Pursuant to this
prospectus supplement and the accompanying base prospectus, Tantech Holdings Ltd (the “Company, ” “Tantech,”
“we,” “us” or “our”) is offering an aggregate of 6,060,608 common shares (the “Shares”),
par value $0.001 per share (the “Common Share”) and warrants (the “Registered Investor Warrants”) to purchase
up to 2,754,820 Common Shares (the “Registered Investor Warrant Shares”), directly to selected investors. The exercise
price of each Registered Investor Warrant will equal $1.81 per share. This prospectus supplement also relates to the offering of
the 2,754,820 Common Shares issuable upon exercise of such Registered Investor Warrants.
We will sell to the investors the Shares
at a public offering price of $1.65 per Share. We will pay all of the expenses incident to the registration, offering and sale
of the securities under this prospectus supplement and the accompanying base prospectus.
In a concurrent private placement, we are
also selling to such investors warrants (the “Unregistered Investor Warrants,” and together with the Registered Investor
Warrants, the “Investor Warrants”) to purchase up to 3,305,788 of our Common Shares (the “Unregistered Investor
Warrant Shares”). The Unregistered Investor Warrants and the Unregistered Investor Warrant Shares are not being registered
under the Securities Act of 1933, as amended (the “Securities Act”), pursuant to the registration statement of which
this prospectus supplement and the accompanying base prospectus form a part and are not being offered pursuant to this prospectus
supplement and the accompanying base prospectus. The Unregistered Investor Warrants and the Unregistered Investor Warrant Shares
are being offered pursuant to an exemption from the registration requirements of the Securities Act provided in Section 4(a)(2) of
the Securities Act and/or Regulation D promulgated thereunder.
The sales of the Shares, the Investor Warrants
and our Common Shares underlying the Investor Warrants will be made in accordance with a securities purchase agreement, dated as
of November 20, 2020, by and among us and the investors named therein (the “Securities Purchase Agreement”).
We have retained Univest Securities, LLC
as the Placement Agent in connection with our offering of the Shares and the Investor Warrants to use its “reasonable best
efforts” to solicit offers to purchase such securities. The Placement Agent has no obligation to buy any such securities
from us or to arrange for the purchase or sale of any specific number or dollar amount of such securities. In consideration for
its services, we have agreed to compensate the Placement Agent with (a) a cash fee equal to the sum of between 6.0% and 7.5%
of the aggregate purchase price paid by investors placed by the Placement Agent for the Shares and the Investor Warrants, depending
on the aggregate gross proceeds received by us from such investors, (b) warrants to purchase up to 363,637 Common Shares,
equal to 6.0% of the number of Shares sold in this offering (the “Univest Warrants”), and (c) certain other expenses.
See “Plan of Distribution” beginning on page S-25 of this prospectus supplement for more information regarding
these arrangements.
Our Common Shares are currently traded
on the Nasdaq Capital Market (“Nasdaq”) under the symbol “TANH.” On November 20, 2020, the last reported
sale price of our Common Shares on Nasdaq was $1.30 per share.
As of the date of this prospectus supplement,
the aggregate market value of our outstanding voting and non-voting common equity held by non-affiliates was $62,036,333.37 based
on 28,888,834 outstanding Common Shares, of which 17,089,899 Common Shares were held by non-affiliates, and using the highest last
reported sale price of our Common Shares during the past 60 days, which was $3.63 per share on November 16, 2020. Pursuant
to General Instruction I.B.5 of Form F-3, in no event will we sell securities in a public primary offering with a value exceeding
one-third of our public float in any 12-month period so long as our public float remains below $75,000,000. During the previous
12 calendar months prior to and including the date of this prospectus supplement, we have not offered any of our securities pursuant
to General Instruction I.B.5 of Form F-3.
We are an “emerging growth company”
as the term is used in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) and, as such, have elected
to comply with certain reduced public company reporting requirements for this and future filings.
You should read carefully this prospectus
supplement, the accompanying base prospectus and the documents incorporated by reference into this prospectus supplement and the
accompanying base prospectus before accepting any Shares.
Delivery of the Shares and the Registered
Investor Warrants is expected to be made on or about November 24, 2020.
CAUTIONARY NOTE ON FORWARD LOOKING STATEMENTS
Certain statements contained or incorporated
by reference in this prospectus supplement, the accompanying base prospectus and the documents incorporated by reference herein
and therein, including the statements of our management referring to or summarizing the contents of this prospectus supplement,
include “forward-looking statements”. We have based these forward-looking statements on our current expectations and
projections about future events. Our actual results may differ materially or perhaps significantly from those discussed herein,
or implied by, these forward-looking statements. Forward-looking statements are identified by words such as “believe,”
“expect,” “anticipate,” “intend,” “estimate,” “plan,” “project”
and other similar expressions. In addition, any statements that refer to expectations or other characterizations of future events
or circumstances are forward-looking statements. Forward-looking statements included or incorporated by reference in this prospectus
or our other filings with the SEC include, but are not necessarily limited to, those relating to:
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risks and uncertainties associated with the integration of the assets and operations we have acquired and may acquire in the future;
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our possible inability to raise or generate additional funds that will be necessary to continue and expand our operations;
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our potential lack of revenue growth;
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our potential inability to add new products and services that will be necessary to generate increased sales;
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our potential lack of cash flows;
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our potential loss of key personnel;
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the availability of qualified personnel;
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international, national regional and local economic political changes;
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general economic and market conditions;
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increases in operating expenses associated with the growth of our operations;
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the potential for increased competition;
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risks related to health epidemics and other outbreaks, which could significantly disrupt our operations and could have a material adverse impact on us, such as the outbreak of the coronavirus disease 2019 (COVID-19), and other events or factors, many of which are beyond our control, including those resulting from such events, or the prospect of such events, including war, terrorism and other international conflicts, public health issues and natural disasters such as fire, hurricanes, earthquakes, tornados or other adverse weather and climate conditions, whether occurring in the People’s Republic of China or elsewhere; and
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other unanticipated factors.
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The foregoing does not represent an exhaustive
list of matters that may be covered by the forward-looking statements contained herein or risk factors that we are faced with that
may cause our actual results to differ from those anticipate in our forward-looking statements. Please see “Risk Factors”
in our reports filed with the SEC, including in this prospectus supplement, the accompanying base prospectus, and the documents
incorporated by reference herein and therein, including our Annual Report on Form 20-F for the fiscal year ended December 31,
2019, for additional risks which could adversely impact our business and financial performance.
Moreover, new risks regularly emerge and
it is not possible for our management to predict or articulate all risks we face, nor can we assess the impact of all risks on
our business or the extent to which any risk, or combination of risks, may cause actual results to differ from those contained
in any forward-looking statements. All forward-looking statements included in this prospectus supplement are based on information
available to us on the date of this prospectus supplement. Except to the extent required by applicable laws or rules, we undertake
no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events
or otherwise. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are
expressly qualified in their entirety by the cautionary statements contained above and throughout (or incorporated by reference
in) this prospectus supplement.
PROSPECTUS SUPPLEMENT SUMMARY
The following summary highlights selected
information contained or incorporated by reference in this prospectus supplement and the accompanying base prospectus.
This summary does not contain all of the information you should consider before investing in our securities. Before
making an investment decision, you should read the entire prospectus supplement, the accompanying base prospectus and
the documents incorporated by reference herein and therein carefully, including the risk factors sections, the financial
statements and the notes to the financial statements incorporated herein and therein by reference.
In this prospectus supplement, unless
otherwise indicated, the terms “Tantech Holdings Ltd,” the “Company,” “we,” “us,”
and “our” refer and relate to Tantech Holdings Ltd and its consolidated subsidiaries.
Our Company
We develop and manufacture bamboo-based
charcoal products for industrial energy applications and household cooking, heating, purification, agricultural and cleaning uses.
We have grown over the past decade to become a pioneer in charcoal products industry made from carbonized bamboo. We are a highly
specialized high-tech enterprise producing, researching and developing bamboo charcoal-based products with an established domestic
and international sales and distribution network. On July 12, 2017, we completed the acquisition of Suzhou E Motors
Co, which became known as Shangchi Automobile Co., Ltd., a specialty electric vehicles manufacturer based in Zhangjiagang
City, Jiangsu Province, and our business includes the manufacture and sale of electric vehicles.
We provide our products in the following
areas:
We oversee a national sales network that
has a presence in 19 cities throughout China. Through wholesalers, our products are also sold in Japan, South Korea, Taiwan, the
Middle East and Europe.
In addition to our bamboo charcoal products,
we also derive revenues from our trading activities, which primarily relate to industrial purchases and sales of charcoal.
Further, we own an indirect 18% interest
in Libo Haokun Stone Co., Ltd., a marble mining operating company, and an indirect 14.76% interest in Fuquan Chengwang Mining
Co., Ltd. (“Fuquan Chengwang”), a basalt mining company. In addition, Fuquan Chengwang is renewing a government-issued
mining permit which expired on May 20, 2019. Pursuant to an investment agreement amendment we signed, we extended the renewal
due date from June 30, 2020 to December 31, 2020.
We are headquartered in the bamboo rich
southwest of Zhejiang Province, in the city of Lishui. Zhejiang province, located in southeastern coastal China, is China’s
tenth largest province in population, with 58.5 million residents, and tenth in terms of population density as of the end of 2019.
The first province in China without any counties in the poverty-county list of the central government, Zhejiang has become one
of the wealthiest and most commercial provinces in China. Its province-wide GDP of approximately RMB 6.23 trillion in 2019 places
it as the fourth highest in China in absolute amount.
Lishui is a prefecture-level city located
in southwest Zhejiang province. Approximately 2.7 million residents live in the city as the end of 2019, and city-wide GDP is approximately
RMB 147.7 billion in 2019. Lishui’s primary industries include wood and bamboo production, ore smelting, textile, clothes
making, construction materials, pharmaceutical chemistry, electronic machinery and food processing. As to wood and bamboo production,
approximately 69% of Lishui prefecture is covered with forest, giving it the nickname “The Foliage Ocean of Zhejiang.”
Zhejiang Province
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City of Lishui
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We rely on a combination of patent, trademark
and trade secret laws and non-disclosure agreements and other methods to protect our intellectual property rights. We currently
own five patents in China covering our bamboo charcoal production.
For the years ended December 31, 2019,
2018 and 2017, three major suppliers accounted for approximately 76%, three major suppliers accounted for approximately 72% and
three major suppliers accounted for approximately 61% of the Company’s total purchases, respectively. Because we purchase
a material amount of our raw materials from these suppliers, the loss of any such suppliers could result in increased expenses
for our company and result in adverse impact on our business, financial condition and results of operations.
Bamboo and Bamboo Charcoal
As a company primarily focused on bamboo
charcoal, our business is in a sub-part of China’s bamboo industry. Government policies that encourage the use of bamboo
also benefit the bamboo charcoal industry. Accordingly, we provide a brief overview of bamboo and those elements of China’s
bamboo industry, insofar as they have an effect on the bamboo charcoal industry in general and our company in particular.
Bamboo
Bamboo plants are some of the fastest growing
plants in the world, with some varieties growing more than three feet per day. Moreover, Bamboo can be re-grown quickly following
harvesting, ensuring high frequency utilization without shortages. Unlike trees, individual bamboo culms emerge from the ground
at their full diameter and grow to their full height in a single growing season of three to four months. Over the next 2–5
years, fungus begins to form on the outside of the culm, which eventually penetrates and overcomes the culm. Eventually the fungal
growths cause the culm to collapse and decay. As a result, bamboo culms generally have life cycles of up to ten years, at which
point they must be cut down in order to preserve the environment of the surrounding forest. Optimal quality bamboo culms for carbonization
are cut at five years of age. Additional bamboo can be grown in the same area where previous culms grew.
Bamboo is considered environmentally friendly
because it takes in substantial amounts of carbon dioxide and gives off oxygen as it grows. Indeed, bamboo sequesters more carbon
dioxide than an equivalent region of plantation trees. Moreover, harvesting of bamboo is considered more environmentally friendly
than allowing it to live through the full life cycle, as such harvesting maximizes the amount of carbon dioxide the bamboo can
sequester because of the effects of fungus noted above.
The total value of China's bamboo industry
was approximately $35 billion, as of 2018. As of 2018, it employs more than 8 million people and has become a pillar industry of
development of economic society of China’s bamboo main producing area and major income source of peasants’ families.
Given bamboo’s importance in China, we believe that favorable government policies and regulations encouraging the advancement
of bamboo technology in China generally will create an environment favorable to our increased production of bamboo-based charcoal
products. The Chinese government is also working to develop its bamboo industry to meet its goals in environmental protection and
green economic development, as planting bamboo is both profitable and environmentally-friendly, according to the International
Network for Bamboo and Rattan (“INBAR”). Moreover, given the central government’s goal to reduce carbon dioxide
emissions per unit of GDP by 60 to 65 percent by 2030 compared to 2005, we expect the bamboo technology industry to continue to
be important to the country’s long-term planning.
China now produces approximately 80% of
the world’s bamboo and consumes approximately 60% of that production. According to statistics from INBAR, China has more
than 6 million hectares for bamboo production and over 500 bamboo species. In 2018, for example, the domestic industry was worth
$30 billion and employed more than 8 million people.
During a period of rampant deforestation,
China put in place restrictions on harvesting of natural wood and encouraged the country to make more use of bamboo. Under the
National Forest Protection Program (“NFPP”), China implemented natural forest logging bans that covered 17 provinces
in China. These bands required consumers of charcoal to look to other sources for creation of charcoal than the natural trees they
were most familiar with using. During this time, bamboo charcoal became a viable alternative in the country.
Bamboo has many desirable characteristics
compared to timber based products:
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Culms are ideally allowed to reach 5-7 years of maturity prior to full capacity harvesting. The clearing out or thinning of culms, particularly older decaying culms, helps to ensure adequate light and resources for new growth;
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Commercial growers can annually harvest between one-quarter and one-third of a bamboo grove that is at least three years old. Harvesting at such rates allows continuous, sustainable harvesting;
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Bamboo will re-grow from same rootstalk (rhizome);
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Plant tends to be drought tolerant
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Bamboo minimizes carbon dioxide gases and generates up to 35% more oxygen than an equivalent area of trees. One hectare of bamboo can sequester 62 tons of CO2 /year, while one hectare of young forest can sequester 15 tons of CO2 /year.
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The physical and environmental properties
of bamboo make it an exceptional economic resource for a wide range of uses. It grows quickly and can be harvested annually without
depletion of the parent plant and without causing harvesting damage or deterioration in soil quality; in addition bamboo is very
versatile and has many uses in the construction, culinary, furniture, pulp, pharmaceutical, and textiles industries. New uses for
bamboo are being developed as we understand its biological, chemical and physical characteristics.
The global bamboos market size was valued
at USD 68.8 billion in 2018 and is expected to grow at a compound annual growth rate of 5.0% from 2019 to 2025. There are about
39 genera of bamboo and more than 590 species in China with more than 6 million hectares of pure bamboo forest, which accounts
for 25% of the bamboo area in the world. With more than 6 million hectares of bamboo plantations as of September 2018 , China
is leading the world’s bamboo industry in its number of varieties, amount of bamboo reserves, as well as production output,
said Zehui Jiang, co-chair of INBAR’s board of trustees.
Zhejiang province is situated on the shore
of the East China Sea and has about thirty genera and four hundred varieties of bamboo. Bamboo products made there are sold all
around the world, with an annual output of RMB 48.6 billion ($6.9 billion) in 2017. Zhejiang province has almost one sixth of the
whole bamboo forest area in China.
Bamboo Charcoal
Bamboo charcoal has been documented in
China as early as 1486 AD during the Ming Dynasty in China. Bamboo charcoal has traditionally been used as a heating source, in
replacement of wood, coal or wood charcoal. As a source of heat, bamboo charcoal has a calorific value approximately half that
of an equivalent weight of oil, and similar to the calorific value of wood. In addition to being an efficient source of heat, bamboo
charcoal is considered by the International Tree Foundation less polluting than wood charcoal, because it burns more cleanly due
to a lower percentage of volatile matter. Smoke and pollution in charcoal burning relate largely to moisture content and volatile
matter. While careful processing can control the moisture content, the ratio of volatile matter is affected by the source of charcoal.
Because of the relatively higher pollution
levels in wood charcoal, it is estimated that the burning of wood fuel claims the lives of an estimated 4 million people every
year who inhale the smoke. Moreover, it takes between seven and ten tons of wood to produce one ton of wood charcoal, compared
with four tons of bamboo to produce one ton of bamboo charcoal.
In addition to use as a heating source,
bamboo charcoal has applications as an adsorbent, deodorizer, dehumidifier, purifier and electrical conductor. Nonactivated bamboo
charcoal is a versatile mineral matter with great porosity and consequently high absorption ability. Bamboo charcoal’s porous
surface area makes it an ideal air and water purifying agent, odor absorbent, additive, dehumidifier and electromagnetic wave absorber
(electromagnetic waves from computers, mobile telephones and other electronics can be conducted through bamboo charcoal to dissipate
their energy in the charcoal pores). While wood charcoal’s surface area may be as low as 20 m 2 /g, bamboo charcoal
generally ranges from 300-600 m 2 /g.
While bamboo charcoal has a high absorptive
capacity after carbonization, it becomes even more effective after activation. Activated bamboo carbon is bamboo charcoal that
has been taken through an extra step greatly increasing its absorptive abilities. Activated bamboo charcoal can be used for cleaning
the environment, absorbing excess moisture and producing medicines.
The carbonization process occurs in the
absence of oxygen and produces a brown-black liquid containing more than 200 organic compounds known as bamboo vinegar, or pyroligneous
acid. Following sedimentation two distinct layers appear: a light yellow-brown liquid (clarified bamboo vinegar) which can be refined
to produce acetic acid, propionic acid, butyric acid, carbinol and organic solvents, and a viscid oily liquid (bamboo tar) containing
large amounts of phenol substances. Bamboo vinegar is found in sanitary and health products as well as a range of horticultural
fertilizers and organic solutions.
EDLC Carbon (Divested Business)
On December 14, 2017, the Company
entered into a sale agreement and related agreements (the “Agreements”) to transfer its electric double-layer capacitor
(“EDLC”) carbon business (including intellectual property rights and equipment) to Zhejiang Apeikesi Energy Co., Ltd.
(the “Buyer”), a Chinese start-up company controlled by Dr. Zaihua Chen, our former CTO. After the completion
of the transactions, the Company focuses its core business on the development of specialty-used electric vehicles and traditional
charcoal products. Tantech’s Board of Directors approved the terms of the sale based on a valuation report obtained by the
parties and with knowledge that Dr. Chen was the Company’s CTO during the transaction. However, as part of the transactions,
Dr. Chen resigned from the Company’s CTO position on December 31, 2017.
The decision of the Company to divest its
EDLC carbon business was made based on business considerations, including the fact that (1) the Company’s EDLC carbon
business had been dependent on a very limited number of customers, (2) there existed capital constraints on additional substantial
investment on developing EDLC carbon products, (3) there existed a challenging market condition and unfavorable political
climate and (4) the Company intended to transition focus of its traditional charcoal business to its electric vehicle business.
Pursuant to the Agreements, Tantech sold
to the Buyer all of its intellectual property rights related to EDLC carbon and the equipment for research and development and
production. The Buyer paid Tantech a total purchase price of RMB 16 million. The payment will be made over 10 years. Other key
terms include the following: (a) the first payment of 28% of the total purchase price, or RMB 4.48 million, was made in 2017,
consisting of RMB 3.2 million in cash advancement and RMB 1.28 million as payment for Tantech’s EDLC carbon related intellectual
property rights; (b) the remaining balance of the purchase price will be paid evenly over the following nine years; (c) the
second payment of RMB 1.28 million of the purchase price and cash interests on the remaining cash receivable was made in 2018;
and (d) Tantech will lease its office space, including offices and EDLC carbon research and development and production facilities,
to the Buyer, subject to a concession of a free leasehold for the first two years.
Disposal of Tantech Energy
On June 26, 2019, our wholly-owned
subsidiary Tantech Bamboo entered a share transfer agreement to sell all of its shares in its wholly-owned subsidiary, Tantech
Energy, to an unrelated third party. The consideration is RMB 6,500,000 (approximately US$ 941,000). The Company completed the
disposition process in July 2019.
Electric Vehicles
Pursuant to the Call Option Agreement executed
on May 2, 2016, Supplemental Agreement I signed on December 22, 2016 and Supplemental Agreement II signed on July 12,
2017, the Company acquired a 70% equity interest of Shangchi Automobile, formerly Suzhou Yimao E-Motors Co., Ltd. The 70%
equity interest include a 19% equity interest owned directly by Jiyi and a 51% equity interest owned through a series of contractual
agreement with the owners of Wangbo. Jiyi is 100% owned by Jiamu, which is, in turn, wholly owned by Euroasia International Capital
(“Euroasia”), a 100% owned subsidiary of the Company. These agreements include an Exclusive Management Consulting and
Technology Agreement, two Equity Pledge Agreements, two Exclusive Call Option Agreements, two Proxy Agreements and two Power of
Attorney (collectively “VIE Agreements”). Pursuant to the above VIE Agreements, Jiamu has the exclusive right to provide
Wangbo consulting services related to business operations including technical and management consulting services. All the above
contractual agreements obligate Jiamu to absorb a majority of the risk of loss from Wangbo’s activities and entitle Jiamu
to receive a majority of their residual returns. In essence, Jiamu has gained effective control over Wangbo. Therefore, the Company
believes that Wangbo should be considered as a Variable Interest Entity (“VIE”).
