1,380,000 Shares WINNER MEDICAL GROUP INC. Common Stock PURCHASE AGREEMENT
Exhibit
1.1
1,380,000
Shares
Common
Stock
April 27,
2010
▇▇▇▇
CAPITAL PARTNERS, LLC
▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
As
Representative of the several
Underwriters
named in Schedule I hereto
Ladies
and Gentlemen:
Winner
Medical Group Inc., a Nevada corporation (the “Company”),
proposes to sell to the underwriters named in Schedule I hereto (each, an “Underwriter” and collectively, the
“Underwriters”)
an aggregate of 1,380,000
shares (the “Firm
Shares”) of Common Stock, $0.001 par value per share (the “Common
Stock”), of the Company pursuant to the terms and conditions of this
agreement (this “Agreement”). The
Company has also granted the Underwriters an option to purchase an aggregate of
up to 207,000 additional
shares of Common Stock on the terms and for the purposes set forth in Section 3
hereof (the “Option
Shares”). The Firm Shares and any Option Shares purchased
pursuant to this Agreement are herein collectively called the “Securities.”
The
Company hereby confirms its agreement with respect to the sale of the Securities
to the Underwriters, for which ▇▇▇▇ Capital Partners, LLC is acting as
representative (the “Representative”).
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. 333-165164) under the Securities
Act of 1933, as amended (the “Securities Act”
or “Act”) and
the rules and regulations (the “Rules and
Regulations”) of the Commission thereunder, and such amendments to such
registration statement as may have been required to the date of this
Agreement. Such registration statement has been declared effective by
the Commission. Such registration statement, at any given time,
including amendments thereto to 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 (the “Rule 430B
Information”) or otherwise pursuant to the Rules and Regulations at such
time, is herein called the “Registration
Statement.” The Registration Statement at the time it
originally became effective is herein called the “Original
Registration Statement.” Any registration statement filed by
the Company pursuant to Rule 462(b) under the Securities Act is called the
“Rule
462(b) Registration Statement” and, from and after the date and time of
filing of the Rule 462(b) Registration Statement, the term “Registration
Statement” shall include the Rule 462(b) Registration
Statement.
The
prospectus in the form in which it appeared in the Original Registration
Statement is herein called the “Base
Prospectus.” Each preliminary prospectus supplement to the
Base Prospectus (including the Base Prospectus as so supplemented), that
describes the Securities and the offering thereof, that omitted the Rule 430B
Information and that was used prior to the filing of the final prospectus
supplement referred to in the following sentence is herein called a “Preliminary
Prospectus.” Promptly after execution and delivery of this Agreement, the
Company will prepare and file with the Commission a final prospectus supplement
to the Base Prospectus relating to the Securities and the offering thereof in
accordance with the provisions Rule 430B and Rule 424(b) of the Rules and
Regulations. Such final supplemental form of prospectus (including
the Base Prospectus as so supplemented), in the form filed with the Commission
pursuant to Rule 424(b), is herein called the “Prospectus.” Any
reference herein to the Base Prospectus, any Preliminary Prospectus or the
Prospectus shall be deemed to refer 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(b) Registration Statement, the Base Prospectus, any Preliminary
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 Base Prospectus, any Preliminary Prospectus or the
Prospectus (or other references of like import) shall be deemed to mean and
include all such financial statements 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 Base Prospectus,
any Preliminary Prospectus or the Prospectus, as the case may be; and all
references in this Agreement to amendments or supplements to the Registration
Statement, the Base Prospectus, any Preliminary 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.
(a) The
Company represents and warrants to, and agrees with, the Underwriters as
follows:
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(i) No
order preventing or suspending the use of any Preliminary Prospectus has been
issued by the Commission and each Preliminary Prospectus, at the time of filing
or the time of first use within the meaning of the Rules and Regulations,
complied in all material respects with the requirements of the Securities Act
and the Rules and Regulations and did not contain an 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; except that the foregoing shall not
apply to statements in or omissions from any Preliminary Prospectus in reliance
upon, and in conformity with, written information furnished to the Company by
you, or any Underwriter through you, specifically for use in the preparation
thereof; it being understood and agreed that the only such information furnished
by any Underwriter consists of the information described as such in Section
6(f).
(ii) The
Registration Statement was initially declared effective by the Commission under
the Securities Act on March 18, 2010. The Company has complied to the
Commission’s satisfaction with all requests of the Commission for additional or
supplemental information. No stop order suspending the effectiveness
of the Registration Statement or any Rule 462(b) Registration Statement is in
effect and no proceedings for such purpose have been instituted or are pending
or, to the best knowledge of the Company, are contemplated or threatened by the
Commission.
(iii) Each
part of the Registration Statement, any Rule 462(b) Registration Statement and
any post-effective amendment thereto, at the time such part became effective
(including each deemed effective date with respect to the Underwriters pursuant
to Rule 430B or otherwise under the Securities Act), at all other subsequent
times until the expiration of the Prospectus Delivery Period (as defined below),
and at the First Closing Date and Second Closing Date (as hereinafter defined),
complied and will comply in all material respects with the applicable
requirements and provisions of the Securities Act, the Rules and Regulations and
the Exchange Act 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
Prospectus (or any amendment or supplement to the Prospectus), at the time of
filing, as of its date, or at the time of first use within the meaning of the
Rules and Regulations, at all subsequent times until the expiration of the
Prospectus Delivery Period, and at the First Closing Date and Second Closing
Date, complied and will comply in all material respects with the applicable
requirements and provisions of the Securities Act, the Rules and Regulations and
the Exchange Act and did not and will not contain any untrue statement of a
material fact or omit to state a material fact necessary in order 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 do not apply to statements in or
omissions from the Registration Statement, any Rule 462(b) Registration
Statement, or any post-effective amendment thereto, or the Prospectus, or any
amendments or supplements thereto, made in reliance upon and in conformity with
written information relating to an Underwriter furnished to the Company by you,
or any Underwriter through you, specifically for use in the preparation thereof;
it being understood and agreed that the only such information furnished by any
Underwriter consists of the information described as such in Section
6(f).
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(iv) Neither
(A) the Issuer General Free Writing Prospectus(es) issued at or prior to the
Time of Sale and set forth on Schedule II, the information set forth on Schedule
III, and the Statutory Prospectus, all considered together (collectively, the
“Time of
Sale Disclosure Package”), nor (B) any individual Issuer Limited-Use Free
Writing Prospectus, when considered together with the Time of Sale Disclosure
Package, includes or included as of the Time of Sale any untrue statement of a
material fact or omits or omitted as of the Time of Sale 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. The
preceding sentence does not apply to statements in or omissions from any
Statutory Prospectus or any Issuer Free Writing Prospectus based upon and in
conformity with written information furnished to the Company by you, or by any
Underwriter through you, specifically for use therein; it being understood and
agreed that the only such information furnished by any Underwriter consists of
the information described as such in Section 6(f). As used in this
paragraph and elsewhere in this Agreement:
(1) “Time of
Sale” means 7:00 a.m. (Eastern time) on the date of this
Agreement.
(2) “Statutory
Prospectus” as of any time means the Preliminary Prospectus that is
included in the Registration Statement immediately prior to that
time. For purposes of this definition, Rule 430B Information
contained in a form of prospectus that is deemed retroactively to be a part of
the Registration Statement shall be considered to be included in the Statutory
Prospectus as of the actual time that form of prospectus is filed with the
Commission pursuant to Rule 424(b) under the Securities Act.
(3) “Issuer Free
Writing Prospectus” means any “issuer free writing prospectus,” as
defined in Rule 433 under the Securities Act, relating to the Securities 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) under the Securities Act because it
contains a description of the Securities or of the offering that does not
reflect the final terms, or is a “bona fide electronic roadshow,” as defined in
Rule 433 of the Rules and Regulations, 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.
(4) “Issuer General
Free Writing Prospectus” means any Issuer Free Writing Prospectus that is
intended for general distribution to prospective investors, as evidenced by its
being specified in Schedule II to this Agreement.
(5) “Issuer
Limited-Use Free Writing Prospectus” means any Issuer Free Writing
Prospectus that is not an Issuer General Free Writing
Prospectus.
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(v) (A)
When taken together with the rest of the Time of Sale Disclosure Package or the
Prospectus, each Issuer Free Writing Prospectus, as of its issue date and at all
subsequent times through the Prospectus Delivery Period or until any earlier
date that the Company notified or notifies the Representative as described in
Section 4(c)(B), did not, does not and will not include any information that
conflicted, conflicts or will conflict with the information contained in the
Registration Statement, any Statutory Prospectus or the
Prospectus. The foregoing sentence does not apply to statements in or
omissions from any Issuer Free Writing Prospectus based upon and in conformity
with written information furnished to the Company by you, or any Underwriter
through you, specifically for use therein; it being understood and agreed that
the only such information furnished by any Underwriter consists of the
information described as such in Section 6(f).
