SECURITIES PURCHASE AGREEMENT
SECURITIES
PURCHASE AGREEMENT
(the
"Agreement"),
dated
as of December 19, 2006, by and between Jinpan International Limited, a British
Virgin Islands corporation, with its principal offices at c/o Hainan Jinpan
Electric Company, 4-1 No. 100 Nanhai Avenue, Jinpan Development Area, Haikou,
Hainan 570216 P.R.C. (the "Company"),
and
CD Investment Partners, Ltd. (the "Buyer").
WHEREAS:
A. The
Company and the Buyer are executing and delivering this Agreement in reliance
upon the exemption from securities registration afforded by Section 4(2)
of the
Securities Act of 1933, as amended (the "1933
Act"),
and
Rule 506 of Regulation D ("Regulation
D")
as
promulgated by the United States Securities and Exchange Commission (the
"SEC")
under
the 1933 Act.
B. The
Buyer
wishes to purchase and the Company wishes to sell, upon the terms and conditions
stated in this Agreement 52,632 common shares ("Common
Shares"),
par
value $0.018 per share of the Company, (the "Common
Stock").
C. Contemporaneously
with the execution and delivery of this Agreement, the parties hereto are
executing and delivering a Registration Rights Agreement, substantially in
the
form attached hereto as Exhibit
A
(the
"Registration
Rights Agreement")
pursuant to which the Company has agreed to provide certain registration
rights
with respect to the Common Shares under the 1933 Act and the rules and
regulations promulgated thereunder and applicable state securities
laws.
NOW,
THEREFORE,
the
Company and the Buyer hereby agree as follows:
1. PURCHASE
AND SALE OF COMMON SHARES
(a) Purchase
of Common Shares.
Subject
to the satisfaction (or waiver) of the conditions set forth in Sections 6
and 7
below, the Company shall issue and sell to the Buyer, and the Buyer shall
purchase from the Company on the Closing Date (as defined below), the Common
Shares (the "Closing").
(i) Closing.
The
date and time of the Closing (the "Closing
Date")
shall
be 10:00 a.m., New York City time, on the date hereof (or such later date
as is
mutually agreed to by the Company and the Buyer) after notification of
satisfaction (or waiver) of the conditions to the Closing set forth in Sections
6 and 7 below at the offices of Xxxxxxxx Xxxxxxx LLP, 000 Xxxxxxxxx Xxxxxx,
Xxx
Xxxx, Xxx Xxxx 00000 or such other location as is mutually agreed by the
Company
and the Buyer.
(ii) Purchase
Price.
The
aggregate purchase price for the Common Shares to be purchased by the Buyer
at
the Closing (the "Purchase
Price")
shall
be $1,000,008.
(b) Form
of Payment.
On the
Closing Date, (i) immediately after the Buyer is delivered the Common Shares
contemplated in clause (ii) below, the Buyer shall pay the Purchase Price
to the
Company by wire transfer of immediately available funds in accordance with
the
Company's written wire instructions and (ii) the Company shall deliver to
the
Buyer certificates representing the Common Shares (allocated in the amounts
as
the Buyer shall request) which the Buyer is purchasing hereunder, duly executed
on behalf of the Company and registered in the name of the Buyer or its
designee.
2. BUYER'S
REPRESENTATIONS AND WARRANTIES.
The
Buyer
hereby represents and warrants to the Company:
(a) No
Public Sale or Distribution.
The
Buyer is acquiring the Common Shares for its own account and not with a view
towards, or for resale in connection with, the public sale or distribution
thereof, except pursuant to sales registered or exempted under the 1933 Act;
provided, however, that by making the representations herein, the Buyer does
not
agree to hold any of the Common Shares for any minimum or other specific
term
and reserves the right to dispose of the Common Shares at any time in accordance
with or pursuant to a registration statement or an exemption under the 1933
Act
and pursuant to the applicable terms of the Transaction Documents (as defined
in
Section 3(b)). The Buyer is acquiring the Common Shares hereunder in the
ordinary course of its business. The Buyer does not presently have any agreement
or understanding, directly or indirectly, with any individual, corporation
(including any non-profit corporation), general or limited partnership, limited
liability company, joint venture, estate, trust, association, organization,
labor union, or other entity or Governmental Entity (each a, "Person")
to
distribute any of the Common Shares. The Buyer is not a broker-dealer registered
with the SEC under the Securities Exchange Act of 1934, as amended ( the
"1934
Act")
or an
entity engaged in a business that would require it to be so registered as
a
broker-dealer.
(b) Accredited
Investor Status.
At the
time the Buyer was offered the Common Shares, it was, and at the date hereof
it
is an "accredited investor" as defined in Rule 501(a)(1), (a)(2), (a)(3),
(a)(5), (a)(6), (a)(7) or (a)(8) under the 1933 Act.
(c) Reliance
on Exemptions.
The
Buyer understands that the Common Shares are being offered and sold to it
in
reliance on specific exemptions from the registration requirements of United
States federal and state securities laws and that the Company is relying
upon
the truth and accuracy of, and the Buyer's compliance with, the representations,
warranties, agreements, acknowledgments and understandings of the Buyer set
forth herein in order to determine the availability of such exemptions and
the
eligibility of the Buyer to acquire the Common Shares.
(d) Information.
The
Buyer and its advisors have been furnished with all materials relating to
the
business, finances and operations of the Company and materials relating to
the
offer and sale of the Common Shares that have been requested by the Buyer.
The
Buyer and its advisors have been afforded the opportunity to ask questions
of
the Company. Neither such inquiries nor any other due diligence investigations
conducted by the Buyer or its advisors, if any, or its representatives shall
modify, amend or affect the Buyer's right to rely on the Company's
representations and warranties contained herein. The Buyer understands that
its
investment in the Common Shares involves a high degree of risk and is able
to
afford a complete loss of such investment. The Buyer has sought such accounting,
legal and tax advice as it has considered necessary to make an informed
investment decision with respect to its acquisition of the Common Shares.
The
Buyer has not relied on any information or advice furnished by or on behalf
of
the Agent (as defined below) or by counsel to the Company in connection with
the
transactions contemplated hereby.
(e) No
Governmental Review.
The
Buyer understands that no United States federal or state agency or any other
government or governmental agency has passed on or made any recommendation
or
endorsement of the Common Shares or the fairness or suitability of the
investment in the Common Shares nor have such authorities passed upon or
endorsed the merits of the offering of the Common Shares.
(f) Transfer
or Resale.
The
Buyer understands that except as provided in the Registration Rights Agreement:
(i) the Common Shares have not been and are not being registered under the
1933
Act or any state securities laws, and may not be offered for sale, sold,
assigned or transferred unless (A) subsequently registered thereunder, (B)
the
Buyer shall have delivered to the Company an opinion of counsel, in form,
scope
and substance reasonably acceptable to the Company and its counsel, to the
effect that such Common Shares to be sold, assigned or transferred may be
sold,
assigned or transferred pursuant to an exemption from such registration,
or (C)
the Buyer provides the Company with reasonable assurance that such Common
Shares
can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A
promulgated under the 1933 Act, as amended, (or a successor rule thereto)
(collectively, "Rule
144");
(ii)
any sale of the Common Shares made in reliance on Rule 144 may be made only
in
accordance with the terms of Rule 144 and further, if Rule 144 is not
applicable, any resale of the Common Shares under circumstances in which
the
seller (or the Person (as defined in Section 3(q)) through whom the sale
is
made) may be deemed to be an underwriter (as that term is defined in the
0000
Xxx) may require compliance with some other exemption under the 1933 Act
or the
rules and regulations of the SEC thereunder; and (iii) neither the Company
nor
any other Person is under any obligation to register the Common Shares under
the
1933 Act or any state securities laws or to comply with the terms and conditions
of any exemption thereunder. The Common Shares may be pledged in connection
with
a bona fide margin account or other loan or financing arrangement secured
by the
Common Shares and such pledge of Common Shares shall not be deemed to be
a
transfer, sale or assignment of the Common Shares hereunder, and to effect
a
pledge of Common Shares the Buyer shall not be required to provide the Company
with any thereof or otherwise make any delivery to the Company pursuant to
this
Agreement or any other Transaction Document (as defined in Section 3(b)),
including, without limitation, this Section 2(f).
(g) Legends.
The
Buyer understands that the certificates or other instruments representing
the
Common Shares until such time as the resale of the Common Shares have been
registered under the 1933 Act as contemplated by the Registration Rights
Agreement, the stock certificates representing the Common Shares, except
as set
forth below, shall bear any legend as required by the "blue sky" laws of
any
state and a restrictive legend in substantially the following form (and a
stop-transfer order may be placed against transfer of such stock
certificates):
THE
COMMON SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.
THE
COMMON SHARES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
(I) IN
THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE COMMON SHARES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL,
IN A
FORM REASONABLY ACCEPTABLE TO THE COMPANY AND ITS COUNSEL, THAT REGISTRATION
IS
NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE
144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE COMMON SHARES MAY
BE
PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY THE COMMON SHARES.
The
legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of the Common Shares upon which
it
is stamped or issue to such holder by electronic delivery at the applicable
balance account at DTC (as in Section 5(a)), unless otherwise required by
state
securities laws, (i) following any sale, assignment or transfer of such Common
Shares that are registered for resale under the 1933 Act, (ii) in connection
with a sale, assignment or other transfer, such holder provides the Company
with
an opinion of a law firm reasonably acceptable to the Company, in form, scope
and substance reasonably acceptable to the Company, to the effect that such
sale, assignment or transfer of the Common Shares may be made without
registration under the applicable requirements of the 1933 Act, (iii) following
any sale, assignment or other transfer of the Common Shares pursuant to Rule
144
or if the Common Shares are eligible for sale assignment or other transfer
under
Rule 144(k).
(h) Validity;
Enforcement.
The
Buyer is duly organized, validly existing and in good standing under the
laws of
its jurisdiction of formation, and has all requisite power and authority
to
enter into this Agreement and the Registration Rights Agreement and consummate
the transactions contemplated hereby and thereby. This Agreement and the
Registration Rights Agreement have been duly and validly authorized, executed
and delivered on behalf of the Buyer and shall constitute the legal, valid
and
binding obligations of the Buyer enforceable against the Buyer in accordance
with their respective terms, except as limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium, and other laws of general application
affecting enforcement of creditors' rights generally and (ii) equitable
principles relating to the availability of specific performance, injunctive
relief and other equitable remedies.
(i) No
Conflicts.
The
execution, delivery and performance by the Buyer of this Agreement and the
Registration Rights Agreement and the consummation by the Buyer of the
transactions contemplated hereby and thereby will not (i) result in a violation
of the organizational documents of the Buyer or (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Buyer is a party, or (iii) to the knowledge of the
Buyer, result in a violation of any law, rule, regulation, order, judgment
or
decree (including federal and state securities laws) applicable to the Buyer,
except in the case of clauses (ii) and (iii) above, for such conflicts,
defaults, rights or violations which would not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the
ability of the Buyer to perform its obligations hereunder.