Suzhou E-Motors was established in April 2011.
It changed its name to Shangchi Automobile in January 2019. It develops, manufactures, and sells specialty electric vehicles.
The company also offers solar cells, lithium-ion batteries, auto parts, and electric control systems in China. Its manufacturing
facility, located in Zhangjiagang City, Jiangsu Province is 15,000 square meters. Shangchi Automobile has been approved by Ministry
of Industry and Information Technology of the People's Republic China (“MIIT”) as qualified to manufacture electric
vehicles. It is also entitled to both central and local government subsidies with any approved electric vehicle (“EV”)
models. As of October 30, 2020, Shangchi Automobile has not updated the previous ten EV models and remained one fuel vehicle
model approved by MIIT.
Shangchi Automobile has to date developed
a full range of electric buses and a variety of specialty vehicles. It has developed more than ten models of electric buses, electric
logistics cars, and specialty vehicles, such as high-speed brushless cleaning cars, electric cleaning cars, special emergency vehicles,
and funeral cars. The sale region for current products is mainly within Jiangsu Province where the Shangchi Automobile locates.
In 2017, we sold 100 various types of vehicles, where 10 types of vehicles directly sold to Northern China, and over 90 types of
vehicles were used in Northern China. In 2018, we sold 110 logistic vehicles to Southern China. In 2019, we sold 117 electronic
logistic cars in fiscal 2019 on behalf of other vehicle manufacturers for commission income. Below are examples of the specialty
vehicles produced by Shangchi Automobile.
Urban Sanitary Vehicles. The Urban
Sanitary Vehicles work with high efficiencies with low operating expenses. They travel (clean) around 20~30 km/hr with fuel consumption
rates approximately 3.33 km/liter. The vehicles are equipped with professional sanitary vehicle chasses, with front axle drives &
front axle steering to strengthen their operations’ stability and smoothness; the whole vehicle is made of strengthened steel
plates and pipes, making it more durable and anti-collusive.
Tourist Buses. The Tourist Buses
are 12-meter-long and 7-meter-long lithium-battery-based buses whose interior noise is less than 76 dBs and off vehicle acceleration
noise is less than 82 dbs.
Logistic Vehicles. The logistic
electric vehicles are 4.2-meter-long, 810 kg standard load weight fully charged vehicles. Each are a 100% electricity-driven vehicle
specially designed for logistics companies. The batteries for this vehicle can be charged and discharged quickly, and each vehicle
is made of high quality steel stamping body which is highly durable. The internal structure and the design of the car doors are
both made for the deliverers’ convenience.
Below are the major vehicle components
we purchase for assembling the EVs:
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Lithium-ion battery packs
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Three-in-One electric control systems
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In general, the purchase of the vehicle
chassis, electric motors, lithium-ion battery pack and three-in-one electric control system have covered two-thirds of EVs’
production cost. We purchase these components from four different but well-established suppliers in China.
We currently rely on local EV distributors
to sell our EVs to end-users. The primary reason for such a sales channel is the dependence on local government subsidy policies.
In general, local governments only allow the locally-licensed EV distributors to sell EV vehicles, which are entitled to EV road
permits and subsidies.
Over the years, Shangchi Automobile has
had more than 15 EV core technologies and patents, including nanotechnology for raw materials for power lithium electronics, group
technology of power lithium electronics and battery management technology.
Due to China's revised new energy vehicle
subsidy policy and fierce competition in the electric buses market, we experienced declined customer orders in sales of EVs in
2019. We have temporarily suspended the sale of EVs in order to protect working capital. With continuing assembling vehicles for
other manufacturer, Shangchi Automobile has maintained a healthy working capital and flow. In the meantime, we were engaged with
research and develop team to seek new EVs models. Based on Chinese government's environmental protection requirements, we have
adopted a differentiation strategy, focusing on new energy special vehicles, such as new energy logistics vehicles and new energy
street sweepers. The newly developed new energy street sweeper is expected to be produced in the first half of 2021, and sales
are expected to begin at that time.
Corporate Information
Our principal executive offices are located
at c/o Tantech Holdings (Lishui) Co., Ltd., No. 10 Cen Shan Road, Shuige Industrial Zone, Lishui City, Zhejiang Province
323000, People’s Republic of China. Our telephone number at this address is +86-578-226-2305. Our Common Shares are traded
on Nasdaq under the symbol “TANH.”
Our Internet website, http://ir.tantech.cn,
provides a variety of information about our Company. We do not incorporate by reference into this prospectus supplement or the
accompanying base prospectus any of the information on, or accessible through, our website, and you should not consider it as part
of this prospectus supplement or accompanying base prospectus. Our annual reports on Form 20-F and current reports on Form 6-K
filed and furnished with the SEC are available, as soon as practicable after filing, at the investors’ page on our corporate
website, or by a direct link to its filings on the SEC’s free website.
THE OFFERING
Common Shares offered by us pursuant to this prospectus supplement
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6,060,608 Common Shares
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Warrants offered by us pursuant to this prospectus supplement
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We are also offering to
institutional investors Registered Investor Warrants to purchase up to 2,754,820 Common Shares.
The exercise price of each Registered Investor Warrant is $1.81 per share. Each Registered
Investor Warrant is exercisable immediately upon issuance and will expire upon the five year
anniversary of the closing date. This prospectus supplement also relates to the offering of
the 2,754,820 Common Shares issuable upon exercise of such Registered Investor Warrants. See
“Description of Warrants” for a discussion on the terms of the Registered Investor
Warrants.
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Common Shares to be outstanding after this offering
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34,949,442 Common Shares (assumes all 6,060,608 Common Shares offered in this offering are sold and no exercise of any
of the Investor Warrants or the Univest Warrants)
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Use of proceeds
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We intend to use the net proceeds from this offering for working capital and general business purposes. See “Use of Proceeds” on page S-18 of this prospectus supplement.
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Risk factors
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Investing in our securities involves a high degree of risk. For a discussion of factors you should consider carefully before deciding to invest in our securities, see the information contained in or incorporated by reference under the heading “Risk Factors” beginning on page S-15 of this prospectus supplement, on page 8 of the accompanying base prospectus, in our Annual Report on Form 20-F for the fiscal year ended December 31, 2019 and in the other documents incorporated by reference into this prospectus supplement and accompanying base prospectus.
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Concurrent private placement
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In a concurrent private placement, we are selling to purchasers of our securities in this
offering Unregistered Investor Warrants to purchase an aggregate of up to 3,305,788 Common Shares. The Unregistered Investor
Warrants will be immediately exercisable from the date of issuance at an exercise price of $1.81 per share and will expire
five (5) years from the date of issuance. We will receive gross proceeds from the concurrent private placement
transaction solely to the extent that the Unregistered Investor Warrants are exercised for cash. In addition, as a portion of
the compensation payable to the Placement Agent in connection with the offering of Shares and Investor Warrants, the
Placement Agent will receive the Univest Warrants after paying the consideration of $100.00. The Univest Warrants will have
substantially the same terms as the Unregistered Investor Warrants, except that the Univest Warrants shall be exercisable at
an exercise price of $1.815, equal to 110% of the public offering price of the Shares, any time during the period commencing
six (6) months after the closing date of the offering of the Shares and Investor Warrants through the third (3rd)
anniversary of the issuance of the Univest Warrants, and shall not bear any anti-dilution protections other than those
customarily present in the event of stock splits, recapitalizations and similar events. The Unregistered Investor Warrants,
the Unregistered Investor Warrants Shares, the Univest Warrants and the Common Shares issuable upon the exercise of the
Univest Warrants are not being offered pursuant to this prospectus supplement and the accompanying base prospectus, and are
being offered pursuant to the exemption provided in Section 4(a)(2) under the Securities Act and
Rule 506(b) of Regulation D promulgated thereunder. See “Private Placement Transaction” and “Plan
of Distribution — Placement Agent’s Warrants”.
|
Market for the Common Shares
|
|
Our Common Shares are quoted and traded on Nasdaq under the symbol “TANH.” There is no established public trading market for the Registered Investor Warrants, and we do not expect a market to develop. In addition, we do not intend to apply to list the Registered Investor Warrants on any securities exchange.
|
Unless specifically
stated otherwise, the information in this prospectus supplement is based on 28,888,834 Common Shares outstanding as of November 20,
2020 and 6,060,608 Common Shares being offered in this offering, but excludes (a) 2,754,820 Common Shares issuable upon the
exercise of the Registered Investor Warrants being offered in this offering, (b) an aggregate of 3,669,425 Common Shares issuable
upon the exercise of Unregistered Investor Warrants and Univest Warrants to be issued in a concurrent private offering, at a per
share exercise price of $1.81 and 1.815, respectively, and (c) an aggregate of 1,078,045 Common Shares issuable upon the exercise
of warrants issued by us in an offering that closed on September 29, 2017, at an initial per share exercise price of $4.25
(reset to $0.001 according to the Securities Purchase Agreement) for warrants issued to the investors in such offering and $4.675
(subject to adjustment) for warrants issued to the placement agent in such offering.
RISK FACTORS
Before you make a decision to invest
in our securities, you should consider carefully the risks described below, together with other information in this prospectus
supplement, the accompanying base prospectus and the information incorporated by reference herein and therein, including our Annual
Report on Form 20-F for the fiscal year ended December 31, 2019. If any of the following events actually occur, our business,
operating results, prospects or financial condition could be materially and adversely affected. This could cause the trading price
of our Common Shares to decline and you may lose all or part of your investment. The risks described below are not the only ones
that we face. Additional risks not presently known to us or that we currently deem immaterial may also significantly impair our
business operations and could result in a complete loss of your investment.
RISKS RELATED TO THIS OFFERING
Since we have some discretion in how we use the proceeds
from this offering, we may use the proceeds in ways with which you disagree.
We have not allocated
specific amounts of the net proceeds from this offering for any specific purpose. Accordingly, subject to any agreed upon contractual
restrictions under the terms of the Securities Purchase Agreement, our management will have some flexibility in applying the net
proceeds of this offering. You will be relying on the judgment of our management with regard to the use of these net proceeds,
and subject to any agreed upon contractual restrictions under the terms of the Securities Purchase Agreement, you will not have
the opportunity, as part of your investment decision, to assess whether the proceeds are being used appropriately. It is possible
that the net proceeds will be invested in a way that does not yield a favorable, or any, return for us. The failure of our management
to use such funds effectively could have a material adverse effect on our business, financial condition, operating results and
cash flow.
There is no minimum offering amount required to consummate
this offering.
There is no minimum
offering amount which must be raised in order for us to consummate this offering. Accordingly, the amount of money raised may not
be sufficient for us to meet our business objectives. Moreover, if only a small amount of money is raised, all or substantially
all of the offering proceeds may be applied to cover the offering expenses and we will not otherwise benefit from the offering.
In addition, because there is no minimum offering amount required, investors will not be entitled to a return of their investment
if we are unable to raise sufficient proceeds to meet our business objectives.
You may experience dilution to the extent that our Common
Shares are issued upon the exercise of outstanding warrants or other securities that we may issue in the future.
You may experience
dilution to the extent that our Common Shares are issued upon the exercise of outstanding warrants, and if we issue additional
equity securities, or there are any issuances and subsequent exercises of stock options issued in the future. Additional Common
Shares may be issued with the exercise of up to 1,078,045 Common Shares issuable upon the exercise of warrants issued in an offering
conducted by us in September 2017 (including warrants issued to the placement agent for such offering), at an initial per share
exercise price of $4.25 (reset to $0.001 according to the Securities Purchase Agreement) for warrants issued to the investors
in such offering and $4.675 for warrants issued to the placement agent in such offering. of These warrants also bear anti-dilution
protections in the event of stock dividends or splits, business combination, sale of assets, similar recapitalization transactions,
or other similar transactions. Additionally, we have established a 2014 Share Incentive Plan for Common Shares and options for
our employees, non-employee directors and consultants, and as of the date of this prospectus supplement, this pool contains Common
Shares and options to purchase an aggregate of up to 2,160,000 of our Common Shares, which was equal to 10% of the number of Common
Shares outstanding as of our initial public offering.
A large number of Common Shares may
be sold in the market following this offering, which may significantly depress the market price of our Common Shares.
The Shares sold in the offering and the
Registered Investor Warrant Shares will be freely tradable without restriction or further registration under the Securities Act.
As a result, a substantial number of our Common Shares may be sold in the public market following this offering. If there are significantly
more Common Shares offered for sale than buyers are willing to purchase, then the market price of our Common Shares may decline
to a market price at which buyers are willing to purchase the offered Common Shares and sellers remain willing to sell our Common
Shares.
Moreover, after this offering, holders
of all of the Unregistered Investor Warrants and Univest Warrants, or their respective transferees, will be entitled to specified
rights with respect to the registration of the offer and sale of their respective Common Shares underlying such warrants under
the Securities Act. Registration of the offer and sale of such Common Shares under the Securities Act would result in such Common
Shares becoming freely tradable without restriction under the Securities Act immediately upon the effectiveness of the registration.
See also “Private Placement Transaction”.
In the event that our Common Shares
are delisted from Nasdaq, U.S. broker-dealers may be discouraged from effecting transactions in our Common Shares because they
may be considered penny stocks and thus be subject to the penny stock rules.
The SEC has adopted a number of rules to
regulate “penny stock” that restricts transactions involving stock which is deemed to be penny stock. Such rules include
Rules 3a51-1, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Exchange Act. These rules may have
the effect of reducing the liquidity of penny stocks. “Penny stocks” generally are equity securities with a price of
less than $5.00 per share (other than securities registered on certain national securities exchanges or quoted on Nasdaq if current
price and volume information with respect to transactions in such securities is provided by the exchange or system). Our Common
Shares have in the past constituted, and may again in the future constitute, “penny stock” within the meaning of the
rules. The additional sales practice and disclosure requirements imposed upon U.S. broker-dealers may discourage such broker-dealers
from effecting transactions in our Common Shares, which could severely limit the market liquidity of our Common Shares and impede
their sale in the secondary market.
A U.S. broker-dealer selling penny stock
to anyone other than an established customer or “accredited investor” (generally, an individual with a net worth in
excess of $1,000,000 or an annual income exceeding $200,000, or $300,000 together with his or her spouse) must make a special suitability
determination for the purchaser and must receive the purchaser’s written consent to the transaction prior to sale, unless
the broker-dealer or the transaction is otherwise exempt. In addition, the “penny stock” regulations require the U.S.
broker-dealer to deliver, prior to any transaction involving a “penny stock,” a disclosure schedule prepared in accordance
with SEC standards relating to the “penny stock” market, unless the broker-dealer or the transaction is otherwise exempt.
A U.S. broker-dealer is also required to disclose commissions payable to the U.S. broker-dealer and the registered representative
and current quotations for the securities. Finally, a U.S. broker-dealer is required to submit monthly statements disclosing recent
price information with respect to the “penny stock” held in a customer’s account and information with respect
to the limited market in “penny stocks”.
Shareholders should be aware that, according
to the SEC, the market for “penny stocks” has suffered in recent years from patterns of fraud and abuse. Such patterns
include (i) control of the market for the security by one or a few broker-dealers that are often related to the promoter or
issuer; (ii) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases;
(iii) “boiler room” practices involving high-pressure sales tactics and unrealistic price projections by inexperienced
sales persons; (iv) excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and (v) the
wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level,
resulting in investor losses. Our management is aware of the abuses that have occurred historically in the penny stock market.
Although we do not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate in the
market, management will strive within the confines of practical limitations to prevent the described patterns from being established
with respect to our securities.
RISKS RELATED TO THE CURRENT PANDEMIC
Public health epidemics or outbreaks
such as COVID-19 could adversely impact our business.
Our business, financial condition and results
of operations may be negatively impacted by risks related to natural disasters, extreme weather conditions, health epidemics and
other catastrophic incidents, such as the COVID-19 outbreak and spread, which could significantly disrupt our operations. In December 2019,
a novel strain of coronavirus (COVID-19) emerged in Wuhan, Hubei Province, China. The COVID-19 outbreak and spread has caused lockdowns,
quarantines, travel restrictions, and closures of businesses and schools worldwide.
In January 2020, the World Health
Organization declared the COVID-19 outbreak a global health emergency as the coronavirus outbreak continued to spread beyond China.
In compliance with the government health emergency rules in place, we temporarily closed our offices in varies provinces in
China and ceased production operations after the Chinese New Year. We gradually resumed operation and production in late February 2020
and fully resumed operation on March 23, 2020. During such temporary business closure period, our employees had very limited
access to our manufacturing facilities and we could not utilize the services of shipping companies and as a result, we experienced
difficulty delivering our products to our customers on a timely basis. In addition, due to the COVID-19 outbreak, some of our customers
or suppliers have experienced financial distress, delayed or defaulted on their payments, reduced the scale of their businesses,
and suffered disruptions in their business, and it may happen again in the future. If workers at one or more of our offices or
the offices of our suppliers or manufacturers become ill or are quarantined and in either or both events are therefore unable to
work, our operations could be subject to disruption. Further, if our suppliers become unable to obtain necessary raw materials
or components, we may incur higher supply costs or our suppliers may be required to reduce production levels, either of which may
negatively affect our financial condition or results of operations. Any increased difficulty in collecting accounts receivable,
delayed raw materials supply, bankruptcy of small and medium businesses, or early termination of agreements due to deterioration
in economic conditions could negatively impact our results of operations.
As of the date of this prospectus supplement,
the COVID-19 outbreak in China appears to have slowed down and most provinces and cities have resumed business activities under
the guidance and support of the government. However, there is still significant uncertainty regarding the possibility of additional
waves of infections and the breadth and duration of business disruptions related to COVID-19, which could continue to have material
impact to the Company’s operations. The extent to which COVID-19 impacts our results for fiscal year 2020 will depend on
certain future developments, including the duration and spread of the COVID-19 outbreak, emerging information concerning the severity
of COVID-19 and the actions taken by governments and private businesses to attempt to contain COVID-19, all of which are uncertain
at this point.
USE OF PROCEEDS
We estimate that the net proceeds from
this offering, after deducting the Placement Agent’s fee and other estimated expenses of this offering payable by us, will
be approximately $9.10 million.
Although we have not yet determined with
certainty the manner in which we will allocate the net proceeds of this offering, we expect to use the net proceeds from this offering
for working capital and general business purposes. The precise amount and timing of the application of these proceeds will depend
on our funding requirements and the availability and costs of other funds. Accordingly, we will retain broad discretion over the
use of such proceeds.
CAPITALIZATION
The
following table sets forth our actual cash and cash equivalents and our capitalization as of June 30, 2020:
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●
|
on a pro forma basis to give effect to the issuance of 944,655 Common Shares upon the exercise of certain warrants issued to the investors in an offering closed on September 29, 2017 (the “2017 Closing”) for which we received exercise notices subsequent to entry into the Securities Purchase Agreement on November 20, 2020;
|
|
●
|
on a pro forma as adjusted basis to give effect to (1) the issuance of 944,655 Common Shares upon the exercise of certain warrants issued to the investors in the 2017 Closing for which we received the exercise notices subsequent to entry into the Securities Purchase Agreement on November 20, 2020; and (2) the sale of the securities in this offering (assuming no exercise of the Investor Warrants and the Univest Warrants), after deducting Placement Agent fees and expenses and estimated offering expenses payable by us.
|
The information below has been derived
from and should be read in conjunction with, and is qualified in its entirety by, our unaudited consolidated financial statements
and the related notes as at June 30, 2020, and for the six-month periods ended June 30, 2020 and 2019, and “Management’s
Discussion and Analysis of Financial Condition and Results of Operations,” filed as exhibits 99.1 and 99.2 to our Current
Report on Form 6-K furnished to the SEC on September 30, 2020, incorporated by reference into this prospectus supplement.
