CHINA-BIOTICS, INC. Common Stock UNDERWRITING AGREEMENT
4,600,000
Shares
Common
Stock
September
29, 2009
▇▇▇▇
Capital Partners, LLC
▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies
and Gentlemen:
China-Biotics,
Inc., a Delaware corporation (the “Company”), proposes,
subject to the terms and conditions stated herein, to issue and sell to ▇▇▇▇
Capital Partners, LLC ("RCP") and each of the
other Underwriters named in Schedule III hereto (collectively with RCP, the
“Underwriters”)
an aggregate of 4,600,000 authorized but unissued shares (the “Underwritten Shares”)
of Common Stock, par value $0.0001 per share (the “Common Stock”), of
the Company. The Company has granted the Underwriters the option to
purchase an aggregate of up to 690,000 additional shares of Common Stock (the
“Additional
Shares”) as may be necessary to cover over-allotments made in connection
with the offering. The Underwritten Shares and Additional Shares are
collectively referred to as the “Shares.” ▇▇▇▇
Capital Partners, LLC shall act as the representative (the “Representative”) of
the several Underwriters.
The
Company and the
Underwriters hereby confirm their agreement as follows:
1. Registration Statement and
Prospectus. The Company has prepared and filed with the
Securities and Exchange Commission (the “Commission”) a
registration statement on Form S-3 (File No. 333-160519) under the Securities
Act of 1933, as amended (the “Securities Act”), and
the rules and regulations (the “Rules and
Regulations”) of the Commission thereunder, and such amendments to such
registration statement (including post effective amendments) as may have been
required to the date of this Agreement. Such registration statement,
as amended (including any post effective amendments) has been declared effective
by the Commission. Such registration statement, at any given time,
including amendments thereto (including post effective amendments thereto) at
such time, the exhibits and any schedules thereto at such time, the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 under the
Securities Act at such time and the documents and information otherwise deemed
to be a part thereof or included therein by Rule 430B under the Securities Act
or otherwise pursuant to the Rules and Regulations at such time, is herein
called the “Registration
Statement.” If the Company has filed or files an abbreviated
registration statement pursuant to Rule 462(b) under the Securities Act (the
“Rule 462 Registration
Statement”), then any reference herein to the term Registration Statement
shall include such Rule 462 Registration Statement.
The
Company is filing with the Commission pursuant to Rule 424 under the Securities
Act a final prospectus supplement relating to the Shares to a form of prospectus
included in the Registration Statement in the form heretofore delivered to
the Underwriters. Such prospectus in the form in which it appears in
the Registration Statement is hereinafter called the “Base Prospectus,” and
such final prospectus supplement as filed, together with the Base Prospectus, is
hereinafter called the “Final
Prospectus.” Such Final Prospectus and any preliminary
prospectus supplement or “red ▇▇▇▇▇▇▇,” in the form in which they shall be filed
with the Commission pursuant to Rule 424(b) under the Securities Act (including
the Base Prospectus as so supplemented) is hereinafter called a “Prospectus.” Any
reference herein to the Base Prospectus, the Final Prospectus or a Prospectus
shall be deemed to include the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 under the Securities Act as of the date of such
Prospectus.
For
purposes of this Agreement, all references to the Registration Statement, the
Rule 462 Registration Statement, the Base Prospectus, the Final Prospectus, the
Prospectus or any amendment or supplement to any of the foregoing shall be
deemed to include the copy filed with the Commission pursuant to its Electronic
Data Gathering, Analysis and Retrieval System (“▇▇▇▇▇”). All references
in this Agreement to financial statements and schedules and other information
which is “described,” “contained,” “included” or “stated” in the Registration
Statement, the Rule 462 Registration Statement, the Base Prospectus, the Final
Prospectus or the Prospectus (or other references of like import) shall be
deemed to mean and include all such financial statements, pro forma financial
information and schedules and other information which is incorporated by
reference in or otherwise deemed by the Rules and Regulations to be a part of or
included in the Registration Statement, the Rule 462 Registration Statement, the
Base Prospectus or the Prospectus, as the case may be; and all references in
this Agreement to amendments or supplements to the Registration Statement, the
Rule 462 Registration Statement, the Base Prospectus, the Final Prospectus or
the Prospectus shall be deemed to mean and include the subsequent filing of any
document under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), that is deemed to be incorporated therein by reference
therein or otherwise deemed by the Rules and Regulations to be a part
thereof.
2. Representations
and Warranties of the Company Regarding the Offering.
(a) The
Company represents and warrants to, and agrees with, the Underwriters, as of the
date hereof and as of the Closing Date (as defined in Section 4(c) below) and
each Option Closing Date (as defined in Section 4(b) below), except as otherwise
specified, as follows:
(i) At
each time of effectiveness, at the date hereof, at the Closing Date and any
Option Closing Date, the Registration Statement and any post-effective amendment
thereto complied or will comply (as applicable) in all material respects with
the requirements of the Securities Act and the Rules and Regulations and did not
and will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading. The Time of Sale Disclosure Package (as
defined in Section 2(a)(iii) below) as of the date hereof, at the Closing Date
and any Option Closing Date, and the Final Prospectus, as amended or
supplemented, at the time of filing pursuant to Rule 424(b) under the Securities
Act, at the Closing Date and any Option Closing Date, did not and will not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The representations and warranties set forth in the two
immediately preceding sentences shall not apply to statements in or omissions
from the Registration Statement or any Prospectus in reliance upon, and in
conformity with, written information furnished to the Company by the
Underwriters specifically for use in the preparation thereof. The
Registration Statement (including each document incorporated by reference
therein) contains all exhibits and schedules required to be filed by the
Securities Act or the Rules and Regulations. No order preventing or
suspending the effectiveness or use of the Registration Statement or any
Prospectus has been issued by the Commission and no proceedings for such purpose
have been instituted or are pending, or, to the knowledge of the Company, are
contemplated or threatened. The Company has complied to the
Commission's satisfaction with all requests of the Commission for additional or
supplemental information.
(ii) The
documents incorporated by reference in the Registration Statement, the Time of
Sale Disclosure Package and any Prospectus, when they became effective or were
filed with the Commission, as the case may be, conformed in all material
respects to the requirements of the Securities Act or the Exchange Act, as
applicable, were filed on a timely basis with the Commission and none of such
documents, when they were filed (or, if amendments to such documents were filed,
when such amendments were filed), contained an untrue statement of a material
fact or omitted to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. Any further documents so filed and incorporated by
reference in the Registration Statement, the Time of Sale Disclosure Package or
the Final Prospectus, when such documents are filed with the Commission, will
conform in all material respects to the requirements of the Exchange Act, and
will not contain an untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(iii) (A)
The Company has provided a copy to the Underwriters of each Issuer Free Writing
Prospectus (as defined below) used in the sale of Shares. The Company has
filed all Issuer Free Writing Prospectuses required to be so filed with the
Commission, and no order preventing or suspending the effectiveness or use of
any Issuer Free Writing Prospectus is in effect and no proceedings for such
purpose have been instituted or are pending, or, to the knowledge of the
Company, are contemplated or threatened. When taken together with the rest
of the Time of Sale Disclosure Package or the Final Prospectus, since its
first use and at all relevant times since then, no Issuer Free Writing
Prospectus has, does or will include (1) any untrue statement of a material
fact or omission to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or (2) information that conflicted, conflicts or will
conflict with the information contained in the Registration Statement or the
Final Prospectus. The representations and warranties set forth in the
immediately preceding sentence shall not apply to statements in or omissions
from the Time of Sale Disclosure Package, the Final Prospectus or any Issuer
Free Writing Prospectus in reliance upon, and in conformity with, written
information furnished to the Company by the Underwriters specifically for use
therein. As used in this paragraph and elsewhere in this
Agreement:
(1) “Time of Sale Disclosure
Package” means the Base Prospectus, the Prospectus most recently
filed with the Commission before the time of this Agreement, including any
preliminary prospectus supplement deemed to be a part thereof, each Issuer Free
Writing Prospectus, and any description of the transaction provided by the
Underwriters included on Schedule I hereto.
(2) “Issuer Free Writing
Prospectus” means any “issuer free writing prospectus,” as defined in
Rule 433 under the Securities Act, relating to the Shares that (A) is required
to be filed with the Commission by the Company, or (B) is exempt from filing
pursuant to Rule 433(d)(5)(i) or (d)(8) under the Securities Act because it
contains a description of the Shares that does not reflect the final
terms, in each case in the form filed or required to be filed with the
Commission or, if not required to be filed, in the form retained in the
Company’s records pursuant to Rule 433(g) under the Securities Act.
(B) At
the time of filing of the Registration Statement and at the date hereof, the
Company was not and is not an “ineligible issuer,” as defined in Rule 405 under
the Securities Act or an “excluded issuer” as defined in Rule 164 under the
Securities Act.
(C) Each
Issuer Free Writing Prospectus satisfied, as of its issue date and at all
subsequent times through the Prospectus Delivery Period (as defined below), all
other conditions as may be applicable to its use as set forth in Rules 164 and
433 under the Securities Act, including any legend, record-keeping or other
requirements.
(iv) The
financial statements of the Company, together with the related notes, included
or incorporated by reference in the Registration Statement, the Time of Sale
Disclosure Package and the Final Prospectus comply in all material respects with
the requirements of the Securities Act and the Exchange Act and fairly present
the financial condition of the Company as of the dates indicated and the results
of operations and changes in cash flows for the periods therein specified in
conformity with generally accepted accounting principles consistently applied
throughout the periods involved; and the supporting schedules included in the
Registration Statement present fairly the information required to be stated
therein. No other financial statements, pro forma financial
information or schedules are required to be included or incorporated by
reference in the Registration Statement, the Time of Sale Disclosure Package or
the Final Prospectus. To the Company’s knowledge, BDO Limited, which
has expressed its opinion with respect to the financial statements and schedules
filed as a part of the Registration Statement and included in the Registration
Statement, the Time of Sale Disclosure Package and the Final Prospectus is an
independent public accounting firm with respect to the Company within the
meaning of the Securities Act and the Rules and Regulations and such accountants
are not in violation of the auditor independence requirements of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 (the "▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act").