(j) Residency.
The
Buyer is a company formed under the laws of the Cayman Islands.
(k) General
Solicitation.
The
Buyer is not purchasing the Common Shares as a result of any advertisement,
article, notice or other communication regarding the Common Shares published
in
any newspaper, magazine or similar media or broadcast over television or
radio
or presented at any seminar or any general advertisement.
(l) Experience
of the Buyer.
The
Buyer has such knowledge, sophistication and experience in business and
financial matters so as to be capable of evaluating the merits and risks
of the
prospective investment in the Common Shares, and has so evaluated the merits
and
risks of such investment. The Buyer is able to bear the economic risk of
an
investment in the Common Shares and, at the present time, is able to afford
a
complete loss of such investment.
(m) Brokers
and Finders.
Except
for fee to be paid to the Agent (as defined below), no Person will have,
as a
result of the transactions contemplated by the Transaction Documents (as
defined
below), any valid right, interest or claim against or upon the Company or
an
Investor for any commission, fee or other compensation pursuant to any
agreement, arrangement or understanding with a placement agent entered into
by
or on behalf of the Buyer.
(n) Prohibited
Transactions.
Since
the time when the Buyer was first contacted by the Company or the Agent
regarding the transactions contemplated hereby, neither the Buyer nor any
affiliate of the Buyer nor any Person acting on behalf of or pursuant to
any
understanding with the Buyer (collectively, "Trading
Affiliates")
has,
directly or indirectly, effected or agreed to effect any short sale, whether
or
not against the box, established any "put equivalent position" (as defined
in
Rule 16a-1(h) under the 0000 Xxx) with respect to the Common Stock, granted
any
other right (including without limitation, any put or call option) with respect
to the Common Stock or with respect to any security that includes, relates
to or
derived any significant part of its value from the Common Stock or otherwise
sought to hedge its position in the Common Shares (each, a "Prohibited
Transaction"),
and
neither the Buyer nor its Trading Affiliates will enter into a Prohibited
Transaction after the date hereof until the transactions contemplated hereby
are
announced pursuant to the 6-K Filing set forth in Section 4(i)
hereof.
(o) Acknowledgement.
The
Buyer acknowledges and agrees that the foregoing representations, warranties,
covenants and acknowledgments are made by it with the intention that they
may be
relied upon by the Company and its agents and legal counsel in determining
its
eligibility or (if applicable) the eligibility of others on whose behalf
it is
contracting hereunder to purchase the Common Shares under the applicable
securities legislation. The Buyer further agrees that by accepting delivery
of
the Common Shares at the Closing Date, it shall be representing and warranting
that the foregoing representations and warranties are true and correct as
at the
Closing Date with the same force and effect as if they had been made by the
Buyer at the Closing Date and that they shall survive the purchase by the
Buyer
of the Common Shares and still continue in full force and effect notwithstanding
any subsequent disposition by the Buyer of the Common Shares. The Company
and
its counsel shall be entitled to rely on the representations and warranties
of
the Buyer contained in this paragraph.
3. REPRESENTATIONS
AND WARRANTIES OF THE COMPANY.
The
Company hereby represents and warrants to each of the Buyer that, except
as set
forth in its SEC Documents (as defined below):
(a) Organization
and Qualification.
Each of
the Company and its "Subsidiaries"
(which
for purposes of this Agreement means any entity in which the Company, directly
or indirectly, owns a majority in voting power of the capital stock or equity
or
similar interests) are entities duly organized and validly existing in good
standing under the laws of the jurisdiction in which they are formed, and
have
the corporate power and authorization to own their properties and to carry
on
their business in all material respects as now being conducted. Each of the
Company and its Subsidiaries is duly qualified as a foreign entity to do
business and is in good standing in every jurisdiction in which its ownership
of
property or the nature of the business conducted by it makes such qualification
necessary, except to the extent that the failure to be so qualified or be
in
good standing would not reasonably be expected to have a Material Adverse
Effect. As used in this Agreement, "Material
Adverse Effect"
means
any material adverse effect on the business, properties, assets, operations,
results of operations or condition (financial or otherwise) of the Company
and
its Subsidiaries, taken as a whole, or on the transactions contemplated hereby
and the other Transaction Documents or on the authority or ability of the
Company to perform its obligations under the Transaction Documents. The Company
has no Subsidiaries except as set forth on Schedule 3(a).
(b) Authorization;
Enforcement; Validity.
The
Company has the requisite corporate power and authority to enter into and
perform its obligations under this Agreement, the Registration Rights Agreement
and each of the other agreements entered into by the parties hereto in
connection with the transactions contemplated by this Agreement (collectively,
the "Transaction
Documents")
and to
issue the Common Shares in accordance with the terms hereof and thereof.
The
execution and delivery of the Transaction Documents by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby,
including, without limitation, the issuance of the Common Shares have been
duly
authorized by the Company's Board of Directors and no further filing, consent
or
authorization is required by the Company, its Board of Directors or its
stockholders. This Agreement and the other Transaction Documents have been
duly
executed and delivered by the Company, and constitute the legal, valid and
binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, except as limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium, and other laws of general
application affecting enforcement of creditors' rights generally and (ii)
equitable principles relating to the availability of specific performance,
injunctive relief and other equitable remedies.
(c) Issuance
of Common Shares.
The
Common Shares are duly authorized and, when issued and paid for in accordance
with the terms hereof, shall be validly issued and free from all preemptive
or
similar rights, taxes, liens and charges with respect to the issue thereof
and
the Common Shares shall be fully paid and nonassessable with the holders
being
entitled to all rights accorded to a holder of Common Stock. Assuming the
accuracy of each of the representations and warranties set forth in Section
2 of
this Agreement, the offer and issuance by the Company of the Common Shares
is
exempt from registration under the 1933 Act.
(d) No
Conflicts.
The
execution, delivery and performance of the Transaction Documents by the Company
and the consummation by the Company of the transactions contemplated hereby
and
thereby (including, without limitation, the issuance of the Common Shares)
will
not (i) result in a violation of the Company’s Memorandum and Articles of
Association (as defined in Section 3(p)) or any Subsidiary’s certificate of
incorporation, bylaws or other organizational or charter documents or (ii)
conflict with, or constitute a default (or an event which with notice or
lapse
of time or both would become a default) in any respect under, or give to
others
any rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which the Company or any of its
Subsidiaries are a party, or (iii) to the knowledge of the Company result
in a
violation of any law, rule, regulation, order, judgment or decree (including
foreign, federal and state securities laws and regulations and the rules
and
regulations of the American Stock Exchange (the "Principal
Market")
applicable to the Company or any of its Subsidiaries or by which any property
or
asset of the Company or any of its Subsidiaries is bound or affected, except
for
any such violation set forth in clauses (ii) or (iii) above as could not
reasonably be expected (whether individually or in the aggregate) to result
in
Material Adverse Effect.
(e) Consents.
Except
for the registration of the Common Shares under the 1933 Act pursuant to
the
Registration Rights Agreement, the filing of a 6-K with the SEC describing
the
terms of the transactions contemplated by the Transaction Documents, the
filing
of Form D, any filings required to be made under state or "blue sky" securities
laws, and any required filings or notifications regarding the issuance or
listing of additional securities with the Principal Market, neither the Company
nor any Subsidiary, is required to obtain any consent, authorization or order
of, or make any filing or registration with, any court, governmental agency
or
any regulatory or self-regulatory agency or any other Person in order for
it to
execute, deliver or perform any of its obligations under or contemplated
by the
Transaction Documents, in each case in accordance with the terms hereof or
thereof other than such as have been made or obtained on or prior to the
Closing
Date and the Company and its Subsidiaries have no knowledge of any facts
or
circumstances that might prevent the Company from obtaining or effecting
any of
the registration, application or filings pursuant to the preceding sentence.
The
Company is not in violation of the listing requirements of the Principal
Market
and has no knowledge of any facts that would reasonably lead to delisting
or
suspension of the Common Stock in the foreseeable future. As used herein,
"knowledge" of the Company and/or its Subsidiaries means the actual knowledge
as
of the time a representation is made by any officer (as defined in Rule 16a-1
under the 0000 Xxx) of the Company after due inquiry.
(f) Acknowledgment
Regarding Buyer's Purchase of Common Shares.
The
Company acknowledges and agrees that the Buyer is acting solely in the capacity
of an arm's length purchaser with respect to the Transaction Documents and
the
transactions contemplated hereby and thereby and that the Buyer is not acting
as
a financial advisor or fiduciary of the Company (or in any similar capacity)
with respect to the Transaction Documents and the transactions contemplated
hereby and thereby, and any advice given by the Buyer or any of its
representatives or agents in connection with the Transaction Documents and
the
transactions contemplated hereby and thereby is merely incidental to the
Buyer's
purchase of the Common Shares. The Company further represents to the Buyer
that
the Company's decision to enter into the Transaction Documents has been based
solely on the independent evaluation by the Company and its
representatives.
(g) No
General Solicitation; Placement Agent's Fees.
Neither
the Company, nor any of its affiliates, nor any Person acting on its or their
behalf, has engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D) in connection with the offer or sale
of the
Common Shares. The Company shall be responsible for the payment of any placement
agent's fees, financial advisory fees, or brokers' commissions (other than
for
persons engaged by the Buyer or its investment advisor) relating to or arising
out of the transactions contemplated hereby. The Company acknowledges that
it
has engaged Xxxxxxxxx & Company, Inc. as placement agent (the "Agent")
in
connection with the sale of the Common Shares. Other than the Agent, the
Company
has not engaged any placement agent, financial advisor, broker or other person
engaged by Buyer or its investment advisor in connection with the sale of
the
Common Shares.
(h) No
Integrated Offering.
Assuming the accuracy of the Buyer's representations and warranties set forth
in
Section 2 hereof, none of the Company, any of their affiliates, and any Person
acting on their behalf has, directly or indirectly, made any offers or sales
of
any security or solicited any offers to buy any security, under circumstances
that would require registration of the issuance of any of the Common Shares
under the 1933 Act, whether through integration with prior offerings or
otherwise, or cause this offering of the Common Shares to require approval
of
stockholders of the Company for purposes of any applicable stockholder approval
provisions, including, without limitation, under the rules and regulations
of
any exchange or automated quotation system on which any of the securities
of the
Company are listed or designated. None of the Company, their affiliates and
any
Person acting on their behalf will take any action or steps referred to in
the
preceding sentence that would require registration of the issuance of any
of the
Common Shares under the 1933 Act or cause the offering of the Common Shares
to
be integrated with other offerings for purposes of any such applicable
stockholder approval provisions.
(i) Application
of Takeover Protections; Rights Agreement.
The
Company and its Board of Directors have taken all necessary action, if any,
in
order to render inapplicable any control share acquisition, business
combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Memorandum and Articles
of
Association (as defined in Section 3(p)) or the laws of the British Virgin
Islands which is or could become applicable to the Buyer as a result of the
transactions contemplated by this Agreement, including, without limitation,
the
Company's issuance of the Common Shares and the Buyer's ownership of the
Common
Shares. The Company and its Board of Directors have taken all necessary action,
if any, in order to render inapplicable any stockholder rights plan or similar
arrangement relating to accumulations of beneficial ownership of Common Stock
or
a change in control of the Company.