(B) (1)
At the earliest time after the filing of the Registration Statement that the
Company or another offering participant made a bona fide offer (within the
meaning of Rule 164(h)(2) under the Securities Act) of the Securities and (2) at
the date hereof, the Company was not and is not an “ineligible issuer,” as
defined in Rule 405 under the Securities Act, including the Company or any
Subsidiary (as defined below) in the preceding three years not having been
convicted of a felony or misdemeanor or having been made the subject of a
judicial or administrative decree or order as described in Rule 405 (without
taking account of any determination by the Commission pursuant to Rule 405 that
it is not necessary that the Company be considered an ineligible issuer), nor 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, all other conditions to
use thereof as set forth in Rules 164 and 433 under the Securities
Act.
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(vi) The
consolidated financial statements of the Company, together with the related
notes, set forth or incorporated by reference in the Registration Statement, the
Time of Sale Disclosure Package and the 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 and its consolidated
Subsidiaries 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 in the United States consistently applied
throughout the periods involved; the supporting schedules, if any, included in
the Registration Statement present fairly the information required to be stated
therein; all non-GAAP financial information, if any, included in the
Registration Statement, the Time of Sale Disclosure Package and the Prospectus
complies with the requirements of Regulation G and Item 10 of Regulation S-K
under the Act; and, except as disclosed in the Time of Sale Disclosure Package
and the Prospectus, there are no material off-balance sheet arrangements (as
defined in Item 303(a)(4)(ii) of Regulation S-K under the Act) or any other
relationships with unconsolidated entities or other persons, that would
reasonably be expected to have a material current or, to the Company’s
knowledge, material future effect on the Company’s financial condition, results
of operations, liquidity, capital expenditures, capital resources or significant
components of revenue or expenses. No other financial statements or
schedules are required to be included in the Registration Statement, the Time of
Sale Disclosure Package or the Prospectus. All pro forma financial
statements and data, if any, included in the Registration Statement, the Time of
Sale Disclosure Package and the Prospectus comply with the requirements of the
Act and the Exchange Act, and the assumptions used in the preparation of such
pro forma financial statements and data are reasonable, the pro forma
adjustments used therein are appropriate to give effect to the transactions or
circumstances described therein and the pro forma adjustments have been properly
applied to the historical amounts in the compilation of such pro forma financial
statements and data. The other financial and statistical data
contained in the Registration Statement, the Time of Sale Disclosure Package and
the Prospectus are accurately and fairly presented and prepared on a basis
consistent with the financial statements and books and records of the
Company. The Company and its Subsidiaries do not have any material
liabilities or obligations, direct or contingent (including any off-balance
sheet arrangements as defined by the rules of the Commission), not described in
the Registration Statement (excluding the exhibits thereto), the Time of Sale
Disclosure Package and the Prospectus. To the Company’s knowledge,
BDO Limited, which has expressed its opinion with respect to the financial
statements filed as a part of the Registration Statement and included in the
Registration Statement, the Time of Sale Disclosure Package and the Prospectus,
is (x) an independent public accounting firm within the meaning of the Act and
the Rules and Regulations, (y) a registered public accounting firm (as defined
in Section 2(a)(12) of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 (the “▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act”)) and (z) not in violation of the auditor independence requirements
of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act.
(vii) The
descriptions of the ownership structure of the Company and its subsidiaries and
non-subsidiary controlled companies (collectively, the “Subsidiaries”)
and the restructurings set forth in the Company’s Form 10-K for the fiscal year
ended September 30, 2009 under the caption “Item 1.Description of Business –
Acquisition of Winner Group Limited” and the Original Registration Statement
under the caption “ABOUT WINNER MEDICAL GROUP INC. - Acquisition of
Winner Medical Group, Limited” are accurate and complete. Other than Winner
Group Limited, Winner Industries (Shenzhen) Co., Ltd, Winner Medical &
Textile Ltd Jingmen, Hubei Winner Textiles Co., Ltd, Winner Medical &
Textile Ltd Yichang, Winner Medical & Textile Ltd Chongyang, Winner Medical
& Textile Ltd Jiayu, Winner Medical (Huanggang) Co. Ltd, Shanghai Winner
Medical Apparatus Co., Ltd, Winner Medical (Hong Kong) Ltd, L+L Healthcare Hubei
Co., Ltd, Chengdu Winner Likang Medical Appliances Company Limited and Shenzhen
PurCotton Technology Co., Ltd, 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. Each of the
Company and its Subsidiaries has been duly organized and is validly existing as
a corporation in good standing under the laws of its jurisdiction of
incorporation. Each of the Company and its Subsidiaries has full 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 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 (“Material Adverse
Effect”).
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(viii) Except
as contemplated in the Time of Sale Disclosure Package and in the Prospectus,
subsequent to the respective dates as of which information is given in the Time
of Sale Disclosure Package, neither the Company nor any of its Subsidiaries has
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
has not 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, 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 change in the general affairs,
condition (financial or otherwise), business, prospects, properties, operations
or results of operations of the Company and its Subsidiaries, taken as a whole
(“Material
Adverse Change”) or any development which could reasonably be expected to
result in any Material Adverse Change.
(ix) Except
as set forth in the Time of Sale Disclosure Package and in the Prospectus, there
is not pending or, to the knowledge of the Company and its Subsidiaries,
threatened or contemplated, any action, suit or proceeding (a) to which the
Company or any of its Subsidiaries is a party or (b) which has as the subject
thereof any officer or director of the Company or any of its Subsidiaries
insofar as such action, suit or proceeding relates to their actions
or positions as an officer or director, any employee benefit plan
sponsored by the Company or any of its Subsidiaries or any property or assets
owned or leased by the Company or any of its Subsidiaries before or by any court
or Governmental Authority (as defined below), or any arbitrator, which,
individually or in the aggregate, might result in any Material Adverse Change,
or would materially and adversely affect the ability of the Company to perform
its obligations under this Agreement or which are otherwise material in the
context of the sale of the Securities. There are no current or, to
the knowledge of the Company and its Subsidiaries, pending legal, governmental
or regulatory actions, suits or proceedings (x) to which the Company or any of
its Subsidiaries is subject or (y) which has as the subject thereof any officer
or director of the Company or any of its Subsidiaries insofar as such action,
suit or proceeding relates to their actions or positions as an
officer or director, any employee plan sponsored by the Company or any of its
Subsidiaries or any property or assets owned or leased by the Company or any of
its Subsidiaries, that are required to be described in the Registration
Statement, Time of Sale Disclosure Package and Prospectus by the Act or by the
Rules and Regulations and that have not been so described.
(x) There
are no statutes, regulations, contracts or documents that are required to be
described in the Registration Statement, in the Time of Sale Disclosure Package
and in the Prospectus or required to be filed as exhibits to the Registration
Statement by the Securities Act or by the Rules and Regulations that have not
been so described or filed.
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(xi) 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, except as rights to indemnity hereunder may be
limited by federal or state securities laws and except as such enforceability
may be limited by bankruptcy, insolvency, reorganization or similar laws
affecting the rights of creditors generally and subject to general principles of
equity. The execution, delivery and performance of this Agreement and
the consummation of the transactions herein contemplated will not (A) conflict
with or result in a breach or violation of any of the terms or provisions of, or
constitute a default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company pursuant to,
any indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries is bound or to which any of the
property or assets of the Company or any of its Subsidiaries is subject, (B)
result in any violation of the provisions of the Company’s charter or by-laws or
(C) result in the violation of any law or statute or any judgment, order, rule,
regulation or decree of any court or arbitrator or federal, state, local or
foreign governmental agency or regulatory authority having jurisdiction over the
Company or any of its Subsidiaries or any of their properties or assets (each, a
“Governmental
Authority”). Except for registration with the relevant PRC
foreign exchange administration authority in connection with the sale of the
Securities by the Company as required by relevant PRC laws, which shall be made
within 30 days following the First Closing Date, no consent, approval,
authorization or order of, or registration or filing with any Governmental
Authority is required for the execution, delivery and performance of this
Agreement or for the consummation of the transactions contemplated hereby,
including the issuance or sale of the Securities by the Company, except such as
may be required under the Act, the rules of the Financial Industry Regulatory
Authority (“FINRA”)
or state securities or blue sky laws; and the Company has full power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby, including the authorization, issuance and sale of the
Securities as contemplated by this Agreement.
(xii) The
Company has not, prior to the date hereof, made any offer or sale of any
securities which are required to be “integrated” pursuant to the Securities Act
or the Rules and Regulations with the offer and sale of the Securities pursuant
to the Registration Statement. Except as disclosed in the
Registration Statement, in the Time of Sale Disclosure Package and in the
Prospectus, the Company has not sold or issued any Relevant Security during the
six-month period preceding the date of the Prospectus, including, but not
limited to, any sales pursuant to Rule 144A or Regulation D or S under the
Securities Act, other than Common Stock issued pursuant to employee benefit
plans, qualified stock option plans or the employee compensation plans or
pursuant to outstanding options, rights or warrants as described in the
Registration Statement, the Time of Sale Disclosure Package and the
Prospectus. As used herein, the term “Relevant
Security” means any Common Stock or other security of the Company or any
Subsidiary that is convertible into, or exercisable or exchangeable for Common
Stock or equity securities, or that holds the right to acquire any Common Stock
or equity securities of the Company or any Subsidiary or any other such Relevant
Security, except for such rights as may have been fully satisfied or waived
prior to the effectiveness of the Registration Statement.