Figures are in thousands of U.S. dollars except share data.
|
|
As of June 30, 2020
|
|
|
|
Actual
|
|
|
Pro Forma (i)
|
|
|
Pro Forma As Adjusted (ii)
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
|
|
(in U.S. dollars, except per share and per share data)
|
|
Cash and cash equivalents
|
|
$
|
15,418,825
|
|
|
$
|
15,419,770
|
|
|
$
|
24,514,773
|
|
Total Current Assets
|
|
|
67,802,071
|
|
|
|
67,803,016
|
|
|
|
76,898,019
|
|
Total Assets
|
|
|
113,943,302
|
|
|
|
113,944,247
|
|
|
|
123,039,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
18,041,694
|
|
|
|
18,041,694
|
|
|
|
18,041,694
|
|
Total Liabilities
|
|
|
19,800,468
|
|
|
|
19,800,468
|
|
|
|
19,800,468
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Shares, par value $0.001, 50,000,000 shares authorized and 28,888,834, 29,833,489 and 35,894,097 shares issued and outstanding - actual, pro forma and pro forma as adjusted
|
|
|
28,889
|
|
|
|
29,834
|
|
|
|
35,895
|
|
Additional paid-in capital
|
|
|
39,343,954
|
|
|
|
39,343,954
|
|
|
|
48,432,896
|
|
Statutory reserves
|
|
|
6,379,276
|
|
|
|
6,379,276
|
|
|
|
6,379,276
|
|
Retained earnings
|
|
|
53,283,096
|
|
|
|
53,283,096
|
|
|
|
53,283,096
|
|
Accumulated other comprehensive loss
|
|
|
(8,986,623
|
)
|
|
|
(8,986,623
|
)
|
|
|
(8,986,623
|
)
|
Total Shareholder Equity attributable to the Company
|
|
|
90,048,592
|
|
|
|
90,049,537
|
|
|
|
99,144,540
|
|
Noncontrolling Interest
|
|
|
4,094,242
|
|
|
|
4,094,242
|
|
|
|
4,094,242
|
|
Total Equity
|
|
|
94,142,834
|
|
|
|
94,143,779
|
|
|
|
103,238,782
|
|
Total Liabilities and Equity
|
|
$
|
113,943,302
|
|
|
$
|
113,944,247
|
|
|
$
|
123,039,250
|
|
|
(i)
|
The pro forma data includes (x) 28,888,834 shares outstanding, actual, as of June 30, 2020 and
(y) the issuance of 944,655 Common Shares upon the exercise of certain warrants we issued to the investors in the 2017 Closing,
for which we received exercise notices subsequent to entry into the Securities Purchase Agreement on November 20, 2020. The exercise
price of such warrants was reduced from $4.25 per share to $0.001 per share by virtue of our entry into the Securities Purchase
Agreement on November 20, 2020. The pro forma data excludes as of such date, (a) the 132,391 Common Shares issuable upon the exercise
of the warrants we issued to the placement agent at an exercise price of $4.675, and (b) the 1,000 Common Shares issuable upon
the exercise of the warrants we issued to an investor in the 2017 Closing at an initial exercise price of $4.25 per share, which
has been reduced to $0.001 per share, for which we have not as of the date of this prospectus received an exercise notice, (c)
the 6,060,608 Common Shares offered by this prospectus, (d) the 2,754,820 Common Shares issuable upon the exercise of the Registered
Investor Warrants, at an exercise price of $1.81 per share, to be issued to the investors in this offering, and (e) the 3,305,788
Common Shares issuable upon the exercise of Unregistered Investor Warrants, at an exercise price of $1.81 per share, to be issued
to the investors in a private placement concurrent with this offering, and (f) the 363,637 Common Shares issuable upon the exercise
of Univest Warrants, at an exercise price of $1.815 per share, to be issued to the Placement Agent in connection with this offering
.
|
|
(ii)
|
The pro forma as adjusted data is based on the pro forma data but includes the 6,060,608 Common
Shares being offered in this offering.
|
DESCRIPTION OF OUR SECURITIES THAT WE
ARE OFFERING
Description of Common Shares
We are offering 6,060,608 Common Shares
which are being issued pursuant to the Securities Purchase Agreement. For a description of the Shares being offered hereby, please
see “Description of Share Capital” in the accompanying base prospectus. You should also refer to our memorandum and
articles of association, which are filed as exhibits to the registration statement of which this prospectus supplement is part.
Registration Rights
In connection with the concurrent private
placement of the Unregistered Investor Warrants in this offering, we are required to file with the SEC a registration statement
to register the Unregistered Investor Warrant Shares within 30 calendar days following November 20, 2020, and for the SEC to declare
such registration statement effective within 60 calendar days (or, in the event of a “full review” by the SEC, within
90 calendar days) following November 20, 2020 and to keep such registration statement effective at all times until no investor
owns any Unregistered Investor Warrants or Unregistered Investor Warrant Shares. Additionally, we have also granted the Placement
Agent the similar registration rights granted to holders of the Unregistered Investor Warrants with respect to the Common Shares
issued and issuable upon the exercise of the Univest Warrants.
Transfer Agent and Registrar
The transfer agent and registrar for our Common Stock is VStock
Transfer, LLC.
Nasdaq Listing
Our Common Shares are listed on Nasdaq
under the symbol “TANH.”
Description of Warrants
The material terms and provisions of
the Registered Investor Warrants being offered pursuant to this prospectus supplement and being issued to the investors are summarized
below. The form of Registered Investor Warrant has been filed as an exhibit to a Current Report on Form 6-K with the SEC on
November 20, 2020 in connection with this offering.
The Registered Investor Warrants to be
issued to the investors will have an exercise price of $1.81 per share. The Registered Investor Warrants are exercisable on or
after the date of issuance and will terminate five (5) years from the date of issuance. The exercise price and number of Registered
Investor Warrant Shares are subject to appropriate adjustment upon the occurrence of certain events, including, but not limited
to, stock dividends or splits, business combination, sale of assets, similar recapitalization transactions, or other similar transactions.
In addition, the exercise price of the Registered Investor Warrants is subject to an adjustment in the event that we issue or are
deemed to issue common shares for less than the applicable exercise price of the Registered Investor Warrants.
There is no established public trading
market for our warrants including the Registered Investor Warrants, and we do not expect a market to develop. We do not intend
to apply to list our warrants on any securities exchange. Without an active market, the liquidity of the Registered Investor Warrants
will be limited.
Holders of the Registered Investor Warrants
may exercise their warrants to purchase Common Shares on or before the termination date by delivering an exercise notice, appropriately
completed and duly signed. Following each exercise of the Registered Investor Warrants, the holder is required to pay the exercise
price for the number of shares for which the Registered Investor Warrant is being exercised in cash. A holder of the Registered
Investor Warrants also will have the right to exercise its warrants on a cashless basis if the registration statement or prospectus
contained therein is not available for the issuance of the Registered Investor Warrant Shares. Registered Investor Warrants may
be exercised in whole or in part, and any portion of the Registered Investor Warrants not exercised prior to the termination date
shall be and become void and of no value. The absence of an effective registration statement or applicable exemption from registration
does not alleviate our obligation to deliver Common Shares issuable upon exercise of a Registered Investor Warrant.
Upon the holder’s exercise of a Registered
Investor Warrant, we will issue part or all of the Registered Investor Warrant Shares accordingly on or prior to two trading days
after our receipt of notice of exercise, subject to receipt of payment of the aggregate exercise price therefor.
The Registered Investor Warrant Shares
are duly and validly authorized and will be, when issued, delivered and paid for in accordance with the Registered Investor Warrants,
issued and fully paid and non-assessable. We will authorize and reserve Common Shares equal at least the number of Registered Investor
Warrant Shares.
If, at any time a Registered Investor Warrant
is outstanding, we consummate any fundamental transaction, as described in the Registered Investor Warrants and generally including
any consolidation or merger into another corporation, or the sale of all or substantially all of our assets, or other transaction
in which our Common Shares is converted into or exchanged for other securities or other consideration, the holder of any Registered
Investor Warrants will thereafter receive, the securities or other consideration to which a holder of the number of Common Shares
then deliverable upon the exercise or exchange of such Registered Investor Warrants would have been entitled upon such consolidation
or merger or other transaction. Additionally, in the event of a fundamental transaction, each Registered Investor Warrant holder
will have the right to require us, or our successor, to repurchase the Registered Investor Warrants for an amount equal to the
Black Scholes value of the remaining unexercised portion of the Registered Investor Warrants on the terms set forth in the Registered
Investor Warrants.
PRIVATE PLACEMENT TRANSACTION
In a concurrent private placement, we plan
to issue and sell to the investors Unregistered Investor Warrants to purchase up to an aggregate of 3,305,788 Common Shares at
an exercise price equal to $1.81 per share.
The Unregistered Investor Warrants and
the Unregistered Investor Warrant Shares are not being registered under the Securities Act, are not being offered pursuant to this
prospectus supplement and the accompanying base prospectus and are being offered pursuant to the exemption provided in Section 4(a)(2) under
the Securities Act and Rule 506(b) promulgated thereunder. Accordingly, the investors may only sell the Unregistered
Investor Warrant Shares pursuant to an effective registration statement under the Securities Act covering the resale of those shares,
an exemption under Rule 144 under the Securities Act or another applicable exemption under the Securities Act.
Exercisability. The Unregistered
Investor Warrants are exercisable for a period of five (5) years after the date of issuance. The Unregistered Investor Warrants
will be exercisable, at the option of each holder, in whole or in part by delivering to us a duly executed exercise notice and,
at any time a registration statement registering the issuance of the Unregistered Investor Warrant Shares under the Securities
Act is effective and available for the issuance of such shares, or an exemption from registration under the Securities Act is
available for the issuance of such shares, by payment in full in immediately available funds for the number of Common Shares purchased
upon such exercise. If a registration statement or current prospectus is not effective or available for the registration of the
Unregistered Investor Warrant Shares under the Securities Act after sixty (60) days of the following the closing date of the offering,
the holder may, in its sole discretion, elect to exercise the Unregistered Investor Warrants through a cashless exercise, in which
case the holder would receive upon such exercise the net number of Common Shares determined according to the formula set forth
in the Unregistered Investor Warrants.
Exercise Limitation. A holder will
not have the right to exercise any portion of the Unregistered Investor Warrants if the holder (together with its affiliates) would
beneficially own in excess of 4.99% (or, upon election of the holder, 9.99%) of the number of our Common Shares outstanding immediately
after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the Unregistered
Investor Warrants. Any holder may increase or decrease such percentage, but in no event may such percentage be increased to more
than 9.99%, provided that any increase will not be effective until the 61st day after such election.
Exercise Price Adjustment. The exercise
price of the Unregistered Investor Warrants is subject to appropriate adjustment in the event of certain stock dividends and distributions,
stock splits, stock combinations, reclassifications or similar events affecting our Common Shares and also upon any distributions
of assets, including cash, stock or other property to our shareholder.
Exchange Listing. There is no established
trading market for the Unregistered Investor Warrants and we do not expect a market to develop. In addition, we do not intend to
apply for the listing of the Unregistered Investor Warrants on any national securities exchange or other trading market.
Participation Rights. If at
any time we grant, issue or sell any Common Shares or Common Share equivalents or rights to purchase stock, warrants, securities
or other property pro rata to the record holders of any Common Shares (the “Purchase Rights”), the holder of the Unregistered
Investor Warrants will be entitled to acquire, upon the terms applicable to such Purchase Rights, subject to the beneficial ownership
limitations, the aggregate Purchase Rights which the holder of the Unregistered Investor Warrants could have acquired if the holder
had held the full number of Unregistered Investor Warrant Shares.
Fundamental Transactions. If we:
|
A.
|
directly or indirectly, including through subsidiaries, affiliates or otherwise, in one or more
related transactions, (i) consolidate or merge with or into (whether or not we are the surviving corporation) another subject
entity, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of our properties or assets
or any of our “significant subsidiaries” (as defined in Rule 1-02 of Regulation S-X) to one or more subject entities,
or (iii) make, or allow one or more subject entities to make, or allow us to be subject to or have our Common Shares be subject
to or party to one or more subject entities making, a purchase, tender or exchange offer that is accepted by the holders of at
least either (x) 50% of the outstanding Common Shares, (y) 50% of the outstanding Common Shares calculated as if any
Common Shares held by all subject entities making or party to, or affiliated with any subject entities making or party to, such
purchase, tender or exchange offer were not outstanding; or (z) such number of Common Shares such that all subject entities
making or party to, or affiliated with any subject entity making or party to, such purchase, tender or exchange offer, become collectively
the beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of at least 50% of the outstanding Common Shares, or (iv) consummate
a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization,
spin-off or scheme of arrangement) with one or more subject entities whereby all such subject entities, individually or in the
aggregate, acquire, either (x) at least 50% of the outstanding Common Shares, (y) at least 50% of the outstanding Common
Shares calculated as if any Common Shares held by all the subject entities making or party to, or affiliated with any subject entity
making or party to, such stock purchase agreement or other business combination were not outstanding; or (z) such number of
Common Shares such that the subject entities become collectively the beneficial owners (as defined in Rule 13d-3 under the
1934 Act) of at least 50% of the outstanding Common Shares, or (v) reorganize, recapitalize or reclassify its Common Shares;
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directly or indirectly, including through subsidiaries, affiliates or otherwise, in one or more
related transactions, allow any subject entity individually or the subject entities in the aggregate to be or become the “beneficial
owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, whether through acquisition, purchase,
assignment, conveyance, tender, tender offer, exchange, reduction in outstanding Common Shares, merger, consolidation, business
combination, reorganization, recapitalization, spin-off, scheme of arrangement, reorganization, recapitalization or reclassification
or otherwise in any manner whatsoever, of either (x) at least 50% of the aggregate ordinary voting power represented by issued
and outstanding Common Shares, (y) at least 50% of the aggregate ordinary voting power represented by issued and outstanding
Common Shares not held by all such subject entities as of the date of this Warrant calculated as if any Common Shares held by all
such subject entities were not outstanding, or (z) a percentage of the aggregate ordinary voting power represented by issued
and outstanding Common Shares or our other equity securities sufficient to allow such subject entities to effect a statutory short
form merger or other transaction requiring our other shareholders to surrender their Common Shares without approval of our shareholders;
or
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directly or indirectly, including through subsidiaries, affiliates or otherwise, in one or more
related transactions, the issuance of or the entering into any other instrument or transaction structured in a manner to circumvent,
or that circumvents, the intent of this definition in which case this definition shall be construed and implemented in a manner
otherwise than in strict conformity with the terms of this definition to the extent necessary to correct this definition or any
portion of this definition which may be defective or inconsistent with the intended treatment of such instrument or transaction,
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then the holder of
any Unregistered Investor Warrants will thereafter receive, the securities or other consideration to which a holder of the number
of Common Shares then deliverable upon the exercise or exchange of such Unregistered Investor Warrants would have been entitled
upon such consolidation or merger or other transaction. Additionally, in the event of a fundamental transaction, each warrant holder
will have the right to require us, or our successor, to repurchase the Unregistered Investor Warrants for an amount equal to the
Black-Scholes value of the remaining unexercised portion of the warrant on the terms set forth in the Unregistered Investor Warrants.
Rights as a Shareholder. Except
as otherwise provided in the Unregistered Investor Warrants or by virtue of such holder’s ownership of our Common Shares,
the holder of an Unregistered Investor Warrant will not have the rights or privileges of a holder of our Common Shares, including
any voting rights, until the holder exercises such warrant.
Placement Agent’s Warrants.
Please see “Plan of Distribution — Placement Agent’s Warrants” for a description of the warrants we have
agreed to issue to the Placement Agent, subject to the completion of this offering.
Related Transaction Agreements
In connection
with the Securities Purchase Agreement, we entered into a placement agency agreement,
dated as of November 20, 2020, with the Placement Agent (the “Placement Agency Agreement”), and issued the Univest
Warrants to the Placement Agent named in the Placement Agency Agreement.
In connection with the Securities Purchase
Agreement, we also entered into a registration rights agreement, dated as of November 20, 2020, with the investors (the “Registration
Rights Agreement”). We are required within 30 calendar days of November 20, 2020 to file a registration statement providing
for the resale of the Unregistered Investor Warrant Shares. We are required to use commercially reasonable efforts to cause such
registration to become effective within 60 calendar days (or, in the event of a “full review” by the SEC, within 90
calendar days) of November 20, 2020 and to keep such registration statement effective at all times until no investor owns
any Unregistered Investor Warrants or Unregistered Investor Warrant Shares.
You should review copies of each of the
Placement Agency Agreement, Securities Purchase Agreement, Registration Rights Agreement,
form of Unregistered Investor Warrant and form of the Univest Warrant, which were
included as exhibits to a Current Report on Form 6-K that we furnished with the SEC on November 20, 2020, for a complete
description of the terms and conditions of such agreements and documents, this offering
and all related transaction agreements.
PLAN OF DISTRIBUTION
Univest Securities, LLC, which we refer
to in this section as the “Placement Agent” or “Univest,” has agreed to act as the exclusive Placement
Agent in connection with this offering subject to the terms and conditions of the Placement Agency Agreement. The Placement Agent
is not purchasing or selling any securities offered by this prospectus supplement, nor is the Placement Agent required to arrange
the purchase or sale of any specific number or dollar amount of our securities, but has agreed to use its best efforts to arrange
for the sale of our securities in this takedown from our shelf registration statement. We have entered into the Securities Purchase
Agreement with the investors pursuant to which we plan to sell to the investors 6,060,608 Common Shares and Registered Investor
Warrants to purchase up to 2,754,820 of our Common Shares in this takedown from our shelf registration statement on Form F-3,
which was declared effective by the SEC on August 31, 2020. We negotiated the price for the Shares and the Registered Investor
Warrants offered in this offering with the investors. The factors considered in determining the price of the Shares and the Registered
Investor Warrants included the recent market price of our Common Shares, the general condition of the securities market at the
time of this offering, the history of, and the prospects, for the industry in which we compete, our past and present operations,
and our prospects for future revenues. Univest is also acting as the exclusive Placement Agent for the concurrent private placement
transaction in which we plan to sell to the same investors the Unregistered Investor Warrants and is being paid a compensation
fee related to the placement of our securities.
Under the Securities Purchase Agreement
and the Placement Agency Agreement, we will be precluded from engaging in subsequent equity or equity-linked securities offerings,
or from filing with the SEC any registration statement, or amendment or supplement thereto, except with respect to this offering,
for a period of 45 days from closing of this offering, subject to certain exceptions.
In addition, we also agreed with the investors
in the Securities Purchase Agreement and the Investor Warrants that for a period of one year following the closing of this offering
with certain limited exceptions, we will not effect or enter into an agreement to effect a “Variable Rate Transaction,”
which means a transaction in which we:
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issue or sell any convertible securities either (A) at a conversion, exercise or exchange rate or other price that is based upon and/or varies with the trading prices of, or quotations for, our Common Shares at any time after the initial issuance of such convertible securities, or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such convertible securities or upon the occurrence of specified or contingent events directly or indirectly related to our business or the market for our Common Shares; or
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enters into, or effects a transaction under, any agreement, including, but not limited to, an equity line of credit, whereby we may issue securities at a future determined price.
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We also agreed to indemnify the investors
against certain losses resulting from our breach of any of our representations, warranties, or covenants under agreements with
the investors as well as under certain other circumstances described in the Securities Purchase Agreement.
We have agreed to indemnify Univest against
specified liabilities, including liabilities under the Securities Act, and to contribute to payments Univest may be required to
make in respect thereof.
Fees and Expenses
We have agreed
to pay the Placement Agent a total cash fee equal to (a) six percent (6.0%) of the aggregate gross proceeds raised in the
offering if the aggregate gross proceeds raised in such offering is less than $10 million; (b) seven percent (7.0%) of the
aggregate gross proceeds raised in the offering if the aggregate gross proceeds raised in such offering is at least $10 million
but less than $13 million and (c) seven and one-half percent (7.5%) of the aggregate gross proceeds raised in the offering
if the aggregate gross proceeds raised in such offering is at least $13 million. Because the aggregate gross proceeds raised in
this offering is greater than $10 million, but less than $13 million, we will pay the Placement Agent a fee equal to 7% of the
aggregate purchase price paid by the investors placed by the Placement Agent.
We have also agreed
to reimburse the Placement Agent for all travel and other out-of-pocket expenses, including the reasonable fees, costs and disbursements
of its legal fees which shall be limited to, in the aggregate, $50,000. We estimate our total expenses associated with the offering,
excluding Placement Agent fees and expenses, will be approximately $130,000.
After deducting certain fees and expenses
due to the Placement Agent and our estimated offering expenses, we expect the net proceeds from this offering to be approximately
$9.10 million.
Placement Agent’s Warrants
In addition, pursuant to the Placement
Agency Agreement and in consideration for $100.00, we have agreed to issue the Placement Agent Univest Warrants to purchase up
to 363,637 Common Shares (equal to 6% of the aggregate number of Shares sold in this offering) at an exercise price of $1.815 per
share, which represents 110% of the public offering price per Share. Neither the Univest Warrants nor the Common Shares issuable
upon exercise of the Univest Warrants are being registered hereby. The Univest Warrants are not being offered pursuant to this
prospectus supplement and the accompanying prospectus and are being offered pursuant to the exemption provided in Section 4(a)(2) under
the Securities Act or Rule 506(b) promulgated thereunder. In addition, we are required within 30 calendar days of November 20,
2020 to file a registration statement providing for the resale of the Common Shares issued and issuable upon the exercise of the
Univest Warrants. We are required to use commercially reasonable efforts to cause such registration to become effective within
60 calendar days (or, in the event of a “full review” by the SEC, within 90 calendar days) of November 20, 2020
and to keep such registration statement effective at all times until Univest no longer owns any Univest Warrants or Common Shares
issuable upon exercise thereof.