(v)
The Company had a reasonable basis for, and made in good faith, each
“forward-looking statement” (within the meaning of Section 27A of the Act or
Section 21E of the Exchange Act) contained or incorporated by reference in the
Registration Statement, the Time of Sale Disclosure Package or the Final
Prospectus.
(vi) All
statistical or market-related data, including any industry forecasts, included
or incorporated by reference in the Registration Statement, the Time of Sale
Disclosure Package or the Final Prospectus are based on or derived from industry
publications and sources that are not and were not at any time under the
Company's control that the Company reasonably believes to be reliable and
accurate, and the Company has obtained the written consent to the use of such
data from such sources, to the extent required.
(vii) The
Common Stock is registered pursuant to Section 12(b) of the Exchange Act and is
included or approved for inclusion on the Nasdaq Global Market. There is
no action pending by the Company or, to the Company’s knowledge, the Nasdaq
Global Market to delist the Common Shares from the Nasdaq Global Market, nor has
the Company received any notification that the Nasdaq Global Market is contemplating
terminating such listing. The Company has complied in all material
respects with the applicable requirements of the Nasdaq Global Market for
maintenance and inclusion of the Common Stock thereon. When issued,
the Shares will be listed on the Nasdaq Global Market.
(viii) The
Company has not taken, directly or indirectly, any action that is designed to or
that has constituted or that would reasonably be expected to cause or result in
the stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares.
(ix)
The Company is not and, after giving effect to the offering and sale
of the Shares, will not be an “investment company,” as such term is defined in
the Investment Company Act of 1940, as amended.
(x)
The Company was at the time of filing the Registration Statement, and at
the date hereof, remains eligible to use Form S-3 under the Securities
Act. The conditions for use of Form S-3 set forth in the General
Instructions thereto have been satisfied.
(b) Any
certificate signed by the Chief Executive Officer and/or Chief Financial Officer
of the Company and delivered to the Underwriters or counsel for the Underwriters
shall be deemed a representation and warranty by the Company to the Underwriters
as to the matters covered thereby.
3. Representations
and Warranties Regarding the Company.
(a) The
Company represents and warrants to and agrees with, the Underwriters, except as
set forth in the Registration Statement, the Time of Sale Disclosure Package and
the Prospectus, as follows:
(i) Each
of the Company and its subsidiaries has been duly organized and is validly
existing as a corporation in good standing (in cases where such concept is
legally applicable) under the laws of its jurisdiction of incorporation. Each of
the Company and its subsidiaries has the corporate power and authority to own
its properties and conduct its business as currently being carried on and as
described in the Registration Statement, the Time of Sale Disclosure Package and
the Prospectus, and is duly qualified to do business as a foreign corporation in
good standing in each jurisdiction in which it owns or leases real property or
in which the conduct of its business makes such qualification necessary and in
which the failure to so qualify would have or is reasonably likely to result in
a material adverse effect upon the business, prospects, properties, operations,
condition (financial or otherwise) or results of operations of the Company and
its subsidiaries, taken as a whole, or in its ability to perform its obligations
under this Agreement (“Material Adverse
Effect”).
(ii) The
Company has the requisite corporate power and authority to enter into this
Agreement and to authorize, issue and sell the Underwritten Shares as
contemplated by this Agreement. This Agreement has been duly
authorized, executed and delivered by the Company, and constitutes a valid,
legal and binding obligation of the Company, enforceable in accordance with its
terms.
(iii) The
execution, delivery and performance of this Agreement and the consummation of
the transactions herein contemplated will not (A) result in a violation of any
of the terms and provisions of, or constitute a default under, any material
applicable law, rule or regulation to which the Company or any subsidiary is
subject, or by which any property or asset of the Company or any subsidiary is
bound or affected, (B) conflict with, result in any violation or breach of, or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or give to others any right of termination,
amendment, acceleration or cancellation (with or without notice, lapse of time
or both) of, any agreement, lease, credit facility, debt, note, bond, mortgage,
indenture or other instrument (the “Contracts”) or
obligation or other understanding to which the Company or any subsidiary is a
party of by which any property or asset of the Company or any subsidiary is
bound or affected, except to the extent for such conflicts, defaults,
terminations, amendments, accelerations or cancellation rights as would not,
individually or in the aggregate, reasonably be expected to have or result in a
Material Adverse Effect or which are validly waived, or (C) result in a breach
or violation of any of the terms and provisions of, or constitute a default
under, the Company’s currently effective Certificate of Incorporation or
By-Laws.
(iv) Neither
the Company nor any of its subsidiaries is in violation, breach or default under
its certificate of incorporation, by-laws or other equivalent organizational or
governing documents.
(v) All
consents, approvals, orders, authorizations and filings required on the part of
the Company and its subsidiaries in connection with the execution, delivery or
performance of this Agreement have been obtained or made, other than such
consents, approvals, orders and authorizations the failure of which to make or
obtain would not reasonably be expected, individually or in the aggregate, to
have or result in a Material Adverse Effect.
(vi) All
of the issued and outstanding shares of capital stock of the Company are duly
authorized and validly issued, fully paid and nonassessable, and have been
issued in compliance with all applicable securities laws, and conform to the
description thereof in the Registration Statement, the Time of Sale Disclosure
Package and the Prospectus and were issued in compliance with all preemptive
rights or other rights to subscribe for or purchase securities other than as
were waived in writing (a copy of which has been delivered to counsel to the
Underwriters). Except for the issuances of options or restricted
stock in the ordinary course of business, since the respective dates as of which
information is provided in the Registration Statement, the Time of Sale
Disclosure Package or the Prospectus, the Company has not entered into or
granted any convertible or exchangeable securities, options, warrants,
agreements, contracts or other rights in existence to purchase or acquire from
the Company any shares of the capital stock of the Company. The
Shares have been duly authorized and when issued, upon payment therefore
pursuant to the terms of this Agreement, will have been validly issued, fully
paid and nonassessable, will be issued in compliance with all applicable
securities laws, and will be free of preemptive, registration or similar rights
including, without limitation, rights of first offer or rights of first
refusal.
(vii) Except
where the failure to do so would not reasonably be expected to result in a
Material Adverse Effect, each of the Company and its subsidiaries has filed all
returns (as hereinafter defined) required to be filed with taxing authorities
prior to the date hereof or has duly obtained extensions of time for the filing
thereof. Except where the failure to do so would not reasonably be
expected to result in a Material Adverse Effect, each of the Company and its
subsidiaries has paid all taxes (as hereinafter defined) shown as due on such
returns that were filed and has paid all taxes imposed on or assessed against
the Company or such respective subsidiary. The provisions for taxes
payable, if any, shown on the financial statements filed with or as part of the
Registration Statement are sufficient for all accrued and unpaid taxes, whether
or not disputed, and for all periods to and including the dates of such
consolidated financial statements. Except as disclosed in writing to
the Underwriters, (i) no issues have been raised (and are currently pending) by
any taxing authority in connection with any of the returns or taxes asserted as
due from the Company or its subsidiaries, and (ii) no waivers of statutes of
limitation with respect to the returns or collection of taxes have been given by
or requested from or on behalf of the Company or its
subsidiaries. The term “taxes” mean all
United States, People's Republic of China, Hong Kong, or other federal, state,
local, foreign, and other net income, gross income, gross receipts, sales, use,
ad valorem, transfer, franchise, profits, license, lease, service, service use,
withholding, payroll, employment, excise, severance, stamp, occupation, premium,
property, windfall profits, customs, duties or other taxes, fees, assessments,
or charges of any kind whatever, together with any interest and any penalties,
additions to tax, or additional amounts with respect thereto. The
term “returns”
means all returns, declarations, reports, statements, and other documents
required to be filed in respect to taxes.
(viii) Since
the respective dates as of which information is given in the Registration
Statement, the Time of Sale Disclosure Package or the Prospectus, (a) neither
the Company nor any of its subsidiaries has incurred any material liabilities or
obligations, direct or contingent, or entered into any material transactions,
(b) the Company has not declared or paid any dividends or made any distribution
of any kind with respect to its capital stock; (c) there has not been any change
in the capital stock of the Company or any of its subsidiaries (other than a
change in the number of outstanding shares of Common Stock due to the issuance
of shares upon the exercise of outstanding options or warrants or the issuance of restricted stock awards or
restricted stock units under the Company’s existing stock awards plan),
(d) there has not been any material change in the Company’s long-term or
short-term debt, and (e) there has not been the occurrence of any event or
series of events that has had or would reasonably be expected to result in a
Material Adverse Effect.
(ix) There
is not pending or, to the knowledge of the Company, threatened, any action, suit
or proceeding to which the Company or any of its subsidiaries is a party or of
which any property or assets of the Company is the subject before or by any
court or governmental agency, authority or body, or any arbitrator or mediator,
which individually or in the aggregate, might reasonably be expected to result
in a Material Adverse Effect.
(x) The
Company and each of its subsidiaries holds, and is in compliance with, all
franchises, grants, authorizations, licenses, permits, easements, consents,
certificates and orders (“Permits”) of all
governmental or self-regulatory agencies, authorities or bodies required for the
conduct of its business, and all such Permits are in full force and effect
except where the failure of which would not reasonably be expected to result in
a Material Adverse Effect.
(xi) The
Company and its subsidiaries have good and marketable title to all property
(whether real or personal) described in the Registration Statement, the Time of
Sale Disclosure Package and the Prospectus as being owned by them that are
material to the business of the Company, in each case free and clear of material
liens, claims, security interests, other encumbrances or defects. The
property held under lease by the Company and its subsidiaries is held by them
under valid, subsisting and enforceable leases with only such exceptions with
respect to any particular lease as do not interfere in any material respect with
the conduct of the business of the Company and its subsidiaries.
(xii) The
Company and each of its subsidiaries owns or possesses or has valid right to use
all patents, patent applications, trademarks, service marks, trade names,
trademark registrations, service ▇▇▇▇ registrations, copyrights, licenses,
inventions, trade secrets and rights necessary for the conduct of the business
of the Company and its subsidiaries as currently carried on and as described in
the Registration Statement, in the Time of Sale Disclosure Package and in the
Prospectus, except where the failure of which would not reasonably be expected
to result in a Material Adverse Effect; except as stated in the Registration
Statement, in the Time of Sale Disclosure Package or in the Prospectus, to the knowledge of the
Company, no name which the Company or any of its subsidiaries uses and no other
aspect of the business of the Company or any of its subsidiaries will involve or
give rise to any infringement of, or license or similar fees for, any patents,
patent applications, trademarks, service marks, trade names, trademark
registrations, service ▇▇▇▇ registrations, copyrights, licenses, inventions,
trade secrets or other similar rights of others material to the business or
prospects of the Company and neither the Company nor any of its subsidiaries has
received any notice alleging any such infringement or fee.