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(xiii) All
of the issued and outstanding shares of capital stock of the Company, including
the outstanding shares of Common Stock, are duly authorized and validly issued,
fully paid and nonassessable, have been issued in compliance with all federal
and state and foreign securities laws, were not issued in violation of or
subject to any preemptive rights or other rights to subscribe for or purchase
securities that have not been waived in writing (a copy of which has been
delivered to counsel to the Underwriters), and the holders thereof are not
subject to personal liability by reason of being such holders; the Securities
which may be sold hereunder by the Company have been duly authorized and, when
issued, delivered and paid for in accordance with the terms of this Agreement,
will have been validly issued and will be fully paid and nonassessable, and the
holders thereof will not be subject to personal liability by reason of being
such holders; and the capital stock of the Company, including the Common Stock,
conforms to the description thereof in the Registration Statement, in the Time
of Sale Disclosure Package and in the Prospectus. Except as otherwise
stated in the Registration Statement, in the Time of Sale Disclosure Package and
in the Prospectus, there are no preemptive rights or other rights to subscribe
for or to purchase, or any restriction upon the voting or transfer of, any
shares of Common Stock pursuant to the Company’s charter, by-laws or any
agreement or other instrument to which the Company or any of its Subsidiaries is
a party or by which the Company or any of its Subsidiaries is
bound. Except as disclosed in the Registration Statement, in the Time
of Sale Disclosure Package and in the Prospectus, neither the filing of the
Registration Statement nor the offering or sale of the Securities as
contemplated by this Agreement gives rise to any rights for or relating to the
registration of any shares of Common Stock or other securities of the Company
(collectively “Registration
Rights”), and any person to whom the Company has granted Registration
Rights has agreed not to exercise such rights until after expiration of the
Lock-Up Period (as defined below). All of the issued and outstanding
shares of capital stock of each of the Company’s Subsidiaries have been duly and
validly authorized and issued and are fully paid and nonassessable, and, except
as otherwise described in the Registration Statement, in the Time of Sale
Disclosure Package and in the Prospectus, the Company owns of record and
beneficially, free and clear of any security interests, claims, liens, proxies,
equities or other encumbrances, all of the issued and outstanding shares of such
stock. Except as described in the Registration Statement, in the Time
of Sale Disclosure Package and in the Prospectus, there are no options,
warrants, agreements, contracts or other rights in existence to purchase or
acquire from the Company or any Subsidiary of the Company any shares of the
capital stock of the Company or any Subsidiary of the Company. The
Company has an authorized and outstanding capitalization as set forth in the
Registration Statement, in the Time of Sale Disclosure Package and in the
Prospectus under the caption “Capitalization.” The capital stock of
the Company, including the Common Stock, conforms in all material respects to
the description thereof contained in the Registration Statement, Time of Sale
Disclosure Package and the Prospectus. The description of the Company’s
stock option, stock bonus and other stock plans or arrangements, and the options
or other rights granted thereunder, set forth in the Registration Statement,
Time of Sale Disclosure Package and the Prospectus accurately and fairly
presents the information required to be shown with respect to such plans,
arrangements, options and rights.
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(xiv) The
Company and each of its Subsidiaries holds, and is operating in compliance in
all material respects with, all franchises, grants, authorizations, licenses,
permits, easements, consents, certificates and orders of any Governmental
Authority or self-regulatory body required for the conduct of its business and
all such franchises, grants, authorizations, licenses, permits, easements,
consents, certifications and orders are valid and in full force and effect; and
neither the Company nor any of its Subsidiaries has received notice of any
revocation or modification of any such franchise, grant, authorization, license,
permit, easement, consent, certification or order or has reason to believe that
any such franchise, grant, authorization, license, permit, easement, consent,
certification or order will not be renewed in the ordinary course; and the
Company and each of its Subsidiaries is in compliance in all material respects
with all applicable federal, state, local and foreign laws, regulations, orders
and decrees.
(xv)
There is no franchise agreement, lease, contract, or other agreement or document
required by the Securities Act or by the Rules and Regulations to be described
in the Time of Sale Disclosure Package and in the Prospectus or a document
incorporated by reference therein or to be filed as an exhibit to the
Registration Statement or a document incorporated by reference therein which is
not so described or filed therein as required; and all descriptions of any such
franchise agreements, leases, contracts, or other agreements or documents
contained in the Time of Sale Disclosure Package and in the Prospectus or in a
document incorporated by reference therein are accurate and complete
descriptions of such documents in all material respects. Other than
as described in the Time of Sale Disclosure Package, no such franchise
agreement, lease, contract or other agreement has been suspended or terminated
for convenience or default by the Company or any of the other parties thereto,
and neither the Company nor any of its Subsidiaries has received notice of, and
the Company does not have knowledge of, any such pending or threatened
suspension, termination, or any reason for such suspension or
termination.
(xvi) The
Company and its Subsidiaries have good and marketable title to all property
(whether real or personal) described in the Registration Statement, in the Time
of Sale Disclosure Package and in the Prospectus as being owned by them that is
material to the business of the Company, in each case free and clear of all
liens, claims, security interests, other encumbrances or defects except such as
are described in the Registration Statement, in the Time of Sale Disclosure
Package and in the Prospectus. 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 or its Subsidiaries.
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(xvii) The
Company and each of its Subsidiaries owns, possesses, or can acquire on
reasonable terms, all Intellectual Property necessary for the conduct of the
Company’s and its Subsidiaries’ business as now conducted or as described in the
Registration Statement, the Time of Sale Disclosure Package and the Prospectus
to be conducted, except as such failure to own, possess, or acquire such rights
would not result in a Material Adverse
Effect. Furthermore: (A) to the knowledge of the Company
and its Subsidiaries, there is no infringement, misappropriation or violation by
third parties of any such Intellectual Property, except as such infringement,
misappropriation or violation would not result in a Material Adverse Effect; (B)
there is no pending or, to the knowledge of the Company and its Subsidiaries,
threatened, action, suit, proceeding or claim by others challenging the
Company’s or any of its Subsidiaries’ rights in or to any such Intellectual
Property, and neither the Company nor any of its Subsidiaries is aware of any
facts which would form a reasonable basis for any such claim; (C) the
Intellectual Property owned by the Company and its Subsidiaries, and to the
knowledge of the Company and its Subsidiaries, the Intellectual Property
licensed to the Company and its Subsidiaries, has not been adjudged invalid or
unenforceable, in whole or in part, and there is no pending or threatened
action, suit, proceeding or claim by others challenging the validity or scope of
any such Intellectual Property, and neither the Company nor any of its
Subsidiaries is aware of any facts which would form a reasonable basis for any
such claim; (D) there is no pending or threatened action, suit, proceeding or
claim by others that the Company or any of its Subsidiaries infringes,
misappropriates or otherwise violates any Intellectual Property or other
proprietary rights of others, neither the Company or any of its Subsidiaries has
received any written notice of such claim and neither the Company nor any of its
Subsidiaries is aware of any other fact which would form a reasonable basis for
any such claim; and (E) to the knowledge of the Company and its Subsidiaries, no
employee of the Company or any of its Subsidiaries is in or has ever been in
violation of any term of any employment contract, patent disclosure agreement,
invention assignment agreement, non-competition agreement, non-solicitation
agreement, nondisclosure agreement or any restrictive covenant to or with a
former employer where the basis of such violation relates to such employee’s
employment with the Company or any of its Subsidiaries or actions undertaken by
the employee while employed with the Company or any of its Subsidiaries, except
as such violation would not result in a Material Adverse
Effect. Except as stated in the Registration Statement, the Time of
Sale Disclosure Package and the Prospectus, 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 Intellectual Property of others material to the
business or prospects of the Company or any of its Subsidiaries and neither the
Company nor any of its Subsidiaries has received any notice alleging any such
infringement or fee. “Intellectual
Property” shall mean all patents, patent applications, trade and service
marks, trade and service ▇▇▇▇ registrations, trade names, copyrights, licenses,
inventions, trade secrets, domain names, technology, know-how and other
intellectual property.
(xviii) Neither
the Company nor any of its Subsidiaries is (i) in violation of its respective
charter, by-laws, memorandum of association or articles of association (or
similar constitutional or organization documents), or (ii) 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 in the case of (ii) as individually or in the
aggregate would not reasonably be expected to have a Material Adverse
Effect.
-11-
(xix) The
Company and its Subsidiaries have timely filed all federal, state, local and
foreign income and franchise tax returns required to be filed and are not in
default in the payment of any taxes which were payable pursuant to said returns
or any assessments with respect thereto, other than any which the Company or any
of its Subsidiaries is contesting in good faith and for which adequate reserves
have been provided, or except as individually or in the aggregate would not
reasonably be expected to have a Material Adverse Effect. There is no
pending dispute with any taxing authority relating to any of such returns, and
neither the Company nor any of its Subsidiaries has knowledge of any proposed
liability for any tax to be imposed upon the properties or assets of the Company
or any of its Subsidiaries for which there is not an adequate reserve reflected
in the Company’s consolidated financial statements included in the Registration
Statement, the Time of Sale Disclosure Package and the Prospectus. All local and
national governmental tax relief, concessions, waivers, holidays and
preferential treatments of the People’s Republic of China (“PRC”)
enjoyed by the Company and its Subsidiaries are valid, binding, and enforceable
and do not violate any PRC laws.
