SECURITIES PURCHASE AGREEMENT
SECURITIES
PURCHASE AGREEMENT
(the
"Agreement"),
dated
as of December 19, 2006, by and among 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
the investors listed on the Schedule of Buyers attached hereto (individually,
a
"Buyer"
and
collectively, the "Buyers").
WHEREAS:
A. The
Company and each Buyer is 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. Each
Buyer wishes to purchase on a several and not joint basis, and the Company
wishes to sell, upon the terms and conditions stated in this Agreement, that
aggregate number of common shares, par value $0.018 per share, (the
"Common
Stock")
of the
Company, set forth opposite such Buyer's name in column (3) on the Schedule
of
Buyers (which aggregate amount for all Buyers together with the Other Buyers
(as
defined below) shall be 1,297,739 shares of Common Stock (being
19.9% of the issued and outstanding shares of Common Stock) and
shall
collectively be referred to herein as, the "Common
Shares")
.
C. Contemporaneously
with this execution and delivery of this Agreement, the Company will execute
and
deliver one or more Securities Purchase Agreements (the "Other
Securities Purchase Agreements")
with
other buyers of Common Shares (the "Other
Buyers")
each
of such Other Securities Purchase Agreement will be substantially similar to
this Agreement.
D. 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 each 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 each Buyer, and each Buyer severally,
but not jointly, shall purchase from the Company on the Closing Date (as defined
below), the number of Common Shares as is set forth opposite such Buyer's name
in column (3) on the Schedule of Buyers (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 such date as is mutually agreed to by
the
Company and the Buyers 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 Buyers of a majority
in interest of the Common Shares.
(ii) Purchase
Price.
The
aggregate purchase price for the Common Shares to be purchased by each Buyer
at
the Closing (the "Purchase
Price")
shall
be the amount set forth opposite each Buyer's name in column (4) of the Schedule
of Buyers.
(b) Form
of Payment.
On the
Closing Date, (i) immediately after each Buyer is delivered the Common Shares
contemplated in clause (ii) below, each Buyer shall pay its Purchase Price
to
the Company for the Common Shares to be issued and sold to such Buyer at the
Closing, by wire transfer of immediately available funds in accordance with
the
Company's written wire instructions and (ii) the Company shall deliver to each
Buyer certificates representing the Common Shares (allocated in the amounts
as
such Buyer shall request) which such Buyer is then purchasing hereunder, duly
executed on behalf of the Company and registered in the name of such Buyer
or
its designee.
| 2. |
BUYER'S
REPRESENTATIONS AND WARRANTIES.
|
Each
Buyer hereby as to itself and for no other Buyer, represents and warrants to
the
Company:
(a) No
Public Sale or Distribution.
Such
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, such 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)).
Such
Buyer is acquiring the Common Shares hereunder in the ordinary course of its
business. Such 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. Other than Equity Strategies Opportunity
Fund, Such 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 such 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.
2
(c) Reliance
on Exemptions.
Such
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 such Buyer's compliance with, the
representations, warranties, agreements, acknowledgments and understandings
of
such Buyer set forth herein in order to determine the availability of such
exemptions and the eligibility of such Buyer to acquire the Common
Shares.
(d) Information.
Such
Buyer and its advisors, if any, 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 such
Buyer. Such Buyer and its advisors, if any, have been afforded the opportunity
to ask questions of the Company. Neither such inquiries nor any other due
diligence investigations conducted by such Buyer or its advisors, if any, or
its
representatives shall modify, amend or affect such Buyer's right to rely on
the
Company's representations and warranties contained herein. Such 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. Such 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. Such 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.
Such
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.
Such
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)
such
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)
such 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 no Buyer
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 (as defined in Section
3(b)), including, without limitation, this Section 2(f).
3
(g) Legends.
Such
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 within
three Trading Days (as defined below) after,
(i)
such Common Shares 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.
Each
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 such Buyer and shall constitute the legal, valid
and
binding obligations of such Buyer enforceable against such 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.
4
(i) No
Conflicts.
The
execution, delivery and performance by such Buyer of this Agreement and the
Registration Rights Agreement and the consummation by such Buyer of the
transactions contemplated hereby and thereby will not (i) result in a violation
of the organizational documents of such Buyer (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
such Buyer is a party, or (iii) result in a violation of any law, rule,
regulation, order, judgment or decree (including federal and state securities
laws) applicable to such 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 such Buyer to perform its obligations
hereunder.
(j) Residency.
Such
Buyer is a resident of that jurisdiction specified below its address on the
Schedule of Buyers.
(k) General
Solicitation.
Such
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 Such Buyer.Such
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. Such 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 Xxxxxxx.Xx
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 such Buyer.
(n) Prohibited
Transactions.Since
the
time when such Buyer was first contacted by the Company or the Agent regarding
the transactions contemplated hereby, neither such Buyer nor any Person acting
on behalf of or pursuant to any understanding with such 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 such 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.
Notwithstanding the foregoing, with respect to LB I Group Inc., the
representation contained in this Section 2(n) shall only apply to the Equities
Strategies Opportunity Fund, as currently configured, of Xxxxxx Brothers Inc.,
and shall not apply to any other affiliate, subsidiary, business unit, area,
group or division of Xxxxxx Brothers Inc.
5
(o) Acknowledgement.Such
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. Such 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 such
Buyer at the Closing Date and that they shall survive the purchase by such
Buyer
of the Common Shares and still continue in full force and effect notwithstanding
any subsequent disposition by such Buyer of the Common Shares. The Company
and
its counsel shall be entitled to rely on the representations and warranties
of
such Buyer contained in this paragraph.
| 3. |
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY.
|
The
Company hereby represents and warrants to each of the Buyers that:
(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) or prospects 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 Other Securities Purchase
Agreements, the Registration Rights Agreement, the Irrevocable Transfer Agent
Instructions (as defined in Section 5) and each of the other agreements entered
into by the parties hereto in connection with the transactions contemplated
by
this Agreement and the Other Securities Purchase Agreements (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.