(xiii) The
Company or its subsidiaries are the exclusive owners of the entire right, title
and interest in and to the intellectual property owned by the Company or any of
its subsidiaries and material to their business (the “Owned Intellectual
Property”), and have a valid license to use the intellectual property
that is licensed or sublicensed to the Company or any of its subsidiaries and
material to their business (the “Licensed Intellectual
Property”). The
Company or its subsidiaries are entitled to use all Owned Intellectual Property
and Licensed Intellectual Property in the continued operation of their business
without limitation, subject only to the terms of the licenses relating to the
Licensed Intellectual Property, except where the failure of which would not
reasonably be expected to result in a Material Adverse Effect. The
Owned Intellectual Property and, to the best of the Company’s knowledge, the
Licensed Intellectual Property have not been adjudged invalid or unenforceable
in whole or in part, and are valid and enforceable. The expiration of
any patents, patent rights, trademarks, service marks, trade names or copyrights
would not result in a Material Adverse Effect that is not otherwise disclosed in
the Registration Statement, the Time of Sale Disclosure Package and the
Prospectus.
To the Company’s knowledge, the conduct
of the Company’s or its subsidiaries’ business as currently conducted or
proposed to be conducted does not infringe or misappropriate the intellectual
property of any third party. No actions or proceedings alleging any
of the foregoing are pending, and no claim has been threatened or asserted
against the Company or any of its subsidiaries alleging any of the
foregoing. To the Company’s knowledge, no person is engaging in any
activity that infringes the Owned Intellectual Property that would result in a
Material Adverse Effect.
No Owned
Intellectual Property is subject to any outstanding decree, order, injunction,
judgment or ruling restricting the Owned Intellectual Property or that would
impair the validity or enforceability of the Owned Intellectual Property, except
for any such decree, order, injunction, judgment or writing that would not
result in a Material Adverse Effect.
(xiv) The
Company and each of its subsidiaries has complied with, is not in violation of,
and has not received any notice of violation relating to any law, rule or
regulation relating to the conduct of its business, or the ownership or
operation of its property and assets, including, without limitation, (A) the
Currency and Foreign Transactions Reporting Act of 1970, as amended, or any
money laundering laws, rules or regulations, (B) any laws, rules or regulations
related to health, safety or the environment, including those relating to the
regulation of hazardous substances, (C) the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act and the rules and
regulations of the Commission thereunder, (D) the Foreign Corrupt Practices Act
of 1977 and the rules and regulations thereunder, and (E) the Employment
Retirement Income Security Act of 1974 and the rules and regulations thereunder,
in each case except where the failure to be in compliance is not reasonably
likely to result in a Material Adverse Effect.
(xv) Neither
the Company nor any of its subsidiaries nor, to the knowledge of the Company,
any director, officer, employee, representative, agent or affiliate of the
Company or any of its subsidiaries is currently subject to any U.S. sanctions
administered by the Office of Foreign Assets Control of the U.S. Treasury
Department (“OFAC”); and the
Company will not directly or indirectly use the proceeds of the offering of the
Shares contemplated hereby, or lend, contribute or otherwise make available such
proceeds to any person or entity, for the purpose of financing the activities of
any person currently subject to any U.S. sanctions administered by
OFAC.
(xvi) The
Company carries, or is covered by, insurance in such amounts and covering such
risks as is reasonable for the conduct of its business and the value of its
properties and as is customary for companies engaged in similar businesses in
similar industries.
(xvii) No
labor dispute with the employees of the Company or any of its subsidiaries
exists or, to the knowledge of the Company, is imminent that is reasonably
likely to result in a Material Adverse Effect.
(xviii) Neither
the Company nor, to its knowledge, any other party is in violation, breach
or default of any Contract that is reasonably likely to result in a Material
Adverse Effect.
(xix) No
supplier, customer, distributor or sales agent of the Company
has notified the Company that it intends to discontinue
or decrease the rate of business done with the Company, except
where such decrease is not reasonably likely to result in a Material Adverse
Effect.
(xx) Neither
the Company nor any of its subsidiaries is or intends to become a “passive
foreign investment company” within the meaning of Section 1297 of the U.S.
Internal Revenue Code of 1986, as amended.
(xxi) All
consents, approvals, authorizations or licenses requisite under the legal
requirements of the People’s Republic of China (not including Taiwan, Hong Kong
and Macau) ("PRC") for the due and
proper establishment and operation of Shanghai Shining Biotechnology Co. Ltd.
and Growing Bioengineering (Shanghai) Co. Ltd. (collectively, the "PRC Subsidiaries")
and the ownership by Sinosmart Group Inc. of the PRC Subsidiaries have been duly
obtained from the relevant PRC governmental bodies and are in full force and
effect. The Company controls no other entity in the PRC other than
the PRC Subsidiaries.
(xxii) All
filings and registrations with PRC governmental bodies required in respect of
the PRC Subsidiaries and their respective capital structure (including their
ownership by Sinosmart Group Inc.) and operations including, without limitation,
the registration with the Ministry of Commerce, the China Securities Regulatory
Commission, the State Administration of Industry and or their respective local
divisions of the Ministry of Commerce, the State Administration of Foreign
Exchange, tax bureau and customs authorities have been duly completed in all
material respects in accordance with the relevant PRC legal
requirements.
(xxiii) The
PRC Subsidiaries have complied in all material respects with all relevant PRC
legal requirements regarding the contribution and payment of their respective
registered share capital, the payment schedule of which has been approved by the
relevant PRC governmental bodies. There are no outstanding
commitments made by the Company or any subsidiary (or any of their shareholders)
to sell any equity interest in the PRC Subsidiaries.
(xxiv) Neither
of the PRC Subsidiaries have received any letter or notice from any relevant PRC
governmental body notifying it of revocation of any licenses or qualifications
issued to it or any subsidy granted to it by any PRC governmental body for
non-compliance with the terms thereof or with applicable PRC legal requirements,
or the lack of compliance or remedial actions in respect of the activities
carried out by either of the PRC Subsidiaries.
(xxv) The
PRC Subsidiaries have conducted their business activities within the permitted
scope of business or has otherwise operated its business in compliance with all
relevant legal requirements and with all requisite licenses and approvals
granted by PRC governmental bodies other than such non-compliance that do not,
and would not, individually or in the aggregate, have a Material Adverse
Effect. As to licenses, approvals and government grants and
concessions requisite or material for the conduct of any material part of either
of the PRC Subsidiaries’ business which is subject to periodic renewal, the
Company has no knowledge of any reasons related to the PRC Subsidiaries for
which such requisite renewals will not be granted by the relevant PRC
governmental bodies.
(xxvi) With
regard to employment and staff or labor, the PRC Subsidiaries have each complied
with all applicable PRC legal requirements in all material respects, including
without limitation, those pertaining to welfare funds, social benefits, medical
benefits, insurance, retirement benefits, pensions or the like, other than such
non-compliance that do not, and would not, individually or in the aggregate,
have a Material Adverse Effect.
(xxvii) There
are no claims, payments, issuances, liabilities, arrangements or understandings
for services in the nature of a finder’s, consulting or origination fee with
respect to the introduction of the Company to any Underwriters or the sale of
the Shares hereunder or any other arrangements, agreements, understandings,
payments or issuances with respect to the Company that may constitute Items of
Value (as defined under the rules and regulations of the Financial Industry
Regulatory Authority (“FINRA”) to the
Underwriters or another FINRA member.
(xxviii) Except
as disclosed to the Underwriters in writing, the Company has not made any direct
or indirect payments (in cash, securities or otherwise) to (i) any person, as a
finder’s fee, investing fee or otherwise, in consideration of such person
raising capital for the Company or introducing to the Company persons who
provided capital to the Company, (ii) any FINRA member, or (iii) any person or
entity that has any direct or indirect affiliation or association with any FINRA
member within the 12-month period prior to the date on which the Registration
Statement was filed with the Commission (“Filing Date”) or
thereafter.
(xxix) None
of the net proceeds of the offering will be paid by the Company to any
participating FINRA member or any affiliate or associate of any participating
FINRA member, except as specifically authorized herein.
(xxx) To
the Company’s knowledge, no (i) officer or director of the Company or its
subsidiaries, (ii) owner of 5% or more of the Company’s unregistered securities
or that of its subsidiaries or (iii) owner of any amount of the Company’s
unregistered securities acquired within the 180-day period prior to the Filing
Date, has any direct or indirect affiliation or association with any FINRA
member. The Company will advise the Underwriters and its counsel if
it becomes aware that any officer, director or stockholder of the Company or its
subsidiaries is or becomes an affiliate or associated person of a FINRA member
participating in the offering.
(xxxi) Other
than the Underwriters, no person has the right to act as an underwriter or as a
financial advisor to the Company in connection with the transactions
contemplated hereby.
(xxxii) The
Company and each of its subsidiaries maintain a system of internal accounting
controls sufficient to provide reasonable assurance that: (1)
transactions are executed in accordance with management’s general or specific
authorization; (2) transactions are recorded as necessary to permit preparation
of financial statements in conformity with United States generally accepted
accounting principles and to maintain accountability for assets; (3) access to
assets is permitted only in accordance with management’s general or specific
authorization; and (4) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences. Except as described in the Time of Sale
Disclosure Package and the Prospectus, since the end of the Company’s most
recent audited fiscal year, there has been (I) no material weakness in the
Company’s internal control over financial reporting (whether or not remediated)
and (II) no change in the Company’s internal control over financial reporting
that has materially affected, or is reasonably likely to materially affect, the
Company’s internal control over financial reporting.
(xxxiii) The
Company and its consolidated subsidiaries employ disclosure controls and
procedures that are designed to ensure that information required to be disclosed
by the Company in the reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported, within the time periods specified
in the Commission’s rules and forms, and is accumulated and communicated to the
Company’s management, including its principal executive officer or officers and
principal financial officer or officers, as appropriate, to allow timely
decisions regarding disclosure.