(xx) 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 II, 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 4(q) of this Agreement.
(xxi) The
Common Stock is registered pursuant to Section 12(b) of the Exchange Act
and is included or approved for listing on the NASDAQ Global Market and the
Company has taken no action designed to, or likely to have the effect of,
terminating the registration of the Common Stock under the Exchange Act or
delisting the Common Stock from the NASDAQ Global Market nor has the Company
received any notification that the Commission or the NASDAQ Global Market is
contemplating terminating such registration or listing. The Company has complied
in all material respects with the applicable requirements of the NASDAQ Global
Market for maintenance of inclusion of the Common Stock
thereon. Except as previously disclosed to counsel for the
Underwriters or as set forth in the Time of Sale Disclosure Package and the
Prospectus, to the knowledge of the Company, no beneficial owners of the
Company’s capital stock or subordinated debt who, together with their associated
persons and affiliates, hold in the aggregate 10% or more of such capital stock
or subordinated debt, have any direct or indirect association or affiliation
with a FINRA member.
-12-
(xxii) The
Company and its Subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management’s general or specific authorization;
(ii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting principles
in the United States and to maintain accountability for assets;
(iii) access to assets is permitted only in accordance with management’s
general or specific authorization; and (iv) the recorded accountability for
assets is compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences. Except as disclosed
in the Registration Statement, in the Time of Sale Disclosure Package and in the
Prospectus, the Company’s and its Subsidiaries’ internal control over financial
reporting is effective and none of the Company, its board of directors and audit
committee is aware of any “significant deficiencies” or “material weaknesses”
(each as defined by the Public Company Accounting Oversight Board) in its
internal control over financial reporting, or any fraud, whether or not
material, that involves management or other employees of the Company who have a
significant role in the Company’s internal controls; and since the end of the
latest audited fiscal year, there has been no change in the Company’s internal
control over financial reporting (whether or not remediated) that has materially
affected, or is reasonably likely to materially affect, the Company’s internal
control over financial reporting. The Company’s board of directors
has, subject to the exceptions, cure periods and the phase-in periods specified
in the applicable stock exchange rules (“Exchange
Rules”), validly appointed an audit committee to oversee internal
accounting controls whose composition satisfies the applicable requirements of
the Exchange Rules and the Company’s board of directors and/or the audit
committee has adopted a charter that satisfies the requirements of the Exchange
Rules.
(xxiii) Other
than as contemplated by this Agreement, the Company has not incurred 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.
(xxiv) Each
of the Company and its Subsidiaries carries, or is covered by, insurance from
insurers with appropriately rated claims paying abilities in such amounts and
covering such risks as is adequate 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; all policies of insurance and any fidelity or
surety bonds insuring the Company or any of its Subsidiaries or its business,
assets, employees, officers and directors are in full force and effect; the
Company and its Subsidiaries are in compliance with the terms of such policies
and instruments in all material respects; there are no claims by the Company or
any of its Subsidiaries under any such policy or instrument as to which any
insurance company is denying liability or defending under a reservation of
rights clause; neither the Company nor any of its Subsidiaries has been refused
any insurance coverage sought or applied for; and neither the Company
nor any of its Subsidiaries has reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to continue
its business at a cost that would not have a Material Adverse
Effect.
-13-
(xxv) The
Company is not and, after giving effect to the offering and sale of the
Securities, will not be an “investment company,” as such term is defined in the
Investment Company Act of 1940, as amended.
(xxvi) The
conditions for use of Form S-3, set forth in the General Instructions
thereto, have been satisfied in all respects and the Company is eligible to use
Form S-3 for the purpose of registration of the Securities.
(xxvii) The
documents incorporated by reference in the Time of Sale Disclosure Package and
in the 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, and were filed on a
timely basis with the Commission and none of such documents 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 Time of Sale Disclosure Package or in the 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.
(xxviii) The
Company and its Subsidiaries are in compliance with all applicable provisions of
the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act and the rules and regulations of the Commission
thereunder.
(xxix) The
Company has established and maintains disclosure controls and procedures (as
defined in Rules 13a-14 and 15d-14 under the Exchange Act) and such controls and
procedures are effective in ensuring that material information relating to the
Company, including its Subsidiaries, is made known to the principal executive
officer and the principal financial officer. The Company has utilized
such controls and procedures in preparing and evaluating the disclosures in the
Registration Statement, in the Time of Sale Disclosure Package and in the
Prospectus.
-14-
(xxx) Each
of the Company, its Subsidiaries, its affiliates and any of their respective
officers, directors, supervisors, managers, agents, or employees, has not
violated, its participation in the offering will not violate, and the Company
has instituted and maintains policies and procedures designed to ensure
continued compliance with, each of the following laws: (a)
anti-bribery laws, including but not limited to, any applicable law, rule, or
regulation of any locality, including but not limited to any law, rule, or
regulation promulgated to implement the OECD Convention on Combating Bribery of
Foreign Public Officials in International Business Transactions, signed
December 17, 1997, including the U.S. Foreign Corrupt Practices Act of
1977, as amended, or any other law, rule or regulation of similar purposes and
scope; (b) anti-money laundering laws, including but not limited to, applicable
federal, state, international, foreign or other laws, regulations or government
guidance regarding anti-money laundering, including, without limitation, U.S.
Currency and Foreign Transactions Reporting Act of 1970, Title 18 U.S. Code
Sections 1956 and 1957, the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, the
Bank Secrecy Act of 1970, and international anti-money laundering principles or
procedures by an intergovernmental group or organization, such as the Financial
Action Task Force on Money Laundering, of which the United States and/or PRC is
a member and with which designation representative of the United States and/or
PRC to the group or organization continues to concur, all as amended, and any
executive order, directive, or regulation pursuant to the authority of any of
the foregoing, or any orders or licenses issued thereunder (collectively, the
“Money
Laundering Laws”); or (c) laws and regulations imposing U.S. economic
sanctions measures, including, but not limited to, the International Emergency
Economic Powers Act, the Trading with the Enemy Act, the United Nations
Participation Act and the Syria Accountability and Lebanese Sovereignty Act, all
as amended, and any executive order, directive, or regulation pursuant to the
authority of any of the foregoing, including the regulations of the United
States Treasury Department set forth under 31 CFR, Subtitle B, Chapter V, as
amended, or any orders or licenses issued thereunder. The operations of the
Company and its Subsidiaries are and have been conducted at all times in
compliance with applicable financial recordkeeping and reporting requirements of
the Money Laundering Laws and no action, suit or proceeding by or before any
court or governmental agency, authority or body or any arbitrator involving the
Company or any of its Subsidiaries with respect to the Money Laundering Laws is
pending or, to the knowledge of the Company and its Subsidiaries, threatened,
except, in each case, as would not reasonably be expected to have a Material
Adverse Effect.
(xxxi) Neither
the Company nor any of its Subsidiaries nor, to the knowledge of the Company and
its Subsidiaries, any director, officer, agent, employee 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. Department of
the Treasury (“OFAC”); no
action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company or any of its
Subsidiaries with respect to U.S. sanctions administered by OFAC is pending or,
to the knowledge of the Company and its Subsidiaries, threatened; and the
Company will not directly or indirectly use the proceeds of the offering, or
lend, contribute or otherwise make available such proceeds to any Subsidiary,
joint venture partner or other person or entity, for the purpose of financing
the activities of any person that would, if undertaken by a U.S. person as
defined in U.S. sanctions administered by OFAC, be prohibited by any
U.S. sanctions administered by OFAC.
(xxxii) To
the knowledge of the Company and its Subsidiaries, no transaction has occurred
between or among the Company and its Subsidiaries, on the one hand, and any of
the Company’s officers, directors or 5% stockholders or any affiliate or
affiliates of any such officer, director or 5% stockholders, on the other hand,
that is required to be described that is not so described in the Registration
Statement, the Time of Sale Disclosure Package and the
Prospectus.
-15-
(xxxiii) Except
as disclosed in the Time of Disclosure Package and the Prospectus, neither the
Company nor any of its Subsidiaries is in violation of any statute, any rule,
regulation, decision or order of any Governmental Authority or any court,
domestic or foreign, relating to the use, disposal or release of hazardous or
toxic substances or relating to the protection or restoration of the environment
or human exposure to hazardous or toxic substances (collectively, “Environmental
Laws”), owns or operates any real property contaminated with any
substance that is subject to any environmental laws, is liable for any off-site
disposal or contamination pursuant to any environmental laws, or is subject to
any claim relating to any environmental laws, which violation,
contamination, liability or claim would individually or in the
aggregate, have a Material Adverse Effect; and neither the Company nor any of
its Subsidiaries is aware of any pending investigation which might lead to such
a claim.