6
(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) 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 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 Form 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.
7
(f) Acknowledgment
Regarding Buyer's Purchase of Common Shares.
The
Company acknowledges and agrees that each 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 no Buyer is 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 a 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 such Buyer's purchase
of
the Common Shares. The Company further represents to each 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 Subsidiaries or 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 any 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 or other agent in connection with the sale
of the Common Shares.
(h) No
Integrated Offering.
Assuming the accuracy of the Buyers' representations and warranties set forth
in
Section 2 hereof, none of the Company, its Subsidiaries, any of its 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,
its
Subsidiaries, 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.
8
(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 are or could become applicable to any Buyer as a result of the
transactions contemplated by this Agreement, including, without limitation,
the
Company's issuance of the Common Shares and any Buyer's ownership of the Common
Shares. The Company and its Board of Directors have taken all necessary action
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.
Since
December 31, 2004 (the "Reporting
Period"),
the
Company has timely 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 during the Reporting
period or 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 Buyers or their respective 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
December 31, 2005, 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
or its Subsidiaries. Except as disclosed in Schedule 3(k), since January 1,
2006, the Company has not declared or paid any dividends. Neither the Company
nor any of its Subsidiaries has 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 and its Subsidiaries, individually and on a consolidated basis, are
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, (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 or (iv) the present saleable value
of
such person's assets is less than the amount required to pay such Person's
total
Indebtedness (as defined in Section 3(q)).
9
(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 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 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.
10
(o) Transactions
With Affiliates.
None of
the officers, or directors, or employees of the Company or any of its
Subsidiaries 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 or any of its Subsidiaries, 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 any of its Subsidiaries,
or contracts, commitments, understandings or arrangements by which the Company
or any of its Subsidiaries is or may become bound to issue additional capital
stock of the Company or any of its Subsidiaries 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 or any of its Subsidiaries;
(iii) there are no outstanding debt securities, notes, credit agreements, credit
facilities or other agreements, documents or instruments evidencing Indebtedness
of the Company or any of its Subsidiaries or by which the Company or any of
its
Subsidiaries 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 or any of its Subsidiaries; (v) there
are
no agreements or arrangements under which the Company or any of its Subsidiaries
is obligated to register the sale of any of their securities under the 1933
Act
(except pursuant to the Registration Rights Agreement); (vi) there are no
outstanding securities or instruments of the Company or any of its Subsidiaries
which contain any redemption or similar provisions, and there are no contracts,
commitments, understandings or arrangements by which the Company or any of
its
Subsidiaries is or may become bound to redeem a security of the Company or
any
of its Subsidiaries; (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 and its Subsidiaries have 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
or
its Subsidiaries' respective businesses and which, individually or in the
aggregate, do not or would not have a Material Adverse Effect. The Company
made
available to the Buyers 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.
11
(q) Indebtedness
and Other Contracts.
Except
as disclosed in Schedule 3(q), neither the Company nor any of its Subsidiaries
(i) has any outstanding Indebtedness (as defined below), (ii) is 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 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 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.
12
(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.
(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
neither the Company nor any such Subsidiary has any reason to believe that
it
will not be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as may
be
necessary to continue its 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 (as defined
in
Rule 501(f) of the 0000 Xxx) of the Company or any of its Subsidiaries has
notified the Company or any such Subsidiary that such officer intends to leave
the Company any such Subsidiary or otherwise terminate such officer's employment
with the Company or any such Subsidiary. 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 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.
13
(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. Neither the Company nor any of its Subsidiaries
have infringed upon any 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 and its Subsidiaries have 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.
The
Company and each of its Subsidiaries (i) have made or filed all material
foreign, federal and state income and all other tax returns, reports and
declarations required by any jurisdiction to which it is subject, (ii) have
materially 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.
14
(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 and each of its
Subsidiaries maintain 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. Except
as
set forth on Schedule
3(y),
during
the twelve months prior to the date hereof neither the Company nor any of its
Subsidiaries have received any notice or correspondence from any accountant
relating to any material weakness in any part of the system of internal
accounting controls of the Company or any of its Subsidiaries.
(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 Buyers
using
Form F-3 promulgated under the 1933 Act.
(cc) Manipulation
of Price.
The
Company has not and 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.
15
(dd) Disclosure.
The
Company confirms that neither it nor any other Person acting on its behalf
has
provided any of the Buyers or their 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
Buyers will rely on the foregoing representations in effecting transactions
in
securities of the Company. All disclosure provided to the Buyers regarding
the
Company, or any of its Subsidiaries, their 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 any of its
Subsidiaries or its or their 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.
(ii) Transfer
Taxes.
On the
Closing Date, all stock transfer or other taxes (other than income or similar
taxes) which are required to be paid in connection with the sale and transfer
of
the Common Shares to be sold to each Buyer hereunder will be, or will have
been,
fully paid or provided for by the Company, and all laws imposing such taxes
will
be or will have been complied with.
16
(jj) U.S.
Real Property Holding Corporation.
The
Company is not, has not ever been, and will not, while any Common Shares are
outstanding, become a U.S. real property holding corporation within the meaning
of Section 897 of the Internal Revenue Code of 1986, as amended, and the Company
shall so certify upon any Buyer's request.
(kk) Acknowledgement
Regarding Buyers' Trading Activity.