The Univest Warrants will have substantially
the same terms as the Unregistered Investor Warrants, except that such warrants will be exercisable beginning six (6) months
after issuance and for three (3) years from the date of issuance. Pursuant to FINRA Rule 5110(g), the Univest Warrants
and any Common Shares issued upon exercise of the Univest Warrants shall not be sold, transferred, assigned, pledged, or hypothecated,
or be the subject of any hedging, short sale, derivative, put or call transaction that would result in the effective economic disposition
of the securities by any person for a period of 180 days immediately following the date of effectiveness or commencement of sales
of this offering, except the transfer of any security: (i) by operation of law or by reason of our reorganization; (ii) to
any FINRA member firm participating in the offering and the officers or partners thereof, if all securities so transferred remain
subject to the lock-up restriction set forth below for the remainder of the time period; (iii) if the aggregate amount of
our securities held by the Placement Agent or related persons do not exceed 1% of the securities being offered; (iv) that
is beneficially owned on a pro-rata basis by all equity owners of an investment fund, provided that no participating member manages
or otherwise directs investments by the fund and the participating members in the aggregate do not own more than 10% of the equity
in the fund; or (v) the exercise or conversion of any security, if all securities remain subject to the lock-up restriction
set forth below for the remainder of the time period.
The Placement Agent may be deemed to be
an underwriter within the meaning of Section 2(a)(11) of the Securities Act and any fees or commissions received by it and
any profit realized on the resale of securities sold by it while acting as principal might be deemed to be underwriting discounts
or commissions under the Securities Act. As an underwriter, the Placement Agent would be required to comply with the requirements
of the Securities Act and the Exchange Act, including, without limitation, Rule 415(a)(4) under the Securities Act and
Rule 10b-5 and Regulation M under the Exchange Act. Under these rules and regulations, the Placement Agent may not: (i) engage
in any stabilization activity in connection with our securities; and (ii) bid for or purchase any of our securities or attempt
to induce any person to purchase any of our securities, other than as permitted under the Exchange Act, until it has completed
its participation in the distribution.
Right of First
Refusal
Pursuant to the
Placement Agency Agreement, we have also granted to the Placement Agent a right of first refusal for twelve (12) months from the
closing date of this offering to provide investment banking services to us on an exclusive basis, exercisable in the Placement
Agent’s discretion. Such right of first refusal grants the Placement Agent the right to serve as lead manager for underwritten
public offerings, placement agent for private offerings and financial advisor in connection with the sale, purchase or transfer
of a majority or controlling portion of our capital stock or assets.
The foregoing does not purport to be a
complete statement of the terms and conditions of the Placement Agency Agreement and the Securities Purchase Agreement. Copies
of each were included as exhibits to our Current Report on Form 6-K that was furnished to the SEC on November 20, 2020
and incorporated by reference into the registration statement of which this prospectus supplement forms a part.
No action has
been or will be taken in any jurisdiction (except in the United States) that would permit a public offering of the securities offered
by this prospectus supplement and accompanying base prospectus, or the possession, circulation or distribution of this prospectus
supplement and accompanying base prospectus or any other material relating to us or the securities offered hereby in any jurisdiction
where action for that purpose is required. Accordingly, the securities offered hereby may not be offered or sold, directly or indirectly,
and neither this prospectus supplement and accompanying base prospectus nor any other offering material or advertisements in connection
with the securities offered hereby may be distributed or published, in or from any country or jurisdiction except in compliance
with any applicable rules and regulations of any such country or jurisdiction. The Placement Agent may arrange to sell the
securities offered by this prospectus supplement and accompanying base prospectus in certain jurisdictions outside the United States,
either directly or through affiliates, where they are permitted to do so.
Lock-up Agreements
Our officers and directors and the holders
of ten percent or more (10%) of the outstanding Common Shares as of the effective date of this offering, have agreed, subject to
limited exceptions, for a period of 90 days after the closing of this offering, not to offer, sell, contract to sell, pledge, grant
any option to purchase, make any short sale or otherwise dispose of, enter into any swap or other derivatives transaction that
transfers to another, in whole or in part, any of the economic benefits or risks of ownership of, or make any demand for or exercise
any right to registration of, directly or indirectly, any Common Shares or any securities convertible into or exchangeable for
our Common Shares either owned as of the date of the Placement Agency Agreement or thereafter acquired without the prior written
consent of Univest. Univest may, in its sole discretion and at any time or from time to time before the termination of the lock-up
period, without notice, release all or any portion of the securities subject to lock-up agreements.
Relationships
The Placement Agent and its affiliates
may provide from time to time in the future certain commercial banking, financial advisory, investment banking and other services
for us in the ordinary course of their business, for which they may receive customary fees and commissions. In addition, from time
to time, the Placement Agent and its affiliates may effect transactions for their own account or the account of customers, and
hold on behalf of themselves or their customers, long or short positions in our debt or equity securities or loans, and may do
so in the future. However, except as disclosed in this prospectus supplement, we have no present arrangements with the Placement
Agent for any further services.
Transfer Agent and Registrar
The transfer agent and registrar for the
Common Shares is VStock Transfer, LLC, whose address is 18 Lafayette Place, Woodmere,
NY 11598 and its telephone number is (212) 828-8436.
Listing
Our Common Shares are listed on Nasdaq
under the symbol “TANH”.
LEGAL MATTERS
Certain legal matters relating to the offering
of our securities under this prospectus supplement will be passed upon for us by Campbells with respect to matters of British Virgin
Islands law and by Kaufman & Canoles, P.C. with respect to matters of U.S. law. Certain legal matters in connection with
this offering will be passed upon for the Placement Agent by Sullivan & Worcester LLP with respect to U.S. law.
EXPERTS
The consolidated financial statements of
our Company for the years ended December 31, 2019 and 2018 appearing in our Annual Report on Form 20-F for the fiscal
year ended December 31, 2019 have been audited by Prager Metis CPAs, LLC, our independent registered public accounting firm,
as set forth in the reports thereon included therein and incorporated herein by reference. Such consolidated financial statements
are incorporated herein by reference in reliance upon such reports given on the authority of such firms as experts in accounting
and auditing.
INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE
All documents filed and furnished by the
registrant listed below shall be deemed to be incorporated by reference into this prospectus supplement and accompanying base prospectus
and to be part hereof and thereof from the date of filing of such documents:
(1) our Annual
Report on Form 20-F for the year ended December 31, 2019, filed with the SEC on June 30, 2020 and Amendment
No. 1 to Form 20-F filed with the SEC on July 6, 2020;
(2) our Current Reports on Form 6-K, furnished
with the SEC on August 12,
2020, September 14,
2020, September 30,
2020, and November 20,
2020;
(3) the description of the Common Shares contained
in the Company’s registration statement on Form F-1
filed with the SEC on September 16, 2014 (File Number 333-198788), as amended from time to time thereafter, and
declared effective by the SEC on March 18, 2015, and any amendment or report filed with the SEC for purposes of updating such
description; and
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(4) the description of our ordinary shares contained in our registration statement on Form 8-A filed on March 17, 2015 and as it may be further amended from time to time.
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We also incorporate by reference in this prospectus supplement
and accompanying base prospectus any future filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange
Act after the date hereof but before the completion or termination of this offering.
Any statement contained in a document that
we incorporate by reference herein will be modified or superseded for all purposes to the extent that a statement contained in
this prospectus supplement (or in any other document that is subsequently filed with the SEC and incorporated by reference herein
prior to the termination of this offering) modifies or is contrary to that previous statement. Any statement so modified or superseded
will not be deemed a part of this prospectus supplement and accompanying base prospectus except as so modified or superseded.
You may obtain a copy of these filings and documents, without
charge, by writing or calling us at:
Tantech Holdings Ltd
c/o Tantech Holdings (Lishui) Co., Ltd.
No. 10 Cen Shan Road, Shuige Industrial
Zone
Lishui City, Zhejiang Province 323000
People’s Republic of China
+86-578-226-2305
Attn: Investor Relations
You should rely only on the information
incorporated by reference or provided in this prospectus supplement and accompanying base prospectus. We have not authorized anyone
else to provide you with different information. You should not assume that the information in this prospectus supplement and accompanying
base prospectus and in the documents incorporated by reference herein or therein is accurate as of any date other than the date
on the front page of those documents.
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement
on Form F-3 with the SEC under the Securities Act with respect to the securities offered by this prospectus supplement and
accompanying base prospectus. This prospectus supplement and accompanying base prospectus form part of that registration statement
and does not contain all the information included in the registration statement.
For further information with respect to
our securities and us, you should refer to such registration statement, its exhibits and the material incorporated by reference
therein. Portions of the exhibits have been omitted as permitted by the rules and regulations of the SEC. Statements made
in this prospectus supplement and accompanying base prospectus as to the contents of any contract, agreement or other document
referred to are not necessarily complete. In each instance, we refer you to the copy of the contracts or other documents filed
as an exhibit to such registration statement, and these statements are hereby qualified in their entirety by reference to such
contract or document.
Such registration statement may be obtained
from the web site that the SEC maintains at http://www.sec.gov. You may also call the SEC at 1-800-SEC-0330 for more information.
We file and submit annual and current reports and other information with the SEC. You may read and copy any reports, statements
or other information on file at the SEC’s public reference room in Washington, D.C. You can request copies of those documents
upon payment of a duplicating fee, by writing to the SEC.
DISCLOSURE OF COMMISSION POSITION
ON INDEMNIFICATION FOR SECURITIES LAW VIOLATIONS
British Virgin Islands law does not limit
the extent to which a company’s articles of association may provide for indemnification of officers and directors, except
to the extent any such provision may be held by the British Virgin Islands courts to be contrary to public policy, such as to provide
indemnification against civil fraud or the consequences of committing a crime. Under our memorandum and articles of association,
we may indemnify our directors, officers and liquidators against all expenses, including legal fees, and against all judgments,
fines and amounts paid in settlement and reasonably incurred in connection with civil, criminal, administrative or investigative
proceedings to which they are party or are threatened to be made a party by reason of their acting as our director, officer or
liquidator. To be entitled to indemnification, these persons must have acted honestly and in good faith with a view to our best
interest and, in the case of criminal proceedings, they must have had no reasonable cause to believe their conduct was unlawful.
Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions,
we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities
Act and is therefore unenforceable.
PROSPECTUS
$107,754,663
TANTECH HOLDINGS LTD
Common shares
Preference Shares
Depositary Shares
Debt Securities
Warrants
Rights
Units
We may offer to sell, from time to time,
in one or more offerings: common shares; preference shares; depositary shares; debt securities; warrants to purchase common shares,
preference shares, depositary shares, or debt securities; rights to purchase common shares, preference shares, depositary shares,
debt securities, warrants or other securities; and units of debt securities, common shares, preference shares, depositary shares,
rights or warrants, in any combination. We may also offer any of these securities that may be issuable upon the conversion, exercise
or exchange of debt securities, rights or warrants.
The aggregate offering price of the securities
issued under this prospectus may not exceed $107,754,663. The prices and other terms of the securities that we will offer will
be determined at the time of their offering and will be described in a supplement to this prospectus.
This prospectus provides a general description
of the securities we may offer. We will provide the specific terms of the securities offered in one or more supplements to this
prospectus. We may also authorize one or more free writing prospectuses to be provided to you in connection with these offerings.
You should read carefully this prospectus, the applicable prospectus supplement and any related free writing prospectus, as well
as any documents incorporated by reference before you invest in any of our securities. This prospectus may not be used to offer
or sell any securities unless accompanied by the applicable prospectus supplement.
The securities issued under this prospectus
may be offered directly or through underwriters, agents or dealers. The names of any underwriters, agents or dealers will be included
in a supplement to this prospectus.
The aggregate market value of our outstanding
common shares held by non-affiliates is $ $31,189,066 based on 28,888,834 shares of outstanding common shares, of which 17,089,899
shares are held by non-affiliates, and a per share price of $1.825 based on the closing sale price of our common shares as reported
by the Nasdaq Capital Market on August 19, 2020. We have not offered any securities pursuant to General Instruction I.B.5
of Form F-3 during the prior 12 calendar month period that ends on and includes the date of this prospectus.
Investing in our securities being offered
pursuant to this prospectus involves a high degree of risk. You should carefully read and consider the risk factors beginning on
page 8 of this prospectus, as well as those included in the periodic and other reports we file with the Securities and Exchange
Commission before you make your investment decision.
Neither the Securities and Exchange Commission,
any United States state securities commission, the British Virgin Island Monetary Authority, nor any state securities commission
has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to
the contrary is a criminal offense.
The date of this prospectus is
August 31, 2020
TABLE OF CONTENTS
You should rely only on the information
contained or incorporated by reference in this prospectus or any prospectus supplement. We have not authorized any person to provide
you with different or additional information. If anyone provides you with different or inconsistent information, you should not
rely on it. This prospectus is not an offer to sell securities, and it is not soliciting an offer to buy securities in any jurisdiction
where the offer or sale is not permitted. You should assume that the information appearing in this prospectus or any prospectus
supplement, as well as information we have previously filed with the SEC and incorporated by reference, is accurate as of the date
on the front of those documents only. Our business, financial condition, results of operations and prospects may have changed since
those dates.
PROSPECTUS SUMMARY
This prospectus is part of a registration
statement that we filed with the Securities and Exchange Commission (SEC) using a “shelf” registration process. Under
this shelf registration process, we may offer from time to time, in one or more offerings, securities having an aggregate initial
offering price of up to $107,754,663 (or its equivalent in foreign or composite currencies). This prospectus provides you with
a general description of the securities that may be offered. Each time we offer securities under this shelf registration statement,
we will provide you with a prospectus supplement that describes the specific amounts, prices and terms of the securities being
offered. The prospectus supplement also may add, update or change information contained in this prospectus. You should read carefully
both this prospectus and any prospectus supplement together with additional information described below under the caption “Where
You Can Find More Information,” before making an investment decision. We have incorporated exhibits into this registration
statement. You should read the exhibits carefully for provisions that may be important to you.
Industry data and other statistical information
used in this prospectus, any applicable prospectus supplement, any related free writing prospectus and any document incorporated
by reference into this prospectus are based on independent publications, reports by market research firms or other published independent
sources. Some data are also based on our good faith estimates, derived from our review of internal surveys and the independent
sources listed above. Although we believe these sources are reliable, we have not independently verified the information.
You should rely only on the information
contained or incorporated by reference in this prospectus or any prospectus supplement. We have not authorized any person to provide
you with different or additional information. If anyone provides you with different or inconsistent information, you should not
rely on it. This prospectus is not an offer to sell securities, and it is not soliciting an offer to buy securities in any jurisdiction
where the offer or sale is not permitted. You should assume that the information appearing in this prospectus or any prospectus
supplement, as well as information we have previously filed with the SEC and incorporated by reference, is accurate as of the date
on the front of those documents only. Our business, financial condition, results of operations and prospects may have changed since
those dates.
We may sell securities through underwriters
or dealers, through agents, directly to purchasers or through a combination of these methods. We and our agents reserve the sole
right to accept or reject, in whole or in part, any proposed purchase of securities. The prospectus supplement, which we will provide
to you each time we offer securities, will set forth the names of any underwriters, agents or others involved in the sale of securities
and any applicable fee, commission or discount arrangements with them. See the information described below under the heading “Plan
of Distribution.”
THIS PROSPECTUS MAY NOT BE USED
TO SELL ANY SECURITIES UNLESS ACCOMPANIED BY THE APPLICABLE PROSPECTUS SUPPLEMENT.
This prospectus is not an offer to sell
these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
You should not assume that the information in this prospectus or a prospectus supplement is accurate as of any date other than
the date on the front of the document.
Except as otherwise indicated by the context,
references in this prospectus to:
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“we,” “us,” “our company,” “our” and “Tantech” refer to
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Tantech Holdings Ltd, a British Virgin Islands company limited by shares (formerly Sinoport Enterprises Limited) (“THL” when individually referenced);
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USCNHK Group Limited, a Hong Kong limited company (“USCNHK” when individually referenced), which is a wholly owned subsidiary of THL;
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EAG International Vantage Capitals Limited, a Hong Kong limited company (“Euroasia” when individually referenced), which is a wholly owned subsidiary of THL;
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Tantech Holdings (Lishui) Co., Ltd., a PRC company (“Lishui Tantech” when individually referenced), which is a wholly owned subsidiary of USCNHK ;
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Euroasia New Energy Automotive (Jiangsu) Co., Ltd., a PRC company (“Euroasia New Energy” when individually referenced), which is a wholly owned subsidiary of EAG;
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Shanghai Jiamu Investment Management Co., Ltd., a PRC company (“Jiamu” when individually referenced), which is a wholly owned subsidiary of EAG;
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Lishui Xincai Industrial Co., Ltd., a PRC company (“Lishui Xincai” when individually referenced), which is a wholly owned subsidiary of Lishui Tantech;
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Zhejiang Tantech Bamboo Charcoal Co., Ltd, a PRC company (“Tantech Charcoal”), which is a wholly owned subsidiary of Lishui Xincai; and
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Lishui Jikang Energy Technology Co., Ltd., a PRC company (“Jikang Energy”), which is a wholly owned subsidiary of Lishui Xincai; and
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Hangzhou Tanbo Technology Co., Ltd., a PRC company (“Tanbo Tech”), which is a wholly owned subsidiary of Lishui Xincai; and
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Hanzhou Wangbo Investment Management Co., Ltd, a PRC company (“Wangbo”), which is 95% owned by Xinyang Wang and 5% owned by Wangfeng Yan, and a consolidated affiliated variable interest entity controlled solely by Jiamu; and
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Hangzhou Jiyi Investment Management Co., Ltd., a PRC company (“Jiyi”), which is a wholly owned subsidiary of Jiamu
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Shangchi Automobile Co., Ltd., a PRC company (“Shangchi Automobile”), which is 51% owned by Wangbo, 19% owned by Jiyi, and 30% owned by an unrelated third party;
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Shenzhen Yimao New Energy Sales Co., Ltd., a PRC company (“Shenzhen Yimao”), which is a wholly owned subsidiary of Shangchi Automobile.
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all references to “RMB,” “Renminbi” and “¥” are to the legal currency of China and all references to “USD,” “U.S. dollars,” “dollars,” and “$” are to the legal currency of the United States; and
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“China” and “PRC” refer to the People’s Republic of China, and for the purpose of this prospectus only, excluding Taiwan, Hong Kong and Macau.
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INFORMATION REGARDING
FORWARD-LOOKING STATEMENTS; CAUTIONARY LANGUAGE
This prospectus, any applicable prospectus
supplement, any related free writing prospectus and any document incorporated by reference into this prospectus contain, or will
contain, forward-looking statements within the meaning of the “safe harbor” provisions of the United States Private
Securities Litigation Reform Act of 1995, or the PSLRA. In addition, we, or our executive officers on our behalf, may from time
to time make forward-looking statements in reports and other documents we file with the SEC or in connection with oral statements
made to the press, potential investors or others. Forward-looking statements include all statements that are not statements of
historical facts and may relate to, but are not limited to, expectations or estimates of future operating results or financial
performance, capital expenditures, regulatory compliance, plans for growth and future operations, as well as assumptions relating
to the foregoing. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,”
“should,” “could,” “expect,” “plan,” “anticipate,” “believe,”
“estimate,” “predict,” “intend,” “potential,” “continue” or the negative
of these terms or other similar terminology. Although we do not make forward-looking statements unless we believe we have a reasonable
basis for doing so, we cannot guarantee their accuracy, and actual results may differ materially from those we anticipated due
to a number of uncertainties, many of which cannot be foreseen. Our actual results could differ materially from those anticipated
in these forward-looking statements for many reasons, including, but not limited to, the risks and uncertainties described in the
section entitled “Risk Factors” in this prospectus, in any applicable prospectus supplement, any related free writing
prospectus and in any document incorporated by reference into this prospectus.
We believe that it is important to communicate
our future expectations to potential investors. However, there may be events in the future that we are not able to accurately predict
or control and that may cause actual events or results to differ materially from the expectations expressed in or implied by our
forward-looking statements. The risks and uncertainties described in the section entitled “Risk Factors” in this prospectus,
in any applicable prospectus supplement, any related free writing prospectus and in any document incorporated by reference into
this prospectus provide examples of risks, uncertainties and events that may cause our actual results to differ materially from
the expectations we describe in our forward-looking statements. Before you invest in our securities, you should be aware that the
occurrence of these risks and uncertainties could negatively impact, among other things, our business, cash flows, results of operations,
financial condition and share price. Potential investors should not place undue reliance on our forward-looking statements.
Forward-looking statements regarding our
present plans or expectations for sales, supply contracts, purchases, sources and availability of financing, and growth involve
risks and uncertainties relative to return expectations and related allocation of resources, and changing economic or competitive
conditions, as well as the negotiation of agreements with suppliers and customers, which could cause actual results to differ from
present plans or expectations, and such differences could be material. Similarly, forward-looking statements regarding our present
expectations for operating results and cash flow involve risks and uncertainties related to factors such as utilization rates,
material prices, demand for products by our customers, supply and other factors described in the section entitled “Risk Factors”
in this prospectus, in any applicable prospectus supplement, any related free writing prospectus and in any document incorporated
by reference into this prospectus, which would also cause actual results to differ from present plans. Such differences could be
material.