(xxxiv) (i)
To the knowledge of the Company and its Subsidiaries, no “prohibited
transaction” as defined under Section 406 of ERISA or Section 4975 of the Code
and not exempt under ERISA Section 408 and the regulations and published
interpretations thereunder has occurred with respect to any Employee Benefit
Plan. At no time has the Company or any ERISA Affiliate maintained,
sponsored, participated in, contributed to or has or had any liability or
obligation in respect of any Employee Benefit Plan subject to Part 3 of Subtitle
B of Title I of ERISA, Title IV of ERISA, or Section 412 of the Code or any
“multiemployer plan” as defined in Section 3(37) of ERISA or any multiple
employer plan for which the Company or any ERISA Affiliate has incurred or could
incur liability under Section 4063 or 4064 of ERISA. No Employee
Benefit Plan provides or promises, or at any time provided or promised, retiree
health, life insurance, or other retiree welfare benefits except as may be
required by the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended, or similar state or foreign law. Each Employee Benefit Plan
is and has been operated in material compliance with its terms and all
applicable laws, including but not limited to ERISA and the Code and, to the
knowledge of the Company and its Subsidiaries, no event has occurred (including
a “reportable event” as such term is defined in Section 4043 of ERISA) and no
condition exists that would subject the Company or any ERISA Affiliate to any
material tax, fine, lien, penalty or liability imposed by ERISA, the Code or
other applicable law. Each Employee Benefit Plan intended to be
qualified under Code Section 401(a) is so qualified and has a favorable
determination or opinion letter from the IRS upon which it can rely, and any
such determination or opinion letter remains in effect and has not been revoked;
to the knowledge of the Company and its Subsidiaries, nothing has occurred since
the date of any such determination or opinion letter that is reasonably likely
to adversely affect such qualification; (ii) with respect to each Foreign
Benefit Plan, such Foreign Benefit Plan (A) if intended to qualify for special
tax treatment, meets, in all material respects, the requirements for such
treatment, and (B) if required to be funded, is funded to the extent required by
applicable law, and with respect to all other Foreign Benefit Plans, adequate
reserves therefore have been established on the accounting statements of the
applicable Company or Subsidiary; (iii) the Company does not have any
obligations under any collective bargaining agreement with any union and no
organization efforts are underway with respect to employees of the Company and
its Subsidiaries. As used in this Agreement, “Code”
means the Internal Revenue Code of 1986, as amended; “Employee Benefit
Plan” means any “employee benefit plan” within the meaning of Section
3(3) of ERISA, including, without limitation, all stock purchase, stock option,
stock-based severance, employment, change-in-control, medical, disability,
fringe benefit, bonus, incentive, deferred compensation, employee loan and all
other employee benefit plans, agreements, programs, policies or other
arrangements, whether or not subject to ERISA, under which (A) any current or
former employee, director or independent contractor of the Company or its
Subsidiaries has any present or future right to benefits and which are
contributed to, sponsored by or maintained by the Company or any of its
respective Subsidiaries or (B) the Company or any of its Subsidiaries has had or
has any present or future obligation or liability; “ERISA”
means the Employee Retirement Income Security Act of 1974, as amended; “ERISA
Affiliate” means any member of the company’s controlled group as defined
in Code Section 414(b), (c), (m) or (o); and “Foreign Benefit
Plan” means any Employee Benefit Plan established, maintained or
contributed to outside of the United States of America or which covers any
employee working or residing outside of the United States.
-16-
(xxxv) Except
as disclosed in the Registration Statement, the Time of Sale Disclosure Package
and the Prospectus, none of the Company or any of its Subsidiaries has granted
rights to develop, manufacture, produce, assemble, distribute, license, market
or sell its products to any other person and is bound by any agreement that
affects the exclusive right of the Company and its Subsidiaries to develop,
manufacture, produce, assemble, distribute, license, market or sell their
products.
(xxxvi) No
labor problem or dispute with the employees of the Company or any of its
Subsidiaries exists or is threatened or imminent, and none of the Company or any
of its Subsidiaries is aware of any existing or imminent labor disturbance by
the employees of any of its or its Subsidiaries’ principal suppliers,
contractors or customers, that could have a Material Adverse
Effect.
(xxxvii) None
of the Subsidiaries of the Company is currently prohibited, directly or
indirectly, from paying any dividends to the Company, from making any other
distribution on such Subsidiary’s share capital, from repaying to the Company
any loans or advances to such Subsidiary from the Company or from transferring
any of such Subsidiary’s property or assets to the Company or any other
Subsidiary of the Company, except as described in or contemplated by the Time of
Sale Disclosure Package and the Prospectus; except as described in the Time of
Sale Disclosure Package and the Prospectus, any dividends and other
distributions declared with respect to after-tax retained earnings on the equity
interests of the Company’s PRC Subsidiaries may under PRC laws and regulations
be paid to the Company.
-17-
(xxxviii) Except
as described in the Registration Statement, the Time of Sale Disclosure Package
and the Prospectus, each of the Company and its Subsidiaries has taken or is in
the process of taking all reasonable steps (to the extent required of the
Company and each such Subsidiary under PRC laws and regulations) to comply with,
and to ensure compliance by each of (i) its principal stockholders as disclosed
in the Registration Statement, the Time of Sale Disclosure Package and the
Prospectus, and (ii) any other persons known to the Company that are required to
comply (in connection with their interests in the Company) with applicable rules
and regulations of the relevant PRC governmental agencies (including, without
limitation, the Ministry of Commerce, the National Development and Reform
Commission and the State Administration of Foreign Exchange) relating to
overseas investment by PRC residents and citizens or overseas listing by
offshore special purpose vehicles controlled directly or indirectly by PRC
companies and individuals, such as the Company (the “PRC Overseas
Investment and Listing Regulations”), including, without limitation,
requesting such persons to complete any registration and other procedures
required under applicable PRC Overseas Investment and Listing
Regulations.
(xxxix) There
are no affiliations or associations between (i) any member of FINRA and (ii) the
Company or, to the knowledge of the Company, any of the Company’s officers,
directors or 5% or greater security holders or any beneficial owner of the
Company’s unregistered equity securities that were acquired at any time on or
after the 180th day immediately preceding the date the Preliminary Prospectus
was initially filed with the Commission, except as disclosed in the Time of Sale
Disclosure Package and in the Prospectus.
(xl) The
statements set forth in each Preliminary Prospectus and the Prospectus under the
caption “Description of Capital Stock,” insofar as they purport to constitute a
summary of the terms of the shares, and under the caption “Underwriting,”
insofar as they purport to describe the provisions of the laws and documents
referred to therein, are accurate, complete and fair in all material
respects.
(xli) The
entering into and performance or enforcement of this Agreement in accordance
with its terms will not subject the Underwriters to a requirement to be licensed
or otherwise qualified to do business in the PRC, nor will the Underwriters be
deemed to be resident, domiciled, carrying on business through an establishment
or place in the PRC or in breach of any laws or regulations in the PRC by reason
of the entering into, performance or enforcement of this Agreement.
(xlii) As
of the date hereof, as of the date of the Prospectus, the First Closing Date and
the Second Closing Date, the Rules on Mergers and Acquisitions of Domestic
Enterprises by Foreign Investors jointly promulgated by the Ministry of
Commerce, the State Assets Supervision and Administration Commission,
the State Tax Administration, the State Administration of Industry and Commerce,
the China Securities Regulatory Commission (“CSRC”) and
the State Administration of Foreign Exchange of the PRC on August 8, 2006 (the
“M&A
Rules”) or any official clarifications, guidance, interpretations or
implementation rules in connection with or related to the M&A Rules did not
and do not apply to the issuance and sale of the Securities, the quotation and
trading of the Securities on the NASDAQ Global Market, the merger transaction
involving the reverse takeover of Winner Group Limited by the Company (or its
predecessor) as disclosed in the Company’s current report on Form 8-K filed on
December 19, 2005 (the “Reverse
Takeover”), or the consummation of the transactions contemplated by this
Agreement, nor is CSRC or any other PRC government approval required in
connection with the above.
-18-
(xliii) The
Company has not taken, directly or indirectly, any action designed to or that
would constitute or that might reasonably be expected to cause or result in,
under the Exchange Act or otherwise, stabilization or manipulation of the price
of any security of the Company to facilitate the sale or resale of the
Securities.
(xliv) The
Company has not distributed and, prior to the later of the First Closing Date
(or the Second Closing Date, if any) or any settlement date and completion of
the distribution of the Securities, will not distribute any offering material in
connection with the offering and sale of the Securities other than the
Preliminary Prospectus, the Prospectus, any Issuer Free Writing Prospectus to
which the Representative has consented in accordance with this Agreement and any
Issuer General Free Writing Prospectus set forth on Schedule II
hereto.
(xlv) The
ownership structure of the Company and its Subsidiaries, both currently and
after giving effect to the offering of the Securities (the “Corporate
Structure”), are in compliance with existing PRC laws and
regulations. All consents, approvals, authorizations or orders of, or
registrations or filings with, any Governmental Authority required for the
restructuring transactions resulting in the Corporate Structure (collectively,
the “Restructuring”),
including, without limitation, the Reverse Takeover, the acquisition of the
Company’s Subsidiaries, and the establishment of the overseas affiliated
companies of the Company’s PRC Subsidiaries have been duly obtained, and none of
such governmental authorizations has been withdrawn or revoked nor are there
circumstances which may give rise to such governmental authorizations being
withdrawn or revoked, or is subject to any condition precedent which has not
been fulfilled or performed. The Restructuring did not and/or does not (A)
contravene or conflict with any provision of any applicable PRC laws and
regulations, (B) contravene or conflict with the respective articles of
association, business license or other constitutional documents of any of the
Company and its Subsidiaries, or (C) conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default under,
any license, indenture, mortgage, deed of trust, loan agreement, note, lease or
other agreement or instrument to which any of the Company and its Subsidiaries
is a party or by which any of the Company and its Subsidiaries is bound or to
which any of the property or assets of any of the Company and its Subsidiaries
is subject.