It is
understood and acknowledged by the Company (i) that none of the Buyers have
been
asked by the Company or its Subsidiaries to agree, nor has any Buyer agreed
with
the Company or its Subsidiaries, to desist from purchasing or selling, long
and/or short, securities of the Company, or "derivative" securities based on
securities issued by the Company or to hold the Common Shares for any specified
term; (ii) that past or future open market or other transactions by any Buyer,
including, without limitation, short sales or "derivative" transactions, before
or after the closing of this or future private placement transactions, may
negatively impact the market price of the Company's publicly-traded securities;
(iii) that any Buyer, and counter parties in "derivative" transactions to which
any such Buyer is a party, directly or indirectly, presently may have a "short"
position in the Common Stock, and (iv) that each Buyer shall not be deemed
to
have any affiliation with or control over any arm's length counter-party in
any
"derivative" transaction. The Company further understands and acknowledges
that
(a) one or more Buyers may engage in hedging and/or trading activities at
various times during the period that the Common Shares are outstanding, and
(b)
such hedging and/or trading activities (if any) could reduce the value of the
existing stockholders' equity interests in the Company at and after the time
that the hedging and/or trading activities are being conducted.
| 4. |
COVENANTS.
|
(a) Material
Best Efforts.
Each
party shall use its material best 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 each 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 Buyers 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
Buyers 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.
17
(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.
Subject
to Section 8 below, at Closing, the Company shall pay to Xxxxxx Bay Fund, LP
or
its designee(s) all reasonable legal fees and disbursements incurred in
connection with the transactions contemplated by the Transaction Documents
in an
amount not to exceed $15,000, which amount, in whole or in part, may be withheld
by Xxxxxx Bay Fund, LP from its Purchase Price at the Closing. 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 any Buyer)
relating to or arising out of the transactions contemplated hereby, including,
without limitation, any fees or commissions payable to the Agents. 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 Buyers.
(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.
18
(i) Disclosure
of Transactions and Other Material Information.
On
or
before 8:30 a.m., New York City time, on the first 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, no Buyer shall 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 any 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 such Buyer. If a 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 two (2) trading days of receipt of such notice, make
public disclosure of such material, nonpublic information. Neither the Company
nor any 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 any 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) each 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 any applicable Buyer, neither the Company
nor any affiliates shall disclose the name of such 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) Variable
Securities.
For so
long as any Common Shares are outstanding, the Company shall not, in any manner,
issue or sell any rights, warrants or options to subscribe for or purchase
Common Stock or directly or indirectly convertible into or exchangeable or
exercisable for Common Stock at a price which varies or may vary with the market
price of the Common Stock, including by way of one or more reset(s) to any
fixed
price.
(k) 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.
19
(l) 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.
(m) Limit
on Number of Common Shares.
The
Company will not be obligated to issue and the Buyers will not be obligated
to
purchase any Common Shares which would result in the issuance under this
Securities Purchase Agreement of more than nineteen and nine-tenths percent
(19.9%) of the issued and outstanding shares of Common Stock.
(n) Additional
Issuances of Securities.
(i) For
purposes of this Section 4(n), the following definitions shall
apply.
(1) "Convertible
Securities"
means
any stock or securities (other than Options) convertible into or exercisable
or
exchangeable for shares of Common
Stock.
(2) "Options"
means
any rights, warrants or options to subscribe for or purchase shares of
Common
Stock or
Convertible Securities.
(3) "Common
Stock Equivalents"
means,
collectively, Options and Convertible Securities.
(4) "Excluded
Securities"
means
any Common Stock issued or issuable: (i) in connection with any Approved Stock
Plan; (ii) pursuant to a bona fide firm commitment underwritten public offering
with a nationally recognized underwriter which generates gross proceeds to
the
Company in excess of $20 million (other than an "at-the-market offering" as
defined in Rule 415(a)(4) under the 1933 Act and "equity lines"); (iii) upon
conversion of any Options or Convertible Securities which are outstanding on
the
day immediately preceding the date hereof, provided that the terms of such
Options or Convertible Securities are not amended, modified or changed on or
after the date hereof; and (iv) in connection with any strategic acquisition
or
transaction by the Company, whether through an acquisition of stock or a merger
of any business, assets or technologies the primary purpose of which is not
to
raise equity capital.
(5) "Trading
Day"
means
any day on which the Common Stock is traded on the Principal Market, or, if
the
Principal Market is not the principal trading market for the Common Stock,
then
on the principal securities exchange or securities market on which the Common
Stock is then traded; provided that "Trading Day" shall not include any day
on
which the Common Stock is scheduled to trade on such exchange or market for
less
than 4.5 hours or any day that the Common Stock is suspended from trading during
the final hour of trading on such exchange or market (or if such exchange or
market does not designate in advance the closing time of trading on such
exchange or market, then during the hour ending at 4:00:00 p.m., New York
Time).
20
(ii) From
the
date hereof until the date that is ninety (90) Trading Days following the
Effective Date (as defined in the Registration Rights Agreement) (the
"Trigger
Date"),
the
Company will not, directly or indirectly, file any registration statement with
the SEC other than the Registration Statement (as defined in the Registration
Rights Agreement). From the date hereof until the Trigger Date, the Company
will
not, directly or indirectly, offer, sell, grant any option to purchase, or
otherwise dispose of (or announce any offer, sale, grant or any option to
purchase or other disposition of) any of its or its Subsidiaries' equity or
equity equivalent securities, including without limitation any debt, preferred
stock or other instrument or security that is, at any time during its life
and
under any circumstances, convertible into or exchangeable or exercisable for
shares of Common Stock or Common Stock Equivalents (any such offer, sale, grant,
disposition or announcement being referred to as a "Subsequent
Placement").
(iii) From
the
Trigger Date until the third anniversary of the Closing Date, the Company will
not, directly or indirectly, effect any Subsequent Placement unless the Company
shall have first complied with this Section 4(n)(iii).