All future written and oral forward-looking
statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements
contained or referred to in this section. Forward-looking statements speak only as of the date the statements are made. New risks
and uncertainties arise from time to time, and we cannot predict those events or how they may affect us. We assume no obligation
to, and do not plan to, update any forward-looking statements as a result of new information, future events or developments, except
as required by U.S. federal securities laws. You should read this prospectus, any applicable prospectus supplement, any related
free writing prospectus and any document incorporated by reference into this prospectus with the understanding that we cannot guarantee
future results, levels of activity, performance or achievements and that actual results may differ materially from what we expect.
The forward-looking statements contained in this prospectus, any applicable prospectus supplement, any related free writing prospectus
and any document incorporated by reference into this prospectus are excluded from the safe harbor protection provided by the PSLRA.
ABOUT OUR COMPANY
We develop and manufacture bamboo-based
charcoal products for industrial energy applications and household cooking, heating, purification, agricultural and cleaning uses.
We have grown over the past decade to become a pioneer in charcoal products industry made from carbonized bamboo. We are a highly
specialized high-tech enterprise producing, researching and developing bamboo charcoal based products with an established domestic
and international sales and distribution network. In 2017, we acquired a controlling equity interest in Suzhou E-Motors, which
became known as Shangchi Automobile in 2019, and we intend to continue to grow our business to include the manufacture and sale
of electric vehicles.
We provide our products in the following
areas:
We oversee a national
sales network that has a presence in 17 cities throughout China. We sell approximately 95% of our products in China, and the remaining
5% of products are sold internationally. We sell products in Japan, South Korea, Taiwan, the Middle East and Europe.
In addition to our
bamboo charcoal products, we also derive revenues from our trading activities, which primarily relate to industrial purchases and
sales of charcoal.
RISK FACTORS
Before making an investment decision, you
should carefully consider the risks described under “Risk Factors” in the applicable prospectus supplement and in our
then most recent Annual Report on Form 20-F, or included in any Annual Report on Form 20-F filed with the SEC after the
date of this prospectus or Reports on Form 6-K furnished to the SEC after the date of this prospectus, together with all of
the other information appearing in this prospectus or incorporated by reference into this prospectus and any applicable prospectus
supplement, in light of your particular investment objectives and financial circumstances. Please see “Where You Can Find
More Information” on how you can view our SEC reports and other filings. Our business, financial condition or results of
operations could be materially adversely affected by any of these risks. The trading price of our securities could decline due
to any of these risks, and you may lose all or part of your investment. When we offer and sell any securities pursuant to a prospectus
supplement, we may include additional risk factors that you should carefully consider.
The risks and uncertainties described in
this prospectus, any applicable prospectus supplement, any related free writing prospectus and any document incorporated by reference
into this prospectus are not the only ones that we face. Additional risks and uncertainties that we do not presently know about
or that we currently believe are not material may also adversely affect our business. If any of the risks and uncertainties described
in this prospectus, any applicable prospectus supplement, any related free writing prospectus and any document incorporated by
reference into this prospectus actually occur, our business, financial condition and results of operations could be materially
and adversely affected. The value of our securities could decline and you may lose some or all of your investment if one or more
of these risks and uncertainties develop into actual events. Keep these risk factors in mind when you read forward-looking statements
contained in this prospectus, any applicable prospectus supplement, any related free writing prospectus and any document incorporated
by reference into this prospectus.
RATIO OF EARNINGS
TO FIXED CHARGES
The following table sets forth our historical
ratio of earnings to fixed changes for the periods indicated.
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Fiscal Year Ended December 31,
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2019
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2018
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2017
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2016
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Ratio of earnings to fixed charges(1)(2)
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-9.048
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4.001
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8.495
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17.049
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(1)
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For purposes of computing this ratio: (a) earnings consist of income before taxes plus fixed charges and (b) fixed charges consist of interest expense, amortization of deferred debt issuance costs, realized losses (gains) on interest rate swaps and caps, net, interest expense portion of rental expense and impact of fixed charges on net income attributable to the non-controlling interest.
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(2)
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To the extent any update to the ratio of earnings to fixed charges is required, they will each be specified in a prospectus supplement or in a document we file with the SEC and incorporated reference pertaining to the issuance, if any, by us of debt securities in the future.
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USE OF PROCEEDS
Unless otherwise set forth in the applicable
prospectus supplement, we intend to use the net proceeds of any offering of securities for working capital and other general corporate
purposes, which may include the repayment or refinancing of outstanding indebtedness and the financing of future acquisitions.
We may have significant discretion in the use of any net proceeds. The net proceeds may be invested temporarily in interest-bearing
accounts and short-term interest-bearing securities until they are used for their stated purpose. We may provide additional information
on the use of the net proceeds from the sale of the offered securities in an applicable prospectus supplement relating to the offered
securities.
GENERAL DESCRIPTION
OF THE SECURITIES WE MAY OFFER
We may issue from time to time, in one or
more offerings the following securities:
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warrants to purchase common shares, preference shares, depositary shares or debt securities;
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rights to purchase common shares, preference shares, depositary shares, debt securities, warrants or other securities; and
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units of debt securities, preference shares, common shares, depositary shares, rights or warrants, in any combination.
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This prospectus contains a summary of the
material general terms of the various securities that we may offer. The specific terms of the securities will be described in a
prospectus supplement, information incorporated by reference, or free writing prospectus, which may be in addition to or different
from the general terms summarized in this prospectus. Where applicable, the prospectus supplement, information incorporated by
reference or free writing prospectus will also describe any material United States federal income tax considerations relating to
the securities offered and indicate whether the securities offered are or will be listed on any securities exchange. The summaries
contained in this prospectus and in any prospectus supplements, information incorporated by reference or free writing prospectus
may not contain all of the information that you would find useful. Accordingly, you should read the actual documents relating to
any securities sold pursuant to this prospectus. See “Where You Can Find More Information” and “Incorporation
of Certain Information by Reference” for information about how to obtain copies of those documents.
The terms of any particular offering, the
initial offering price and the net proceeds to us will be contained in the applicable prospectus supplement, information incorporated
by reference or free writing prospectus, relating to such offering.
DESCRIPTION OF SHARE CAPITAL
THL was incorporated
on November 9, 2010 under the BVI Companies Act, 2004 as a company limited by shares under the name “SINOPORT ENTERPRISES
LIMITED中港企業有限公司”.
On April 15, 2013, SINOPORT ENTERPRISES LIMITED中港企業有限公司changed
its name to “TANTECH HOLDINGS LTD 炭博士控股有限公司”.
On March 4, 2016, TANTECH HOLDINGS LTD. 炭博士控股有限公司
changed its name to “TANTECH HOLDINGS LTD”.
Our authorized share capital consists of
50,000,000 common shares, par value $0.001 per share.
Options
Incentive Securities Pool
We have established a pool for shares and
share options for our employees, non-employee directors, and consultants. This pool initially contained shares and options to purchase
2,160,000 of our common shares, equal to 10% of the number of common shares outstanding as of our initial public offering. Any
options granted will vest at a rate of 20% per year for five years and have a per share exercise price equal to the fair market
value of one of our common shares on the date of grant.
The following are summaries of the material
provisions of our amended memorandum and articles of association that will be in force at the time of the closing of this offering
and the BVI Act, insofar as they relate to the material terms of our common shares. The forms of our amended memorandum and articles
of association are filed as exhibits to the registration statement of which this prospectus is a part.
Common Shares
All of our issued common shares are fully
paid and non-assessable. Certificates representing the common shares are issued in registered form. Our shareholders who are non-residents
of the British Virgin Islands may freely hold and vote their common shares.
As of the date of this prospectus, there
are 28,888,834 common shares issued and outstanding.
Preference Shares
Pursuant to the Business Companies Act 2004
of British Virgin Islands, or the BVI Act, and our memorandum of association, our board of directors by resolution may authorize
establishment of one or more classes of preference shares having such number of shares, designations, dividend rates, relative
voting rights, conversion or exchange rights, redemption rights, liquidation rights and other relative participation, optional
or other special rights, qualifications, limitations or restrictions as may be fixed by the board of directors without any further
shareholder approval. Such rights, preferences, powers and limitations as may be established could have the effect of discouraging
an attempt to obtain control of us.
Listing
Our common shares are traded on the Nasdaq
Capital Market under the symbol “TANH.”
Transfer Agent and Registrar
The transfer agent and registrar for the
common shares is VStock Transfer, LLC, 18 Lafayette Place, Woodmere, New York 11598.
Distributions
The holders of our common shares are entitled
to such dividends as may be declared by our board of directors subject to the BVI Act.
Voting rights
Any action required or permitted to be taken
by the shareholders may be approved at a duly convened and constituted meeting of the shareholders by the affirmative vote of a
majority of in excess of 50 percent of the votes of the shares present at the meeting and entitled to vote on the proposed matters;
or may be consented to in writing by a majority of in excess of 50 percent of the votes of shares entitled to vote on the proposed
matters. Each shareholder who is present in person or by proxy (or, in the case of a shareholder being a
corporation, by its duly authorized representative) will have one vote for each common share which such shareholder holds.
Election of directors
Under the memorandum and articles of association,
the directors can either be elected by a resolutions of shareholders or by a resolution of directors. A director may
be removed from office, (a) with or without cause, by resolution of shareholders passed at a meeting of shareholders
called for the purposes of removing the director or for purposes including the removal of the director or by a written resolution
passed by at least 75 percent of the votes of the shareholders entitled to vote; or (b) with cause, by resolution of directors
passed at a meeting of directors called for the purpose of removing the director or for purposes including the removal of the director.
Meetings
THL must provide written notice of all meetings
of shareholders, stating the time, place and, in the case of a special meeting of shareholders, the purpose or purposes thereof,
at least 7 days before the date of the proposed meeting to those persons whose names appear as shareholders in the register of
members on the date of the notice and are entitled to vote at the meeting. THL board of directors shall call a special
meeting upon the written request of shareholders holding at least 30% of the voting rights in respect of the matter for which the
meeting is requested. In addition, the board of directors may call a special meeting of shareholders on its own motion.
A meeting of shareholders may be called on short notice: (a) if it is so agreed by shareholders holding not less than 90%
of the total voting rights on all the matters to be considered at the meeting have waived notice of the meeting and, for this purpose. The
presence of a shareholder at the meeting constitutes waiver in relation to all the shares which that shareholder holds.
At any meeting of shareholders, a quorum
will be present if there are shareholders present in person or by proxy representing not less than 50% of the votes of the shares
entitled to vote on the resolutions to be considered at the meeting. Such quorum may be represented by only a single shareholder
or proxy. If no quorum is present within two hours of the start time of the meeting, the meeting shall be dissolved if it was convened
on the requested of shareholders. In any other case, the meeting shall be adjourned to the next business day, and if shareholders
representing not less than one-third of the votes of the common shares or each class of shares entitled to vote on the matters
to be considered at the meeting are present within one hour of the start time of the adjourned meeting, a quorum will be present.
If not, the meeting will be dissolved. No business may be transacted at any general meeting unless a quorum is present at the commencement
of business. If present, the chair of the board of directors shall be the chair presiding at any meeting of the shareholders.
A corporation that is a shareholder shall
be deemed for the purpose of our memorandum and articles of association to be present in person if represented by its duly authorized
representative. This duly authorized representative shall be entitled to exercise the same powers on behalf of the corporation
which he represents as that corporation could exercise if it were our individual shareholder.
Protection of minority shareholders
The BVI Act provides for protection of minority
shareholders in certain circumstances. Outside of this, we would normally expect British Virgin Islands courts to follow
English case law precedents, which permit a minority shareholder to commence a representative action, or derivative actions in
our name, to challenge (1) an act which is ultra vires or illegal, (2) an act which constitutes a fraud against the minority
by parties in control of us, (3) the act complained of constitutes an infringement of individual rights of shareholders, such
as the right to vote and pre-emptive rights and (4) an irregularity in the passing of a resolution which requires a special
or extraordinary majority of the shareholders.
Pre-emptive rights
The memorandum and articles of association
of THL disapply the statutory pre-emptive rights applicable to the issue by us of new common shares.
Transfer of common shares
Subject to the restrictions in our memorandum
and articles of association, the lock-up agreements with our underwriter described in “Shares Eligible for Future Sale — Lock-Up
Agreements” and applicable securities laws, any of our shareholders may transfer all or any of his or her common shares by
written instrument of transfer signed by the transferor and containing the name and address of the transferee. Our board of directors
may resolve by resolution to refuse or delay the registration of the transfer of any common share. If our board of directors resolves
to refuse or delay any transfer, it shall specify the reasons for such refusal in the resolution. Our directors may not resolve
or refuse or delay the transfer of a common share unless the person transferring the shares has failed to pay any amount due in
respect of any of those shares.
Liquidation
THL may by a resolution of shareholders
appoint a voluntary liquidator. Each common share confers upon the shareholder the right to an equal share in the distribution
of the surplus assets of the Company on its liquidation. Generally under BVI law, a liquidator may divide among the
shareholders in specie or kind the whole or any part of our assets (whether they shall consist of property of the same kind or
not) and may, for such purpose, set such value as the liquidator deems fair upon any property to be divided.
Calls on common shares and forfeiture of common shares
All shares are issued fully paid. Shares
that are not fully paid on issue are subject to the forfeiture provisions set forth in the memorandum and articles of association,
Our board of directors may from time to time make calls upon shareholders for any amounts unpaid on their common shares in a notice
served to such shareholders at least 14 days prior to the specified time of payment. The common shares that have been called upon
and remain unpaid will be liable to be forfeited .
Redemption of common shares
THL may by a resolution of directors redeem,
repurchase or otherwise acquire its shares generally with the consent of the relevant shareholders on such terms as the directors
may agree with the relevant shareholders, and subject to the memorandum and articles of association and any applicable requirements
imposed from time to time by, the BVI Act, the SEC, the Nasdaq Capital Market, or by any recognized stock exchange on which our
securities are listed.
Modifications of rights
All or any of the rights attached to any
class of shares may, subject to the provisions of the BVI Act, be amended only with the consent in writing of or by a resolution
passed at a meeting by the holders of not less than 50 percent of the issued shares in that class.
Changes in the number of shares we are authorized to issue
and those in issue
We may from time to time by resolution of
our board of directors:
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amend our memorandum of association to increase or decrease the maximum number of shares we are authorized to issue;
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amend our memorandum of association to create additional classes of shares with on such terms and in such manner as they may determine in their sole discretion at any time;
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subject to our memorandum, divide our authorized and issued shares into a larger number of shares; and
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subject to our memorandum, combine our authorized and issued shares into a smaller number of shares.
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Untraceable shareholders
We are entitled to sell any shares of a
shareholder who is untraceable, provided that:
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all checks or warrants in respect of dividends of these shares, not being less than three in number, for any sums payable in cash to the holder of such shares have remained uncashed for a period of twelve years prior to the publication of the notice and during the three months referred to in the third bullet point below;
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we have not during that time received any indication of the whereabouts or existence of the shareholder or person entitled to these shares by death, bankruptcy or operation of law; and
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we have caused a notice to be published in newspapers in the manner stipulated by our memorandum and articles of association, giving notice of our intention to sell these shares, and a period of three months has elapsed since such notice.
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The net proceeds of any such sale shall
belong to us, and when we receive these net proceeds we shall become indebted to the former shareholder for an amount equal to
the net proceeds.
Inspection of books and records
Under British Virgin Islands Law, holders
of our common shares are entitled, upon giving written notice to us, to inspect (i) our memorandum and articles of association,
(ii) the register of members, (iii) the register of directors and (iv) minutes of meetings and resolutions of members,
and to make copies and take extracts from the documents and records. However, our directors can refuse access if they are satisfied
that to allow such access would be contrary to our interests. See “Where You Can Find Additional Information.”
Rights of non-resident or foreign shareholders
There are no limitations imposed by our
memorandum and articles of association on the rights of non-resident or foreign shareholders to hold or exercise voting rights
on our shares. In addition, there are no provisions in our memorandum and articles of association governing the ownership threshold
above which shareholder ownership must be disclosed.
Issuance of additional common shares
Our memorandum and articles of association
authorizes our board of directors to issue additional common shares from authorized but unissued shares, to the extent available,
from time to time as our board of directors shall determine.
Differences in Corporate Law
The BVI Act and the laws of the British
Virgin Islands affecting British Virgin Islands companies like us and our shareholders differ from laws applicable to U.S. corporations
and their shareholders. Set forth below is a summary of the material differences between the provisions of the laws of the British
Virgin Islands applicable to us and the laws applicable to companies incorporated in the United States and their shareholders.
Mergers and similar arrangements
Under the laws of the British Virgin Islands,
two or more companies may merge or consolidate in accordance with Section 170 of the BVI Act. A merger means the merging of
two or more constituent companies into one of the constituent companies and a consolidation means the uniting of two or more constituent
companies into a new company. In order to merge or consolidate, the directors of each constituent company must approve a written
plan of merger or consolidation, which must be authorized by a resolution of shareholders (except when a parent company merge with
one or more subsidiary companies in accordance with Section 172 of the BVI Act).
While a director may vote on the plan of
merger or consolidation even if he has a financial interest in the plan, the interested director must disclose the interest to
all other directors of the company promptly upon becoming aware of the fact that he is interested in a transaction entered into
or to be entered into by the company.
A transaction entered into by our company
in respect of which a director is interested (including a merger or consolidation) is voidable by us unless the director’s
interest was (a) disclosed to the board prior to the transaction or (b) the transaction is (i) between the director
and the company and (ii) the transaction is in the ordinary course of the company’s business and on usual terms and
conditions.
Notwithstanding the above, a transaction
entered into by the company is not voidable if the material facts of the interest are known to the shareholders and they approve
or ratify it or the company received fair value for the transaction.
Shareholders not otherwise entitled to vote
on the merger or consolidation may still acquire the right to vote if the plan of merger or consolidation contains any provision
which, if proposed as an amendment to the memorandum or articles of association, would entitle them to vote as a class or series
on the proposed amendment. In any event, all shareholders must be given a copy of the plan of merger or consolidation irrespective
of whether they are entitled to vote at the meeting to approve the plan of merger or consolidation.
The shareholders of the constituent companies
are not required to receive shares of the surviving or consolidated company but may receive debt obligations or other securities
of the surviving or consolidated company, other assets, or a combination thereof. Further, some or all of the shares of a class
or series may be converted into a kind of asset while the other shares of the same class or series may receive a different kind
of asset. As such, not all the shares of a class or series must receive the same kind of consideration.
After the plan of merger or consolidation
has been approved by the directors and authorized by a resolution of the shareholders, articles of merger or consolidation are
executed by each company and filed with the Registrar of Corporate Affairs in the British Virgin Islands.
A shareholder may dissent from a mandatory
redemption of his shares, an arrangement (if permitted by the court), a merger (unless the shareholder was a shareholder of the
surviving company prior to the merger and continues to hold the same or similar shares after the merger) or a consolidation. A
shareholder properly exercising his dissent rights is entitled to a cash payment equal to the fair value of his shares.
A shareholder dissenting from a merger or
consolidation must object in writing to the merger or consolidation before the vote by the shareholders on the merger or consolidation,
unless notice of the meeting was not given to the shareholder. If the merger or consolidation is approved by the shareholders,
the company must give notice of this fact to each shareholder within 20 days who gave written objection. These shareholders then
have 20 days to give to the company their written election in the form specified by the BVI Act to dissent from the merger or consolidation,
provided that in the case of a merger, the 20 days starts when the plan of merger is delivered to the shareholder.
Upon giving notice of his election to dissent,
a shareholder ceases to have any shareholder rights except the right to be paid the fair value of his shares. As such, the merger
or consolidation may proceed in the ordinary course notwithstanding his dissent.
Within seven days of the later of the delivery
of the notice of election to dissent and the effective date of the merger or consolidation, the company must make a written offer
to each dissenting shareholder to purchase his shares at a specified price per share that the company determines to be the fair
value of the shares. The company and the shareholder then have 30 days to agree upon the price. If the company and a shareholder
fail to agree on the price within the 30 days, then the company and the shareholder shall, within 20 days immediately following
the expiration of the 30-day period, each designate an appraiser and these two appraisers shall designate a third appraiser. These
three appraisers shall fix the fair value of the shares as of the close of business on the day prior to the shareholders’
approval of the transaction without taking into account any change in value as a result of the transaction.
Shareholders’ suits
There are both statutory and common law
remedies available to our shareholders as a matter of British Virgin Islands law. These are summarized below:
Prejudiced members
A shareholder who considers that the affairs
of the company have been, are being, or are likely to be, conducted in a manner that is, or any act or acts of the company have
been, or are, likely to be oppressive, unfairly discriminatory or unfairly prejudicial to him in that capacity, can apply to the
court under Section 184I of the BVI Act, inter alia, for an order that his shares be acquired, that he be provided compensation,
that the Court regulate the future conduct of the company, or that any decision of the company which contravenes the BVI Act or
our memorandum and articles of association be set aside.