(j) SEC
Documents; Financial Statements.
The
Company has filed all reports, schedules, forms, statements and other documents
required to be filed by it with the SEC pursuant to the reporting requirements
of the 1934 Act (all of the foregoing filed prior to the date of the Closing
and
all exhibits included therein and financial statements, notes and schedules
thereto and documents incorporated by reference therein being hereinafter
referred to as the "SEC
Documents").
The
Company has made available to the Buyer or its representatives true, correct
and
complete copies of the SEC Documents not available on the SEC’s XXXXX system, if
any. As of their respective filing dates, the SEC Documents complied in all
material respects with the requirements of the 1934 Act and the rules and
regulations of the SEC promulgated thereunder applicable to the SEC Documents,
and none of the SEC Documents, at the time they were filed with the SEC,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. As of their respective filing dates, the financial statements
of the
Company included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules
and
regulations of the SEC with respect thereto. Such financial statements have
been
prepared in accordance with generally accepted accounting principles,
consistently applied, during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto, or
(ii)
in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in
all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments).
(k) Absence
of Certain Changes.
Since
January 1, 2006, there has been no material adverse change and no material
adverse development in the business, properties, operations, condition
(financial or otherwise), or results of operations or prospects of the Company.
Except as disclosed in Schedule 3(k), since January 1, 2006, the Company
has not
declared or paid any dividends. The Company has not taken any steps to seek
protection pursuant to any bankruptcy law nor does the Company have any
knowledge or reason to believe that its creditors intend to initiate involuntary
bankruptcy proceedings or any actual knowledge of any fact that would reasonably
lead a creditor to do so. The Company is not as of the date hereof, and after
giving effect to the transactions contemplated hereby to occur at the Closing,
will not be Insolvent. For purposes of this Section 3(k), "Insolvent"
means,
with respect to any Person (i) such Person is unable to pay its debts and
liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured, (ii) such Person intends to incur
or
believes that it will incur debts that would be beyond its ability to pay
as
such debts mature or (iii) such Person has unreasonably small capital with
which
to conduct the business in which it is engaged as such business is now conducted
and is currently proposed to be conducted.
(l) Conduct
of Business; Regulatory Permits.
Neither
the Company nor any of its Subsidiaries is in violation of any term of or
in
default under its Memorandum and Articles of Association, certificate or
articles of incorporation or bylaws. Neither the Company nor any of its
Subsidiaries is in violation of any judgment, decree or order or any statute,
ordinance, rule or regulation applicable to the Company or any of its
Subsidiaries, except for violations which would not, individually or in the
aggregate reasonably be expected to have a Material Adverse Effect. Without
limiting the generality of the foregoing, the Company is not in violation
of any
of the rules, regulations or requirements of the Principal Market and has
no
knowledge of any facts or circumstances which would reasonably lead to delisting
or suspension of the Common Stock by the Principal Market in the foreseeable
future. Since February 27, 1998, the Common Stock has been included for listing
on the Principal Market. During the two years prior to the date hereof, (i)
trading in the Common Stock has not been suspended by the SEC or the Principal
Market and (ii) except as disclosed in Schedule 3(l), the Company has received
no communication, written or oral, from the SEC or the Principal Market
regarding the suspension or delisting of the Common Stock from the Principal
Market. The Company and its Subsidiaries possess all certificates,
authorizations and permits issued by the appropriate regulatory authorities
necessary to conduct their respective businesses, except where the failure
to
possess such certificates, authorizations or permits would not have,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect, and neither the Company nor any Subsidiary has received any
notice of proceedings relating to the revocation or modification of any such
certificate, authorization or permit.
(m) Foreign
Corrupt Practices.
Neither
the Company, nor any of its Subsidiaries, nor any director, officer, agent,
employee or other Person acting on behalf of the Company or any of its
Subsidiaries has, in the course of its actions for, or on behalf of, the
Company
or any of its Subsidiaries (i) used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to
political activity; (ii) made any direct or indirect unlawful payment to
any
foreign or domestic government official or employee from corporate funds;
(iii)
violated or is in violation in any material resepct of any provision of the
U.S.
Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any unlawful
bribe, rebate, payoff, influence payment, kickback or other unlawful payment
to
any foreign or domestic government official or employee.
(n) Xxxxxxxx-Xxxxx
Act.
The
Company is in material compliance with any and all applicable requirements
of
the Xxxxxxxx-Xxxxx Act of 2002 that are effective as of the date hereof,
and any
and all applicable rules and regulations promulgated by the SEC thereunder
that
are effective as of the date hereof.
(o) Transactions
With Affiliates.
None of
the officers, or directors, and to the knowledge of the Company, none of
the
employees of the Company is presently a party to any transaction with the
Company or any of its Subsidiaries (other than for ordinary course services
as
employees, consultants, officers or directors), including any contract,
agreement or other arrangement providing for the furnishing of services to
or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any such officer, director or employee or,
to the
knowledge of the Company, any corporation, partnership, trust or other entity
in
which any such officer, director, or employee has a substantial interest
or is
an officer, director, trustee or partner. The Company will use a portion
of the
proceeds from the sale of the Common Shares to purchase an interest in Hainan
Jinpan Electric Company Limited as described in Schedule 3(o).
(p) Equity
Capitalization.
As of
the date hereof, the authorized capital stock of the Company consists of
(x)
20,000,000 shares of Common Stock, of which as of the date hereof, 6,821,246
shares are issued and outstanding, 795,000 shares are reserved for issuance
pursuant to the Company's stock incentive plan and other options and warrants
outstanding and no shares are reserved for issuance pursuant to securities
exercisable or exchangeable for, or convertible into, shares of Common Stock,
and (y) 1,000,000 shares of preferred stock, of which as of the date hereof,
6,111 shares are issued and outstanding. All of such outstanding shares have
been, or upon issuance will be, validly issued and are fully paid and
nonassessable. Except as set forth above in this Section 3(p) and below in
Section 3(q): (i) none of the Company's capital stock is subject to preemptive
rights or any other similar rights or any liens or encumbrances suffered
or
permitted by the Company; (ii) there are no outstanding options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, or exercisable or
exchangeable for, any capital stock of the Company, or contracts, commitments,
understandings or arrangements by which the Company is or may become bound
to
issue additional capital stock of the Company or options, warrants, scrip,
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, or exercisable or
exchangeable for, any capital stock of the Company; (iii) there are no
outstanding debt securities, notes, credit agreements, credit facilities
or
other agreements, documents or instruments evidencing Indebtedness of the
Company or by which the Company is or may become bound; (iv) there are no
financing statements securing obligations in any material amounts, either
singly
or in the aggregate, filed in connection with the Company; (v) there are
no
agreements or arrangements under which the Company is obligated to register
the
sale of any of its securities under the 1933 Act (except pursuant to the
Registration Rights Agreement); (vi) there are no outstanding securities
or
instruments of the Company which contain any redemption or similar provisions,
and there are no contracts, commitments, understandings or arrangements by
which
the Company is or may become bound to redeem a security of the Company; (vii)
there are no securities or instruments containing anti-dilution or similar
provisions that will be triggered by the issuance of the Common Shares; (viii)
the Company does not have any stock appreciation rights or "phantom stock"
plans
or agreements or any similar plan or agreement; and (ix) the Company has
no
liabilities or obligations required to be disclosed in the SEC Documents
but not
so disclosed in the SEC Documents, other than those incurred in the ordinary
course of the Company's business and which, individually or in the aggregate,
do
not or would not have a Material Adverse Effect. The Company made available
to
the Buyer true, correct and complete copies of the Company's Memorandum and
Articles of Association, as amended and as in effect on the date hereof (the
"Memorandum
and Articles of Association"),
and
the terms of all securities convertible into, or exercisable or exchangeable
for, shares of Common Stock and the material rights of the holders thereof
in
respect thereto.
(q) Indebtedness
and Other Contracts.
Except
as disclosed in Schedule 3(q), the Company (i) does not have any outstanding
Indebtedness (as defined below), (ii) is not a party to any contract, agreement
or instrument, the violation of which, or default under which, by the other
party(ies) to such contract, agreement or instrument could reasonably be
expected to result in a Material Adverse Effect, (iii) is not in violation
of
any term of or in default under any contract, agreement or instrument relating
to any Indebtedness, except where such violations and defaults would not
result,
individually or in the aggregate, in a Material Adverse Effect, or (iv) is
not a
party to any contract, agreement or instrument relating to any Indebtedness,
the
performance of which, in the judgment of the Company's officers, has or is
expected to have a Material Adverse Effect. For purposes of this Agreement:
(x)
"Indebtedness"
of any
Person means, without duplication (A) all indebtedness for borrowed money,
(B)
all obligations issued, undertaken or assumed as the deferred purchase price
of
property or services, including (without limitation) "capital leases" in
accordance with generally accepted accounting principles (other than trade
payables entered into in the ordinary course of business), (C) all reimbursement
or payment obligations with respect to letters of credit, surety bonds and
other
similar instruments, (D) all obligations evidenced by notes, bonds, debentures
or similar instruments, including obligations so evidenced incurred in
connection with the acquisition of property, assets or businesses, (E) all
indebtedness created or arising under any conditional sale or other title
retention agreement, or incurred as financing, in either case with respect
to
any property or assets acquired with the proceeds of such indebtedness (even
though the rights and remedies of the seller or bank under such agreement
in the
event of default are limited to repossession or sale of such property), (F)
all
monetary obligations under any leasing or similar arrangement which, in
connection with generally accepted accounting principles, consistently applied
for the periods covered thereby, is classified as a capital lease, (G) all
indebtedness referred to in clauses (A) through (F) above secured by (or
for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any mortgage, lien, pledge, charge, security
interest or other encumbrance upon or in any property or assets (including
accounts and contract rights) owned by any Person, even though the Person
which
owns such assets or property has not assumed or become liable for the payment
of
such indebtedness, and (H) all Contingent Obligations in respect of indebtedness
or obligations of others of the kinds referred to in clauses (A) through
(G)
above; (y) "Contingent
Obligation"
means,
as to any Person, any direct or indirect liability, contingent or otherwise,
of
that Person with respect to any indebtedness, lease, dividend or other
obligation of another Person if the primary purpose or intent of the Person
incurring such liability, or the primary effect thereof, is to provide assurance
to the obligee of such liability that such liability will be paid or discharged,
or that any agreements relating thereto will be complied with, or that the
holders of such liability will be protected (in whole or in part) against
loss
with respect thereto; and (z) "Person"
means
an individual, a limited liability company, a partnership, a joint venture,
a
corporation, a trust, an unincorporated organization and a government or
any
department or agency thereof.
(r) Absence
of Litigation.