(1) The
Company shall deliver to each Buyer an irrevocable written notice
(the "Offer
Notice")
of any
proposed or intended issuance or sale or exchange (the "Offer")
of the
securities being offered (the "Offered
Securities")
in a
Subsequent Placement, which Offer Notice shall (w) identify and describe the
Offered Securities, (x) describe the price and other terms upon which they
are to be issued, sold or exchanged, and the number or amount of the Offered
Securities to be issued, sold or exchanged, (y) identify the persons or
entities (if known) to which or with which the Offered Securities are to be
offered, issued, sold or exchanged and (z) offer to issue and sell to or
exchange with such Buyers at least twenty five percent (25%) of the Offered
Securities, allocated among such Buyers (a) based on such Buyer's pro rata
portion of the aggregate principal amount of Notes purchased hereunder (the
"Basic
Amount"),
and
(b) with respect to each Buyer that elects to purchase its Basic Amount, any
additional portion of the Offered Securities attributable to the Basic Amounts
of other Buyers as such Buyer shall indicate it will purchase or acquire should
the other Buyers subscribe for less than their Basic Amounts (the "Undersubscription
Amount"),
which
process shall be repeated until the Buyers shall have an opportunity to
subscribe for any remaining Undersubscription Amount.
(2) To
accept
an Offer, in whole or in part, such Buyer must deliver a written notice to
the
Company prior to the end of the tenth (10th)
Business Day after such Buyer's receipt of the Offer Notice (the "Offer
Period"),
setting forth the portion of such Buyer's Basic Amount that such Buyer elects
to
purchase and, if such Buyer shall elect to purchase all of its Basic Amount,
the
Undersubscription Amount, if any, that such Buyer elects to purchase (in either
case, the "Notice
of Acceptance");
provided,
however,
that
such Buyers may not accept an Offer by electing to purchase less than 5% of
the
Offered Securities on an aggregate basis. If the Basic Amounts subscribed for
by
all Buyers are less than the total of all of the Basic Amounts, then each Buyer
who has set forth an Undersubscription Amount in its Notice of Acceptance shall
be entitled to purchase, in addition to the Basic Amounts subscribed for, the
Undersubscription Amount it has subscribed for; provided,
however,
that if
the Undersubscription Amounts subscribed for exceed the difference between
the
total of all the Basic Amounts and the Basic Amounts subscribed for (the
"Available
Undersubscription Amount"),
each
Buyer who has subscribed for any Undersubscription Amount shall be entitled
to
purchase only that portion of the Available Undersubscription Amount as the
Basic Amount of such Buyer bears to the total Basic Amounts of all Buyers that
have subscribed for Undersubscription Amounts, subject to rounding by the
Company to the extent its deems reasonably necessary.
21
(3) The
Company shall have fifteen (15) Business Days from the expiration of the Offer
Period above to offer, issue, sell or exchange all or any part of such Offered
Securities as to which a Notice of Acceptance has not been given by the Buyers
(the "Refused
Securities"),
but
only to the offerees described in the Offer Notice (if so described therein)
and
only upon terms and conditions (including, without limitation, unit prices
and
interest rates) that are not more favorable to the acquiring person or persons
or less favorable to the Company than those set forth in the Offer Notice and
(ii) to publicly announce (a) the execution of such Subsequent Placement
Agreement, and (b) either (x) the consummation of the transactions contemplated
by such Subsequent Placement Agreement or (y) the termination of such Subsequent
Placement Agreement, which shall be filed with the SEC on a Current Report
on
Form 8-K with such Subsequent Placement Agreement and any documents contemplated
therein filed as exhibits thereto.
(4) In
the
event the Company shall propose to sell less than all the Refused Securities
(any such sale to be in the manner and on the terms specified in Section
4(n)(iii)(3) above), then each Buyer may, at its sole option and in its sole
discretion, reduce the number or amount of the Offered Securities specified
in
its Notice of Acceptance to an amount that shall be not less than the number
or
amount of the Offered Securities that such Buyer elected to purchase pursuant
to
Section 4(n)(iii)(2) above multiplied by a fraction, (i) the numerator of which
shall be the number or amount of Offered Securities the Company actually
proposes to issue, sell or exchange (including Offered Securities to be issued
or sold to Buyers pursuant to Section 4(n)(iii)(3) above prior to such
reduction) and (ii) the denominator of which shall be the original amount of
the
Offered Securities. In the event that any Buyer so elects to reduce the number
or amount of Offered Securities specified in its Notice of Acceptance, the
Company may not issue, sell or exchange more than the reduced number or amount
of the Offered Securities unless and until such securities have again been
offered to the Buyers in accordance with Section 4(n)(iii)(1)
above.
22
(5) Upon
the
closing of the issuance, sale or exchange of all or less than all of the Refused
Securities, the Buyers shall acquire from the Company, and the Company shall
issue to the Buyers, the number or amount of Offered Securities specified in
the
Notices of Acceptance, as reduced pursuant to Section 4(p)(iii)(3) above if
the
Buyers have so elected, upon the terms and conditions specified in the Offer.
Notwithstanding anything to the contrary contained in this Agreement, if the
Company does not consummate the closing of the issuance, sale or exchange of
all
or less than all of the Refused Securities within fifteen (15) Business Days
of
the expiration of the Offer Period, the Company shall issue to the Buyers the
number or amount of Offered Securities specified in the Notices of Acceptance,
as reduced pursuant to Section 4(p)(iii)(4) above if the Buyers have so elected,
upon the terms and conditions specified in the Offer. The purchase by the Buyers
of any Offered Securities is subject in all cases to the preparation, execution
and delivery by the Company and the Buyers of a purchase agreement relating
to
such Offered Securities reasonably satisfactory in form and substance to the
Buyers and their respective counsel.
(6) Any
Offered Securities not acquired by the Buyers or other persons in accordance
with Section 4(n)(iii)(3) above may not be issued, sold or exchanged until
they
are again offered to the Buyers under the procedures specified in this
Agreement.
(7) The
Company and the Buyers agree that if any Buyer elects to participate in the
Offer, (x) neither the Subsequent Placement Agreement with respect to such
Offer
nor any other transaction documents related thereto (collectively, the
"Subsequent
Placement Documents")
shall
include any term or provisions whereby any Buyer shall be required to agree
to
any restrictions in trading as to any securities of the Company owned by such
Buyer prior to such Subsequent Placement, and (y) any registration rights set
forth in such Subsequent Placement Documents shall be similar in all material
respects to the registration rights contained in the Registration Rights
Agreement.