Derivative actions
Section 184C of the BVI Act provides
that a shareholder of a company may, with the leave of the Court, bring an action in the name of the company to redress any wrong
done to it.
Just and equitable winding up
In addition to the statutory remedies outlined
above, shareholders can also petition for the winding up of a company on the grounds that it is just and equitable for the court
to so order. Save in exceptional circumstances, this remedy is only available where the company has been operated as a quasi-partnership
and trust and confidence between the partners has broken down.
Indemnification of directors and executive officers and limitation
of liability
British Virgin Islands law does not limit
the extent to which a company’s articles of association may provide for indemnification of officers and directors, except
to the extent any provision providing indemnification may be held by the British Virgin Islands courts to be contrary to public
policy, such as to provide indemnification against civil fraud or the consequences of committing a crime.
Under our memorandum and articles of association,
we indemnify against all expenses, including legal fees, and against all judgments, fines and amounts paid in settlement and reasonably
incurred in connection with legal, administrative or investigative proceedings for any person who:
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is or was a party or is threatened to be made a party to any threatened, pending or completed proceedings, whether civil, criminal, administrative or investigative, by reason of the fact that the person is or was our director; or
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is or was, at our request, serving as a director or officer of, or in any other capacity is or was acting for, another body corporate or a partnership, joint venture, trust or other enterprise.
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These indemnities only apply if the person
acted honestly and in good faith with a view to our best interests and, in the case of criminal proceedings, the person had no
reasonable cause to believe that his conduct was unlawful. This standard of conduct is generally the same as permitted under the
Delaware General Corporation Law for a Delaware corporation.
Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to our directors, officers or persons controlling us under the foregoing provisions,
we have been advised that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities
Act and is therefore unenforceable.
Anti-takeover provisions in our memorandum and articles of
association
Some provisions of our memorandum and articles
of association may discourage, delay or prevent a change in control of our company or management that shareholders may consider
favorable, including provisions that provide for a staggered board of directors and prevent shareholders from taking an action
by written consent in lieu of a meeting. However, under British Virgin Islands law, our directors may only exercise the rights
and powers granted to them under our memorandum and articles of association, as amended and restated from time to time, as they
believe in good faith to be in the best interests of our company.
Directors’ fiduciary duties
Under Delaware corporate law, a director
of a Delaware corporation has a fiduciary duty to the corporation and its shareholders. This duty has two components: the duty
of care and the duty of loyalty. The duty of care requires that a director act in good faith, with the care that an ordinarily
prudent person would exercise under similar circumstances. Under this duty, a director must inform himself of, and disclose to
shareholders, all material information reasonably available regarding a transaction that is material to the company. The duty of
loyalty requires that a director act in a manner he reasonably believes to be in the best interests of the corporation. He must
not use his corporate position for personal gain or advantage. This duty prohibits self-dealing by a director and mandates that
the best interest of the corporation and its shareholders take precedence over any interest possessed by a director, officer or
controlling shareholder and not shared by the shareholders generally. In general, actions of a director are presumed to have been
made on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the corporation.
However, this presumption may be rebutted by evidence of a breach of one of the fiduciary duties. Should such evidence be presented
concerning a transaction by a director, a director must prove the procedural fairness of the transaction and that the transaction
was of fair value to the corporation.
Under British Virgin Islands law, our directors
owe the company certain statutory and fiduciary duties including, among others, a duty to act honestly, in good faith, for a proper
purpose and with a view to what the directors believe to be in the best interests of the company. Our directors are also required,
when exercising powers or performing duties as a director, to exercise the care, diligence and skill that a reasonable director
would exercise in comparable circumstances, taking into account without limitation, the nature of the company, the nature of the
decision and the position of the director and the nature of the responsibilities undertaken. In the exercise of their powers, our
directors must ensure neither they nor the company acts in a manner which contravenes the BVI Act or our memorandum and articles
of association, as amended and re-stated from time to time. A shareholder has the right to seek damages for breaches of duties
owed to us by our directors.
Shareholder action by written consent
Under the Delaware General Corporation Law,
a corporation may eliminate the right of shareholders to act by written consent by amendment to its certificate of incorporation.
British Virgin Islands law provides that shareholders may approve corporate matters by way of a written resolution without a meeting
signed by or on behalf of shareholders sufficient to constitute the requisite majority of shareholders who would have been entitled
to vote on such matter at a general meeting.
Shareholder proposals
Under the Delaware General Corporation Law,
a shareholder has the right to put any proposal before the annual meeting of shareholders, provided it complies with the notice
provisions in the governing documents. A special meeting may be called by the board of directors or any other person authorized
to do so in the governing documents, but shareholders may be precluded from calling special meetings. British Virgin Islands law
and our memorandum and articles of association allow our shareholders holding not less than 30% of the votes of the outstanding
voting shares to requisition a shareholders’ meeting. We are not obliged by law to call shareholders’ annual general
meetings, but our memorandum and articles of association do permit the directors to call such a meeting. The location of any shareholders’
meeting can be determined by the board of directors and can be held anywhere in the world.
Cumulative voting
Under the Delaware General Corporation Law,
cumulative voting for elections of directors is not permitted unless the corporation’s certificate of incorporation specifically
provides for it. Cumulative voting potentially facilitates the representation of minority shareholders on a board of directors
since it permits the minority shareholder to cast all the votes to which the shareholder is entitled on a single director, which
increases the shareholder’s voting power with respect to electing such director. As permitted under British Virgin Islands
law, our memorandum and articles of association do not provide for cumulative voting. As a result, our shareholders are not afforded
any less protections or rights on this issue than shareholders of a Delaware corporation.
Removal of directors
Under the Delaware General Corporation Law,
a director of a corporation with a classified board may be removed only for cause with the approval of a majority of the outstanding
shares entitled to vote, unless the certificate of incorporation provides otherwise. Under our memorandum and articles of association,
directors can be removed from office, with cause, by a resolution of shareholders or by a resolution of directors passed at a meeting
of directors called for the purpose of removing the director or for purposes including the removal of the director.
Transactions with interested shareholders
The Delaware General Corporation Law contains
a business combination statute applicable to Delaware public corporations whereby, unless the corporation has specifically elected
not to be governed by such statute by amendment to its certificate of incorporation, it is prohibited from engaging in certain
business combinations with an “interested shareholder” for three years following the date that such person becomes
an interested shareholder. An interested shareholder generally is a person or group who or which owns or owned 15% or more of the
target’s outstanding voting shares within the past three years. This has the effect of limiting the ability of a potential
acquirer to make a two-tiered bid for the target in which all shareholders would not be treated equally. The statute does not apply
if, among other things, prior to the date on which such shareholder becomes an interested shareholder, the board of directors approves
either the business combination or the transaction which resulted in the person becoming an interested shareholder. This encourages
any potential acquirer of a Delaware public corporation to negotiate the terms of any acquisition transaction with the target’s
board of directors. British Virgin Islands law has no comparable statute.
Dissolution; Winding Up
Under the Delaware General Corporation Law,
unless the board of directors approves the proposal to dissolve, dissolution must be approved by shareholders holding 100% of the
total voting power of the corporation. Only if the dissolution is initiated by the board of directors may it be approved by a simple
majority of the corporation’s outstanding shares. Delaware law allows a Delaware corporation to include in its certificate
of incorporation a supermajority voting requirement in connection with dissolutions initiated by the board. Under the BVI Act and
our memorandum and articles of association, we may appoint a voluntary liquidator by a resolution of the shareholders or by resolution
of directors.
Variation of rights of shares
Under the Delaware General Corporation Law,
a corporation may vary the rights of a class of shares with the approval of a majority of the outstanding shares of such class,
unless the certificate of incorporation provides otherwise. Under our memorandum and articles of association, if at any time our
shares are divided into different classes of shares, the rights attached to any class may only be varied, whether or not our company
is in liquidation, by a resolution passed at a meeting by a majority of the votes cast by those entitled to vote at a meeting of
the holders of the issued shares in that class.
Amendment of governing documents
Under the Delaware General Corporation Law,
a corporation’s governing documents may be amended with the approval of a majority of the outstanding shares entitled to
vote, unless the certificate of incorporation provides otherwise. As permitted by British Virgin Islands law, our memorandum and
articles of association may be amended by a resolution of shareholders and, subject to certain exceptions, by a resolution of directors.
Any amendment is effective from the date it is registered at the Registry of Corporate Affairs in the British Virgin Islands.
DESCRIPTION OF DEPOSITARY SHARES
The following description of the depositary
shares sets forth the material terms and provisions of the depositary shares to which any prospectus supplement may relate. You
should read the particular terms of any depositary shares and any depositary receipts that are offered by us, and any deposit agreement
relating to a common shares or any series thereof, which will be described in more detail in an applicable prospectus supplement,
which will also include a discussion of certain tax considerations. The applicable prospectus supplement will also state whether
any of the general provisions summarized below do not apply to the depositary shares being offered.
General
We may issue depositary shares that represent
common shares. The common shares represented by depositary shares will be deposited under a deposit agreement between us and a
bank or trust company selected by us and having its principal office in the United States and combined capital and surplus of at
least $50 million. Subject to the terms of the deposit agreement, each owner of a depositary share will be entitled, in proportion
to the applicable common shares or fraction thereof represented by the depositary share, to all of the rights and preferences of
the common shares represented thereby, including any dividend, voting, redemption, conversion and liquidation rights. The depositary
shares will be evidenced by depositary receipts issued pursuant to the deposit agreement.
We may, at our option, elect to offer fractional
shares of common shares, rather than full common shares. In the event we exercise this option, we will issue receipts for depositary
shares to the public, each of which will represent a fraction, to be described in an applicable prospectus supplement, of an ordinary
share or a share of a particular series of common shares as described below.
Pending the preparation of definitive depositary
receipts, the depositary may, upon our written order or the written order of any holder of deposited common shares, execute and
deliver temporary depositary receipts that are substantially identical to, and that entitle the holders to all the rights pertaining
to, the definitive depositary receipts. Depositary receipts will be prepared thereafter without unreasonable delay, and temporary
depositary receipts will be exchangeable for definitive depositary receipts at our expense.
Dividends and Other Distributions
The depositary will distribute all cash
dividends and other cash distributions received in respect of the deposited common shares to the record holders of depositary shares
relating to the common shares, in proportion to the numbers of the depositary shares owned by such holders.
In the event of a non-cash distribution,
the depositary will distribute property it receives to the appropriate record holders of depositary shares. If the depositary determines
that it is not feasible to make a distribution, it may, with our approval, sell the property and distribute the net proceeds from
the sale to the holders.
Redemption or Repurchase of Shares
Subject to the Companies Law (as revised)
of the British Virgin Islands, if a series of common shares represented by depositary shares is to be redeemed or repurchased,
the depositary shares will be redeemed from the proceeds received by the depositary resulting from the redemption or repurchase,
in whole or in part, of each series of common shares held by the depositary. The depositary shares will be redeemed by the depositary
at a price per depositary share equal to the applicable fraction of the redemption or repurchase price per share payable in respect
of the common shares so redeemed or repurchased. Whenever we redeem or repurchase common shares held by the depositary, the
depositary will redeem, as of the same date, the number of depositary shares representing common shares redeemed or repurchased.
If fewer than all the depositary shares are to be redeemed, the depositary shares to be redeemed will be selected by the depositary
by lot or pro rata or by any other equitable method as may be determined by the depositary.
Withdrawal of Shares
Any holder of depositary shares may, upon
surrender of the depositary receipts at the corporate trust office of the depositary, unless the related depositary shares have
previously been called for redemption, receive the number of whole shares of the related series of common shares and any money
or other property represented by the depositary receipts. Holders of depositary shares making withdrawals will be entitled to receive
whole shares of common shares on the basis described in an applicable prospectus supplement for such series of common shares, but
holders of whole common shares will not thereafter be entitled to deposit the common shares under the deposit agreement or to receive
depositary receipts therefor. If the depositary shares surrendered by the holder in connection with a withdrawal exceed the number
of depositary shares that represent the number of whole common shares to be withdrawn, the depositary will deliver to the holder
at the same time a new depositary receipt evidencing the excess number of depositary shares.
Voting Deposited Common shares
Upon receipt of notice of any meeting at
which the holders of any series of deposited common shares are entitled to vote, the depositary will mail the information contained
in the notice of meeting to the record holders of the depositary shares relating to such series of common shares. Each record holder
of the depositary shares on the record date, which will be the same date as the record date for the relevant series of common shares,
will be entitled to instruct the depositary as to the exercise of the voting rights pertaining to the amount of the common shares
represented by the holder’s depositary shares.
The depositary will attempt, insofar as
practicable, to vote the amount of such series of common shares represented by the depositary shares in accordance with the instructions,
and we will agree to take all reasonable actions that may be deemed necessary by the depositary to enable the depositary to do
so. The depositary will refrain from voting the common shares to the extent it does not receive specific instructions from the
holder of depositary shares representing the common shares.
Amendment and Termination of the Deposit Agreement
The form of depositary receipt evidencing
the depositary shares and any provision of the deposit agreement may at any time be amended by agreement between us and the depositary.
However, any amendment that materially and adversely alters the rights of the holders of the depositary shares representing common
shares of any series will not be effective unless the amendment has been approved by the holders of at least the amount of the
depositary shares then outstanding representing the minimum amount of common shares of such series necessary to approve any amendment
that would materially and adversely affect the rights of the holders of the common shares of such series. Every holder of an outstanding
depositary receipt at the time any amendment becomes effective, or any transferee of the holder, will be deemed, by continuing
to hold the depositary receipt, or by reason of the acquisition thereof, to consent and agree to the amendment and to be bound
by the deposit agreement as amended thereby. The deposit agreement will automatically terminate if:
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all outstanding depositary shares have been redeemed;
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a final distribution in respect of the common shares has been made to the holders of depositary shares in connection with any of our liquidation, dissolution or winding up; or
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upon the consent of holders of depositary receipts representing not less than 66 2/3% of the depositary shares outstanding.
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Charges of Depositary
We will pay all transfer and other taxes
and governmental charges arising solely from the existence of the depositary arrangements. We will pay all charges of the depositary
in connection with the initial deposit of the relevant series of common shares and any redemption or repurchase of the common shares.
Holders of depositary receipts will pay other transfer and other taxes and governmental charges and other charges or expenses as
are expressly provided in the deposit agreement.
The depositary may refuse to effect any
transfer of a depositary receipt or any withdrawal of common shares evidenced thereby until all such taxes and charges with respect
to such depositary receipt or such common shares are paid by the holders thereof.
Resignation and Removal of Depositary
The depositary may resign at any time by
delivering to us notice of its election to do so, and we may at any time remove the depositary, any resignation or removal to take
effect upon the appointment of a successor depositary and its acceptance of the appointment. The successor depositary must be appointed
within 60 days after delivery of the notice of resignation or removal and must be a bank or trust company having its principal
office in the United States and having a combined capital and surplus of at least $50 million.
Miscellaneous
The depositary will forward all reports
and communications from us that are delivered to the depositary and that we are required to furnish to the holders of the deposited
common shares.
Neither we nor the depositary will be liable
if we are or it is prevented or delayed by law or any circumstances beyond our or its control in performing any obligations under
the deposit agreement. Our and their obligations under the deposit agreement will be limited to performance in good faith of our
and their duties under the deposit agreement and neither we nor they will be obligated to prosecute or defend any legal proceeding
in respect of any depositary shares, depositary receipts, common shares unless satisfactory indemnity is furnished. The depositary
may rely upon written advice of counsel or accountants, or upon information provided by holders of depositary receipts or other
persons believed to be competent and on documents believed to be genuine.
DESCRIPTION OF DEBT SECURITIES
As used in this prospectus, debt securities
means the debentures, notes, bonds and other evidences of indebtedness that we may issue from time to time. The debt securities
may be either secured or unsecured and will either be senior debt securities or subordinated debt securities. The debt securities
will be issued under one or more separate indentures between us and a trustee to be specified in an accompanying prospectus supplement.
Senior debt securities will be issued under a new senior indenture. Subordinated debt securities will be issued under a subordinated
indenture. Together, the senior indentures and the subordinated indentures are sometimes referred to in this prospectus as the
indentures. This prospectus, together with the applicable prospectus supplement, will describe the terms of a particular series
of debt securities.
The statements and descriptions in this
prospectus or in any prospectus supplement regarding provisions of the indentures and debt securities are summaries thereof, do
not purport to be complete and are subject to, and are qualified in their entirety by reference to, all of the provisions of the
indentures (and any amendments or supplements we may enter into from time to time which are permitted under each indenture) and
the debt securities, including the definitions therein of certain terms.
General
Unless otherwise specified in a prospectus
supplement, the debt securities will be direct unsecured obligations of the THL. The senior debt securities will rank equally with
any of our other senior and unsubordinated debt. The subordinated debt securities will be subordinate and junior in right of payment
to any senior indebtedness.
Unless otherwise specified in a prospectus
supplement, the indentures do not limit the aggregate principal amount of debt securities that we may issue and provide that we
may issue debt securities from time to time at par or at a discount, and in the case of the new indentures, if any, in one or more
series, with the same or various maturities. Unless indicated in a prospectus supplement, we may issue additional debt securities
of a particular series without the consent of the holders of the debt securities of such series outstanding at the time of the
issuance. Any such additional debt securities, together with all other outstanding debt securities of that series, will constitute
a single series of debt securities under the applicable indenture.
Each prospectus supplement will describe
the terms relating to the specific series of debt securities being offered. These terms will include some or all of the following:
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the title of the debt securities and whether they are subordinated debt securities or senior debt securities;
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any limit on the aggregate principal amount of the debt securities;
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the ability to issue additional debt securities of the same series;
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the price or prices at which we will sell the debt securities;
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the maturity date or dates of the debt securities on which principal will be payable;
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the rate or rates of interest, if any, which may be fixed or variable, at which the debt securities will bear interest, or the method of determining such rate or rates, if any;
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the date or dates from which any interest will accrue or the method by which such date or dates will be determined;
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the right, if any, to extend the interest payment periods and the duration of any such deferral period, including the maximum consecutive period during which interest payment periods may be extended;
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whether the amount of payments of principal of (and premium, if any) or interest on the debt securities may be determined with reference to any index, formula or other method, such as one or more
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currencies, commodities, equity indices or other indices, and the manner of determining the amount of such payments;
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the dates on which we will pay interest on the debt securities and the regular record date for determining who is entitled to the interest payable on any interest payment date;
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the place or places where the principal of (and premium, if any) and interest on the debt securities will be payable, where any securities may be surrendered for registration of transfer, exchange or conversion, as applicable, and notices and demands may be delivered to or upon us pursuant to the indenture;
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if we possess the option to do so, the periods within which and the prices at which we may redeem the debt securities, in whole or in part, pursuant to optional redemption provisions, and the other terms and conditions of any such provisions;
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our obligation, if any, to redeem, repay or purchase debt securities by making periodic payments to a sinking fund or through an analogous provision or at the option of holders of the debt securities, and the period or periods within which and the price or prices at which we will redeem, repay or purchase the debt securities, in whole or in part, pursuant to such obligation, and the other terms and conditions of such obligation;
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the denominations in which the debt securities will be issued, if other than denominations of $1,000 and integral multiples of $1,000;
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the portion, or methods of determining the portion, of the principal amount of the debt securities which we must pay upon the acceleration of the maturity of the debt securities in connection with an event of default (as described below), if other than the full principal amount;
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the currency, currencies or currency unit in which we will pay the principal of (and premium, if any) or interest, if any, on the debt securities, if not United States dollars;
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provisions, if any, granting special rights to holders of the debt securities upon the occurrence of specified events;
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any deletions from, modifications of or additions to the events of default or our covenants with respect to the applicable series of debt securities, and whether or not such events of default or covenants are consistent with those contained in the applicable indenture;
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any limitation on our ability to incur debt, redeem shares, sell our assets or other restrictions;
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the application, if any, of the terms of the indenture relating to defeasance and covenant defeasance (which terms are described below) to the debt securities;
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whether the subordination provisions summarized below or different subordination provisions will apply to the debt securities;
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the terms, if any, upon which the holders may convert or exchange the debt securities into or for our common shares or other securities or property;
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whether any of the debt securities will be issued in global form and, if so, the terms and conditions upon which global debt securities may be exchanged for certificated debt securities;
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any change in the right of the trustee or the requisite holders of debt securities to declare the principal amount thereof due and payable because of an event of default;
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the depository for global or certificated debt securities;
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any special tax implications of the debt securities;
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any British Virgin Islands tax consequences applicable to the debt securities, including any debt securities denominated and made payable, as described in the prospectus supplements, in foreign currencies, or units based on or related to foreign currencies;
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any trustees, authenticating or paying agents, transfer agents or registrars, or other agents with respect to the debt securities;
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any other terms of the debt securities not inconsistent with the provisions of the indentures, as amended or supplemented;
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to whom any interest on any debt security shall be payable, if other than the person in whose name the security is registered, on the record date for such interest, the extent to which, or the manner in which, any interest payable on a temporary global debt security will be paid if other than in the manner provided in the applicable indenture;
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if the principal of or any premium or interest on any debt securities of the series is to be payable in one or more currencies or currency units other than as stated, the currency, currencies or currency units in which it shall be paid and the periods within and terms and conditions upon which such election is to be made and the amounts payable (or the manner in which such amount shall be determined);
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the portion of the principal amount of any securities of the series which shall be payable upon declaration of acceleration of the maturity of the debt securities pursuant to the applicable indenture if other than the entire principal amount; and
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if the principal amount payable at the stated maturity of any debt security of the series will not be determinable as of any one or more dates prior to the stated maturity, the amount which shall be deemed to be the principal amount of such securities as of any such date for any purpose, including the principal amount thereof which shall be due and payable upon any maturity other than the stated maturity or which shall be deemed to be outstanding as of any date prior to the stated maturity (or, in any such case, the manner in which such amount deemed to be the principal amount shall be determined).