(xlvi) Any
third-party statistical and market-related data included in the Registration
Statement, the Time of Sale Disclosure Package and the Prospectus are based on
or derived from sources that the Company believes to be reliable and accurate in
all material respects.
(xlvii) No
approval of the shareholders of the Company under the rules and regulations of
the NASDAQ Global Market or other applicable laws and regulations is required
for the Company to issue and deliver the Securities to the
Underwriter.
-19-
(xlviii) None
of the Company, any of its Subsidiaries or any of their respective properties or
assets has any immunity from the jurisdiction of any court or from any legal
process (whether through service or notice, attachment prior to judgment,
attachment in aid of execution or otherwise) under the laws of the PRC, Nevada,
New York or United States federal law; and, to the extent that the Company, any
of its Subsidiaries or any of their respective properties or assets may have or
may hereafter become entitled to any such right of immunity in any such court in
which proceedings may at any time be commenced, each of the Company and its
Subsidiaries waives and will waive such right to the extent permitted by
law.
(xlix) Under
the laws of Nevada, the courts of Nevada recognize and give effect to the choice
of law provisions set forth in Section 13 hereof and enforce judgments of U.S.
courts obtained against the Company to enforce this Agreement. Under the
laws and regulations of the PRC, the courts of the PRC will recognize and give
effect to the choice of law provisions set forth in Section 13
hereof.
(b) Any
certificate signed by any officer of the Company and delivered to you or to
counsel for the Underwriters shall be deemed a representation and warranty by
the Company to each Underwriter as to the matters covered thereby.
3.
Purchase, Sale
and Delivery of Securities.
(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 the Firm Shares to the Underwriters, and each Underwriter agrees
to purchase from the Company the number of Firm Shares set forth opposite the
name of such Underwriter in Schedule I hereto.
The Firm
Shares will be delivered by the Company to you for the accounts of 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 9:00 a.m. Pacific
time on the third (or if the Securities 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 you
and the Company determine pursuant to Rule 15c6-1(a) under the Exchange Act,
such time and date of delivery being herein referred to as the “First Closing
Date.” If the Representative so elects, delivery of the Firm
Shares may be made by credit through full fast transfer to the accounts at The
Depository Trust Company designated by the
Representative. Certificates representing the Firm Shares, in
definitive form and in such denominations and registered in such names as you
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., Pacific
time, on the business day next preceding the First Closing Date at the offices
of ▇▇▇▇ Capital Partners, LLC, ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇
▇▇▇▇▇, or such other location as may be mutually acceptable.
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(b) On
the basis of the representations, warranties and agreements herein contained,
but subject to the terms and conditions herein set forth, the Company hereby
grants to the Underwriters an option to purchase all or any portion of the
Option Shares at the same purchase price as the Firm Shares, for use solely in
covering any over-allotments made by the Underwriters in the sale and
distribution of the Firm Shares. The option granted hereunder may be
exercised in whole or in part at any time (but not more than once) within 30
days after the effective date of this Agreement upon notice (confirmed in
writing) by the Representative to the Company setting forth the aggregate number
of Option Shares as to which the Underwriters are exercising the option, the
names and denominations in which the certificates for the Option Shares are to
be registered and the date and time, as determined by you, when the Option
Shares are to be delivered, such time and date being herein referred to as the
“Second
Closing” and “Second Closing
Date” (together with the First Closing Date, collectively, the “Closing
Dates”, each, a “Closing
Date”), respectively; provided, however, that the Second Closing Date
shall not be earlier than the First Closing Date nor earlier than one business
day after the date on which the option shall have been exercised. No
Option Shares shall be sold and delivered unless the Firm Shares previously have
been, or simultaneously are, sold and delivered.
The
Option Shares will be delivered by the Company to you for the account of 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 9:00 a.m., Pacific
time, on the Second Closing Date. If the Representative so elects,
delivery of the Option Shares may be made by credit through full fast transfer
to the accounts at The Depository Trust Company designated by the
Representative. Certificates representing the Option Shares in
definitive form and in such denominations and registered in such names as you
have set forth in your notice of option exercise, or evidence of their issuance,
will be made available for checking and packaging not later than 10:30 a.m.,
Pacific time, on the business day next preceding the Second Closing
Date at the office of ▇▇▇▇ Capital Partners, LLC, ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, or such other location as may be mutually
acceptable.
(c) It
is understood that you, individually and not as Representative of the
Underwriters, may (but shall not be obligated to) make payment to the Company on
behalf of any Underwriter for the Securities to be purchased by such
Underwriter. Any such payment by you shall not relieve any such
Underwriter of any of its obligations hereunder. Nothing herein
contained shall constitute any of the Underwriters an unincorporated association
or partner with the Company.
4.
Covenants. The
Company covenants and agrees with the Underwriters as follows:
(a) During
the period beginning on the date hereof and ending on the later of the Second
Closing Date or such date, as in the opinion of counsel for the Underwriters,
the Prospectus is no longer required by law to be delivered (assuming the
absence of Rule 172 under the Securities Act), 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(b) Registration Statement), the Time of Sale
Disclosure Package or the Prospectus, the Company shall furnish to the
Representative for review 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 or counsel to the Underwriters reasonably
objects. Subject to this Section 4(a), immediately following
execution of this Agreement, the Company will prepare the Prospectus containing
the Rule 430B Information and other selling terms of the Securities, the plan of
distribution thereof and such other information as may be required by the
Securities Act or the Rules and Regulations or as the Representative and the
Company may deem appropriate, and if requested by the Representative, an Issuer
Free Writing Prospectus containing the selling terms of the Securities and such
other information as the Company and the Representative may deem appropriate,
and will file or transmit for filing with the Commission, in accordance with
Rule 424(b) or Rule 433, as the case may be, copies of the Prospectus and each
Issuer Free Writing Prospectus.
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(b) From
the date of this Agreement until the end of the Prospectus Delivery Period, the
Company shall promptly advise the Representative 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 any
Preliminary Prospectus, the Time of Sale Disclosure Package or the Prospectus,
(C) of the time and date that any post-effective amendment to the Registration
Statement becomes effective, (D) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or any
post-effective amendment thereto or of any order preventing or suspending its
use or the use of any Preliminary Prospectus, the Time of Sale Disclosure
Package, the Prospectus or any Issuer Free Writing Prospectus, or (E) of any
proceedings to remove, suspend or terminate from listing or quotation the Common
Stock from any securities exchange 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, the Company will use its best 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), Rule 433 or Rule 462 were received in a
timely manner by the Commission (without reliance on Rule 424(b)(8) or Rule
164(b)).
(c) (A) During
the Prospectus Delivery Period, the Company will comply as far as it is able
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 so far as necessary to permit the continuance of
sales of or dealings in the Securities as contemplated by the provisions hereof,
the Time of Sale Disclosure Package and the Prospectus. If during
such period any event occurs as a 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 counsel to the Underwriters 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
which 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 you 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.
-22-
(B) If
at any time following issuance of an Issuer Free Writing Prospectus there
occurred or occurs an event or development as a result of which such Issuer Free
Writing Prospectus conflicted or would conflict with the information contained
in the Registration Statement, the Statutory Prospectus or the 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
Representative 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.
(d) The
Company shall use commercially reasonable efforts to qualify the Securities for
sale under the securities laws of such jurisdictions as you reasonably designate
and to continue such qualifications in effect so long as required for the
distribution of the Securities, except that the Company shall not be required in
connection therewith to qualify as a foreign corporation, to execute a general
consent to service of process in any state, or to subject itself to taxation of
any jurisdiction if it is not otherwise so subject.
(e) The
Company will furnish, at its own expense, to the Underwriters and counsel for
the Underwriters copies of the Registration Statement (which will include three
complete manually signed copies of the Registration Statement and all consents
and exhibits filed therewith), and to the Underwriters and any dealer each
Preliminary Prospectus, the Time of Sale Disclosure Package, the 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 you may
from time to time reasonably request.
(f) During
a period of five years commencing with the date hereof, the Company will furnish
to the Representative, and to each Underwriter who may so request in writing,
copies of all periodic and special reports furnished to the stockholders of the
Company and all information, documents and reports filed with the Commission,
FINRA or any securities exchange (other than any such information, documents and
reports that are filed with the Commission electronically via ▇▇▇▇▇ or any
successor system).
(g) The
Company will make generally available to its security holders as soon as
practicable, but in no event 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.