(8) Notwithstanding
anything to the contrary in this Section 4(n) and unless otherwise agreed to
by
the Buyers, the Company shall either confirm in writing to the Buyers that
the
transaction with respect to the Subsequent Placement has been abandoned or
shall
publicly disclose its intention to issue the Offered Securities, in either
case
in such a manner such that the Buyers will not be in possession of material
non-public information, by the fifteen (15th)
Business Day following delivery of the Offer Notice. If by the fifteen
(15th)
following delivery of the Offer Notice no public disclosure regarding a
transaction with respect to the Offered Securities has been made, and no notice
regarding the abandonment of such transaction has been received by the Buyers,
such transaction shall be deemed to have been abandoned and the Buyers shall
not
be deemed to be in possession of any material, non-public information with
respect to the Company. Should the Company decide to pursue such transaction
with respect to the Offered Securities, the Company shall provide each Buyer
with another Offer Notice and each Buyer will again have the right of
participation set forth in this Section 4(n)(iii). The Company shall not be
permitted to deliver more than one such Offer Notice to the Buyers in any 60
day
period.
23
(iv) The
restrictions contained in subsections (ii) and (iii) of this Section 4(n) shall
not apply in connection with the issuance of any Excluded
Securities.
| 5. |
TRANSFER
AGENT INSTRUCTIONS.
|
(a) Transfer
Agent Instructions.
The
Company represents and warrants that instruction 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 a 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 such 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 a 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 a 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
City 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.
24
| 6. |
CONDITIONS
TO THE COMPANY'S OBLIGATION TO SELL.
|
The
obligation of the Company hereunder to issue and sell the Common Shares to
each
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 each Buyer with prior written notice
thereof:
(i) Such
Buyer shall have executed each of the Transaction Documents to which it is
a
party and delivered the same to the Company.
(ii) Such
Buyer shall have delivered to the Company the Purchase Price (less, in the
case
of Xxxxxx Bay Fund, LP, the amounts withheld pursuant to Section 4(g)) for
the
Common Shares being purchased by such 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 such 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 such 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 such 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.
25
(v) The
sale
of the Common Shares by the Company shall not be prohibited by any law or
governmental order or regulation.
(vi) Such
Buyer shall have executed and delivered to the Company a cross-receipt with
respect to the receipt by such Buyer of a certificate representing the
Common
Shares issued
to
such Buyer at the Closing.
| 7. |
CONDITIONS
TO EACH BUYER'S OBLIGATION TO PURCHASE.
|
The
obligation of each 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 each Buyer's sole
benefit and may be waived by such 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 such Buyer (i) each of the
Transaction Documents and (ii) the Common Shares (in such amounts as such Buyer
shall request) being
purchased by such Buyer at the Closing pursuant to this Agreement.
(ii) Such
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 such 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 such 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 such 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. Such 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 such Buyer in the form attached hereto
as Exhibit
D.
26
(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
Agent
shall have received a lock-up agreement substantially in the form of
Exhibit
E
hereto
duly executed by each officer (as defined in Rule 16a-1 under the 0000 Xxx)
and
director of the Company.
(ix) The
Company shall have delivered to such Buyer a copy of the Irrevocable Transfer
Agent Instructions, in the form of Exhibit F
attached
hereto, which instructions shall have been delivered to and acknowledged in
writing by the Company's transfer agent.
(x) Contemporaneously
with the Closing, the Company shall have raised no less than $20 million
pursuant to the transactions contemplated hereby.
(xi) The
Company shall have delivered to such Buyer such other documents relating to
the
transactions contemplated by this Agreement as such Buyer or its counsel may
reasonably request.
8. TERMINATION.
In
the
event that the Closing shall not have occurred with respect to a Buyer on or
before five (5) Business Days from the date hereof due to the Company's or
such
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 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.
27
(c) Jurisdiction;
Jury Trial:
Each
party hereby irrevocably submits to the exclusive jurisdiction of the state
and
federal courts sitting in The City of New York, Borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that
the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to
such
party at the address for such notices to it under this Agreement and agrees
that
such service shall constitute good and sufficient service of process and notice
thereof. The Company hereby appoints Jinpan International (USA) Limited with
offices at 000 Xxxxxx Xxxxxx, Xxxxxxxxx Xxxxxx, Xxx Xxxxxx 00000, as its agent
for service of process in New York. Nothing contained herein shall be deemed
to
limit in any way any right to serve process in any manner permitted by law.
EACH
PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.
(d) Judgment
Currency.
The Company agrees to indemnify the Buyers against any loss incurred by the
Buyers 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 Buyers are able to purchase United States dollars
with
the amount of the Judgment Currency actually received by the Buyers. 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.
28
(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 Buyers, 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 any 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 holders of Common Shares representing at least a majority
of
the amount of the Common Shares, or, if prior to the Closing Date, the Buyers
listed on the Schedule of Buyers as being obligated to purchase at least a
majority of the amount of the Common Shares. No provision hereof may be waived
other than by an instrument in writing signed by the party against whom
enforcement is sought. No such amendment shall be effective to the extent that
it applies to less than all of the holders of the Common Shares then
outstanding. No consideration shall be offered or paid to any Person to amend
or
consent to a waiver or modification of any provision of any of the Transaction
Documents unless the same consideration also is offered to all of the parties
to
the Transaction Documents or holders of Common Shares. The Company has not,
directly or indirectly, made any agreements with any Buyers 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,
no
Buyer has made any commitment or promise or has 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 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:
29
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 a
Buyer, to its address and facsimile number set forth on the Schedule of Buyers,
with copies to such Buyer's representatives as set forth on the Schedule of
Buyers, 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.