(xxxiv) Neither
the Company nor any of its subsidiaries is in breach of or otherwise in default,
and no event has occurred which, with notice or lapse of time or both, would
constitute such a default, in the performance of any material obligation,
agreement or condition contained in any bond, debenture, note, indenture, loan
agreement or any other material contract, lease or other instrument to which it
is subject or by which any of them may be bound, or to which any of the material
property or assets of the Company or any of its subsidiaries is subject, except
where the failure of which would not reasonably be expected to result in a
Material Adverse Effect.
(xxxv) Other
than the subsidiaries of the Company listed in the Registration Statement, the
Time of Sale Disclosure Package and the Prospectus, the Company, directly or
indirectly, owns no capital stock or other equity or ownership or proprietary
interest in any corporation, partnership, association, trust or other
entity.
(xxxvi) There
are no business relationships or related-party transactions involving the
Company or any subsidiary or any other person required to be described in the
Registration Statement, the Time of Sale Disclosure Package and the Prospectus
that have not been described as required.
(xxxvii) The
Company has not distributed and will not distribute any prospectus or other
offering material in connection with the offering and sale of the Securities
other than any Preliminary Prospectus, the Time of Sale Disclosure Package or
the Prospectus or other materials permitted by the Securities Act to be
distributed by the Company; provided, however, that, except as
set forth on Schedule I, the Company has not made and will not make any offer
relating to the Securities that would constitute a “free writing prospectus” as
defined in Rule 405 under the Securities Act, except in accordance with the
provisions of Section 6(a)(viii) of this Agreement.
4. Purchase,
Sale and Delivery of Shares.
(a) On
the basis of the representations, warranties and agreements herein contained,
but subject to the terms and conditions herein set forth, the Company agrees to
issue and sell to the Underwriters the Underwritten Shares, and the
Underwriters, severally and not jointly, agree to purchase the Underwritten
Shares. The purchase price for each Underwritten Share shall be
$15.00 per share (the “Per Share
Price”). The Company agrees to pay the Underwriters’
compensation as set forth in Schedule I hereto.
(b) The
Company hereby grants to the Underwriters the option to purchase all or any
portion of the Additional Shares as the Underwriters (in their sole discretion
elect) and, upon the basis of the warranties and representations and subject to
the terms and conditions herein set forth, the Underwriters shall have the right
to purchase, severally and not jointly, all or any portion of the Additional
Shares at the Per Share Price as may be necessary to cover over-allotments made
in connection with the transactions contemplated hereby. This option
may be exercised by an Underwriter at any time or from time to time on or before
the thirtieth day following the date hereof, by written notice to the Company
(the “Option
Notice”). The Option Notice shall set forth the aggregate
number of Additional Shares as to which the option is being exercised, and the
date and time when the Additional Shares are to be delivered (such date and time
being herein referred to as the “Option Closing
Date”); provided,
however, that the
Option Closing Date shall not be earlier than the Closing Date (as defined
below) nor later than the next business day after the date on which the option
shall have been exercised unless the Company and the Underwriters otherwise
agree.
Payment of the purchase price for and
delivery of the Additional Shares shall be made at the Option Closing Date in
the same manner and at the same office as the payment for the Underwritten
Shares as set forth in subparagraph (c) below. For the purpose of
expediting the checking of the certificate for the Additional Shares by the
Underwriters, the Company agrees to make a form of such certificate available to
the Underwriters for such purpose at least one full business day preceding the
Option Closing Date.
(c) The
Underwritten Shares will be delivered by the Company to the Underwriters against
payment of the purchase price therefor by wire transfer of same day funds
payable to the order of the Company at the offices of ▇▇▇▇ Capital Partners,
LLC, ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, or such other location as may
be mutually acceptable, at 6:00 a.m. PDT, on the third (or if the Underwritten
Shares are priced, as contemplated by Rule 15c6-1(c) under the Exchange Act,
after 4:30 p.m. Eastern time, the fourth) full business day following the date
hereof, or at such other time and date as the Underwriters and the Company
determine pursuant to Rule 15c6-1(a) under the Exchange Act, or, in the case of
the Additional Shares, at such date and time set forth in the Option
Notice. The time and date of delivery of the Underwritten Shares or
the Additional Shares, as applicable, is referred to herein as the “Closing
Date.” If an Underwriter so elects, delivery of the
Underwritten Shares and Additional Shares
may be made by credit through full fast transfer to the account at The
Depository Trust Company designated by such Underwriter. Certificates
representing the Shares, in definitive form and in such denominations and
registered in such names as the Underwriters may request upon at least two
business days’ prior notice to the Company, will be made available for checking
and packaging not later than 10:30 a.m. PDT on the business day next preceding
the Closing Date at the above addresses, or such other location as may be
mutually acceptable.
5.
Covenants.
(a) The
Company covenants and agrees with the Underwriters as follows:
(i) During
the period beginning on the date hereof and ending on the later of the Closing
Date or such date as determined by the Underwriters the Prospectus is no longer
required by law to be delivered in connection with sales by an underwriter or
dealer (the “Prospectus Delivery
Period”), prior to amending or supplementing the Registration Statement,
including any Rule 462 Registration Statement, the Time of Sale Disclosure
Package or the Prospectus, the Company shall furnish to the Representative for
review and comment a copy of each such proposed amendment or supplement, and the
Company shall not file any such proposed amendment or supplement to which the
Representative reasonably objects.
(ii) From
the date of this Agreement until the end of the Prospectus Delivery Period, the
Company shall promptly advise the Underwriters in writing (A) of the receipt of
any comments of, or requests for additional or supplemental information from,
the Commission, (B) of the time and date of any filing of any post-effective
amendment to the Registration Statement or any amendment or supplement to the
Time of Sale Disclosure Package, the Prospectus or any Issuer Free Writing
Prospectus, (C) of the time and date that any post-effective amendment to the
Registration Statement becomes effective and (D) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or of any order preventing or suspending its use or the use of the
Time of Sale Disclosure Package, the Prospectus or any Issuer Free Writing
Prospectus, or of any proceedings to remove, suspend or terminate from listing
or quotation the Common Stock from any securities exchange or quotation system
upon which it is listed for trading or included or designated for quotation, or
of the threatening or initiation of any proceedings for any of such
purposes. If the Commission shall enter any such stop order at any
time during the Prospectus Delivery Period, the Company will use its reasonable
efforts to obtain the lifting of such order at the earliest possible
moment. Additionally, the Company agrees that it shall comply with
the provisions of Rules 424(b), 430A and 430B, as applicable, under the
Securities Act and will use its reasonable efforts to confirm that any filings
made by the Company under Rule 424(b) or Rule 433 were received in a timely
manner by the Commission (without reliance on Rule 424(b)(8) or 164(b) of the
Securities Act).
(iii) (A)
During the Prospectus Delivery Period, the Company will comply with all
requirements imposed upon it by the Securities Act, as now and hereafter
amended, and by the Rules and Regulations, as from time to time in force, and by
the Exchange Act, as now and hereafter amended, so far as necessary to permit
the continuance of sales of or dealings in the Shares as contemplated by the
provisions hereof, the Time of Sale Disclosure Package, the Registration
Statement and the Prospectus. If during such period any event occurs
the result of which the Prospectus (or if the Prospectus is not yet available to
prospective purchasers, the Time of Sale Disclosure Package ) would include an
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances then existing,
not misleading, or if during such period it is necessary or appropriate in the
opinion of the Company or its counsel or the Representative or its counsel to
amend the Registration Statement or supplement the Prospectus (or if the
Prospectus is not yet available to prospective purchasers, the Time of Sale
Disclosure Package ) to comply with the Securities Act or to file under the
Exchange Act any document that would be deemed to be incorporated by reference
in the Prospectus in order to comply with the Securities Act or the Exchange
Act, the Company will promptly notify the Underwriters and will amend the
Registration Statement or supplement the Prospectus (or if the Prospectus is not
yet available to prospective purchasers, the Time of Sale Disclosure Package) or
file such document (at the expense of the Company) so as to correct such
statement or omission or effect such compliance.
(B) If
at any time following the issuance of an Issuer Free Writing Prospectus there
occurred or occurs an event or development the result of which such Issuer Free
Writing Prospectus conflicted or would conflict with the information contained
in the Registration Statement or any Prospectus or included or would include an
untrue statement of a material fact or omitted or would omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances prevailing at that subsequent time, not misleading, the Company
has promptly notified or promptly will notify the Underwriters and has promptly
amended or will promptly amend or supplement, at its own expense, such Issuer
Free Writing Prospectus to eliminate or correct such conflict, untrue statement
or omission.
(iv) The
Company shall use reasonable efforts to qualify the Shares for sale under the
securities laws of such jurisdictions as the Underwriters reasonably designate
and to continue such qualifications in effect so long as required for the
distribution of the Shares, except that the Company shall not be required in
connection therewith to qualify as a foreign corporation or as a dealer in
securities in any jurisdiction in which it is not so qualified, to execute a
general consent to service of process in any state or to subject itself to
taxation in respect of doing business in any jurisdiction in which it is not
otherwise subject.
(v) The
Company will furnish to the Underwriters and counsel for the Underwriters copies
of the Registration Statement, each Prospectus, any Issuer Free Writing
Prospectus, and all amendments and supplements to such documents, in each case
as soon as available and in such quantities as the Underwriters may from time to
time reasonably request.
(vi) The
Company will make generally available to its security holders as soon as
practicable, but in any event not later than 15 months after the end of the
Company’s current fiscal quarter, an earnings statement (which need not be
audited) covering a 12-month period that shall satisfy the provisions of Section
11(a) of the Securities Act and Rule 158 of the Rules and
Regulations.