-23-
(h) The
Company, whether or not the transactions contemplated hereunder are consummated
or this Agreement is terminated, will pay all costs and expenses directly and
necessarily incurred in connection with the performance of its obligations
hereunder, including, but not limited to, the following: (A) all expenses
(including transfer taxes allocated to the respective transferees) incurred in
connection with the delivery to the Underwriters of the Securities, (B) all
expenses and fees 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
Securities, each Preliminary Prospectus, 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, including Blue Sky Memoranda (covering the
states and other applicable jurisdictions), (C) all filing fees and fees and
disbursements of the Underwriters’ counsel incurred in connection with the
qualification of the Securities for offering and sale by the Underwriters or by
dealers under the securities or blue sky laws of the states and other
jurisdictions which you shall designate, (D) the fees and expenses of any
transfer agent or registrar, (E) all fees and expenses in connection with the
filing with FINRA (including, without limitation, the filing fees and fees and
disbursements of Underwriters’ counsel incident to any required review and
approval by FINRA of the terms of the sale of the Securities), (F) listing fees,
if any, (G) the cost and expenses of the Company relating to investor
presentations or any “roadshow” undertaken in connection with marketing of the
Securities, (H) all reasonable out-of-pocket expenses incurred by the
Representative in connection with its services under this Agreement (including,
without limitation, the fees and disbursement for the Underwriters’ counsel) up
to an aggregate of $100,000, and (I) all other costs and expenses of the Company
incident to the performance of its obligations hereunder that are not otherwise
specifically provided for herein.
(i) The
Company will apply the net proceeds from the sale of the Securities to be sold
by it hereunder for the purposes set forth in the Time of Sale Disclosure
Package and in the Prospectus and will file such reports with the Commission
with respect to the sale of the Securities and the application of the proceeds
therefrom as may be required in accordance with Rule 463 of the Rules and
Regulations.
(j) The
Company will not, without the prior written consent of the Representative, from
the date of execution of this Agreement and continuing to and including the date
90 days after the date of the Prospectus (the “Lock-Up Period”), (A) offer,
pledge, announce the intention to sell, sell, contract to sell, sell any option
or contract to purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase or otherwise transfer or dispose of,
directly or indirectly, any shares of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock or (B) enter into any swap
or other agreement that transfers, in whole or in part, any of the economic
consequences of ownership of the Common Stock, whether any such transaction
described in clause (A) or (B) above is to be settled by delivery of Common
Stock or such other securities, in cash or otherwise, except (i) to the
Underwriters pursuant to this Agreement and (ii) to directors, employees and
consultants of the Company under the Company’s equity incentive plans disclosed
in the Time of Sale Disclosure Package and in the Prospectus, so long as such
persons agree to be bound by the terms of the Lock-Up Agreement described in
section 4(k) hereof. The Company agrees not to accelerate the vesting
of any option or warrant or the lapse of any repurchase right prior to the
expiration of the Lock-Up Period. If (1) during the last 17 days of
the Lock-Up Period, (a) the Company issues an earnings release, (b) the Company
publicly announces material news or (c) a material event relating to the Company
occurs; or (2) 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, then the restrictions in this
Agreement, unless otherwise waived by the Representative in writing, shall
continue to apply until the expiration of the date that is 18 calendar days
after the date on which (a) the Company issues the earnings release, (b) the
Company publicly announces material news or (c) a material event relating to the
Company occurs. The Company will provide the Representative, any
co-managers and each shareholder subject to the Lock-Up Agreement (as defined
below) with prior notice of any such announcement that gives rise to the
extension of the Lock-Up Period.
-24-
(k) The
Company has caused to be delivered to you prior to the date of this Agreement a
letter, in the form of Exhibit A hereto (the
“Lock-Up
Agreement”), from each of the persons listed on Schedule IV
hereto. The Company will enforce the terms of each Lock-Up Agreement
and issue stop-transfer instructions to the transfer agent for the Common Stock
with respect to any transaction or contemplated transaction that would
constitute a breach of or default under the applicable Lock-Up
Agreement.
(l) The
Company 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 Securities, and has not effected any sales
of Common Stock which are required to be disclosed in response to Item 701
of Regulation S-K under the Securities Act which have not been so disclosed
in the Registration Statement.
(m) 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.
(n) 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.
(o) The
Company and its Subsidiaries will maintain such controls and other procedures,
including without limitation those 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.
-25-
(p) The
Company and its Subsidiaries will comply with all applicable provisions of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act.
(q) The
Company represents and agrees that, unless it obtains the prior written consent
of the Representative, and each Underwriter severally represents and agrees
that, unless it obtains the prior written consent of the Company and the
Representative, it has not made and will not make any offer relating to the
Securities that would constitute an “issuer free writing prospectus,” as defined
in Rule 433 under the Securities Act, or that would otherwise constitute a “free
writing prospectus,” as defined in Rule 405 under the Securities Act, required
to be filed with the Commission; 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 II. 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 and 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.
(r) Prior
to a 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 and/or its Subsidiaries, their condition, financial or otherwise,
or the earnings, business, operations or prospects of any of them, or the
offering of the Securities (except for routine oral marketing communications in
the ordinary course of business and consistent with the past practices of the
Company and of which the Representative is notified), 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 or applicable stock exchange, 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.
5.
Conditions of
Underwriters’ Obligations. The obligations of the Underwriters
hereunder are subject to the accuracy, as of the date hereof and at each of the
First Closing Date and the Second Closing Date (as if made at such Closing
Date), of and compliance with all representations, warranties and agreements of
the Company contained herein, to the performance by the Company of their
respective obligations hereunder and to 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 Rule 164(b)); the Registration Statement shall remain effective; no
stop order suspending the effectiveness of the Registration Statement or any
part thereof, any Rule 462(b) 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 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 your satisfaction.
-26-
(b) The
Representative shall not have reasonably determined, and advised the Company,
that (i) the Registration Statement or any amendment thereof or supplement
thereto contains an untrue statement of a material fact which, in your opinion,
is material or omits to state a material fact which, in your opinion, is
required to be stated therein or necessary to make the statements therein not
misleading, or (ii) 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 your opinion, is
material, or omits to state a fact which, in your opinion, is material and is
required to be stated therein, or necessary to make the statements therein, in
light of the circumstances under which they are made, not
misleading.
(c) Except
as contemplated in the Time of Sale Disclosure Package and in the Prospectus,
subsequent to the respective dates as of which information is given in the Time
of Sale Disclosure Package, 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
Change or any development involving a prospective Material Adverse Change
(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 your judgment, makes it impractical
or inadvisable to offer or deliver the Securities on the terms and in the manner
contemplated in the Time of Sale Disclosure Package and in the
Prospectus.
(d) On
or after the Time of Sale, (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.
(e) On
each Closing Date, there shall have been furnished to you, as Representative of
the Underwriters, the opinion of Winston & ▇▇▇▇▇▇ LLP, United States counsel
for the Company, dated such Closing Date and addressed to you in substantially
the form attached hereto as Exhibit B.
-27-
(f) On
each Closing Date, there shall have been furnished to you, as Representative of
the Underwriters, the opinion of Holland & ▇▇▇▇ LLP, Nevada counsel for the
Company, dated such Closing Date and addressed to you in substantially the form
attached hereto as Exhibit C.
(g) On
each Closing Date, there shall have been furnished to you, as Representative of
the Underwriters, the opinion of Sincere Partners and Attorneys, PRC counsel for
the Company and ▇▇, ▇▇▇, ▇▇▇ & ▇▇▇▇, ▇▇▇▇ ▇▇▇▇ counsel for the Company,
addressed to you, in substantially the form attached hereto as Exhibit
D.
(h) On
each Closing Date, there shall have been furnished to you, as Representative of
the Underwriters, the opinion of Kleinfeld, ▇▇▇▇▇▇ and ▇▇▇▇▇▇, LLP, US FDA
counsel for the Company, addressed to you, in substantially the form attached
hereto as Exhibit
E.
(i) On
each Closing Date, there shall have been furnished to you, as Representative of
the Underwriters, the opinion of Winston & ▇▇▇▇▇▇ LLP, EU FDA counsel for
the Company, addressed to you, in substantially the form attached hereto as
Exhibit
F.
(j) On
each Closing Date, there shall have been furnished to you the opinion of
▇▇▇▇▇▇▇▇ Mori & Tomotsune, Japan FDA counsel for the Company, addressed to
you, in substantially the form attached hereto as Exhibit
G.
(k) On
each Closing Date, there shall have been furnished to you, as Representative of
the Underwriters, such opinion or opinions from Sichenzia ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
LLP, United States counsel for the Underwriters, dated such Closing Date and
addressed to you, in form and substance satisfactory to the Representative, and
such counsel shall have been provided with such papers and information as they
request to enable them to pass upon such matters.
(l) On
the date hereof and on each Closing Date you, as Representative of the
Underwriters, shall have received a letter of BDO Limited, dated the date hereof
or such Closing Date and addressed to you, 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
stating, 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, customarily included in
the accountants’ “comfort letter,” with respect to the financial information and
other matters covered by its letter delivered to you concurrently with the
execution of this Agreement, and the effect of the letter so to be delivered on
such Closing Date shall be to confirm the conclusions and findings set forth in
such prior letter.