30
With
a
copy (for informational purposes only) to:
Xxxxxxx
Xxxx & Xxxxx LLP
000
Xxxxx
Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Telephone: (000)
000-0000
Facsimile: (000)
000-0000
Attention: Xxxxxxx
X. Xxxxx, Esq.
(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. A 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 a 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.
31
(m) Reliance
by the Agent.
The
parties agree and acknowledge that the 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 to the respective 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 resepct 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 Buyers.
(n) Survival.
Unless
this Agreement is terminated under Section 8, the representations and warranties
of the Company and the Buyers in Sections 2 and 3, 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. Each
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 each 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 each 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 such 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.
32
(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.
Each
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 Buyers. The Company therefore agrees that the Buyers
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 Buyers hereunder
or
pursuant to any of the other Transaction Documents or the Buyers enforce or
exercise their 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.
33
(t) Independent
Nature of Buyers' Obligations and Rights.
The
obligations of each Buyer under any Transaction Document are several and not
joint with the obligations of any other Buyer, and no Buyer shall be responsible
in any way for the performance of the obligations of any other Buyer under
any
Transaction Document. Nothing contained herein or in any other Transaction
Document, and no action taken by any Buyer pursuant hereto or thereto, shall
be
deemed to constitute the Buyers as, a partnership, an association, a joint
venture or any other kind of entity, or create a presumption that the Buyers
are
in any way acting in concert or as a group with respect to such obligations
or
the transactions contemplated by the Transaction Documents. Each Buyer confirms
that it has independently participated in the negotiation of the transactions
contemplated hereby with the advice of its own counsel and advisors. Each Buyer
shall be entitled to independently protect and enforce its rights, including,
without limitation, the rights arising out of this Agreement or out of any
other
Transaction Documents, and it shall not be necessary for any other Buyer to
be
joined as an additional party in any proceeding for such purpose.
[Signature
Page Follows]
34
IN
WITNESS WHEREOF,
the
parties have executed this Securities Purchase Agreement as of the date first
written above.
| JINPAN INTERNATIONAL LIMITED | ||
| |
|
|
| By: | ||
|
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 Securities
Purchase 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 Domicile: | ||
| Taxpayer Identification Number: |
| Purchase Price: | $ | |
| Number of Shares: |
SCHEDULE
OF BUYERS
|
(1)
Buyer
|
(2)
Address
and Facsimile Number
|
(3)
Number
of Common Shares
|
(4)
Purchase
Price
|
(5)
Legal
Representative's Address and Facsimile
Number
|
|
Silver
Oak Capital LLC
|
000
Xxxx Xxxxxx 00xx Xxxxx
Xxx
Xxxx, XX 00000
Fax:
(000) 000-0000
Attn:
Xxxx X Xxxx
|
157,895
|
$3,000,005
|
Paul,
Weiss, Rifkins, Xxxxxxx & Xxxxxxxx LLP
0000
Xxxxxx xx Xxxxxxxx
Xxx
Xxxx, XX 00000
Fax:
(000) 000-0000
Attn:
Xxxx Xxxx
|
|
Crestview
Capital Master LLC
|
Crestview
Capital Master LLC
00
Xxxxxx Xxxxx, Xxxxx X
Xxxxxxxxxx,
XX 00000
Fax:
(000) 000-0000
Attn:
Xxxxxxx Xxxxx / Xxxx Xxxxxxx
|
63,158
|
$1,200,002
|
|
|
Cranshire
Capital LP
|
0000
Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx,
XX 00000
Fax:
(000) 000-0000
Attn:
Xxxxxxxx X. Xxxxx
|
63,158
|
$1,200,002
|
|
|
Enable
Growth Partners LP
|
Xxx
Xxxxx Xxxxxxxx Xxxxx 000
Xxx
Xxxxxxxxx, XX 00000
Fax:
(000) 000-0000
Attn:
Xxxxxxx X'Xxxx
|
178,947
|
$3,399,993
|
|
|
Enable
Opportunity Partners LP
|
Xxx
Xxxxx Xxxxxxxx Xxxxx 000
Xxx
Xxxxxxxxx, XX 00000
Fax:
(000) 000-0000
Attn:
Xxxxxxx X'Xxxx
|
21,053
|
$400,007
|
|
|
Xxxxxx
Diversified Strategy Master Fund
|
Xxx
Xxxxx Xxxxxxxx Xxxxx 000
Xxx
Xxxxxxxxx, XX 00000
Fax:
(000) 000-0000
Attn:
Xxxxxxx X'Xxxx
|
10,526
|
$199,994
|
|
|
Convergent
Long Short Opportunity Fund
|
00
Xxxxxxxxxx Xx Xxxxx 000X
Xxxxx
Xxxx, XX 00000
Fax:
(000) 000-0000
Attn:
Xxxxx Xxxxxxxxx
|
26,500
|
$503,500
|
|
(1)
Buyer
|
(2)
Address
and Facsimile Number
|
(3)
Number
of Common Shares
|
(4)
Purchase
Price
|
(5)
Legal
Representative's Address and Facsimile
Number
|
|
Hedge
Capital Partners
|
00
Xxxxxxxxxx Xx Xxxxx 000X
Xxxxx
Xxxx, XX 00000
Fax:
(000) 000-0000
Attn:
Xxxxx Xxxxxxxxx
|
26,500
|
$503,500
|
|
|
Capital
Venture International
|
Capital
Venture International
c/o
Heights Capital Management
000
Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx
Xxxxxxxxx, XX 00000
Fax:
(000) 000-0000
Attn:
Xxxxxx Hoe
|
52,632
|
$1,000,008
|
|
|
Highbridge
International LLC
|
Highbridge
International LLC
c/o
Highbridge Capital Management LLC
0
Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Fax:
(000) 000-0000
Attn:
Xxx X. Xxxxxx / Xxxx X. Chill
|
52,632
|
$1,000,008
|
|
|
Xxxxxx
Bay Fund LP
|
000
Xxxxxxxx 00xx Xxxxx
Xxx
Xxxx, XX 00000
Fax:
(000) 000-0000
Attn:
Xxxx Xxxx, May Xxx
|
75,789
|
$1,439,991
|
Xxxxxx Xxxx & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxx, Esq.