(vii) The
Company will pay or cause to be paid (A) all expenses (including
transfer taxes allocated to the respective transferees) incurred in connection
with the delivery to the Underwriters of the Shares, (B) all expenses and fees
(including, without limitation, fees and expenses of the Company’s counsel) in
connection with the preparation, printing, filing, delivery, and shipping of the
Registration Statement (including the financial statements therein and all
amendments, schedules, and exhibits thereto), the Shares, the Time of Sale
Disclosure Package, the Prospectus, any Issuer Free Writing Prospectus and any
amendment thereof or supplement thereto, and the printing, delivery, and
shipping of this Agreement and other underwriting documents, (C) all filing fees
and reasonable fees and disbursements of counsel for the Underwriters incurred
in connection with the qualification of the Shares for offering and sale by the
Underwriters or by dealers under the securities or blue sky laws of the states
and other jurisdictions that the Underwriters shall designate, (D) the fees and
expenses of any transfer agent or registrar, (E) listing fees, if any, (F) the
filing fees and reasonable fees and disbursements of Underwriters’ counsel
incident to any required review and approval by FINRA of the terms of the sale
of the Shares and (G) all other reasonable and customary costs and expenses
incident to the performance of its obligations hereunder that are not otherwise
specifically provided for herein. In addition to the foregoing, on
the Closing Date the Company will reimburse the Representative for up to
$100,000 for its expenses incurred in connection with the purchase and sale of
the Shares contemplated hereby (the “Underwriter’s
Expenses”). Notwithstanding anything contained herein, the
maximum amount payable by the Company for the fees of counsel for the
Underwriters, disbursements and other out-of-pocket expenses pursuant to this
Section 5(a)(vii) exclusive of the Underwriters’ Expenses shall be
$100,000.
(viii) The
Company represents and agrees that, unless it obtains the prior written consent
of the Representative, and each of the Underwriters represents and agrees that,
unless it obtains the prior written consent of the Company, it has not made and
will not make any offer relating to the Shares that would constitute an Issuer
Free Writing Prospectus; provided, that the
prior written consent of the parties hereto shall be deemed to have been given
in respect of the free writing prospectuses included in Schedule
I. Any such free writing prospectus consented to by the Company and
the Representative is hereinafter referred to as a “Permitted Free Writing
Prospectus.” The Company represents that it has treated or
agrees that it will treat each Permitted Free Writing Prospectus as an “issuer
free writing prospectus,” as defined in Rule 433, and has complied or will
comply with the requirements of Rule 433 applicable to any Permitted Free
Writing Prospectus, including timely Commission filing where required, legending
and record-keeping.
(ix) The
Company hereby agrees that, without the prior written consent of the
Representative, it will not, during the period ending 90 days after the date
hereof (“Lock-Up
Period”), (i) offer, pledge, issue, sell (including through any hedging
transactions or short sales), contract to sell, purchase, contract to purchase,
lend, or otherwise transfer or dispose of, directly or indirectly, any options,
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock, except pursuant to existing outstanding
instruments; or (ii) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of
the Common Stock, whether any such 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; or (iii) file any registration statement with the Commission
relating to the offering of any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock. The
restrictions contained in the preceding sentence shall not apply to (1) the
Shares to be sold hereunder, (2) the issuance of Common Stock upon
the exercise of options or warrants disclosed as outstanding in the Registration
Statement (excluding exhibits thereto) or the Prospectus, (3) the issuance of
employee stock options not exercisable during the Lock-Up Period and the grant
of restricted stock awards or restricted stock units pursuant to equity
incentive plans described in the Registration Statement (excluding exhibits
thereto) and the Prospectus, or (4) the issuance of Company securities as all or
part of the purchase price for the acquisition of another company or business
(which does not include the issuance of any Company securities for the purpose
of financing, directly or indirectly, any such
acquisition). Notwithstanding the foregoing, if (x) the Company
issues an earnings release or material news, or a material event relating to the
Company occurs, during the last 17 days of the Lock-Up Period, or (y) prior to
the expiration of the Lock-Up Period, the Company announces that it will release
earnings results during the 16-day period beginning on the last day of the
Lock-Up Period, the restrictions imposed by this clause shall continue to apply
until the expiration of the 18-day period beginning on the issuance of the
earnings release or the occurrence of the material news or material event,
unless the Representative waives such extension in writing.
(x)
The Company shall cause each stockholder, officer and director of
the Company listed on Schedule IV to furnish to the Underwriters, on or prior to
the date of this Agreement, a lock-up agreement substantially in the form of
Exhibit A
attached hereto.
(xi)
The Company will apply the net proceeds from the sale of the Shares to be
sold by it hereunder for the purposes set forth in the Time of Sale Disclosure
Package and in the Prospectus.
(xii) The
Company has not taken and will not take, directly or indirectly, any action
designed to or which might reasonably be expected to cause or result in, or
which has constituted, the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the
Shares.
(xiii) The
Company will not incur any liability for any finder’s or broker’s fee or agent’s
commission in connection with the execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby except as provided
hereunder.
(xiv) For
so long as the Company’s Common Stock is registered under the Exchange Act, the
Company and its subsidiaries will maintain such controls and other procedures,
including without limitation those applicable to the Company and required by
Sections 302 and 906 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act and the applicable regulations
thereunder, that are designed to ensure that information required to be
disclosed by the Company in the reports that it files or submits under the
Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the Commission’s rules and forms, including without
limitation, controls and procedures designed to ensure that information required
to be disclosed by the Company in the reports that it files or submits under the
Exchange Act is accumulated and communicated to the Company’s management,
including its principal executive officer and its principal financial officer,
or persons performing similar functions, as appropriate to allow timely
decisions regarding required disclosure, to ensure that material information
relating to Company, including its subsidiaries, is made known to them by others
within those entities.
(xv) The
Company shall not invest, or otherwise use the proceeds received by the Company
from its sale of the Shares in such a manner as would require the Company to
register as an investment company under the Investment Company Act of 1940, as
amended.
(xvi) The
Company and its subsidiaries will substantially comply with all effective
applicable provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act.
(xvii) During
the Prospectus Delivery Period, the Company will file on a timely basis with the
Commission such periodic and special reports as required by the Rules and
Regulations.
(xviii) Prior
to the Closing Date, the Company will not issue any press release or other
communication directly or indirectly or hold any press conference with respect
to the Company, its condition, financial or otherwise, or the earnings,
business, operations or prospects of any of them, or the offering of the Shares,
without the prior written consent of the Representative, unless in the
reasonable judgment of the Company and its counsel, and after notification to
the Representative, such press release or communication is required by law, in
which case the Company shall use its reasonable best efforts to allow the
Representative reasonable time to comment on such release or other communication
in advance of such issuance.
6. Conditions of the Underwriter’s
Obligations. The obligations of the Underwriters hereunder to
purchase the Shares are subject to the accuracy, as of the date hereof and at
the Closing Date and any Option Closing Date (as if made at such date), of and
compliance with all representations, warranties and agreements of the Company
contained herein, the performance by the Company of its obligations hereunder
and the following additional conditions:
(a) If
filing of the Prospectus, or any amendment or supplement thereto, or any Issuer
Free Writing Prospectus, is required under the Securities Act or the Rules and
Regulations, the Company shall have filed the Prospectus (or such amendment or
supplement) or such Issuer Free Writing Prospectus with the Commission in the
manner and within the time period so required (without reliance on Rule
424(b)(8) or 164(b) under the Securities Act); the Registration Statement shall
remain effective; no stop order suspending the effectiveness of the Registration
Statement or any part thereof, any Rule 462 Registration Statement, or any
amendment thereof, nor suspending or preventing the use of the Time of Sale
Disclosure Package, the Prospectus or any Issuer Free Writing Prospectus shall
have been issued; no proceedings for the issuance of such an order shall have
been initiated or threatened; any request of the Commission or the Underwriters
for additional information (to be included in the Registration Statement, the
Time of Sale Disclosure Package, the Prospectus, any Issuer Free Writing
Prospectus or otherwise) shall have been complied with to the reasonable
satisfaction of the Representative; and FINRA shall have raised no objection to
the fairness and reasonableness of the underwriting terms and
arrangements.
(b) The
Representative shall not have reasonably
determined, and advised the
Company, that the Registration Statement, the Time of Sale Disclosure Package or
the Prospectus, or any amendment thereof or supplement thereto, or any Issuer
Free Writing Prospectus, contains an untrue statement of fact which, in the
Representative's reasonable opinion, is material, or omits to state a fact
which, in the Representative's reasonable opinion, is material and is required
to be stated therein or necessary to make the statements therein not
misleading.
(c) On
or after the date hereof (i) no downgrading shall have occurred in the rating
accorded any of the Company’s securities by any “nationally recognized
statistical organization,” as that term is defined by the Commission for
purposes of Rule 436(g)(2) under the Securities Act, and (ii) no such
organization shall have publicly announced that it has under surveillance or
review, with possible negative implications, its rating of any of the Company’s
securities.
(d) Except
as contemplated in the Time of Sale Disclosure Package or in the Prospectus, subsequent to the
respective dates as of which information is given in the Time of Sale Disclosure
Package and prior to the later of the Closing Date or Option Closing Date, as
applicable, neither the Company nor any of its subsidiaries shall have incurred
any material liabilities or obligations, direct or contingent, or entered into
any material transactions, or declared or paid any dividends or made any
distribution of any kind with respect to its capital stock; and there shall not
have been any change in the capital stock (other than a change in the number of
outstanding shares of Common Stock due to the issuance of shares upon the
exercise of outstanding options or warrants), or any material change in the
short-term or long-term debt of the Company, or any issuance of options,
warrants, convertible securities or other rights to purchase the capital stock
of the Company or any of its subsidiaries, or any Material Adverse Effect
(whether or not arising in the ordinary course of business), or any loss by
strike, fire, flood, earthquake, accident or other calamity, whether or not
covered by insurance, incurred by the Company or any subsidiary, the effect of
which, in any such case described above, in the Representative’s judgment, makes
it impractical or inadvisable to offer or deliver the Shares or the Additional
Shares, as applicable, on the terms and in the manner contemplated in the Time
of Sale Disclosure Package, the Registration Statement and in the
Prospectus.
(e) There
has been no occurrence of any event resulting or reasonably likely to result in
a Material Adverse Effect during the period from and after the date of this
Agreement and prior to the Closing Date or Option Closing Date, as the case may
be.
(f) On
the Closing Date and any Option Closing Date, there shall have been furnished to
the Underwriters the (i) opinion and negative assurance letters of K&L Gates
LLP, (ii) opinion of ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇, and (iii) opinion of Hua Hong
Law Office, each of which who are counsel to the Company, dated the Closing Date
and Option Closing Date, as applicable, and addressed to the Underwriters, in
substantially the form and substance set forth in Schedule II.
