the
reasons for such failure, compensating investors in Tongmei for losses
according to law, foregoing dividends from Tongmei, and returning any gains
that resulted from such failure within five business days of receipt of such
gains.
Letter of Commitment on
has agreed that it will not compete with the principal business of Tongmei,
including supporting any companies that may compete with Tongmei. If AXT
? engages in any competitive activity, it has agreed to terminate or otherwise
transfer such activity and, in the case of transfer, grants to Tongmei a right
of first refusal to acquire such transferred activity. The commitment under
this agreement will remain in effect so long as AXT remains the controlling
shareholder of Tongmei.
Letter of Commitment on Regulating and Reducing Related Party Transactions,
? pursuant to which AXT has agreed that any transactions between AXT and Tongmei
will be regulated and implemented based on fair pricing.
Letter of Commitment on Avoiding Illegal Guarantees, pursuant to which AXT has
agreed that the funds of Tongmei are not controlled by AXT for non-operational
? purposes and that Tongmei will not provide any guarantees for AXT. AXT has
agreed to exercise its rights as a shareholder according to law and will not
misuse its rights to damage the legal rights and interests of Tongmei or other
shareholders of Tongmei.
? Statement and Letter of Commitment, pursuant to which AXT has made
representations with respect to its ownership of shares of Tongmei.
Special Commitment Letter for Disclosure of Shareholders' Information and
? Verification of Retired Personnel of CSRC, pursuant to which AXT has made
representations with respect to its ownership of shares of Tongmei.
Item 9.01. Financial Statements and Exhibits.
Exhibit
No. Description
99.1* Preliminary Information Document of to Beijing Tongmei Xtal Technology
Co., Ltd.
99.2 Press Release, dated January 10, 2022
104 Cover Page Interactive Data File (formatted as inline XBRL).
* Unofficial English translation of original document prepared in Mandarin Chinese.
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