Facisimile (000) 000-0000
Telephone: (000) 000-0000
|
|
Xxxxxx
Bay Overseas Fund Ltd
|
000
Xxxxxxxx 00xx Xxxxx
Xxx
Xxxx, XX 00000
Fax:
(000) 000-0000
Attn:
Xxxx Xxxx, May Xxx
|
82,106
|
$1,560,014
|
Xxxxxx Xxxx & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxx, Esq.
Facisimile (000) 000-0000
Telephone: (000) 000-0000
|
|
Iroquois
Masterfund Ltd.
|
000
Xxxxxxxxx Xxx 00xx Xxxxx
Xxx
Xxxx, XX 00000
Fax:
(000) 000-0000
Xxxxxx
Xxxxxxxxx
|
52,632
|
$1,000,000
|
|
|
LBI
Group Inc.
|
Attn:
Xxxxxx Xxxxxxx
000
0xx Xxx 0xx Xxxxx
Xxx
Xxxx, XX 00000
Fax:
(000) 000-0000
|
184,211
|
$3,500,009
|
|
|
Marathon
Global Convertible Master Fund
|
Marathon
Global Convertible Master Fund
c/o
Marathon Asset Management LLC
000
Xxxxx Xxxxxx
00xx
Xxxxx
Xxx
Xxxx, XX 00000
|
65,789
|
$1,250,000
|
|
|
Nite
Capital LP
|
000
Xxxx Xxxx Xxx Xxxxx 000
Xxxxxxxxxxxx,
XX 00000
Fax:
(000) 000-0000
Attn:
Xxxxx Xxxxxxx
|
52,632
|
$1,000,008
|
|
(1)
Buyer
|
(2)
Address
and Facsimile Number
|
(3)
Number
of Common Shares
|
(4)
Purchase
Price
|
(5)
Legal
Representative's Address and Facsimile
Number
|
|
Portside
Growth and Opportunity Fund
|
000
Xxxxx Xxx. 26th Floor
c/o
Ramius Capital Group
Xxx
Xxxx, XX 00000
Fax:
(000) 000-0000
Attn:
Xxxxxxx Xxxxx / Xxxx Xxxxxxx
|
131,579
|
$2,500,001
|
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
|
Schedule
3(y)
Internal
Accounting and Disclosure Controls
In
connection with the audit of the Company’s consolidated financial statements for
the year ended December 31, 2005, the Company and its independent public
accounting firm, Xxxxx Xxxxxxxx, identified the following material weaknesses
(as defined by the Public Company Accounting Oversight Board, Auditing Standard
No.2) in the Company’s internal control over financial reporting:
| · |
A
lack of appropriate segregation of duties in initiating journal entries
and approval of entries.
|
| · |
The
Company does not have adequate controls over financial reporting
to ensure
that materials errors do not occur in
preparation.
|
Based
on
that evaluation, and taking into account the reportable conditions and material
weaknesses, the Company’s Chief Executive Officer and Chief Financial Officer
concluded that the Company’s disclosure controls and procedures were not
effective as of the end of the period covered by its Annual Report on Form
20-F
for the year ended December 31, 2005.
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 E |
Form
of Lock-Up Agreement
|
| Exhibit F |
Form
of Irrevocable Transfer Agent
Instructions
|
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 among the Company and the
investors listed on the Schedule of Buyers attached thereto (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 __th
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 among the Company and the investors identified on the Schedule of Buyers
attached thereto (the "Securities
Purchase Agreement"),
hereby represents and warrants to the Buyers 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 __ day of December
2006.
|
Xxxxxxx
Xx
Chief
Executive Officer
|
||
EXHIBIT
E
Form
of Lock-Up Agreement
December
___, 2006
[Buyers]]
Ladies
& Gentlemen:
The
undersigned, an officer and/or director] of Jinpan International Limited, a
British Virgin Islands corporation (the "Company"), understands that
___________________
(the
“Buyers”),
entered into a Securities Purchase Agreement (the “Purchase
Agreement”)
with
the Company providing for the offering (the “Offering”)
of
shares
(the “Common
Shares”) of
the
Company’s common stock, par value $0.018 (the “Common
Stock”).
Contemporaneously with the execution and delivery of the Purchase Agreement
the
Company and the Buyers have executed a Registration Rights Agreement (the
“Registration
Rights Agreement”),
pursuant to which the Company agreed to provide certain registration rights
with
respect to the Common Shares under the Securities Act of 1933, as amended.
In
recognition of the benefit of the Offering will confer upon the undersigned
as
[and an officer and/or director] of the Company, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the
undersigned agrees with each Buyer, during a period of 30 days from the date
of
the Effective Date (as defined in the Registration Rights Agreement), directly
or indirectly, (i) 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 for the sale of, or otherwise dispose of or transfer any shares
of Common Stock or any securities convertible into or exchangeable or
exercisable for Common Stock, whether now owned or hereafter acquired by the
undersigned or with respect to which the undersigned has or hereafter acquires
the power of disposition, r file any registration statement under the Securities
Act of 1933, as amended, 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 is to be settled by delivery
of Common Stock or other securities, in cash or otherwise, except for shares
of
Common Stock (i) sold to the Buyers pursuant to the Purchase Agreement, (ii)
transferred pursuant to will, the laws of decent and distribution, or qualified
domestic relations order, (iii) disposed of as bona fide gifts, and (iv)
transferred to a trust for
the
direct or indirect benefit of the undersigned or the immediate family of the
undersigned;
provided, however, that any shares of
Common
Stock transferred pursuant to items (iii) and (iv) of this letter shall be
subject to the same 30 day restriction set forth in this letter and prior to
such transfer.