(g) On
the Closing Date and any Option Closing Date, the Underwriters shall have
received a letter of BDO ▇▇▇▇▇▇ Lo Limited, dated the Closing Date and addressed
to the Underwriters, confirming that they are independent public accountants
within the meaning of the Securities Act and are in compliance with the
applicable requirements relating to the qualifications of accountants under Rule
2-01 of Regulation S-X of the Commission, and confirming, as of the date of such
letter (or, with respect to matters involving changes or developments since the
respective dates as of which specified financial information is given in the
Time of Sale Disclosure Package, as of a date not prior to the date hereof or
more than five days prior to the date of such letter), the conclusions and
findings of said firm with respect to the financial information and other
matters covered by its letter delivered to the Representative concurrently with
the execution of this Agreement, and the effect of the letter so to be delivered
on the Closing Date and any Option Closing Date shall be to confirm the
conclusions and findings set forth in such prior letter.
(h) On
each of the Closing Date and each Option Closing Date, there shall have been
furnished to the Underwriters a certificate, dated the Closing Date and
addressed to the Underwriters, signed by the chief executive officer and the
chief financial officer of the Company, in their capacity as officers of the
Company, to the effect that:
(i) The
representations and warranties of the Company in this Agreement are true and
correct, in all material respects, as if made at and as of the Closing Date or
Option Closing Date, as the case may be, and the Company has complied with all
the agreements and satisfied all the conditions on its part to be performed or
satisfied at or prior to the Closing Date or Option Closing Date, as the case
may be;
(ii) No
stop order or other order (A) suspending the effectiveness of the Registration
Statement or any part thereof or any amendment thereof, (B) suspending the
qualification of the Shares for offering or sale, or (C) suspending or
preventing the use of the Time of Sale Disclosure Package, the Prospectus or any
Issuer Free Writing Prospectus, has been issued, and no proceeding for that
purpose has been instituted or, to their knowledge, is contemplated by the
Commission or any state or regulatory body; and
(iii) There
has been no occurrence of any event resulting or reasonably likely to result in
a Material Adverse Effect during the period from and after the date of this
Agreement and prior to the Closing Date or Option Closing Date, as the case may
be.
(i) The
“lock-up” agreements between the Representative and the stockholders, officers
and directors of the Company listed on Schedule IV, delivered to the
Representative on or before the date hereof, shall be in full force and effect
on the Closing Date or such Option Closing Date, as applicable.
(j) The
Company shall have furnished to the Underwriters and their counsel such
additional documents, certificates and evidence as the Underwriters or their
counsel may have reasonably requested.
If any condition specified in this
Section 6 shall not have been fulfilled when and as required to be fulfilled,
this Agreement may be terminated by the Representative by notice to the Company
at any time at or prior to the Closing Date and such termination shall be
without liability of any party to any other party, except that Section
5(a)(vii), Section 7 and Section 8 shall survive any such termination and remain
in full force and effect.
7.
Indemnification and
Contribution.
(a) The
Company agrees to indemnify, defend and hold harmless each Underwriter,
its respective affiliates, directors and officers and employees, and each
person, if any, who controls the Underwriters within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act, from and against
any losses, claims, damages or liabilities to which the Underwriters or such
person may become subject, under the Securities Act or otherwise (including in
settlement of any litigation if such settlement is effected with the written
consent of the Company), insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon (i) an untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, including the information deemed to be a part of the
Registration Statement at the time of effectiveness and at any subsequent time
pursuant to Rules 430A and 430B of the Rules and Regulations, the Time of Sale
Disclosure Package, the Prospectus, or any amendment or supplement thereto
(including any documents filed under the Exchange Act and deemed to be
incorporated by reference into the Registration Statement or the Prospectus), or
any Issuer Free Writing Prospectus, or in any materials or information provided
to investors by, or with the approval of, the Company in connection with the
marketing of the offering of the Common Stock, including any roadshow or
investor presentations made to investors by the Company (whether in person or
electronically), or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, (ii) in whole or in part, any inaccuracy
in the representations and warranties of the Company contained herein, or (iii)
in whole or in part, any failure of the Company to perform its obligations
hereunder or under law, and will reimburse the Underwriters for any legal or
other expenses reasonably incurred by them in connection with evaluating,
investigating or defending against such loss, claim, damage, liability or
action; provided, however, that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage, liability or action arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in the
Registration Statement, the Time of Sale Disclosure Package, the Prospectus, or
any amendment or supplement thereto or any Issuer Free Writing Prospectus, in
reliance upon and in conformity with written information furnished to the
Company by such Underwriter specifically for use in the preparation
thereof.
(b) Each
Underwriter will, severally and not jointly, indemnify and hold harmless the
Company, its respective affiliates, directors, officers and employees, and
each person, if any, who controls the Company within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act, from and against any
losses, claims, damages or liabilities to which the Company may become subject,
under the Securities Act or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of such
Underwriters), insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon an untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement, the Time of Sale Disclosure Package, the Prospectus, or any amendment
or supplement thereto or any Issuer Free Writing Prospectus, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in the Registration Statement, the Time of Sale Disclosure Package, the
Prospectus, or any amendment or supplement thereto or any Issuer Free Writing
Prospectus in reliance upon and in conformity with written information furnished
to the Company by such Underwriter specifically for use in the preparation
thereof, and will reimburse the Company for any legal or other expenses
reasonably incurred by the Company in connection with defending against any such
loss, claim, damage, liability or action.
(c) Promptly
after receipt by an indemnified party under subsection (a) or (b) above of
notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party under such
subsection, notify the indemnifying party in writing of the commencement
thereof; but the failure to notify the indemnifying party shall not relieve the
indemnifying party from any liability that it may have to any indemnified party
except to the extent such indemnifying party has been materially prejudiced by
such failure. In case any such action shall be brought against any
indemnified party, and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
in, and, to the extent that it shall wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of the indemnifying party’s election so to
assume the defense thereof, the indemnifying party shall not be liable to such
indemnified party under such subsection for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof; provided,
however, that if (i)
the indemnified party has reasonably concluded (based on advice of counsel) that
there may be legal defenses available to it or other indemnified parties that
are different from or in addition to those available to the indemnifying party,
(ii) a conflict or potential conflict exists (based on advice of counsel to the
indemnified party) between the indemnified party and the indemnifying party (in
which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party), or (iii) the indemnifying
party has not in fact employed counsel reasonably satisfactory to the
indemnified party to assume the defense of such action within a reasonable time
after receiving notice of the commencement of the action, the indemnified party
shall have the right to employ a single counsel to represent it in any claim in
respect of which indemnity may be sought under subsection (a) or (b) of this
Section 7, in which event the reasonable and documented fees and expenses of
such separate counsel shall be borne by the indemnifying party or parties and
reimbursed to the indemnified party as incurred; it being understood, however,
that the indemnifying party shall not be liable for the expenses of more than
one separate counsel (plus local counsel).
The
indemnifying party under this Section 7 shall not be liable for any settlement
of any proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party against any loss, claim, damage,
liability or expense by reason of such settlement or judgment. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement, compromise or consent to the entry of judgment in
any pending or threatened action, suit or proceeding in respect of which any
indemnified party is a party or could be named and indemnity was or would be
sought hereunder by such indemnified party, unless such settlement, compromise
or consent (a) includes an unconditional release of such indemnified party from
all liability for claims that are the subject matter of such action, suit or
proceeding and (b) does not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of any indemnified
party.
(d) If
the indemnification provided for in this Section 7 is unavailable or
insufficient to hold harmless an indemnified party under subsection (a) or (b)
above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in subsection (a) or (b) above, (i) in such proportion
as is appropriate to reflect the relative benefits received by the Company on
the one hand and the Underwriters on the other from the offering and sale of the
Shares or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company on
the one hand and the Underwriters on the other in connection with the statements
or omissions that resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and the Underwriters on the
other shall be deemed to be in the same proportion as the total net proceeds
from the offering (before deducting expenses) received by the Company bear to
the total underwriting discounts and commissions received by the Underwriters,
in each case as set forth in the table on the cover page of the Final
Prospectus. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Underwriters and
the parties’ relevant intent, knowledge, access to information and opportunity
to correct or prevent such untrue statement or omission. The
Company and the
Underwriters agree that it would not be just and equitable if contributions
pursuant to this subsection (d) were to be determined by pro rata allocation or
by any other method of allocation that does not take account of the equitable
considerations referred to in the first sentence of this subsection
(d). The amount paid by an indemnified party as a result of the
losses, claims, damages or liabilities referred to in the first sentence of this
subsection (d) shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
against any action or claim that is the subject of this subsection
(d). Notwithstanding the provisions of this subsection (d), the Underwriters shall not
be required to contribute any amount in excess of the amount of the
Underwriters' commissions referenced in Section 4(a) actually received by the
Underwriters pursuant to this Agreement. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
(e) The
obligations of the Company under this Section 7 shall be in addition to any
liability that the Company may otherwise have and the benefits of such
obligations shall extend, upon the same terms and conditions, to each person, if
any, who controls the Underwriters within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act; and the obligations of the
Underwriters under this Section 7 shall be in addition to any liability that the
Underwriters may otherwise have and the benefits of such obligations shall
extend, upon the same terms and conditions, to the Company and its respective
officers, directors and each person who controls the Company within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange
Act.
(f) For
purposes of this Agreement, the Underwriters confirm, and the Company
acknowledges, that there is no information concerning the Underwriters furnished
in writing to the Company by the Underwriters specifically for preparation of or
inclusion in the Registration Statement, the Time of Sale Disclosure Package,
the Prospectus or any Issuer Free Writing Prospectus, other than the statements
set forth in the last paragraph on the cover page of the Prospectus and the
statements set forth in the “Underwriting” section of the Prospectus and Time of
Sale Disclosure Package, and then only insofar as such statements relate to the
amount of selling concession and re-allowance or to over-allotment and related
activities that may be undertaken by the Underwriters.
8. Representations and Agreements to
Survive Delivery. All representations, warranties, and
agreements of the Company herein or in certificates delivered pursuant hereto,
including, but not limited to, the agreements of the Underwriters and the Company
contained in Section 5(a)(vii) and Section 7 hereof, shall remain operative and
in full force and effect regardless of any investigation made by or on behalf of
the Underwriters or any controlling person thereof, or the Company or any of its
respective officers, directors, or
controlling persons, and shall survive delivery of, and payment for, the Shares
to and by the Underwriters hereunder.