There
is no action, suit, proceeding, inquiry or investigation before or by the
Principal Market, any court, public board, government agency, self-regulatory
organization or body pending or, to the knowledge of the Company, threatened
against or affecting the Company or any of its Subsidiaries, the Common Stock
or
any of the Company's or its Subsidiaries’ officers or directors, whether of a
civil or criminal nature or otherwise that if adversely determined would
reasonably be expected to have a Material Adverse Effect.
(s) Insurance.
The
Company and each of its Subsidiaries is insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts
as
management of the Company believes to be prudent and customary in the businesses
in which the Company and its Subsidiaries are engaged. Neither the Company
nor
any Subsidiary has been refused any insurance coverage sought or applied
for and
the Company does not have any reason to believe that it nor any of its
Subsidiaries will not be able to renew their existing insurance coverage
as and
when such coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue their respective business at a cost that
would
not have a Material Adverse Effect.
(t) Employee
Relations.
(i) Neither
the Company nor any of its Subsidiaries is a party to any collective bargaining
agreement or employs any member of a union. No executive officer of the Company
has notified the Company that such officer intends to leave the Company or
otherwise terminate such officer's employment with the Company. No executive
officer of the Company or any of its Subsidiaries, to the knowledge of the
Company, is in violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement,
non-competition agreement, or any other contract or agreement or any restrictive
covenant, and the continued employment of each such executive officer does
not
subject the Company or any of its Subsidiaries to any liability with respect
to
any of the foregoing matters.
(ii) The
Company and its Subsidiaries, to its knowledge, are in compliance with all
federal, state, local and foreign laws and regulations respecting labor,
employment and employment practices and benefits, terms and conditions of
employment and wages and hours, except where failure to be in compliance
would
not, either individually or in the aggregate, reasonably be expected to result
in a Material Adverse Effect.
(u) Title.
The
Company and its Subsidiaries have good and marketable title in fee simple
to all
real property and good and marketable title to all personal property owned
by
them which is material to the business of the Company and its Subsidiaries,
in
each case free and clear of all liens, encumbrances and defects except such
as
do not materially affect the value of such property and do not interfere
with
the use made and proposed to be made of such property by the Company and
any of
its Subsidiaries. Any real property and facilities held under lease by the
Company and any of its Subsidiaries are held by them under valid, subsisting
and
enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and buildings
by the
Company and its Subsidiaries.
(v) Intellectual
Property Rights.
The
Company and its Subsidiaries own or possess adequate rights or licenses to
use
all trademarks, service marks and all applications and registrations therefor,
trade names, patents, patent rights, copyrights, original works of authorship,
inventions, trade secrets and other intellectual property rights ("Intellectual
Property Rights")
necessary to conduct its business as conducted on the date of this Agreement,
except for such Intellectual Property Rights, the inability to use would
not
have a Material Adverse Effect. The Company does not have any knowledge of
any
infringement by the Company or its Subsidiaries of the Intellectual Property
Rights or other Property Rights of others which could reasonably be expected
to
result in a Material Adverse Effect. There is no claim, action or proceeding
being made or brought, or to the knowledge of the Company, being threatened,
against the Company or its Subsidiaries regarding (i) its Intellectual Property
Rights, or (ii) that the products or services of the Company infringe the
Intellectual Property Rights of others. The Company has taken reasonable
security measures to protect the secrecy, confidentiality and value of all
of
its Intellectual Property Rights.
(w) Environmental
Laws.
The
Company and its Subsidiaries (i) are in compliance with any and all
Environmental Laws (as hereinafter defined), (ii) have received all permits,
licenses or other approvals required of them under applicable Environmental
Laws
to conduct their respective businesses and (iii) are in compliance with all
terms and conditions of any such permit, license or approval where, in each
of
the foregoing clauses (i), (ii) and (iii), the failure to so comply could
be
reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect. The term "Environmental
Laws"
means
all federal, state, local or foreign laws relating to pollution or protection
of
human health or the environment (including, without limitation, ambient air,
surface water, groundwater, land surface or subsurface strata), including,
without limitation, laws relating to emissions, discharges, releases or
threatened releases of chemicals, pollutants, contaminants, or toxic or
hazardous substances or wastes (collectively, "Hazardous
Materials")
into
the environment, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials, as well as all authorizations, codes, decrees, demands
or
demand letters, injunctions, judgments, licenses, notices or notice letters,
orders, permits, plans or regulations issued, entered, promulgated or approved
thereunder.
(x) Tax
Status.
Except
for matters that would not, individually or in the aggregate, have or reasonably
be expected to have a Material Adverse Effect, the Company and each of its
Subsidiaries (i) have made or filed all foreign, federal and state income
and
all other tax returns, reports and declarations required by any jurisdiction
to
which it is subject, (ii) have paid all taxes and other governmental assessments
and charges that are material in amount, shown or determined to be due on
such
returns, reports and declarations, except those being contested in good faith
and (iii) has set aside on its books provision reasonably adequate for the
payment of all taxes for periods subsequent to the periods to which such
returns, reports or declarations apply. There are no unpaid taxes in any
material amount claimed to be due by the taxing authority of any jurisdiction,
and the officers of the Company have no knowledge of any basis for any such
claim.
(y) Internal
Accounting and Disclosure Controls.
Except
as set forth in the Company’s Annual Report on Form 20-F for the fiscal year
ended December 31, 2005, with respect to material weaknesses in the Company’s
internal control over financial reporting, the Company maintains a system
of
internal accounting controls sufficient to provide reasonable assurance that
(i)
transactions are executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset and liability accountability,
(iii)
access to assets or incurrence of liabilities is permitted only in accordance
with management's general or specific authorization and (iv) the recorded
accountability for assets and liabilities is compared with the existing assets
and liabilities at reasonable intervals and appropriate action is taken with
respect to any difference. The Company maintains disclosure controls and
procedures (as such term is defined in Rule 13a-14 under the 0000 Xxx) that
are
effective in ensuring that are designed to ensure that material information
required to be disclosed by the Company in the reports that it files or submits
under the 1934 Act is recorded, processed, summarized and reported, within
the
time periods specified in the rules and forms of the SEC including, without
limitation, controls and procedures designed in to ensure that information
required to be disclosed by the Company in the reports that it files or submits
under the 1934 Act is accumulated and communicated to the Company's management,
including its principal executive officer or officers and its principal
financial officer or officers, as appropriate, to allow timely decisions
regarding required disclosure.
(z) Off
Balance Sheet Arrangements.
There
is no transaction, arrangement, or other relationship between the Company
and an
unconsolidated or other off balance sheet entity that is required to be
disclosed by the Company in its 1934 Act filings and is not so disclosed
or that
otherwise would be reasonably likely to have a Material Adverse
Effect.
(aa) Investment
Company Status.
The
Company is not, and upon consummation of the sale of the Common Shares will
not
be, an "investment company," a company controlled by an "investment company"
or
an "affiliated person" of, or "promoter" or "principal underwriter" for,
an
"investment company" as such terms are defined in the Investment Company
Act of
1940, as amended.
(bb) Form
F-3 Eligibility.
The
Company is eligible to register the Common Shares for resale by the Buyer
using
Form F-3 promulgated under the 1933 Act.
(cc) Manipulation
of Price.
The
Company has not, and to its knowledge no one acting on its behalf has, (i)
taken, directly or indirectly, any action designed to cause or to result
in the
stabilization or manipulation of the price of any security of the Company
to
facilitate the sale or resale of any of the Common Shares, (ii) other than
the
Agent, sold, bid for, purchased, or paid any compensation for soliciting
purchases of, any of the Common Shares, or (iii) other than the Agent, paid
or
agreed to pay to any person any compensation for soliciting another to purchase
any other securities of the Company.
(dd) Disclosure.
The
Company confirms that neither it nor any other Person acting on its behalf
has
provided the Buyer or its agents or counsel with any information that
constitutes or could reasonably be expected to constitute material, nonpublic
information other than the terms of, and the existence of, the transactions
contemplated hereby. The Company understands and confirms that each of the
Buyer
will rely on the foregoing representations in effecting transactions in
securities of the Company. All disclosure provided to the Buyer regarding
the
Company, its business and the transactions contemplated hereby, including
the
Schedules to this Agreement, furnished by or on behalf of the Company is
true
and correct and does not contain any untrue statement of a material fact
or omit
to state any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading. No event or circumstance has occurred or information exists with
respect to the Company or its business, properties, prospects, operations
or
financial conditions, which, under applicable law, rule or regulation, requires
public disclosure or announcement by the Company but which has not been so
publicly announced or disclosed.
(ee) Choice
of Law.
The
choice of the laws of the State of New York as the governing law of this
Agreement and the other Transaction Documents is a valid choice of law under
the
laws of British Virgin Islands and any political subdivision thereof and
courts
of British Virgin Islands should honor this choice of law.
(ff) Validity
under the Laws of the British Virgin Islands.
Each of
this Agreement and the other Transaction Documents are in proper legal form
under the laws of the British Virgin Islands and any political subdivision
thereof or authority or agency therein for the enforcement thereof against
the
Company therein and it is not necessary to ensure the legality, validity,
enforceability or admissibility in evidence of this Agreement or any of the
other Transaction Documents in the British Virgin Islands or any political
subdivision thereof or agency therein that any of them be filed or recorded
with
any court, authority or agency in, or that any stamp, registration or similar
taxes or duties be paid to any court, authority or agency of the British
Virgin
Islands or any political subdivision thereof.
(gg) Stamp
Duty.
Except
as has already been paid or authorized for payment, no stamp duty or similar
tax
or duty is payable under applicable laws or regulations in connection with
the
creation, issuance or delivery of the Common Shares, the transfer of any
of the
Common Shares or with respect to the execution and delivery of and performance
by the respective parties under this Agreement or any other Transaction
Document.
(hh) Withholding
Taxes.
Payments made by the Company to holders under the Common Shares and by the
Company to the Buyer under this Agreement will not be subject under the current
laws of British Virgin Islands or any political subdivision of any such
jurisdiction to any withholdings or similar charges for or on account of
taxation.
4. COVENANTS.
(a) Commercially
Reasonable Efforts.
Each
party shall use its commercially reasonable efforts timely to satisfy each
of
the covenants and conditions to be satisfied by it as provided in Sections
6 and
7 of this Agreement.
(b) Form
D
and Blue Sky.
The
Company agrees to file a Form D with respect to the Common Shares as required
under Regulation D and to provide a copy thereof to the Buyer promptly after
such filing. The Company, on or before the Closing Date, shall take such
action
as the Company shall reasonably determine is necessary in order to obtain
an
exemption for or to qualify the Common Shares for sale to the Buyer at the
Closing pursuant to this Agreement under applicable securities or "Blue Sky"
laws of the states of the United States (or to obtain an exemption from such
qualification), and shall provide evidence of any such action so taken to
the
Buyer on or prior to the Closing Date. The Company shall make all filings
and
reports relating to the offer and sale of the Common Shares required under
applicable securities or "Blue Sky" laws of the states of the United States
following the Closing Date.
(c) Reporting
Status.