|
Very
truly yours,
Signature:
_____________________________
Print
Name:____________________________
|
EXHIBIT
F
TRANSFER
AGENT INSTRUCTIONS
JINPAN
INTERNATIONAL LIMITED
December
__, 2006
American
Stock Transfer & Trust Company
00
Xxxxxx
Xxxx
Xxx
Xxxx,
XX 00000
Attention: [________________________]
Ladies
and Gentlemen:
Reference
is made to that certain Securities Purchase Agreement, dated as of December
__,
2006 (the "Agreement"),
by
and among Jinpan International Limited, Inc., a British Virgin Islands
corporation (the "Company"),
and
the investors named on the Schedule of Buyers attached thereto (collectively,
the "Holders"),
pursuant to which the Company is issuing to the Holders shares (the
"Common
Shares")
of
Common Stock of the Company, par value $0.018 per share (the "Common
Stock").
This
letter shall serve as our irrevocable authorization and direction to you
(provided that you are the transfer agent of the Company at such time) to issue
shares of Common Stock upon transfer or resale of the Common
Shares.
You
acknowledge and agree that so long as you have previously received (a) written
confirmation from the Company's general counsel
that either (i) a registration statement covering resales of the Common Shares
has been declared effective by the Securities and Exchange Commission (the
"SEC")
under
the Securities Act of 1933, as amended (the "1933
Act"),
or
(ii) sales of the Common Shares have been made in conformity with Rule 144
("Rule
144")
under
the 1933 Act or may be made in conformity with Rule 144(k) under the 1933
Act
and
(b) if
applicable, a copy of such registration statement, then as promptly as
practicable, you
shall
issue the certificates representing the Common Shares registered
in the names of such transferees,
and such
certificates shall not bear any legend restricting transfer of the Common Shares
thereby and should not be subject to any stop-transfer restriction; provided,
however,
that if
such Common Shares are not registered for resale under the 1933 Act, sold under
Rule 144 or able to be sold under Rule 144(k), then the certificates for such
Common Shares shall bear the following legend:
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN
THE
ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
THE
SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL, IN A FORM
REASONABLY ACCEPTABLE TO THE COMPANY, 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 SECURITIES MAY BE PLEDGED IN CONNECTION
WITH
A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY
THE
SECURITIES.
A
form of
written confirmation from the Company's outside legal counsel that a
registration statement covering resales of the Common Shares has been declared
effective by the SEC under the 1933 Act is attached hereto as Exhibit
I.
Please
execute this letter in the space indicated to acknowledge your agreement to
act
in accordance with these instructions. Should you have any questions concerning
this matter, please contact me at ____________.
| Very truly yours, | ||
| JINPAN INTERNATIONAL LIMITED | ||
| |
|
|
| By: | /s/ | |
|
Name:
Title:
|
||
THE
FOREGOING INSTRUCTIONS ARE
ACKNOWLEDGED
AND AGREED TO
this
___
day of December 2006
AMERICAN
STOCK TRANSFER & TRUST COMPANY
By:
Name:
Title:
Enclosures
cc:
[Buyers]
FORM
OF NOTICE OF EFFECTIVENESS
OF
REGISTRATION STATEMENT
[
]
American
Stock Transfer & Trust Company
00
Xxxxxx
Xxxx
Xxx
Xxxx,
XX 00000
Attention:
[
]
Re: Jinpan
International Limited
Ladies
and Gentlemen:
I
am
counsel to Jinpan International Limited, a British Virgin Islands corporation
(the "Company"),
and
have represented the Company in connection with that certain Securities Purchase
Agreement, dated as of December __, 2006 (the "Securities Purchase
Agreement"),
entered into by and among the Company and the buyers named therein
(collectively, the "Holders")
pursuant to which the Company issued to the Holders its shares of the Company's
Common Stock, par value $0.018 per share (the "Common
Stock").
Pursuant to the Securities Purchase Agreement, the Company also has entered
into
a Registration Rights Agreement with the Holders (the "Registration
Rights Agreement")
pursuant to which the Company agreed, among other things, to register the resale
of the Registrable Securities (as defined in the Registration Rights Agreement),
under the Securities Act of 1933, as amended (the "1933
Act").
In
connection with the Company's obligations under the Registration Rights
Agreement, on ____________ ___, 2006, the Company filed a Registration Statement
on Form F-3 (File No. 333-_____________) (the "Registration
Statement")
with
the Securities and Exchange Commission (the "SEC")
relating to the Registrable Securities which names each of the Holders as a
selling stockholder thereunder.
In
connection with the foregoing, I advise you that a member of the SEC's staff
has
advised me by telephone that the SEC has entered an order declaring the
Registration Statement effective under the 1933 Act at [ENTER
TIME OF EFFECTIVENESS]
on
[ENTER
DATE OF EFFECTIVENESS]
and I
have no knowledge, after telephonic inquiry of a member of the SEC's staff,
that
any stop order suspending its effectiveness has been issued or that any
proceedings for that purpose are pending before, or threatened by, the SEC
and
the Registrable Securities are available for resale under the 1933 Act pursuant
to the Registration Statement.
This
letter shall serve as our standing instruction to you that the shares of Common
Stock are freely transferable by the Holders pursuant to the Registration
Statement and may be issued without any legend. So long as you have not received
a notice from legal counsel to the Company that the Registration Statement
may
not be used by the Holders, certificates may be issued free of any legends
and
you need not require further letters from us to effect any future legend-free
issuance or reissuance of shares of Common Stock to the Holders as contemplated
by the Company's Irrevocable Transfer Agent Instructions dated December __.
2006.
|
Very
truly yours,
[COUNSEL]
By:_____________________
|
CC: [LIST
NAMES OF HOLDERS]