9. Termination of this
Agreement.
(a) In
addition to the provisions of Section 6, the Representative shall have the right
to terminate this Agreement by giving notice to the Company as hereinafter
specified at any time at or prior to the Closing Date, if (i) the Company shall
have failed, refused, or been unable, at or prior to the Closing Date, to
perform any material agreement on its part to be performed hereunder, (ii)
trading in the Company’s Common Stock shall have been suspended by the
Commission or trading in securities generally on the OTC Bulletin Board, Nasdaq
Global Market, New York Stock Exchange or NYSE Amex shall have been suspended,
(iii) minimum or maximum prices for trading shall have been fixed, or maximum
ranges for prices for securities shall have been required, on the OTC Bulletin
Board, Nasdaq Global Market, New York Stock Exchange or NYSE Amex, by such
exchange or by order of the Commission or any other governmental authority
having jurisdiction, (iv) a banking moratorium shall have been declared by
federal or state authorities, (v) there shall have occurred any attack on,
outbreak or escalation of hostilities or act of terrorism involving the United
States, any declaration by the United States of a national emergency or war, any
change in financial markets, any substantial change or development involving a
prospective substantial change in United States or international political,
financial or economic conditions or any other calamity or crisis, or (vi) the
Company suffers any loss by strike, fire, flood, earthquake, accident or other
calamity, whether or not covered by insurance, the effect of which, in each case
described in this subsection (a), in the Representative’s judgment is material
and adverse and makes it impractical or inadvisable to proceed with the
completion of the sale of and payment for the Shares. Any such
termination shall be without liability of any party to any other party except
that the provisions of Section 5(a)(vii) and Section 7 hereof shall at all times
be effective and shall survive such termination.
(b) If
the Representative elects to terminate this Agreement as provided in this
Section, the Company shall be notified promptly by the Representative by
telephone, confirmed by letter.
10. Notices. Except as
otherwise provided herein, all communications hereunder shall be in writing and,
if to ▇▇▇▇, shall be mailed, delivered or telecopied to ▇▇▇▇ Capital Partners,
LLC, ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, telecopy number: (▇▇▇)
▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇; and if to the Company, shall
be mailed, delivered or telecopied to it at No. 999 Ningqiao Road, Jinqiao
Export Processing ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇'▇ ▇▇▇▇▇▇▇▇ of China,
telecopy number: ▇▇.▇▇.▇▇▇▇.▇▇▇▇, Attention: Mr. Song Jinan, Chairman of
the Board, Chief Executive Officer, Treasurer and Secretary; or in each case to
such other address as the person to be notified may have requested in
writing. Any party to this Agreement may change such address for
notices by sending to the parties to this Agreement written notice of a new
address for such purpose.
11. Persons Entitled to Benefit of
Agreement. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and assigns and
the controlling persons, officers and directors referred to in Section
7. Nothing in this Agreement is intended or shall be construed to
give to any other person, firm or corporation any legal or equitable remedy or
claim under or in respect of this Agreement or any provision herein
contained. The term “successors and assigns” as herein used shall not
include any purchaser, as such purchaser, of any of the Shares from the
Underwriters.
12. Absence of Fiduciary
Relationship. The Company acknowledges and agrees that: (a)
the Underwriters have been retained solely to act as underwriter in connection
with the sale of the Shares and that no fiduciary, advisory or agency
relationship between the Company and the Underwriters have been created in
respect of any of the transactions contemplated by this Agreement, irrespective
of whether the Underwriters have advised or is advising the Company on other
matters; (b) the price and other terms of the Shares set forth in this Agreement
were established by the Company following discussions and arms-length
negotiations with the Underwriters and the Company is capable of evaluating and
understanding and understands and accepts the terms, risks and conditions of the
transactions contemplated by this Agreement; (c) it has been advised that each
of the Underwriters and its affiliates are engaged in a broad range of
transactions that may involve interests that differ from those of the Company
and that the Underwriters have no obligation to disclose such interest and
transactions to the Company by virtue of any fiduciary, advisory or agency
relationship; (d) it has been advised that each Underwriter is acting, in
respect of the transactions contemplated by this Agreement, solely for the
benefit of such Underwriter, and not on behalf of the Company.
13. Amendments and
Waivers. No supplement, modification or waiver of this
Agreement shall be binding unless executed in writing by the party to be bound
thereby. The failure of a party to exercise any right or remedy shall
not be deemed or constitute a waiver of such right or remedy in the
future. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provision hereof (regardless of
whether similar), nor shall any such waiver be deemed or constitute a continuing
waiver unless otherwise expressly provided.
14. Partial
Unenforceability. The invalidity or unenforceability of any
section, paragraph, clause or provision of this Agreement shall not affect the
validity or enforceability of any other section, paragraph, clause or
provision.
15. Entire
Agreement. This Agreement, together with the exhibits and
schedules hereto, and the Time of Sale Disclosure Package, contain the entire
understanding of the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, oral or written, with respect
to such matters, which the parties acknowledge have been merged into such
documents, exhibits and schedules.
16. Governing Law. This
Agreement shall be governed by and construed in accordance with the laws of the
State of Delaware.
17. Counterparts. This
Agreement may be executed in one or more counterparts and, if executed in more
than one counterpart, the executed counterparts shall each be deemed to be an
original and all such counterparts shall together constitute one and the same
instrument.
Please
sign and return to the Company the enclosed duplicates of this letter whereupon
this letter will become a binding agreement between the Company and
the Underwriters in accordance with its terms.
| Very truly yours, | ||
| CHINA-BIOTICS, INC. | ||
|
By:
|
||
|
Name:
|
||
|
Title:
|
||
Confirmed
as of the date first above-
mentioned
by the Underwriter.
▇▇▇▇
CAPITAL PARTNERS, LLC
|
By:
|
|
|
Name:
|
|
|
Title:
|
SCHEDULE
I
FREE
WRITING PROSPECTUS
Filed
Pursuant to Rule 433
Supplementing
the Preliminary Prospectus Supplement dated September 29, 2009
Registration
Statement No. 333-160519
Dated
September 30, 2009
4,600,000
Shares of Common Stock
Final
Term Sheet
|
Issuer:
|
China-Biotics,
Inc. (the “Company”)
|
|
Security:
|
Common
stock, par value $0.0001 per share
|
|
Size:
|
4,600,000
shares of common stock
|
|
Over-allotment
option:
|
690,000
additional shares of common stock
|
|
Public
offering price:
|
$15.00
per share
|
|
Underwriting
discounts and commissions:
|
$0.75
per share
|
|
Net
proceeds (excluding the over-allotment):
|
$____________
(after deducting the underwriters’ discounts and commissions and estimated
offering expenses payable by the Company)
|
|
Form
of Offering:
|
Firm
commitment underwritten public offering pursuant to a registration
statement on Form S-3 that was filed on July 10, 2009 and declared
effective on September 9, 2009
|
|
Listing:
|
The
Shares are listed on the NASDAQ Global Market under the symbol
“CHBT”
|
|
Trade
date:
|
September
30, 2009
|
|
Settlement
date:
|
October
5, 2009
|
|
Underwriters:
|
▇▇▇▇
Capital Partners,
LLC
|
The
issuer has filed a registration statement (including a prospectus) with the SEC
for the offering to which this communication relates. Before you
invest, you should read the prospectus in that registration statement and other
documents the issuer has filed with the SEC for more complete information about
the issuer and this offering. You may get these documents for free by
visiting ▇▇▇▇▇ on the SEC Web site at ▇▇▇.▇▇▇.▇▇▇. Alternatively, the
issuer, any underwriter or any dealer participating in the offering will arrange
to send you the prospectus if you request it from ▇▇▇▇ Capital Partners, LLC,
Attention: Syndicate Department, ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇,
▇▇▇▇▇, by telephone at ▇-▇▇▇-▇▇▇-▇▇▇▇, by e-mail to ▇▇▇▇▇▇▇@▇▇▇▇.▇▇▇, by fax to
(▇▇▇) ▇▇▇-▇▇▇▇.
SCHEDULE
II
Opinions
and Negative Assurance, Counsel to the Company
1. The
Company has been duly incorporated and is validly existing as a corporation in
good standing under the laws of the State of Delaware, with the requisite
corporate power to own or lease, as the case may be, and operate its properties,
and to conduct its business, as described in the Registration Statement and the
Final Prospectus.
2. The
Company is duly registered or qualified to do business as a foreign corporation
and is in good standing under the laws of the States of
______________.
3. The
Shares to be purchased by the Underwriters have been duly authorized for sale to
the Underwriters pursuant to the Underwriting Agreement and, when issued and
paid for by you pursuant to the Underwriting Agreement, the Shares will be
validly issued, fully paid and nonassessable and no holder of the Shares is or
will be subject to personal liability by reason of being such a
holder.
4. The
holders of outstanding shares of capital stock of the Company Stock are not
entitled to any preemptive right or right of first offer or right of first
refusal (i) set forth in or provided for by the Company’s currently effective
Certificate of Incorporation or By-Laws (collectively, the “Company Governing
Documents”), or (ii) granted by the Company in any currently effective
written agreement.
5. The
issuance and sale of the Shares by the Company is not subject to the preemptive
or other similar rights of any security holder of the Company.
6. Each
subsidiary of the Company has been duly organized and is validly existing in
good standing under the laws of the jurisdiction of its organization, has
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Prospectus and is duly qualified to
transact business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify or
to be in good standing would not result in a Material Adverse Effect; except as
otherwise disclosed in the Registration Statement, all of the issued and
outstanding capital stock of each subsidiary of the Company has been duly
authorized and validly issued, is fully paid and non-assessable and, to the best
of our knowledge, is owned by the Company, directly or through subsidiaries,
free and clear of any security interest, mortgage, pledge, lien, encumbrance,
claim or equity; none of the outstanding shares of capital stock of any
subsidiary of the Company was issued in violation of the preemptive or similar
rights of any security holder of such subsidiary of the Company.
7. The
statements in the Base Prospectus, the most recent Prospectus that is part of
the Time of Sale Disclosure Package (the “Time of Sale
Prospectus”) and the Final Prospectus under the headings “Description of
Capital Stock” and in the Registration Statement in Part II, Item 15,
insofar as such statements purport to summarize legal matters, agreements or
documents discussed therein, fairly summarize such legal matters, agreements or
documents, in all material respects.