Until
the date on which the Investors (as defined in the Registration Rights
Agreement) shall have sold all the Common Shares (the "Reporting
Period"),
the
Company shall file all reports required to be filed with the SEC pursuant
to the
1934 Act, and the Company shall not terminate its status as an issuer required
to file reports under the 1934 Act even if the 1934 Act or the rules and
regulations thereunder would otherwise permit such termination.
(d) Use
of
Proceeds.
The
Company will use the proceeds from the sale of the Common Shares (i) for
capital
expenditures, (ii) to purchase the minority shareholder’s interest in Hainan
Jinpan Electric Company Limited as described in Schedule 3(o) and (iii) for
general corporate purposes.
(e) Financial
Information.
The
Company agrees to send the following to each Investor (as defined in the
Registration Rights Agreement) during the Reporting Period unless the following
are filed with the SEC through its XXXXX system and are available to the
public
through the XXXXX system, within three (3) Business Days after the filing
thereof with the SEC, a copy of its Annual Reports on Form 20-F, any interim
reports or any consolidated balance sheets, income statements, stockholders'
equity statements and/or cash flow statements for any period other than annual,
any reports on Form 6-K and any registration statements (other than on Form
S-8)
or amendments filed pursuant to the 1933 Act. As used herein, "Business
Day"
means
any day other than Saturday, Sunday or other day on which commercial banks
in
The City of New York are authorized or required by law to remain
closed.
(f) Listing.
The
Company shall promptly secure the listing of all of the Registrable Securities
(as defined in the Registration Rights Agreement), once they have been issued,
upon each national securities exchange and automated quotation system, if
any,
upon which shares of Common Stock are then listed (subject to official notice
of
issuance) and shall maintain, so long as any other shares of Common Stock
shall
be so listed, such listing of all Registrable Securities from time to time
issuable under the terms of the Transaction Documents. The Company shall
maintain the Common Stock's authorization for listing on the Principal Market.
The Company shall not take any action which would be reasonably expected
to
result in the delisting or suspension of the Common Stock on the Principal
Market. The Company shall pay all fees and expenses in connection with
satisfying its obligations under this Section 4(f).
(g) Fees.
The
Company shall be responsible for the payment of any placement agent's fees,
financial advisory fees, or broker's commissions (other than for Persons
engaged
by the Buyer) relating to or arising out of the transactions contemplated
hereby, including, without limitation, any fees or commissions payable to
the
Agent. Except as otherwise set forth in the Transaction Documents, each party
to
this Agreement shall bear its own expenses in connection with the sale of
the
Common Shares to the Buyer.
(h) Pledge
of Common Shares.
The
Company acknowledges and agrees that the Common Shares may be pledged by
an
Investor (as defined in the Registration Rights Agreement) in connection
with a
bona fide margin agreement or other loan or financing arrangement that is
secured by the Common Shares. The pledge of Common Shares shall not be deemed
to
be a transfer, sale or assignment of the Common Shares hereunder, and no
Investor effecting a pledge of Common Shares shall be required to provide
the
Company with any notice thereof or otherwise make any delivery to the Company
pursuant to this Agreement or any other Transaction Document, including,
without
limitation, Section 2(f) of this Agreement; provided that an Investor and
its
pledgee shall be required to comply with the provisions of Section 2(f) of
this
Agreement in order to effect a sale, transfer or assignment of Common Shares
to
such pledgee. The Company hereby agrees to execute and deliver such
documentation as a pledgee of the Common Shares may reasonably request in
connection with a pledge of the Common Shares to such pledgee by an
Investor.
(i) Disclosure
of Transactions and Other Material Information.
On or
before 8:30 a.m., New York City time, on the second Business Day following
the
date of this Agreement, the Company shall issue a press release and file
a
report on Form 6-K describing the terms of the transactions contemplated
by the
Transaction Documents in the form required by the 1934 Act and attaching
the
material Transaction Documents (including, without limitation, this Agreement
and the form of the Registration Rights Agreement) as exhibits to such filing
(including all attachments, the "6-K
Filing").
From
and after the filing of the 6-K Filing with the SEC, the Buyer shall not
be in
possession of any material, nonpublic information received from the Company
or
any of its officers, directors, employees or agents, that is not disclosed
in
the 6-K Filing. The Company shall not, and shall cause its officers, directors,
employees and agents, not to, provide the Buyer with any material, nonpublic
information regarding the Company from and after the filing of the 6-K Filing
with the SEC without the express written consent of the Buyer. If the Buyer
has,
or believes it has, received any such material, nonpublic information regarding
the Company, it shall provide the Company with written notice thereof. The
Company shall, within one (1) trading day of receipt of such notice, make
public
disclosure of such material, nonpublic information. Neither the Company nor
the
Buyer shall issue any press releases or any other public statements with
respect
to the transactions contemplated hereby; provided, however, that the Company
shall be entitled, without the prior approval of the Buyer, to make any press
release or other public disclosure with respect to such transactions (i)
in
substantial conformity with the 6-K Filing and contemporaneously therewith
and
(ii) as is required by applicable law and regulations (provided that in the
case
of clause (i) the Buyer shall be consulted by the Company in connection with
any
such press release or other public disclosure prior to its release). Without
the
prior written consent of the Buyer, neither the Company nor any affiliates
shall
disclose the name of the Buyer in any filing, announcement, release or otherwise
other than in connection with the Registration Statement, (as defined in
the
Registration Rights Agreement), as contemplated by the Registration Rights
Agreement, unless such disclosure is required by law, regulation or the
Principal Market.
(j) Conduct
of Business.
The
business of the Company and its Subsidiaries shall not be conducted in violation
of any law, ordinance or regulation of any governmental entity, except where
such violations would not result, either individually or in the aggregate,
in a
Material Adverse Effect.
(k) Restrictions
on Sale of Common Stock.
During
a period of 30 days from the Effective Date (as defined in the Registration
Rights Agreement), the Company will not, (i) directly or indirectly, offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant
to
purchase or otherwise transfer or dispose of any share of Common Stock or
any
securities convertible into or exercisable or exchangeable for Common Stock,
or
file any registration statement under the 1933 Act with respect to any of
the
foregoing or (ii) enter into any swap or any other agreement or any transaction
that transfers, in whole or in part, directly or indirectly, the economic
consequence of ownership of the Common Stock, whether any such swap or
transaction described in clause (i) or (ii) above is to be settled by delivery
of Common Stock or such other securities, in cash or otherwise. The foregoing
sentence shall not apply to (A) the Common Shares to be sold hereunder, (B)
any
shares of Common Stock issued by the Company upon the exercise of an option
or
warrant or the conversion of a security outstanding on the Closing Date hereof,
or (C) any shares of Common Stock issued or options to purchase Common Stock
granted pursuant to existing employee benefit plans or employee stock purchase
plans of the Company.
5. TRANSFER
AGENT INSTRUCTIONS.
(a) Transfer
Agent Instructions. The Company represents and warrants that no instruction
and stop transfer instructions to give effect to Section 2(f) hereof, will
be
given by the Company to its transfer agent with respect to the Common Shares,
and that the Common Shares shall otherwise be freely transferable on the
books
and records of the Company as and to the extent provided in this Agreement
and
the other Transaction Documents. If the Buyer effects a sale, assignment
or
transfer of the Common Shares in accordance with Section 2(f), the Company
shall
permit the transfer and shall promptly instruct its transfer agent to issue
one
or more certificates or credit shares to the applicable balance accounts
at The
Depositary Trust Company (“DTC”) in such name and in such denominations as
specified by the Buyer to effect such sale, transfer or assignment.
(b) Breach.
The
Company acknowledges that a breach by it of its obligations hereunder will
cause
irreparable harm to the Buyer. Accordingly, the Company acknowledges that
the
remedy at law for a breach of its obligations under this Section 5 will be
inadequate and agrees, in the event of a breach or threatened breach by the
Company of the provisions of this Section 5, that the Buyer shall be entitled,
in addition to all other available remedies, to an order and/or injunction
restraining any breach and requiring immediate issuance and transfer, without
the necessity of showing economic loss and without any bond or other security
being required.
(c) Additional
Relief.
If the
Company shall fail for any reason or for no reason to issue to such holder
unlegended certificates within three (3) Business Days of (x) receipt of
documents necessary for the removal of legend set forth above or (y) the
date of
its obligation to deliver the shares of Common Stock as contemplated pursuant
to
clause (ii) below (the "Deadline
Date"),
then,
in addition to all other remedies available to the holder, if on or after
the
trading day immediately following such three Business Day period, the holder
purchases (in an open market transaction or otherwise) shares of Common Stock
to
deliver in satisfaction of a sale by the holder of shares of Common Stock
that
the holder anticipated receiving from the Company (a "Buy-In"),
then
the Company shall, within three Business Days after the holder's request
and in
the holder's discretion, either (i) pay cash to the holder in an amount equal
to
the holder's total purchase price (including brokerage commissions, if any)
for
the shares of Common Stock so purchased (the "Buy-In
Price"),
at
which point the Company's obligation to deliver such certificate (and to
issue
such shares of Common Stock) shall terminate, or (ii) promptly honor its
obligation to deliver to the holder a certificate or certificates representing
such shares of Common Stock and pay cash to the holder in an amount equal
to the
excess (if any) of the Buy-In Price over the product of (A) such number of
shares of Common Stock, times (B) the Closing Bid Price on the Deadline Date.
"Closing
Bid Price"
means,
for any security as of any date, the last closing price for such security
on the
Principal Market, as reported by Bloomberg, or, if the Principal Market begins
to operate on an extended hours basis and does not designate the closing
bid
price then the last bid price of such security prior to 4:00:00 p.m., New
York
Time, as reported by Bloomberg Financial Markets (“Bloomberg”), or, if the
Principal Market is not the principal securities exchange or trading market
for
such security, the last closing price of such security on the principal
securities exchange or trading market where such security is listed or traded
as
reported by Bloomberg, or if the foregoing do not apply, the last closing
price
of such security in the over-the-counter market on the electronic bulletin
board
for such security as reported by Bloomberg, or, if no closing bid price is
reported for such security by Bloomberg, the average of the bid prices of
any
market makers for such security as reported in the "pink sheets" by Pink
Sheets
LLC (formerly the National Quotation Bureau, Inc.). If the Closing Bid Price
cannot be calculated for a security on a particular date on any of the foregoing
bases, the Closing Bid Price of such security on such date shall be the fair
market value as mutually determined by the Company and the holder. If the
Company and the holder are unable to agree upon the fair market value of
such
security, then the Company shall, within two (2) Business Days submit via
facsimile (a) the disputed determination of the fair market value to an
independent reputable investment bank selected by the Company and approved
by
the holder or (b) the disputed arithmetic calculation of the fair market
value
to the Company’s independent, outside accountant. The Company shall cause, at
its expense, the investment bank or the accountant, as the case may be, to
perform the determinations or calculations and notify the Company and the
holder
of the results no later than ten (10) Business Days from the time it receives
the disputed determinations or calculations. Such investment bank’s or
accountant’s determination or calculation, as the case may be, will be binding
upon all parties absent demonstrable error. All such determinations to be
appropriately adjusted for any stock dividend, stock split, stock combination
or
other similar transaction during the applicable calculation period.