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Unless otherwise specified in the applicable
prospectus supplement, the debt securities will not be listed on any securities exchange.
Unless otherwise specified in the applicable
prospectus supplement, debt securities will be issued in fully-registered form without coupons.
Debt securities may be sold at a substantial
discount below their stated principal amount, bearing no interest or interest at a rate which at the time of issuance is below
market rates. The applicable prospectus supplement will describe the federal income tax consequences and special considerations
applicable to any such debt securities. The debt securities may also be issued as indexed securities or securities denominated
in foreign currencies, currency units or composite currencies, as described in more detail in the prospectus supplement relating
to any of the particular debt securities. The prospectus supplement relating to specific debt securities will also describe any
special considerations and certain additional tax considerations applicable to such debt securities.
Subordination
The prospectus supplement relating to any
offering of subordinated debt securities will describe the specific subordination provisions. However, unless otherwise noted in
the prospectus supplement, subordinated debt securities will be subordinate and junior in right of payment to any existing senior
indebtedness.
Unless otherwise specified in the applicable
prospectus supplement, under the subordinated indenture, “senior indebtedness” means all amounts due on obligations
in connection with any of the following, whether outstanding at the date of execution of the subordinated indenture, or thereafter
incurred or created:
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the principal of (and premium, if any) and interest due on our indebtedness for borrowed money and indebtedness evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof);
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all of our capital lease obligations or attributable debt (as defined in the indentures) in respect of sale and leaseback transactions;
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all obligations representing the balance deferred and unpaid of the purchase price of any property or services, which purchase price is due more than six months after the date of placing such property in service or taking delivery and title thereto, except any such balance that constitutes an accrued expense or trade payable or any similar obligation to trade creditors;
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all of our obligations in respect of interest rate swap agreements (whether from fixed to floating or from floating to fixed), interest rate cap agreements and interest rate collar agreements; other agreements or arrangements designed to manage interest rates or interest rate risk; and other agreements or arrangements designed to protect against fluctuations in currency exchange rates or commodity prices;
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all obligations of the types referred to above of other persons for the payment of which we are responsible or liable as obligor, guarantor or otherwise; and
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all obligations of the types referred to above of other persons secured by any lien on any property or asset of ours (whether or not such obligation is assumed by us).
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However, senior indebtedness does not include:
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any indebtedness which expressly provides that such indebtedness shall not be senior in right of payment to the subordinated debt securities, or that such indebtedness shall be subordinated to any other of our indebtedness, unless such indebtedness expressly provides that such indebtedness shall be senior in right of payment to the subordinated debt securities;
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any of our obligations to our subsidiaries or of a subsidiary guarantor to us or any other of our other subsidiaries;
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any liability for federal, state, local or other taxes owed or owing by us or any subsidiary guarantor,
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any accounts payable or other liability to trade creditors arising in the ordinary course of business (including guarantees thereof or instruments evidencing such liabilities);
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any obligations with respect to any capital stock;
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any indebtedness incurred in violation of the indenture, provided that indebtedness under our credit facilities will not cease to be senior indebtedness under this bullet point if the lenders of such indebtedness obtained an officer’s certificate as of the date of incurrence of such indebtedness to the effect that such indebtedness was permitted to be incurred by the indenture; and
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any of our indebtedness in respect of the subordinated debt securities.
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Senior indebtedness shall continue to be
senior indebtedness and be entitled to the benefits of the subordination provisions irrespective of any amendment, modification
or waiver of any term of such senior indebtedness.
Unless otherwise noted in an accompanying
prospectus supplement, if we default in the payment of any principal of (or premium, if any) or interest on any senior indebtedness
when it becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration or otherwise, then, unless
and until such default is cured or waived or ceases to exist, we will make no direct or indirect payment (in cash, property, securities,
by set-off or otherwise) in respect of the principal of or interest on the subordinated debt securities or in respect of any redemption,
retirement, purchase or other requisition of any of the subordinated debt securities.
In the event of the acceleration of the
maturity of any subordinated debt securities, the holders of all senior debt securities outstanding at the time of such acceleration,
subject to any security interest, will first be entitled to receive payment in full of all amounts due on the senior debt securities
before the holders of the subordinated debt securities will be entitled to receive any payment of principal (and premium, if any)
or interest on the subordinated debt securities.
If any of the following events occurs, we
will pay in full all senior indebtedness before we make any payment or distribution under the subordinated debt securities, whether
in cash, securities or other property, to any holder of subordinated debt securities:
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any dissolution or winding-up or liquidation or reorganization of THL, whether voluntary or involuntary or in bankruptcy,
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insolvency or receivership;
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any general assignment by us for the benefit of creditors; or
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any other marshaling of our assets or liabilities.
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In such event, any payment or distribution
under the subordinated debt securities, whether in cash, securities or other property, which would otherwise (but for the subordination
provisions) be payable or deliverable in respect of the subordinated debt securities, will be paid or delivered directly to the
holders of senior indebtedness in accordance with the priorities then existing among such holders until all senior indebtedness
has been paid in full. If any payment or distribution under the subordinated debt securities is received by the trustee of any
subordinated debt securities in contravention of any of the terms of the subordinated indenture and before all the senior indebtedness
has been paid in full, such payment or distribution will be received in trust for the benefit of, and paid over or delivered and
transferred to, the holders of the senior indebtedness at the time outstanding in accordance with the priorities then existing
among such holders for application to the payment of all senior indebtedness remaining unpaid to the extent necessary to pay all
such senior indebtedness in full.
The subordinated indenture does not limit
the issuance of additional senior indebtedness.
Events of Default, Notice and Waiver
Unless an accompanying prospectus supplement
states otherwise, the following shall constitute “events of default” under the indentures with respect to each series
of debt securities:
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we default for 30 consecutive days in the payment when due of interest on the debt securities;
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we default in the payment when due (at maturity, upon redemption or otherwise) of the principal of, or premium, if any, on the debt securities;
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our failure to observe or perform any other of our covenants or agreements with respect to such debt securities for 60 days after we receive notice of such failure;
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certain events of bankruptcy, insolvency or reorganization of the THL; or
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any other event of default provided with respect to securities of that series.
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Unless an accompanying prospectus supplement
states otherwise, if an event of default with respect to any debt securities of any series outstanding under either of the indentures
shall occur and be continuing, the trustee under such indenture or the holders of at least 25% (or at least 10%, in respect of
a remedy (other than acceleration) for certain events of default relating to the payment of dividends) in aggregate principal amount
of the debt securities of that series outstanding may declare, by notice as provided in the applicable indenture, the principal
amount (or such lesser amount as may be provided for in the debt securities of that series) of all the debt securities of that
series outstanding to be due and payable immediately; provided that, in the case of an event of default involving certain events
in bankruptcy, insolvency or reorganization, acceleration is automatic; and, provided further, that after such acceleration, but
before a judgment or decree based on acceleration, the holders of a majority in aggregate principal amount of the outstanding debt
securities of that series may, under certain circumstances, rescind and annul such acceleration if all events of default, other
than the nonpayment of accelerated principal, have been cured or waived. Upon the acceleration of the maturity of original issue
discount securities, an amount less than the principal amount thereof will become due and payable. Reference is made to the prospectus
supplement relating to any original issue discount securities for the particular provisions relating to acceleration of maturity
thereof.
Any past default under either indenture
with respect to debt securities of any series, and any event of default arising therefrom, may be waived by the holders of a majority
in principal amount of all debt securities of such series outstanding under such indenture, except in the case of (1) default
in the payment of the principal of (or premium, if any) or interest on any debt securities of such series or (2) certain events
of default relating to the payment of dividends.
The trustee is required within 90 days after
the occurrence of a default (which is known to the trustee and is continuing), with respect to the debt securities of any series
(without regard to any grace period or notice requirements), to give to the holders of the debt securities of such series notice
of such default.
The trustee, subject to its duties during
default to act with the required standard of care, may require indemnification by the holders of the debt securities of any series
with respect to which a default has occurred before proceeding to exercise any right or power under the indentures at the request
of the holders of the debt securities of such series. Subject to such right of indemnification and to certain other limitations,
the holders of a majority in principal amount of the outstanding debt securities of any series under either indenture may direct
the time, method and place of conducting any proceeding for any remedy available to the trustee, or exercising any trust or power
conferred on the trustee with respect to the debt securities of such series, provided that such direction shall not be in conflict
with any rule of law or with the applicable indenture and the trustee may take any other action deemed proper by the trustee
which is not inconsistent with such direction.
No holder of a debt security of any series
may institute any action against us under either of the indentures (except actions for payment of overdue principal of (and premium,
if any) or interest on such debt security or for the conversion or exchange of such debt security in accordance with its terms)
unless (1) the holder has given to the trustee written notice of an event of default and of the continuance thereof with respect
to the debt securities of such series specifying an event of default, as required under the applicable indenture, (2) the
holders of at least 25% in aggregate principal amount of the debt securities of that series then outstanding under such indenture
shall have requested the trustee to institute such action and offered to the trustee indemnity reasonably satisfactory to it against
the costs, expenses and liabilities to be incurred in compliance with such request; (3) the trustee shall not have instituted
such action within 60 days of such request and (4) no direction inconsistent with such written request has been given to the
trustee during such 60-day period by the holders of a majority in principal amount of the debt securities of that series. We are
required to furnish annually to the trustee statements as to our compliance with all conditions and covenants under each indenture.
Discharge, Defeasance and Covenant Defeasance
We may discharge or defease our obligations
under the indenture as set forth below, unless otherwise indicated in the applicable prospectus supplement.
We may discharge certain obligations to
holders of any series of debt securities issued under either the senior indenture or the subordinated indenture which have not
already been delivered to the trustee for cancellation by irrevocably depositing with the trustee money in an amount sufficient
to pay and discharge the entire indebtedness on such debt securities not previously delivered to the trustee for cancellation,
for principal and any premium and interest to the date of such deposit (in the case of debt securities which have become due and
payable) or to the stated maturity or redemption date, as the case may be, and we or, if applicable, any guarantor, have paid all
other sums payable under the applicable indenture.
If indicated in the applicable prospectus
supplement, we may elect either (1) to defease and be discharged from any and all obligations with respect to the debt securities
of or within any series (except in all cases as otherwise provided in the relevant indenture) (“legal defeasance”)
or (2) to be released from our obligations with respect to certain covenants applicable to the debt securities of or within
any series (“covenant defeasance”), upon the deposit with the relevant indenture trustee, in trust for such purpose,
of money and/or government obligations which through the payment of principal and interest in accordance with their terms will
provide money in an amount sufficient to pay the principal of (and premium, if any) or interest on such debt securities to maturity
or redemption, as the case may be, and any mandatory sinking fund or analogous payments thereon. As a condition to legal defeasance
or covenant defeasance, we must deliver to the trustee an opinion of counsel to the effect that the holders of such debt securities
will not recognize income, gain or loss for federal income tax purposes as a result of such legal defeasance or covenant defeasance
and will be subject to federal income tax on the same amounts and in the same manner and at the same times as would have been the
case if such legal defeasance or covenant defeasance had not occurred. Such opinion of counsel, in the case of legal defeasance
under clause (i) above, must refer to and be based upon a ruling of the Internal Revenue Service or a change in applicable
federal income tax law occurring after the date of the relevant indenture. In addition, in the case of either legal defeasance
or covenant defeasance, we shall have delivered to the trustee (1) if applicable, an officer’s certificate to the effect
that the relevant debt securities exchange(s) have informed us that neither such debt securities nor any other debt securities
of the same series, if then listed on any securities exchange, will be delisted as a result of such deposit and (2) an officer’s
certificate and an opinion of counsel, each stating that all conditions precedent with respect to such legal defeasance or covenant
defeasance have been complied with.
We may exercise our defeasance option with
respect to such debt securities notwithstanding our prior exercise of our covenant defeasance option.
Modification and Waiver
Under the indentures, unless an accompanying
prospectus supplement states otherwise, we and the applicable trustee may supplement the indentures for certain purposes which
would not materially adversely affect the interests or rights of the holders of debt securities of a series without the consent
of those holders. We and the applicable trustee may also modify the indentures or any supplemental indenture in a manner that affects
the interests or rights of the holders of debt securities with the consent of the holders of at least a majority in aggregate principal
amount of the outstanding debt securities of each affected series issued under the indenture. However, the indentures require the
consent of each holder of debt securities that would be affected by any modification which would:
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reduce the principal amount of debt securities whose holders must consent to an amendment, supplement or waiver;
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reduce the principal of or change the fixed maturity of any debt security or, except as provided in any prospectus supplement, alter or waive any of the provisions with respect to the redemption of the debt securities;
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reduce the rate of or change the time for payment of interest, including default interest, on any debt security;
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waive a default or event of default in the payment of principal of or interest or premium, if any, on, the debt securities (except a rescission of acceleration of the debt securities by the holders of at least a majority in aggregate principal amount of the then outstanding debt securities and a waiver of the payment default that resulted from such acceleration);
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make any debt security payable in money other than that stated in the debt securities;
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make any change in the provisions of the applicable indenture relating to waivers of past defaults or the rights of holders of the debt securities to receive payments of principal of, or interest or premium, if any, on, the debt securities;
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waive a redemption payment with respect to any debt security (except as otherwise provided in the applicable prospectus supplement);
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except in connection with an offer by us to purchase all debt securities, (1) waive certain events of default relating to the payment of dividends or (2) amend certain covenants relating to the payment of dividends and the purchase or redemption of certain equity interests;
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make any change to the subordination or ranking provisions of the indenture or the related definitions that adversely affect the rights of any holder; or
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make any change in the preceding amendment and waiver provisions.
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The indentures permit the holders of at
least a majority in aggregate principal amount of the outstanding debt securities of any series issued under the indenture which
is affected by the modification or amendment to waive our compliance with certain covenants contained in the indentures.
Payment and Paying Agents
Unless otherwise indicated in the applicable
prospectus supplement, payment of interest on a debt security on any interest payment date will be made to the person in whose
name a debt security is registered at the close of business on the record date for the interest.
Unless otherwise indicated in the applicable
prospectus supplement, principal, interest and premium on the debt securities of a particular series will be payable at the office
of such paying agent or paying agents as we may designate for such purpose from time to time. Notwithstanding the foregoing, at
our option, payment of any interest may be made by check mailed to the address of the person entitled thereto as such address appears
in the security register.
Unless otherwise indicated in the applicable
prospectus supplement, a paying agent designated by us will act as paying agent for payments with respect to debt securities of
each series. All paying agents initially designated by us for the debt securities of a particular series will be named in the applicable
prospectus supplement. We may at any time designate additional paying agents or rescind the designation of any paying agent or
approve a change in the office through which any paying agent acts, except that we will be required to maintain a paying agent
in each place of payment for the debt securities of a particular series.
All moneys paid by us to a paying agent
for the payment of the principal, interest or premium on any debt security which remain unclaimed at the end of two years after
such principal, interest or premium has become due and payable will be repaid to us upon request, and the holder of such debt security
thereafter may look only to us for payment thereof.
Denominations, Registrations and Transfer
Unless an accompanying prospectus supplement
states otherwise, debt securities will be represented by one or more global certificates registered in the name of a nominee for
The Depository Trust Company, or DTC. In such case, each holder’s beneficial interest in the global securities will be shown
on the records of DTC and transfers of beneficial interests will only be effected through DTC’s records.
A holder of debt securities may only exchange
a beneficial interest in a global security for certificated securities registered in the holder’s name if:
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we deliver to the trustee notice from DTC that it is unwilling or unable to continue to act as depository or that it is no longer a clearing agency registered under the Exchange Act and, in either case, a successor depositary is not appointed by us within 120 days after the date of such notice from DTC;
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we in our sole discretion determine that the debt securities (in whole but not in part) should be exchanged for definitive debt securities and deliver a written notice to such effect to the trustee; or
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there has occurred and is continuing a default or event of default with respect to the debt securities.
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If debt securities are issued in certificated
form, they will only be issued in the minimum denomination specified in the accompanying prospectus supplement and integral multiples
of such denomination. Transfers and
exchanges of such debt securities will only be permitted in
such minimum denomination. Transfers of debt securities in certificated form may be registered at the trustee’s corporate
office or at the offices of any paying agent or trustee appointed by us under the indentures. Exchanges of debt securities for
an equal aggregate principal amount of debt securities in different denominations may also be made at such locations.
Governing Law
The indentures and debt securities will
be governed by, and construed in accordance with, the laws of the State of New York, without regard to its principles of conflicts
of laws, except to the extent the Trust Indenture Act is applicable.
Trustee
The trustee or trustees under the indentures
will be named in any applicable prospectus supplement.
Conversion or Exchange Rights
The prospectus supplement will describe
the terms, if any, on which a series of debt securities may be convertible into or exchangeable for our common shares or other
debt securities. These terms will include provisions as to whether conversion or exchange is mandatory, at the option of the holder
or at our option. These provisions may allow or require the number of shares of our common shares or other securities to be received
by the holders of such series of debt securities to be adjusted. Any such conversion or exchange will comply with applicable British
Virgin Islands law and our Articles of Association.
DESCRIPTION OF WARRANTS
The following description, together with
the additional information we may include in any applicable prospectus supplements, summarizes the material terms and provisions
of the warrants that we may offer under this prospectus and the related warrant agreements and warrant certificates. While the
terms summarized below will apply generally to any warrants that we may offer under this prospectus, we will describe the particular
terms of any series of warrants that we may offer in more detail in the applicable prospectus supplement. If we indicate in the
prospectus supplement, the terms of any warrants offered under that prospectus supplement may differ from the terms described below.
However, no prospectus supplement shall fundamentally change the terms that are set forth in this prospectus or offer a security
that is not registered and described in this prospectus at the time of its effectiveness. Specific warrant agreements will contain
additional important terms and provisions and will be incorporated by reference as an exhibit to the registration statement that
includes this prospectus or as an exhibit to a report filed under the Exchange Act.
General
We may issue warrants that entitle the holder
to purchase our debt securities, common shares, preference shares, depositary shares or any combination thereof. We may issue warrants
independently or together with common shares, preference shares, debt securities, depositary shares or any combination thereof,
and the warrants may be attached to or separate from such securities.
We will describe in the applicable prospectus
supplement the terms of the series of warrants, including:
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the offering price and aggregate number of warrants offered;
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the currency for which the warrants may be purchased, if not United States dollars;
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if applicable, the designation and terms of the securities with which the warrants are issued and the number of warrants issued with each such security or each principal amount of such security;
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if applicable, the date on and after which the warrants and the related securities will be separately transferable;
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in the case of warrants to purchase debt securities, the principal amount of debt securities purchasable upon exercise of one warrant and the price at, and currency, if not United States dollars, in which, this principal amount of debt securities may be purchased upon such exercise;
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in the case of warrants to purchase common shares, preference shares, or depositary shares, the number of shares of common shares, preference shares or depositary shares purchasable upon the exercise of one warrant and the price at which these shares may be purchased upon such exercise;
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the effect of any merger, consolidation, sale or other disposition of our business on the warrant agreement and the warrants;
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the terms of any rights to redeem or call the warrants;
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any provisions for changes to or adjustments in the exercise price or number of securities issuable upon exercise of the warrants;
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the dates on which the right to exercise the warrants will commence and expire;
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the manner in which the warrant agreement and warrants may be modified;
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federal income tax consequences of holding or exercising the warrants;
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the terms of the securities issuable upon exercise of the warrants; and
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any other specific terms, preferences, rights or limitations of or restrictions on the warrants.
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Before exercising their warrants, holders
of warrants will not have any of the rights of holders of the securities purchasable upon such exercise, including:
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in the case of warrants to purchase debt securities, the right to receive payments of principal of, or premium, if any, or interest on, the debt securities purchasable upon exercise or to enforce covenants in the applicable indenture; or
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in the case of warrants to purchase common shares, preference shares or depositary shares, the right to receive dividends, if any, or, payments upon our liquidation, dissolution or winding up or to exercise voting rights, if any.