8. The
Registration Statement has been declared effective under the Securities Act; any
required filing of each prospectus relating to the Shares (including the
Prospectus) pursuant to Rule 424(b) has been made in the manner and within the
time period required by Rule 424(b) (without reference to Rule 424(b)(8)); any
required filing of each Issuer Free Writing Prospectus pursuant to Rule 433 has
been made in the manner and within the time period required by Rule 433(d); and,
to the best of our knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued under the Securities Act and no
proceedings for that purpose have been instituted or are pending or threatened
by the Commission.
9. The
Underwriting Agreement has been duly authorized by all necessary corporate
action on the part of the Company and has been duly executed and delivered by
the Company.
10. The
Company is not, and after giving effect to the offering and sale of the Shares
and the application of the proceeds thereof as described in the Time of Sale
Disclosure Package and the Final Prospectus will not be, required to register as
an “investment company” as defined in the Investment Company Act.
11. No
consent, approval, authorization or filing with or order of any U.S. Federal,
PRC, State of Delaware court or governmental agency or body having jurisdiction
over the Company is required, under the laws, rules and regulations of the
United States of America, PRC, and the State of Delaware, for the consummation
by the Company of the transactions contemplated by the Underwriting Agreement,
except (i) such as have been made or obtained under the Securities Act and (ii)
such as may be required under the blue sky laws of any jurisdiction in
connection with the purchase and distribution of the Shares by you in the manner
contemplated in the Underwriting Agreement and in the Final Prospectus, as to
which we express no opinion.
12. The
issue and sale of the Shares pursuant to the Underwriting Agreement will not
result in a breach or violation of (or constitute any event that with notice,
lapse of time or both would result in a breach of violation of): (i)
the Company Governing Documents, (ii) any statute, rule, or regulation of the
United States of America, PRC, or the State of Delaware which, in our
experience, is typically applicable to transactions of the nature contemplated
by the Underwriting Agreement and is applicable to the Company, (iii) any
currently effective order, writ, judgment, injunction, decree, or award that
names and has been entered against the Company and of which we have knowledge,
or (iv) any Contract that was filed as an exhibit to the Company’s most recent
annual report on Form 10-K, in each case (ii) through (iv) the breach or
violation of which would materially and adversely affect the
Company.
13. To
our knowledge, except as set forth in the Time of Sale Disclosure Package and
the Final Prospectus, the Company is not a party to any written agreement
granting any holders of securities of the Company rights to require the
registration under the Securities Act of resales of such
securities.
In
addition to rendering legal advice and assistance to the Company in the course
of the preparation of the Registration Statement and the Time of Sale Disclosure
Package and the Final Prospectus, involving, among other things, discussions and
inquiries concerning various legal matters and the review of certain corporate
records, documents and proceedings, we also participated in conferences with
certain officers and other representatives of the Company, its independent
certified public accountants and you and your counsel, at which the contents of
the Registration Statement, the Time of Sale Disclosure Package and the Final
Prospectus, the documents incorporated by reference in the Time of Sale
Disclosure Package and the Final Prospectus and related matters were
discussed. We have also reviewed and relied upon certain corporate
records and documents of the Company, letters from counsel and accountants, and
oral and written statements and certificates of officers and other
representatives of the Company and others as to the existence and consequences
of certain factual and other matters.
The
purpose of our professional engagement was not to establish or confirm factual
matters or financial or quantitative information. Therefore, we are not passing
upon and do not assume any responsibility for the accuracy, completeness or
fairness of the statements or information contained or incorporated by reference
in the Registration Statement, the Time of Sale Disclosure Package or the Final
Prospectus and have not made, or undertaken any obligation to make, an
independent check or verification thereof (except as also stated in that opinion
letter). Moreover, many of the determinations required to be made in
the preparation of the Registration Statement, the Time of Sale Disclosure
Package and the Final Prospectus involve matters of a non-legal
nature.
However,
subject to the foregoing and based on our participation, review and reliance
described in the second preceding paragraph, (i) we believe (a) the
Registration Statement (as of its effective date), the Time of Sale Prospectus
(as of the Applicable Time), the Final Prospectus (as of its date), and any
further amendments and supplements thereto (as of their respective dates), as
applicable, made by the Company prior to the Closing Date and any Option Closing
Date, as applicable (other than the financial statements and schedules and other
financial and statistical data included therein or derived therefrom, as to
which we express no belief) appeared on their face to be appropriately
responsive, and complied as to form, in all material respects to the
requirements of the Securities Act and the applicable rules and regulations of
the Commission thereunder and (b) the documents incorporated by reference in the
Registration Statement and the Time of Sale Prospectus and the Final Prospectus
(other than the financial statements and schedules and other financial and
statistical data included therein or derived therefrom, as to which we express
no belief), at the time they were filed with the Commission, appeared on their
face to be appropriately responsive, and complied as to form, in all material
respects to the requirements of the Exchange Act and the applicable rules and
regulations of the Commission thereunder, and (ii) we confirm that nothing
has come to our attention that would lead us to believe (a) that the
Registration Statement or any amendment thereto filed by the Company prior to
the Closing Date and any Option Closing Date, as applicable (other than the
financial statements and schedules and other financial and statistical data
included therein or derived therefrom, as to which we express no belief), when
the Registration Statement or such amendment became effective, except as it
relates to any class of securities other than the Common Stock, contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not misleading,
(b) that the Time of Sale Disclosure Package (other than the financial
statements and schedules and other financial and statistical data included
therein or derived therefrom, as to which we express no belief), as of 6:00 a.m.
PDT on __________, 2009 (the “Applicable Time,” which, you have informed us, is
a time before the time of the first sale of the Shares by any Underwriter),
except as it relates to any class of securities other than the Common Stock,
contained any untrue statement of a material fact or omitted to state any
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; or (c) that, as of
its date and as of the Closing Date and any Option Closing Date, as applicable,
the Final Prospectus or any further amendment or supplement thereto made by the
Company prior to the Closing Date and any Option Closing Date, as applicable
(other than the financial statements and schedules and other financial and
statistical data included therein or derived therefrom, as to which we express
no belief), except as it relates to any class of securities other than the
Common Stock, contained or contains any untrue statement of a material fact or
omitted or omits to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
In
addition, we supplementally inform you that, to our knowledge, there is no
action, suit or proceeding by or before any court or other governmental agency,
authority or body or any arbitrator pending or overtly threatened against the
Company or its properties by a third party of a character required to be
disclosed in the Registration Statement, the Time of Sale Disclosure Package or
the Final Prospectus that is not disclosed in the Registration Statement, the
Time of Sale Disclosure Package or the Final Prospectus as required by the
Securities Act and the rules thereunder.
SCHEDULE
III
|
List
of Underwriters
|
Percentage of Shares
|
|||
|
▇▇▇▇
Capital Partners, LLC
|
90 | % | ||
|
Maxim
Group LLC
|
10 | % | ||
SCHEDULE
IV
List
of Persons and Entities Subject to Lock-Up Agreements
Song
Jinan
▇▇▇▇▇
Fan
Ji ▇▇▇
▇▇▇▇
Wen ▇▇▇
▇▇
▇▇▇▇▇
▇▇▇▇
Exhibit
A
Form
of Lock-Up Agreement
l, 2009
▇▇▇▇
CAPITAL PARTNERS, LLC
as
Representative of the several
Underwriters
to be named in the
within-mentioned
Underwriting
Agreement
▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
|
|
Re:
|
Proposed Public
Offering by China-Biotics,
Inc.
|
Dear
Sirs:
The
undersigned, a shareholder [and an officer and/or director] of China-Biotics,
Inc., a Delaware corporation (the “Company”), understands that ▇▇▇▇ Capital
Partners, LLC (“RCP”), as Representative of the several underwriters, proposes
to enter into an Underwriting
Agreement (the “Underwriting Agreement”) with
the Company providing for the public offering of shares (the “Securities”) of
the Company’s common stock, par value $0.0001 per share (the “Common
Stock”). In recognition of the benefit that such an offering will
confer upon the undersigned as a shareholder [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
underwriter to be named in the Underwriting Agreement that,
during a period of 90 days from the date of the Underwriting Agreement, the
undersigned will not, without the prior written consent of RCP, 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 the Company’s 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, or file, or cause to be filed, any registration
statement under the Securities Act of 1933, as amended, with respect to any of
the foregoing (collectively, the “Lock-Up Securities”) 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
Lock-Up Securities, whether any such swap or transaction is to be settled by
delivery of Common Stock or other securities, in cash or otherwise.
Notwithstanding
the foregoing, if:
(1) during
the last 17 days of the 90-day lock-up period, the Company issues an earnings
release or material news or a material event relating to the Company occurs;
or
(2) prior
to the expiration of the 90-day lock-up period, the Company announces that it
will release earnings results or becomes aware that material news or a material
event will occur during the 16-day period beginning on the last day of the
90-day lock-up period, the
restrictions imposed by this lock-up agreement shall continue to apply until the
expiration of the 18-day period beginning on the issuance of the earnings
release or the occurrence of the material news or material event, as applicable,
unless RCP waives, in writing, such extension.
The
undersigned hereby acknowledges and agrees that written notice of any extension
of the 90-day lock-up period pursuant to the previous paragraph will be
delivered by RCP to the Company (in accordance with Section 10 of the Underwriting Agreement) and that
any such notice properly delivered will be deemed to have been given to, and
received by, the undersigned. The undersigned further agrees that, prior to
engaging in any transaction or taking any other action that is subject to the
terms of this lock-up agreement during the period from the date of this lock-up
agreement to and including the 34th day
following the expiration of the initial 90-day lock-up period, it will give
notice thereof to the Company and will not consummate such transaction or take
any such action unless it has received written confirmation from the Company
that the 90-day lock-up period (as may have been extended pursuant to the
previous paragraph) has expired.
The
undersigned also agrees and consents to the entry of stop transfer instructions
with the Company’s transfer agent and registrar against the transfer of the
Lock-Up Securities except in compliance with the foregoing
restrictions.
|
Very
truly yours,
|
||
|
By:
|
||
|
Name:
|
||