6. CONDITIONS
TO THE COMPANY'S OBLIGATION TO SELL.
The
obligation of the Company hereunder to issue and sell the Common Shares to
the
Buyer at the Closing is subject to the satisfaction, at or before the Closing
Date, of each of the following conditions, provided that these conditions
are
for the Company's sole benefit and may be waived by the Company at any time
in
its sole discretion by providing the Buyer with prior written notice
thereof:
(i) The
Buyer
shall have executed each of the Transaction Documents to which it is a party
and
delivered the same to the Company.
(ii) The
Buyer
shall have delivered to the Company the Purchase Price for the Common Shares
being purchased by the Buyer at the Closing by wire transfer of immediately
available funds pursuant to the wire instructions provided by the
Company.
(iii)
The
representations and warranties of the Buyer shall be true and correct in
all
material respects (except for those representations and warranties that are
qualified by materiality or Material Adverse Effect, which shall be true
and
correct in all respects) as of the date when made and as of the Closing Date
as
though made at that time (except for representations and warranties that
speak
as of a specific date, which shall be true and correct as of such specified
date), and the Buyer shall have performed, satisfied and complied in all
material respects with the covenants, agreements and conditions required
by this
Agreement to be performed, satisfied or complied with by the Buyer at or
prior
to the Closing Date.
(iv)
No
proceeding challenging this Agreement or the transactions contemplated hereby,
or seeking to prohibit, alter, prevent or materially delay the Closing, shall
have been instituted or be pending before any court, arbitrator, governmental
body, agency or official.
(v) The
sale
of the Common Shares by the Company shall not be prohibited by any law or
governmental order or regulation.
(vi)
The
Company
shall
have sold securities to third party purchasers, who are not acting in concert
with the Buyer, for an aggregate minimum of $20,000,000 and an aggregate
maximum
of $27,000,000. Such securities shall be sold on, and have, such terms and
conditions as the Company shall determine in its sole discretion.
(vii)
The
Buyer
shall have executed and delivered to the Company a cross-receipt with respect
to
the receipt by the Buyer of a certificate representing the Common Shares
issued
to the Buyer at the Closing.
7. CONDITIONS
TO THE BUYER'S OBLIGATION TO PURCHASE.
The
obligation of the Buyer hereunder to purchase the Common Shares at the Closing
is subject to the satisfaction, at or before the Closing Date, of each of
the
following conditions, provided that these conditions are for the Buyer's
sole
benefit and may be waived by the Buyer at any time in its sole discretion
by
providing the Company with prior written notice thereof:
(i) The
Company shall have duly executed and delivered to the Buyer (i) each of the
Transaction Documents and (ii) the Common Shares (in such amounts as the
Buyer
shall request) being purchased by the Buyer at the Closing pursuant to this
Agreement.
(ii) The
Buyer
shall have received the opinions of each of Xxxxxxxx Xxxxxxx LLP, Xxxxxx
Westwood & Riegels and Hainan Haida Pingzheng Law Office, each the Company’s
outside counsel, dated as of the Closing Date, in substantially the forms
of
Exhibits X-0, X-0 and B-3, respectively, attached hereto.
(iii) The
Company shall have delivered to the Buyer a certificate evidencing the existence
of the Company in the British Virgin Islands as of a date within 10 days
of the
Closing Date.
(iv)
The
Common Stock (I) shall be listed on the Principal Market and (II) shall not
have
been suspended, as of the Closing Date, by the SEC or the Principal Market
from
trading on the Principal Market nor shall suspension by the SEC or the Principal
Market have been threatened, as of the Closing Date, either (A) in writing
by
the SEC or the Principal Market or (B) by falling below the minimum listing
maintenance requirements of the Principal Market.
(v)
The
Company shall have delivered to the Buyer a certificate, executed by the
Secretary of the Company and dated as of the Closing Date, as to (i) the
resolutions consistent with Section 3(b) as adopted by the Company's Board
of
Directors in a form reasonably acceptable to the Buyer, (ii) the Memorandum
and
Articles of Association as in effect on the Closing Date, in the form attached
hereto as Exhibit
C.
(vi)
The
representations and warranties of the Company contained in Section 3 shall
be
true and correct in all material respects (except for those representations
and
warranties that are qualified by materiality or Material Adverse Effect,
which
shall be true and correct in all respects) as of the date when made and as
of
the Closing Date as though made at that time (except for representations
and
warranties that speak as of a specific date, which shall be true and correct
as
of such specified date) and the Company shall have performed, satisfied and
complied in all material respects with the covenants, agreements and conditions
required by the Transaction Documents to be performed, satisfied or complied
with by the Company at or prior to the Closing Date. The Buyer shall have
received a certificate, executed by the Chief Executive Officer of the Company,
dated as of the Closing Date, to the foregoing effect and as to such other
matters as may be reasonably requested by the Buyer in the form attached
hereto
as Exhibit
D.
(vii)
The
Company shall have obtained all governmental, regulatory or third party consents
and approvals, if any, necessary for the sale of the Common Shares.
(viii) The
Company shall have executed and delivered to the Buyer a cross-receipt with
respect to the Company's receipt of the Buyer’s Purchase Price.
(ix)
The
Company shall have delivered to the Buyer such other documents relating to
the
transactions contemplated by this Agreement as the Buyer or its counsel may
reasonably request.
(x) The
Company shall have sold securities to third party purchasers, who are not
acting
in concert with the Buyer, for an aggregate minimum of $20,000,000 and an
aggregate maximum of $27,000,000. Such securities shall be sold on, and have,
such terms and conditions as the Company shall determine in its sole
discretion.
8. TERMINATION.
In the
event that the Closing shall not have occurred on or before five (5) Business
Days from the date hereof due to the Company's or the Buyer's failure to
satisfy
the conditions set forth in Sections 6 and 7 above (and the nonbreaching
party's
failure to waive such unsatisfied condition(s)), the nonbreaching party shall
have the option to terminate this Agreement with respect to such breaching
party
at the close of business on such date without liability of any party to any
other party.
9. MISCELLANEOUS.
(a) Governing
Law.
All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by the internal laws of the State of
New
York, without giving effect to any choice of law or conflict of law provision
or
rule (whether of the State of New York or any other jurisdictions) that would
cause the application of the laws of any jurisdictions other than the State
of
New York.
(b) Dispute
Resolution.
Any
dispute between the parties hereto shall be finally resolved by arbitration
in
accordance with the Rules of the International Chamber of Commerce, by three
(3)
arbitrators appointed in accordance with the said rules. The decision of
the
arbitrators shall be final, binding on the parties, and not subject to appeal.
The language of the arbitration shall be English and the exclusive place
of
arbitration shall be New York. The parties hereby expressly waive any right
of
appeal to any court having jurisdiction on any question of fact or law. Without
prejudice to the other provisions of this Agreement, no party shall be entitled
to suspend its performance of this Agreement by reason only of the reference
of
any matter or dispute to an arbitral tribunal.
(c) Jurisdiction:
A
judgment on the arbitrators' award may be entered in any court having
jurisdiction over the parties. The parties hereby consent to the non-exclusive
jurisdiction of the United States District Court for the Southern District
of
New York, for such purposes, provided, however, that, if (but only if) such
United States District Court does not have jurisdiction, the parties hereby
consent to the non-exclusive jurisdiction of the courts of the State of New
York
in the Borough of Manhattan for such purposes (such United States District
Court
or, in the absence of jurisdiction, any such court of the State of New York,
being herein referred to as a "Consented
Court").
Each
party irrevocably waives any objection which it may have at any time to the
laying of venue of any suit, action or proceeding arising out of or relating
to
the enforcement of any judgment of the arbitrators brought in a Consented
Court,
irrevocably waives any claim that any such suit, action or proceeding brought
in
such Consented Court has been brought in an inconvenient forum and further
irrevocably waives the right to object, with respect to such claim, suit,
action
or proceeding brought in such Consented Court for the enforcement of any
judgment of the arbitrators, that such Consented Court does not have
jurisdiction over such party.
(d) Judgment
Currency.
The
Company agrees to indemnify the Buyer against any loss incurred by the Buyer
as
a result of any judgment or order being given or made for any amount due
hereunder and such judgment or order being expressed and paid in a currency
(the
"Judgment
Currency")
other
than United States dollars and as a result of any variation as between (i)
the
rate of exchange at which the United States dollar amount is converted into
the
Judgment Currency for the purpose of such judgment or order, and (ii) the
rate
of exchange at which the Buyer is able to purchase United States dollars
with
the amount of the Judgment Currency actually received by the Buyer. The
foregoing indemnity shall constitute a separate and independent obligation
of
the Company and shall continue in full force and effect notwithstanding any
such
judgment or order as aforesaid. The term "rate of exchange" shall include
any
premiums and costs of exchange payable in connection with the purchase of,
or
conversion into, the relevant currency.
(e) Waiver
of Immunities.
To the
extent that the Company or any of its respective properties, assets or revenues
may have or may hereafter become entitled to, or have attributed to them,
any
right of immunity, on the grounds of sovereignty, from any legal action,
suit or
proceeding, from set-off or counterclaim, from the jurisdiction of any court,
from service of process, from attachment upon or prior to judgment, or from
attachment in aid of execution of judgment, or from execution of judgment,
or
other legal process or proceeding for the giving of any relief or for the
enforcement of any judgment, in any jurisdiction in which proceedings may
at any
time be commenced, with respect to their obligations, liabilities or any
other
matter under or arising out of or in connection with this Agreement or any
additional agreement, the Company hereby irrevocably and unconditionally,
to the
extent permitted by applicable law, waives and agrees not to plead or claim
any
such immunity and consents to such relief and enforcement.
(f) Counterparts.
This
Agreement may be executed in two or more identical counterparts, all of which
shall be considered one and the same agreement and shall become effective
when
counterparts have been signed by each party and delivered to the other party;
provided that a facsimile signature shall be considered due execution and
shall
be binding upon the signatory thereto with the same force and effect as if
the
signature were an original, not a facsimile signature.
(g) Headings.
The
headings of this Agreement are for convenience of reference and shall not
form
part of, or affect the interpretation of, this Agreement.
(h) Severability.
If any
provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction
or the
validity or enforceability of any provision of this Agreement in any other
jurisdiction.
(i) Entire
Agreement; Amendments.
This
Agreement and the other Transaction Documents supersede all other prior oral
or
written agreements between the Buyer, the Company, their affiliates and Persons
acting on their behalf with respect to the matters discussed herein, and
this
Agreement, the other Transaction Documents and the instruments referenced
herein
and therein contain the entire understanding of the parties with respect
to the
matters covered herein and therein and, except as specifically set forth
herein
or therein, neither the Company nor the Buyer makes any representation,
warranty, covenant or undertaking with respect to such matters. No provision
of
this Agreement may be amended other than by an instrument in writing signed
by
the Company and the Buyer. No provision hereof may be waived other than by
an
instrument in writing signed by the party against whom enforcement is sought.