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Exercise of Warrants
Each warrant will entitle the holder to
purchase the securities that we specify in the applicable prospectus supplement at the exercise price that we describe in the applicable
prospectus supplement. Unless we otherwise specify in the applicable prospectus supplement, holders of the warrants may exercise
the warrants at any time up to the specified time on the expiration date that we set forth in the applicable prospectus supplement.
After the close of business on the expiration date, unexercised warrants will become void.
Holders of the warrants may exercise the
warrants by delivering the warrant certificate representing the warrants to be exercised together with specified information, and
paying the required amount to the warrant agent in immediately available funds, as provided in the applicable prospectus supplement.
We will set forth on the reverse side of the warrant certificate and in the applicable prospectus supplement the information that
the holder of the warrant will be required to deliver to the warrant agent.
Upon receipt of the required payment and
the warrant certificate properly completed and duly executed at the corporate trust office of the warrant agent or any other office
indicated in the applicable prospectus supplement, we will issue and deliver the securities purchasable upon such exercise. If
fewer than all of the warrants represented by the warrant certificate are exercised, then we will issue a new warrant certificate
for the remaining amount of warrants. If we so indicate in the applicable prospectus supplement, holders of the warrants may surrender
securities as all or part of the exercise price for warrants.
Enforceability of Rights by Holders of Warrants
Each warrant agent will act solely as our
agent under the applicable warrant agreement and will not assume any obligation or relationship of agency or trust with any holder
of any warrant. A single bank or trust company may act as warrant agent for more than one issue of warrants. A warrant agent will
have no duty or responsibility in case of any default by us under the applicable warrant agreement or warrant, including any duty
or responsibility to initiate any proceedings at law or otherwise, or to make any demand upon us. Any holder of a warrant may,
without the consent of the related warrant agent or the holder of any other warrant, enforce by appropriate legal action its right
to exercise, and receive the securities purchasable upon exercise of, its warrants.
Modification of the Warrant Agreement
The warrant agreements may permit us and
the warrant agent, if any, without the consent of the warrant holders, to supplement or amend the agreement in the following circumstances:
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to correct or supplement any provision which may be defective or inconsistent with any other provisions; or
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to add new provisions regarding matters or questions that we and the warrant agent may deem necessary or desirable and which do not adversely affect the interests of the warrant holders.
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DESCRIPTION OF UNITS
We may issue units comprised of one or more
of the other securities described in this prospectus in any combination. Each unit will be issued so that the holder of the unit
is also the holder of each security included in the unit. Thus, the holder of a unit will have the rights and obligations of a
holder of each included security. The unit agreement under which a unit is issued may provide that the securities included in the
unit may not be held or transferred separately, at any time or at any time before a specified date or occurrence.
The applicable prospectus supplement may
describe:
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the designation and terms of the units and of the securities comprising the units, including whether and under what circumstances those securities may be held or transferred separately;
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any provisions for the issuance, payment, settlement, transfer or exchange of the units or of the securities comprising the units; and
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whether the units will be issued in fully registered or global form.
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The applicable prospectus supplement will
describe the terms of any units. The preceding description and any description of units in the applicable prospectus supplement
does not purport to be complete and is subject to and is qualified in its entirety by reference to the unit agreement and, if applicable,
collateral arrangements and depository arrangements relating to such units.
DESCRIPTION OF RIGHTS
We may issue rights to purchase common shares,
preference shares, depositary shares or debt securities that we may offer to our securityholders. The rights may or may not be
transferable by the persons purchasing or receiving the rights. In connection with any rights offering, we may enter into a standby
underwriting or other arrangement with one or more underwriters or other persons pursuant to which such underwriters or other persons
would purchase any offered securities remaining unsubscribed for after such rights offering. Each series of rights will be issued
under a separate rights agent agreement to be entered into between us and a bank or trust company, as rights agent, that we will
name in the applicable prospectus supplement. The rights agent will act solely as our agent in connection with the rights and will
not assume any obligation or relationship of agency or trust for or with any holders of rights certificates or beneficial owners
of rights.
The prospectus supplement relating to any
rights that we offer will include specific terms relating to the offering, including, among other matters:
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the date of determining the securityholders entitled to the rights distribution;
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the aggregate number of rights issued and the aggregate number of shares of common shares, preference shares, or depositary shares or aggregate principal amount of debt securities purchasable upon exercise of the rights;
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the conditions to completion of the rights offering;
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the date on which the right to exercise the rights will commence and the date on which the rights will expire; and
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applicable tax considerations.
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Each right would entitle the holder of the
rights to purchase for cash the principal amount of shares of common shares, preference shares, depositary shares or debt securities
at the exercise price set forth in the applicable prospectus supplement. Rights may be exercised at any time up to the close of
business on the expiration date for the rights provided in the applicable prospectus supplement. After the close of business on
the expiration date, all unexercised rights will become void.
If less than all of the rights issued in
any rights offering are exercised, we may offer any unsubscribed securities directly to persons other than our security holders,
to or through agents, underwriters or dealers or through a combination of such methods, including pursuant to standby arrangements,
as described in the applicable prospectus supplement.
PLAN OF DISTRIBUTION
We may sell the securities through underwriters
or dealers, through agents, directly to one or more purchasers, through a rights offering, or otherwise. We will describe the terms
of the offering of the securities in a prospectus supplement, information incorporated by reference or free writing prospectus,
including:
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the name or names of any underwriters, if any;
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the purchase price of the securities and the proceeds we will receive from the sale;
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any underwriting discounts and other items constituting underwriters’ compensation;
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any initial public offering price;
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any discounts or concessions allowed or reallowed or paid to dealers; and
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any securities exchange or market on which the securities may be listed.
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Only underwriters we name in the prospectus
supplement, information incorporated by reference or free writing prospectus are underwriters of the securities offered thereby.
The distribution of securities may be effected, from time to time, in one or more transactions, including:
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block transactions (which may involve crosses) and transactions on the NASDAQ Capital Market or any other organized market where the securities may be traded;
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purchases by a broker-dealer as principal and resale by the broker-dealer for its own account pursuant to a prospectus supplement;
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ordinary brokerage transactions and transactions in which a broker-dealer solicits purchasers;
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sales “at the market” to or through a market maker or into an existing trading market, on an exchange or otherwise; and
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sales in other ways not involving market makers or established trading markets, including direct sales to purchasers.
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The securities may be sold at a fixed price
or prices, which may be changed, or at market prices prevailing at the time of sale, at prices relating to the prevailing market
prices or at negotiated prices. The consideration may be cash or another form negotiated by the parties. Agents, underwriters or
broker-dealers may be paid compensation for offering and selling the securities. That compensation may be in the form of discounts,
concessions or commissions to be received from us or from the purchasers of the securities. Dealers and agents participating in
the distribution of the securities may be deemed to be underwriters, and compensation received by them on resale of the securities
may be deemed to be underwriting discounts and commissions under the U.S. Securities Act of 1933, as amended, or the Securities
Act. If such dealers or agents were deemed to be underwriters, they may be subject to statutory liabilities under the Securities
Act.
We may also make direct sales through rights
distributed to our existing shareholders on a pro rata basis, which may or may not be transferable. In any distribution of rights
to our shareholders, if all of the underlying securities are not subscribed for, we may then sell the unsubscribed securities directly
to third parties or may engage the services of one or more underwriters, dealers or agents, including standby underwriters, to
sell the unsubscribed securities to third parties.
Some or all of the securities that we offer
though this prospectus may be new issues of securities with no established trading market. Any underwriters to whom we sell our
securities for public offering and sale may make a market in those securities, but they will not be obligated to do so and they
may discontinue any market making at any time without notice. Accordingly, we cannot assure you of the liquidity of, or continued
trading markets for, any securities that we offer.
Agents may, from time to time, solicit offers
to purchase the securities. If required, we will name in the applicable prospectus supplement, document incorporated by reference
or free writing prospectus, as applicable, any agent involved in the offer or sale of the securities and set forth any compensation
payable to the agent. Unless otherwise indicated, any agent will be acting on a best efforts basis for the period of its appointment.
Any agent selling the securities covered by this prospectus may be deemed to be an underwriter, as that term is defined in the
Securities Act, of the securities.
If underwriters are used in an offering,
securities will be acquired by the underwriters for their own account and may be resold, from time to time, in one or more transactions,
including negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale, or under
delayed delivery contracts or other contractual commitments. Securities may be offered to the public either through underwriting
syndicates represented by one or more managing underwriters or directly by one or more firms acting as underwriters. If an underwriter
or underwriters are used in the sale of securities, an underwriting agreement will be executed with the underwriter or underwriters
at the time an agreement for the sale is reached. The applicable prospectus supplement will set forth the managing underwriter
or underwriters, as well as any other underwriter or underwriters, with respect to a particular underwritten offering of securities,
and will set forth the terms of the transactions, including compensation of the underwriters and dealers and the public offering
price, if applicable. The prospectus, and the applicable prospectus supplement and any applicable free writing prospectus will
be used by the underwriters to resell the securities.
If a dealer is used in the sale of the securities,
we or an underwriter will sell the securities to the dealer, as principal. The dealer may then resell the securities to the public
at varying prices to be determined by the dealer at the time of resale. To the extent required, we will set forth in the prospectus
supplement, document incorporated by reference or free writing prospectus, as applicable, the name of the dealer and the terms
of the transactions.
We may directly solicit offers to purchase
the securities and may make sales of securities directly to institutional investors or others. These persons may be deemed to be
underwriters within the meaning of the Securities Act with respect to any resale of the securities. To the extent required, the
prospectus supplement, document incorporated by reference or free writing prospectus, as applicable, will describe the terms of
any such sales, including the terms of any bidding or auction process, if used.
Agents, underwriters and dealers may be
entitled under agreements which may be entered into with us to indemnification by us against specified liabilities, including liabilities
incurred under the Securities Act, or to contribution by us to payments they may be required to make in respect of such liabilities.
If required, the prospectus supplement, document incorporated by reference or free writing prospectus, as applicable, will describe
the terms and conditions of such indemnification or contribution. Some of the agents, underwriters or dealers, or their affiliates
may be customers of, engage in transactions with or perform services for us, our subsidiaries or affiliates in the ordinary course
of business.
Under the securities laws of some states,
the securities offered by this prospectus may be sold in those states only through registered or licensed brokers or dealers.
Any person participating in the distribution
of common shares registered under the registration statement that includes this prospectus will be subject to applicable provisions
of the Exchange Act, and the applicable SEC rules and regulations, including, among others, Regulation M, which may limit
the timing of purchases and sales of any of our common shares by any such person. Furthermore, Regulation M may restrict the ability
of any person engaged in the distribution of our common shares to engage in market-making activities with respect to our common
shares. These restrictions may affect the marketability of our common shares and the ability of any person or entity to engage
in market-making activities with respect to our common shares.
Certain persons participating in an offering
may engage in over-allotment, stabilizing transactions, short-covering transactions and penalty bids in accordance with Regulation
M under the Exchange Act that stabilize, maintain or otherwise affect the price of the offered securities. If any such activities
will occur, they will be described in the applicable prospectus supplement.
To the extent required, this prospectus
may be amended or supplemented from time to time to describe a specific plan of distribution.
All securities we offer other than common
shares will be new issues of securities with no established trading market. Any underwriters may make a market in these securities,
but will not be obligated to do so and may discontinue any market making at any time without notice. We cannot guarantee the liquidity
of the trading markets for any securities.
In compliance with the guidelines of the
Financial Industry Regulatory Authority (“FINRA”), the aggregate maximum discount, commission or agency fees or other
items constituting underwriting compensation to be received by any FINRA member or independent broker-dealer will not exceed 8%
of any offering pursuant to this prospectus and any applicable prospectus supplement, as the case may be.
LEGAL MATTERS
Kaufman & Canoles, P.C., will pass
upon the validity of the securities offered in this offering. Except as otherwise set forth in the applicable prospectus supplement,
certain legal matters in connection with the securities offered pursuant to this prospectus will be passed upon for us by Campbells
to the extent governed by the laws of the British Virgin Islands. The address of Campbells in the British Virgin Islands is
Floor 2, Romasco Place, Waterfront Drive, PO Box 4541, Road Town, Tortola VG1110, and in Hong Kong,
Floor 35, Rm 3507, Edinburgh Tower, The Landmark, 15 Queen’s Road Central. The address of Kaufman & Canoles,
P.C. is Two James Center, 1021 East Cary Street, Suite 1400, Richmond, VA 23219-4058. Additional legal matters may be passed
on for us, or any underwriters, dealers or agents, by counsel that we will name in the applicable prospectus supplement.
EXPERTS
The consolidated financial statements of
our Company appearing in our annual report on Form 20-F for the fiscal year ended December 31, 2019 have been audited
by Prager Metis CPAs, LLC, independent registered public accounting firm, as set forth in the reports thereon included therein
and incorporated herein by reference. Such consolidated financial statements are incorporated herein by reference in
reliance upon such reports given on the authority of such firms as experts in accounting and auditing.
ENFORCEABILITY OF CIVIL LIABILITIES
UNDER UNITED STATES FEDERAL SECURITIES LAWS AND OTHER MATTERS
We are incorporated under the laws of the
British Virgin Islands with limited liability. We are incorporated in the British Virgin Islands because of certain benefits associated
with being a British Virgin Islands corporation, such as political and economic stability, an effective judicial system, a favorable
tax system, the absence of exchange control or currency restrictions and the availability of professional and support services.
However, the British Virgin Islands has a less developed body of securities laws as compared to the United States and provides
protections for investors to a lesser extent. In addition, British Virgin Islands companies may not have standing to sue before
the federal courts of the United States.
Substantially all of our assets are located
outside the United States. In addition, a majority of our directors and officers are nationals and/or residents of countries other
than the United States, and all or a substantial portion of such persons’ assets are located outside the United States. As
a result, it may be difficult for investors to effect service of process within the United States upon us or such persons or to
enforce against them or against us, judgments obtained in United States courts, including judgments predicated upon the civil liability
provisions of the securities laws of the United States or any state thereof.
We have appointed CT Corporation System
as our agent to receive service of process with respect to any action brought against us in the United States District Court for
the Southern District of New York under the federal securities laws of the United States or of any State of the United States or
any action brought against us in the Supreme Court of the State of New York in the County of New York under the securities laws
of the State of New York.
Zhejiang Zhengbiao Law Firm, our counsel
as to Chinese law, has advised us that there is uncertainty as to whether the courts of China would (1) recognize or enforce
judgments of United States courts obtained against us or such persons predicated upon the civil liability provisions of the securities
laws of the United States or any state thereof, or (2) be competent to hear original actions brought in each respective jurisdiction,
against us or such persons predicated upon the securities laws of the United States or any state thereof.
Zhejiang Zhengbiao Law Firm has advised
us that the recognition and enforcement of foreign judgments are provided for under the Chinese Civil Procedure Law. Chinese courts
may recognize and enforce foreign judgments in accordance with the requirements of the Chinese Civil Procedure Law based either
on treaties between China and the country where the judgment is made or in reciprocity between jurisdictions. China does not have
any treaties or other agreements with the British Virgin Islands or the United States that provide for the reciprocal recognition
and enforcement of foreign judgments. As a result, it is uncertain whether a Chinese court would enforce a judgment rendered by
a court in either of these two jurisdictions.
We have been advised by Campbells, our counsel
as to British Virgin Islands law, that the United States and the British Virgin Islands do not have a treaty providing for reciprocal
recognition and enforcement of judgments of courts of the United States in commercial matters. In the case of a final and conclusive
judgment obtained in a court of a foreign country (with which no reciprocal arrangements exist or extend), such as the United States,
for either a liquidated sum (not in respect of penalties or taxes or a fine or similar fiscal or revenue obligations), or in certain
circumstances, for in personam non-money relief, such judgment will be recognized and enforced in the British Virgin Islands courts
without any re-examination of the merits at common law, by an action commenced on the foreign judgment in the British Virgin Islands
courts. The courts would enforce the relevant judgment, provided that:
- the judgment
had not been wholly satisfied;
- United States
court had jurisdiction in the matter and the Company either submitted to the jurisdiction of the foreign court or was resident
or carrying on business within such jurisdiction and was duly served with process;
- in obtaining
judgment there was no fraud on the part of the person in whose favor judgment was given or on the part of a court;
- recognition
or enforcement of the judgment in the British Virgin Islands would not be contrary to public policy or for some other similar reason
the judgment could not have been entertained by the British Virgin Islands courts; and
- the proceedings
pursuant to which judgment was obtained were not contrary to natural justice.
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions,
we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities
Act and is therefore unenforceable.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus is part of a registration
statement on Form F-3 that we have filed with the SEC using a “shelf” registration process. Under this shelf registration
process, we may from time to time sell the securities described in this prospectus in one or more offerings up to a total dollar
amount of $107,754,663. This prospectus provides you with a general description of the securities we may offer. Each time we offer
securities under this shelf registration process, we will provide a prospectus supplement that will contain more specific information
about the terms of that offering. This prospectus does not contain all the information provided in the registration statement we
have filed with the SEC. For further information about us or the securities offered hereby, you should refer to that registration
statement and the exhibits filed as a part of that registration statement.
We are subject to the reporting requirements
of the Exchange Act, and file reports, including Annual Reports on Form 20-F and Reports on Form 6-K, with the SEC. The
SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers
that file electronically with the SEC at http://www.sec.gov. The public may read our SEC filings, including the registration statement
of which this prospectus is a part and the exhibits filed as a part of that registration statement, over the Internet at http://www.sec.gov.
The public may also read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street,
N.E., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC
at 1-800-SEC-0330. In addition, you can obtain information about us at the offices of the New York Stock Exchange, 20 Broad Street,
New York, New York 10005.
Our filings with the SEC are also available
to the public through the SEC’s Internet site at http://www.sec.gov.
INFORMATION INCORPORATED BY REFERENCE
The SEC allows us to “incorporate
by reference” into this prospectus the information we file with them. The information we incorporate by reference into this
prospectus is an important part of this prospectus. Any statement in a document we have filed with the SEC prior to the date of
this prospectus and which is incorporated by reference into this prospectus will be considered to be modified or superseded to
the extent a statement contained in this prospectus or any other subsequently filed document that is incorporated by reference
into this prospectus modifies or supersedes that statement. The modified or superseded statement will not be considered to be a
part of this prospectus, except as modified or superseded.
We incorporate by reference into this prospectus
the information contained in the following documents that we have filed with the SEC pursuant to the Securities Exchange Act of
1934, as amended (the “Exchange Act”), which is considered to be a part of this prospectus:
(1) Our Annual Report on Form 20-F for the year ended December 31, 2019, filed on June 30, 2020 and Amendment No. 1 to Form 20-F filed on July 6, 2020;
(2) the Company’s Current Reports on Form 6-K, filed with the SEC on August 12, 2020;
(3) All other reports filed by the Registrant pursuant
to Section 13(a) or 15(d) of the Exchange Act since the end of the fiscal year covered by the Annual Report on Form 20-F
referred to in the paragraph above;
(4) The description of the common shares, $0.001 par
value per share, contained in the Registrant’s registration statement on Form F-1 filed with the SEC on September 16, 2014 (File Number 333-198788), as amended from time to time thereafter, and declared effective by the SEC on March 18, 2015,
and any amendment or report filed with the SEC for purposes of updating such description; and
All documents that we file with the SEC pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Registration Statement and prior to the filing of a
post-effective amendment to this Registration Statement (that indicates that all securities offered have been sold or that deregisters
all securities then remaining unsold) shall be deemed to be incorporated by reference in this Registration Statement and to be
part hereof from the date of filing of such documents.
We also incorporate by reference all additional documents that
we file with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act that are filed after the effective
date of the registration statement of which this prospectus is a part and prior to the termination of the offering of securities
offered pursuant to this prospectus. We also incorporate by reference all additional documents that we file with the SEC pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act that are filed after the filing date of the registration statement
of which this prospectus is a part and prior to effectiveness of that registration statement. We are not, however, incorporating,
in each case, any documents or information that we are deemed to “furnish” and not file in accordance with SEC rules.
You may obtain a copy of these filings,
without charge, by writing or calling us at:
Tantech Holdings Ltd
c/o Zhejiang Tantech Bamboo Technology
Co., Ltd.
No. 10 Cen Shan Road, Shuige Industrial
Zone, Lishui City, Zhejiang Province 323000
People’s Republic of China
+86 (578) 226-2309
Attn: Investor Relations
TANTECH HOLDINGS LTD
$107,754,663
Common shares
Depositary Shares
Preference Shares
Debt Securities
Warrants
Rights
Units
PROSPECTUS
August 31, 2020
No dealer, salesperson, or other person has been authorized
to give any information or to make any representation not contained in this prospectus, and, if given or made, such information
and representation should not be relied upon as having been authorized by us. This prospectus does not constitute an offer to sell
or a solicitation of an offer to buy any of the securities offered by this prospectus in any jurisdiction or to any person to whom
it is unlawful to make such offer or solicitation. Neither the delivery of this prospectus nor any sale made hereunder shall under
any circumstances create an implication that there has been no change in the facts set forth in this prospectus or in our affairs
since the date hereof.
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