The Company has not, directly or indirectly, made any agreements with the
Buyer
relating to the terms or conditions of the transactions contemplated by the
Transaction Documents except as set forth in the Transaction Documents. Without
limiting the foregoing, the Company confirms that, except as set forth in
this
Agreement, the Buyer has not made any commitment or promise nor does the
Buyer
have any other obligation to provide any financing to the Company or otherwise.
(j) Notices.
Any
notices, consents, waivers or other communications required or permitted
to be
given under the terms of this Agreement must be in writing and will be deemed
to
have been delivered: (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile (provided confirmation of transmission is
mechanically or electronically generated and kept on file by the sending
party);
or (iii) one (1) Business Day after deposit with an overnight courier service,
in each case properly addressed to the party to receive the same. The addresses
and facsimile numbers for such communications shall be:
If
to the
Company:
Jinpan
International Limited
c/o
Hainan Jinpan Special Electric Company
4-1
No.
100 Nanhai Avenue
Jinpan
Development Area
Haikou,
Hainan 570216 P.R.C.
Telephone: (00)
000-0000-0000
Facsimile: (00)
000-0000-0000
Attention:
Xxxxx
Xxx
with
a
copy to:
Jinpan
International (USA) Limited
000
Xxxxxx Xxxxxx
Xxxxxxxxx
Xxxxxx, XX 00000
Telephone: (000)
000-0000
Facsimile: (000)
000-0000
Attention: Xxxx
Du
Xxxxxxxx
Xxxxxxx LLP
000
Xxxxxxxxx Xxxxxx
Xxx
Xxxx,
XX 00000
Telephone:
(000)
000-0000
Facsimile: (000)
000-0000
Attention:
Xxxxx
X.
Xxxxxxx
If
to the
Transfer Agent:
American
Stock Transfer & Trust Company
00
Xxxxxx
Xxxx
Xxx
Xxxx,
XX 00000
Telephone: (000)
000-0000
Facsimile: (000)
000-0000
Attention: Xxxxxxxxx
Xxxxxxxxx
If
to the
Buyer:
CD
Investment Partners, Ltd.
000
Xxxxx
Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx,
XX 00000
Telephone: _______________
Facsimile: (000)
000-0000
Attention: Investment
Manager
with
a
copy to:
Xxxxxxxxx
Traurig LLC
00
X.
Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx,
XX 00000
Telephone: (000)
000-0000
Facsimile: (000)
000-0000
Attention:
Xxxxx
X.
Xxxxxxxxx
Xxxx
X.
Xxxxx
or
to
such other address and/or facsimile number and/or to the attention of such
other
Person as the recipient party has specified by written notice given to each
other party five (5) days prior to the effectiveness of such change. Written
confirmation of receipt (A) given by the recipient of such notice, consent,
waiver or other communication, (B) mechanically or electronically generated
by
the sender's facsimile machine containing the time, date, recipient facsimile
number and an image of the first page of such transmission or (C) provided
by an
overnight courier service shall be rebuttable evidence of personal service,
receipt by facsimile or receipt from an overnight courier service in accordance
with clause (i), (ii) or (iii) above, respectively.
(k) Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and assigns, including any purchasers of the
Common
Shares. The Company shall not assign this Agreement or any rights or obligations
hereunder without the prior written consent of the holders of at least a
majority of the aggregate number of Registrable Securities issued and issuable
hereunder, including by way of a Fundamental Transaction. The Buyer may assign
some or all of its rights hereunder without the consent of the Company, in
which
event such assignee shall be deemed to be the Buyer hereunder with respect
to
such assigned rights. A merger or sale of the Company shall not be deemed
to be
an assignment for the purposes of this section. For purposed of this Section
"Fundamental
Transaction"
means
that the Company shall, directly or indirectly, in one or more related
transactions, (i) consolidate or merge with or into (whether or not the Company
is the surviving corporation) another Person, or (ii) sell, assign, transfer,
convey, or otherwise dispose of all or substantially all of the properties
or
assets of the Company to another Person, or (iii) allow another Person to
make a
purchase, tender or exchange offer that is accepted by the holders of more
than
the 50% of the outstanding shares of Common Stock (not including any shares
of
Common Stock held by the Person or Persons making or party to, or associated
or
affiliated with the Persons making or party to, such purchase, tender or
exchange offer), or (iv) consummate a stock purchase agreement or other business
combination (including, without limitation, a reorganization, recapitalization,
spin-off, or scheme of arrangement) with another Person whereby such other
Person acquires more than the 50% of the outstanding shares of Common Stock
(not
including any shares of Common Stock held by the other Person or other Persons
making or party to, or associated or affiliated with the other Persons making
or
party to, such stock purchase agreement or other business combination), (v)
reorganize, recapitalize or reclassify its Common Stock, or (vi) any "person"
or
"group" (as these terms are used for purposes of Sections 13(d) and 14(d)
of the
Exchange Act) is or will become the "beneficial owner" (as defined in Rule
13d-3
under the Exchange Act), directly or indirectly, of 50% of the aggregate
ordinary voting power represented by issued and outstanding Common Stock.
(l) No
Third Party Beneficiaries.
This
Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may
any
provision hereof be enforced by, any other Person.
(m) Reliance
by the Agent.
The
parties agree and acknowledge that Agent may rely on the representations,
warranties, agreements and covenants of the Company contained in this Agreement
and may rely on the representations and warranties of the Buyer set forth
in
this Agreement as if such representations, warranties, agreements and covenants,
as applicable, were made directly to the Agent. The parties further agree
that
the Agent may relay on or, if the Agent so requests, be specifically named
as an
addressee of, the legal opinions to be delivered pursuant to this Agreement.
In
addition, no representation, warranty or covenant, express or implied, is
or
will be made by the Agent with respect to the Company or the transactions
contemplated by this Agreement; and no responsibility of any kind exists
with
the Agent with respect to the completeness or accuracy of, or any other matter
concerning, any other information made or provided by the Company or its
representatives to the Buyer (as to diligence matters or otherwise) or with
respect to any statements made regarding any such information by the Company,
its representatives or the Agent to the Buyer.
(n) Survival.
Unless
this Agreement is terminated under Section 8, the representations and warranties
of the Company and the Buyer in Sections 2 and 3 shall survive the Closing
until
the eighteen-month anniversary of the Closing Date (except for the
representations and warranties of the Company made pursuant to Section 3(c),
which shall survive indefinitely), and the agreements and covenants set forth
in
Sections 4, 5 and 9 shall survive the Closing until the expiration of the
applicable statute of limitations. The Buyer shall be responsible only for
its
own representations, warranties, agreements and covenants
hereunder.
(o) Further
Assurances.
Each
party shall do and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents, as any other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated
hereby.
(p) Indemnification.
In
consideration of the Buyer's execution and delivery of the Transaction Documents
and acquiring the Common Shares thereunder and in addition to all of the
Company's other obligations under the Transaction Documents, the Company
shall
defend, protect, indemnify and hold harmless the Buyer and each other holder
of
the Common Shares and all of their stockholders, partners, members, officers,
directors, employees and direct or indirect investors and any of the foregoing
Persons' agents or other representatives (including, without limitation,
those
retained in connection with the transactions contemplated by this Agreement)
(collectively, the "Indemnitees")
from
and against any and all actions, causes of action, suits, claims, losses,
costs,
penalties, fees, liabilities and damages, and expenses in connection therewith
(irrespective of whether any such Indemnitee is a party to the action for
which
indemnification hereunder is sought), and including reasonable attorneys'
fees
and disbursements (the "Indemnified
Liabilities"),
incurred by any Indemnitee as a result of, or arising out of, or relating
to (a)
any misrepresentation or breach of any representation or warranty made by
the
Company in the Transaction Documents or any other certificate, instrument
or
document contemplated hereby or thereby, (b) any breach of any covenant,
agreement or obligation of the Company contained in the Transaction Documents
or
any other certificate, instrument or document contemplated hereby or thereby
or
(c) any cause of action, suit or claim brought or made against such Indemnitee
by a third party (including for these purposes a derivative action brought
on
behalf of the Company) and arising out of or resulting from (i) the execution,
delivery, performance or enforcement of the Transaction Documents or any
other
certificate, instrument or document contemplated hereby or thereby, (ii)
any
transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of the issuance of the Common Shares, or (iii)
the
status of the Buyer or holder of the Common Shares as an investor in the
Company. To the extent that the foregoing undertaking by the Company may
be
unenforceable for any reason, the Company shall make the maximum contribution
to
the payment and satisfaction of each of the Indemnified Liabilities which
is
permissible under applicable law. Except as otherwise set forth herein, the
mechanics and procedures with respect to the rights and obligations under
this
Section 9(p) shall be the same as those set forth in Section 6 of the
Registration Rights Agreement.
(q) No
Strict Construction.
The
language used in this Agreement will be deemed to be the language chosen
by the
parties to express their mutual intent, and no rules of strict construction
will
be applied against any party.
(r) Remedies.
The
Buyer and each holder of the Common Shares shall have all rights and remedies
set forth in the Transaction Documents and all rights and remedies which
such
holders have been granted at any time under any other agreement or contract
and
all of the rights which such holders have under any law. Any Person having
any
rights under any provision of this Agreement shall be entitled to enforce
such
rights specifically (without posting a bond or other security), to recover
damages by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law. Furthermore, the Company recognizes
that in the event that it fails to perform, observe, or discharge any or
all of
its obligations under the Transaction Documents, any remedy at law may prove
to
be inadequate relief to the Buyer. The Company therefore agrees that the
Buyer
shall be entitled to seek temporary and permanent injunctive relief in any
such
case without the necessity of proving actual damages and without posting
a bond
or other security.
(s) Payment
Set Aside.
To the
extent that the Company makes a payment or payments to the Buyer hereunder
or
pursuant to any of the other Transaction Documents or the Buyer enforce or
exercise its rights hereunder or thereunder, and such payment or payments
or the
proceeds of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the Company, a trustee, receiver or any other Person under any law
(including, without limitation, any bankruptcy law, foreign, state or federal
law, common law or equitable cause of action), then to the extent of any
such
restoration the obligation or part thereof originally intended to be satisfied
shall be revived and continued in full force and effect as if such payment
had
not been made or such enforcement or setoff had not occurred.
(t) Independent
Nature of Buyer's Obligations and Rights.
The
obligations of the Buyer under the Transaction Documents are several and
not
joint with the obligations of any other third party purchase or the Company’s
securities under any other agreement between such third party purchaser and
the
Company. Buyer shall not be responsible in any way for the performance of
the
obligations of any other third party purchaser of the Company’s securities under
any such other agreement. The decision of the Buyer to purchase Common Shares
pursuant to this Agreement has been made by the Buyer independently of any
other
third party purchaser of the Company’s securities. Nothing contained herein or
in any Transaction Document, and no action taken by the Buyer pursuant thereto,
shall be deemed to constitute the Buyer and any third party purchaser of
the
Company’s securities as a partnership, an association, a joint venture or any
other kind of entity or group, or create a presumption that the Buyer and
any
third party purchaser of the Company’s securities are in any way acting in
concert or as a group with respect to any matters. The Buyer acknowledges
that
no other third party purchaser of the Company’s securities has acted as agent
for the Buyer in connection with making its investment hereunder and that
no
third party purchaser of the Company’s securities will be acting as agent of the
Buyer in connection with monitoring its investment in the Common Shares or
enforcing its rights under the Transaction Documents. The Buyer confirms
that it
has independently participated in the negotiation of the transactions
contemplated hereby with the advice of its own counsel and advisors. The
Buyer
shall be entitled to independently protect and enforce its rights (including,
without limitation, the rights arising out of this Agreement or out of the
other
Transaction Documents), and it shall not be necessary for any third party
purchaser of the Company’s securities to be joined as an additional party in any
proceeding for such purpose. To the extent that any such third party purchasers
purchase the same or similar securities as the Buyer hereunder or on the
same or
similar terms and conditions or pursuant to the same or similar documents,
all
such matters are solely in the control of the Company, not the action or
decision of the Buyer, and would be solely for the convenience of the Company
and not because it was required or requested to do so by the Buyer or any
such
third party purchaser. For clarification purposes only and without implication
that the contrary would otherwise be true, the transactions contemplated
by the
Transaction Documents include only the transaction between the Company and
the
Buyer and do not include any other transaction between the Company and any
other
third party purchaser of the Company’s securities.
(u) Delivery
of Securities.
Notwithstanding anything contained in this Agreement or any other Transaction
Document to the contrary, unless otherwise directed in writing by the Buyer,
all
of the Buyer's securities purchased pursuant to this Agreement (and all
securities which are issuable to the Buyer pursuant to the terms of this
Agreement or any other agreement or instrument entered into, or delivered,
in
connection with execution of this Agreement or the consummation of the
transaction contemplated hereby) shall be registered in the name of the Buyer,
and the Company shall, and shall cause its agents and representatives to,
deliver all certificates representing such securities to Xxxxxxx, Xxxxx &
Co., Xxx Xxx Xxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxxxx Xxxxx,
and copies of all certificates representing such securities shall be sent
to the
Buyer in accordance with Section 9(j) of this Agreement.
[SIGNATURE
PAGE FOLLOWS]
IN
WITNESS WHEREOF,
the
parties have executed this Securities Purchase Agreement as of the date first
written above.
| JINPAN INTERNATIONAL LIMITED | ||
| |
|
|
| By: | /s/ | |
|
Name:
Title:
|
||
IN
WITNESS WHEREOF,
the
parties have executed this Securities Purchase Agreement as of the date first
written above. The Buyer, intending to be legally bound, hereby executes
and
delivers to the Company this signature page to the Securities Purchase Agreement
and authorizes the Company to attach it to the counterpart of the Agreement
executed or to be executed by the Company, which when so attached shall be
considered effective and one and the same agreement.
|
PURCHASER
|
|||
|
[
|
] | ||
| (Insert full legal name that the Purchaser desires to appear on the stock certificate and warrant as the registered holder) | |||
| By: | |||
| Name: | |||
| Title: | |||
| Address for Notice: | With a copy to: | |
| Facsimile No: | Facsimile No: | |||
| Attention: | Attention: |
| Jurisdiction of Organization: | ||
| Taxpayer Identification Number: |
| Purchase Price: | $ | |
| Number of Shares: |
Schedule
3(a)
Subsidiaries
|
Name
of Entity
|
Date
of Establishment
|
Jurisdiction
of Incorporation
|
Percentage
of Ownership
|
|
Hainan
Jinpan Electric Company, Ltd.
|
June
3, 1997
|
People’s
Republic of China
|
85%
|
|
Jinpan
International
(USA)
Limited
|
February
18, 0000
|
Xxxxx
xx Xxx Xxxx
|
100%
|
|
Wuhan
Jinpan Electric Company Limited
|
September
28, 2006
|
People’s
Republic of China
|
100%
owned by Hainan Jinpan Electric Company,
Ltd.
|
Schedule
3(k)
Dividends
Declared or Paid Since January 1, 2006
On
January 17, 2006, the Company declared a cash dividend of $0.24 per share.
On
February 28, 2006, the Company paid half of the dividend, $0.12 per share,
to
all holders of record as of February 10, 2006. The remainder of the dividend
was
paid on August 24, 2006, to all holders of record as of August 10, 2006.
Schedule
3(1)
Conduct
of Business; Regulatory Permits
On
September 27, 2005, the Company received a letter from the American Stock
Exchange (the "Amex")
regarding the noncompliance by the company with Section 8.04(a) of the Amex
Company Guide which requires that Board of Directors nominations must be
either
selected, or recommended for the Board’s selection, by a Nominating Committee
comprised solely of independent directors or by a majority of independent
directors, and Section 804(c) of the Company Guide which requires that each
listed company must adopt a form charter or board resolution, as applicable,
addressing the nominations process and such related matters as may be required
under the federal securities laws.
On
October 31, 2005, the Company received a letter from the Amex concluding
that
the Company had resolved the continued listing deficiency referenced in the
September 27, 2005 letter.
Schedule
3(o)
Transactions
With Affiliates
The
Company will enter into a Joint Venture Purchase Agreement with Haikou Jinpan
Special Transformer Works, a People’s Republic of China corporation registered
in Haikou, Hainan Province (the "Minority Shareholder"), pursuant to which
the
Company will purchase the Minority Shareholders’ interest in Hainan Jinpan
Electric Company Limited. The Company will use a portion of the proceeds
from
the sale of the Common Shares to purchase the interest from the Minority
Shareholder. Certain directors and officers of the Company own interests
in the
Minority Shareholder, who in turn owns 15% of Hainan Jinpan Electric Company,
Ltd., a subsidiary of the Company (the "Subsidiary"). Xx. Xx Zhiyuan, Chairman,
President and Chief Executive Officer of the Company, and Xx. Xxxx Xiangsheng,
Vice Chairman and Vice President of the Company, own 3% and 2%, respectively,
of
the Minority Shareholder.
Schedule
3(q)
Indebtedness
and Other Contracts
|
Name
of Creditor
|
Type
of Indebtedness
|
Credit
Amount
|
Principal
Outstanding as of
December
4, 2006
|
Maturity
Date
|
Security
Status
|
|
Xxx
Xxx Commercial Bank
|
Irrevocable
Letter of Credit
|
US$6.0
Million
|
US$1.52
Million
|
August
18, 2007
|
Guaranteed
by the Company
|
|
Bank
of China
|
Irrevocable
Letter of Credit
|
XXX
00 Xxxxxxx
|
XXX
0.83 Million
|
February
1, 2007
|
Unsecured
|
|
Bank
of China
|
Working
Capital
|
XXX
00 Xxxxxxx
|
XXX
20 Million
|
May
11, 2007
|
Unsecured
|
|
China
Industrial Bank
|
Working
Capital and Letter of Credit
|
XXX
000 Xxxxxxx
|
XXX
10 Million
|
October
18, 2007
|
Unsecured
|
EXHIBITS
|
Exhibit
A
|
-
|
Form
of Registration Rights Agreement
|
|
Exhibit
B-1
|
-
|
Form
of Company Counsel Opinion
|
|
Exhibit
B-2
|
-
|
Form
of Company Counsel Opinion
|
|
Exhibit
B-3
|
-
|
Form
of Company Counsel Opinion
|
|
Exhibit
C
|
-
|
Form
of Secretary's Certificate
|
|
Exhibit
D
|
-
|
Form
of Officer's Certificate
|
EXHIBIT
A
Form
of Registration Rights Agreement
EXHIBIT
B-1
Form
of Company Counsel Opinion
EXHIBIT
B-2
Form
of Company Counsel Opinion
EXHIBIT
B-3
Form
of Company Counsel Opinion
EXHIBIT
C
Form
of Secretary's Certificate
JINPAN
INTERNATIONAL LIMITED
SECRETARY’S
CERTIFICATE
The
undersigned hereby certifies that she is the duly elected, qualified and
acting
Secretary of JINPAN INTERNATIONAL LIMITED, a British Virgin Islands corporation
(the "Company"),
and
that as such she is authorized to execute and deliver this certificate in
the
name and on behalf of the Company and in connection with the Securities Purchase
Agreement, dated as of December 19, 2006, by and between the Company and
CD
Investment Partners, LTD. (the "Securities
Purchase Agreement"),
and
further certifies in her official capacity, in the name and on behalf of
the
Company, the items set forth below. Capitalized terms used but not otherwise
defined herein shall have the meaning set forth in the Securities Purchase
Agreement.
(i) Attached
hereto as Exhibit
A
is a
true, correct and complete copy of the resolutions duly adopted by the Board
of
Directors of the Company at a meeting of the Board of Directors held on December
19, 2006. Such resolutions have not in any way been amended, modified, revoked
or rescinded, have been in full force and effect since their adoption to
and
including the date hereof and are now in full force and effect.
(ii) Attached
hereto as Exhibit
B
is a
true, correct and complete copy of the Memorandum of Association of the Company,
together with any and all amendments thereto, and no action has been taken
to
further amend, modify or repeal such Memorandum of Association, the same
being
in full force and effect in the attached form as of the date hereof.
(iii)
Attached
hereto as Exhibit
C
is a
true, correct and complete copy of the Articles of Association of the Company
and any and all amendments thereto, and no action has been taken to further
amend, modify or repeal such Articles of Association, the same being in full
force and effect in the attached form as of the date hereof.
IN
WITNESS WHEREOF, the undersigned has hereunto set his hand as of this
20th
day of
December 2006.
|
Xxxxxx
Xxxx
Secretary
|
EXHIBIT
D
Form
of Officer's Certificate
The
undersigned, Chief Executive Officer of JINPAN INTERNATIONAL LIMITED, a British
Virgin Islands corporation (the "Company"),
pursuant to the Securities Purchase Agreement, dated as of December 19, 2006,
by
and between the Company and CD Investment Partners, LTD. (the "Buyer"),
(the
"Securities
Purchase Agreement"),
hereby represents and warrants to the Buyer as follows (capitalized terms
used
but not otherwise defined herein shall have the meaning set forth in the
Securities Purchase Agreement):
1. The
representations and warranties made by the Company as set forth in Section
3
of the
Securities Purchase Agreement are true and correct in all material respects
(except for those representations and warranties that are qualified by
materiality or Material Adverse Effect, which shall be true and correct in
all
respects) as of the date of the Securities Purchase Agreement and the hereof
as
though made at that time (except for representations and warranties that
speak
as of a specific date, which are true and correct as of such date).
2. The
Company has performed, satisfied or complied in all material respects with
the
covenants, agreements and conditions required by the Transaction Documents
to be
performed, satisfied or complied with by the Company at or prior to the date
hereof.
IN
WITNESS WHEREOF,
the
undersigned has executed this certificate this 20th
day of
December 2006.
|
Xxxxxxx
Xx
Chief
Executive Officer
|