(m) On
each of the First Closing Date and the Second Closing Date, there shall have
been furnished to you, as Representative of the Underwriters, a certificate,
dated the Closing Date and addressed to the Representative, 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:
-28-
(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 First Closing
Date or the Second 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 First Closing Date or the Second
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 Firm Shares or Option Shares, as the case may be, 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 First Closing Date or the Second Closing Date, as the
case may be.
(n) On
each of the First Closing Date and the Second Closing Date, there shall have
been furnished to you, as Representative of the Underwriters, a certificate of
the Company’s Secretary, dated such Closing Date and addressed to you, in form
and substance satisfactory to the Representative.
(o) The
Company shall have furnished to you and counsel for the Underwriter such
additional documents, certificates and evidence as you or they may have
reasonably requested.
(p) The
Securities to be delivered on such Closing Date shall have been approved for
listing on the NASDAQ Global Market, subject to official notice of
issuance.
All such
opinions, certificates, letters and other documents will be in compliance with
the provisions hereof only if they are satisfactory in form and substance to you
and counsel for the Underwriter. The Company will furnish you with
such conformed copies of such opinions, certificates, letters and other
documents as you shall reasonably request.
-29-
6.
Indemnification
and Contribution.
(a) The
Company agrees to indemnify and hold harmless each Underwriter, its affiliates,
directors and officers and each person, if any, who controls such Underwriter
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
from and against any losses, claims, damages or liabilities, joint or several,
to which such indemnified person may become subject, under the 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 an
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement, including the 430B Information and any other information
deemed to be a part of the Registration Statement at the time of effectiveness
and at any subsequent time pursuant to the Rules and Regulations, if applicable,
any Preliminary Prospectus, the Time of Sale Disclosure Package, the Prospectus,
or any amendment or supplement thereto, 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
(“Marketing
Materials”), 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
not misleading, and will reimburse each indemnified person for any legal or
other expenses reasonably incurred by it in connection with investigating or
defending against such loss, claim, damage, liability or action as such expenses
are incurred; provided,
however, that the Company will 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, any Preliminary Prospectus,
the Time of Sale Disclosure Package, the Prospectus, or any such amendment or
supplement, any Issuer Free Writing Prospectus or in any Marketing Materials, in
reliance upon and in conformity with written information furnished to the
Company by you, or any Underwriter through you, specifically for use in the
preparation thereof; it being understood and agreed that the only information
furnished by any Underwriter consists of the information described as such in
Section 6(f).
(b) Each
Underwriter will, severally and jointly, indemnify and hold harmless the Company
and its affiliates, directors and officers and each person, if any, who controls
the Company within the meaning of Section 15 of the Act and Section 20 of the
Exchange Act, from and against any losses, claims, damages or liabilities to
which such indemnified person may become subject, under the Act or otherwise
(including in settlement of any litigation, if such settlement is effected with
the written consent of such Underwriter), 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, any Preliminary Prospectus, 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, any Preliminary Prospectus, the Time of Sale Disclosure
Package, the Prospectus, or any such amendment or supplement, or any Issuer Free
Writing Prospectus in reliance upon and in conformity with written information
furnished to the Company by you, or by such Underwriter through you,
specifically for use in the preparation thereof (it being understood and agreed
that the only information furnished by any Underwriter consists of the
information described as such in Section 6(f)), and will reimburse the Company
for any legal or other expenses reasonably incurred by the Company in connection
with investigating or defending against any such loss, claim, damage, liability
or action as such expenses are incurred.
-30-
(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 omission so 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 (through the forfeiture of substantive rights or
defenses). 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 other than reasonable costs of investigation; provided, however, that
if, in the sole judgment of the Representative, it is advisable for the
Underwriters to be represented as a group by separate counsel, the
Representative shall have the right to employ a single counsel (in addition to
local counsel) to represent the Representative and all Underwriters who may be
subject to liability arising from any claim in respect of which indemnity may be
sought by the Underwriters under subsection (a) of this Section 6, in which
event the reasonable fees and expenses of such separate counsel shall be borne
by the indemnifying party or parties and reimbursed to the
Underwriters. An indemnifying party shall not be obligated under any
settlement agreement relating to any action under this Section 6 to which it has
not agreed in writing. In addition, no indemnifying party shall,
without the prior written consent of the indemnified party (which consent shall
not be unreasonably withheld or delayed), effect any settlement of any pending
or threatened proceeding unless such settlement includes an unconditional
release of such indemnified party for all liability on claims that are the
subject matter of such proceeding and does not include a statement as to, or an
admission of, fault, culpability or a failure to act by or on behalf of an
indemnified party.
-31-
(d) If
the indemnification provided for in this Section 6 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 hand from the offering
of the Securities 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 hand 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 hand 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 Prospectus. The relative
benefits received by the Company on the one hand and the Underwriters on the
other hand 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
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
(even if the Underwriters were treated as one entity for such purpose) or by any
other method of allocation which 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 which is the subject of this subsection
(d). Notwithstanding the provisions of this subsection (d), no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages that such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent
misrepresentation. The Underwriters’ obligations in this subsection
(d) to contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) The
obligations of the Company under this Section 6 shall be in addition to any
liability which the Company may otherwise have and shall extend, upon the same
terms and conditions, to each person, if any, who controls any Underwriter
within the meaning of the Act; and the obligations of the Underwriters under
this Section 6 shall be in addition to any liability that the respective
Underwriters may otherwise have and shall extend, upon the same terms and
conditions, to each director of the Company (including any person who, with his
consent, is named in the Registration Statement as about to become a director of
the Company), to each officer of the Company who has signed the Registration
Statement and to each person, if any, who controls the Company within the
meaning of the Act.
(f) The
Underwriters severally confirm and the Company acknowledges that the statements
with respect to the public offering of the Securities by the Underwriters
regarding the names and corresponding share amounts set forth in the table of
the underwriters under the caption “Underwriting” and the concession and
reallowance figures and the paragraph relating to stabilization by the
Underwriters appearing under the caption “Underwriting” in the Time of Sale
Disclosure Package and in the Prospectus are correct and constitute the only
information concerning such Underwriters furnished in writing to the Company by
or on behalf of the Underwriters specifically for inclusion in the Registration
Statement, any Preliminary Prospectus, the Time of Sale Disclosure Package, the
Prospectus or any Issuer Free Writing Prospectus.
-32-
7.
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, the Company contained in Section 6 hereof, shall remain operative
and in full force and effect regardless of any investigation made by or on
behalf of any Underwriter or any controlling person thereof, or the Company or
any of its officers, directors, or controlling persons, and shall survive
delivery of, and payment for, the Securities to and by the Underwriters
hereunder.
8. Substitution of
Underwriters.
(a) If
any Underwriter or Underwriters shall fail to take up and pay for the amount of
Firm Shares agreed by such Underwriter or Underwriters to be purchased
hereunder, upon tender of such Firm Shares in accordance with the terms hereof,
and the amount of Firm Shares not purchased does not aggregate more than 10% of
the total amount of Firm Shares set forth in Schedule I hereto, the remaining
Underwriters shall be obligated to take up and pay for (in proportion to their
respective underwriting obligations hereunder as set forth in Schedule I hereto
except as may otherwise be determined by you) the Firm Shares that the
withdrawing or defaulting Underwriters agreed but failed to
purchase.
(b) If
any Underwriter or Underwriters shall fail to take up and pay for the amount of
Firm Shares agreed by such Underwriter or Underwriters to be purchased
hereunder, upon tender of such Firm Shares in accordance with the terms hereof,
and the amount of Firm Shares not purchased aggregates more than 10% of the
total amount of Firm Shares set forth in Schedule I hereto, and arrangements
satisfactory to you for the purchase of such Firm Shares by other persons are
not made within 36 hours thereafter, this Agreement shall
terminate. In the event of any such termination, the Company shall
not be under any liability to any Underwriter (except to the extent provided in
Section 4(h) and Section 6 hereof) nor shall any Underwriter (other than an
Underwriter who shall have failed, otherwise than for some reason permitted
under this Agreement, to purchase the amount of Firm Shares agreed by such
Underwriter to be purchased hereunder) be under any liability to the Company
(except to the extent provided in Section 6
hereof).
If Firm Shares to which a default
relates are to be purchased by the non-defaulting Underwriters or by any other
party or parties, the Representative or the Company shall have the right to
postpone the First Closing Date for not more than seven business days in order
that the necessary changes in the Registration Statement, in the Time of Sale
Disclosure Package, in the Prospectus or in any other documents, as well as any
other arrangements, may be effected. As used herein, the term
“Underwriter” includes any person substituted for an Underwriter under this
Section 8.
-33-
9. Termination of
this Agreement.
(a) You,
as Representative of the Underwriters, 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 First Closing Date, and the option referred to in
Section 3(b), if exercised, may be cancelled at any time prior to the
Second Closing Date, if (i) the Company shall have failed, refused or been
unable, at or prior to such Closing Date, to perform any agreement on its part
to be performed hereunder, (ii) any other condition of the Underwriters’
obligations hereunder is not fulfilled, (iii) trading in the Company’s Common
Stock shall have been suspended by the Commission or the NASDAQ Global Market
or trading in securities generally on the New York Stock Exchange or the
Nasdaq Stock Market shall have been suspended, (iv) minimum or maximum
prices for trading shall have been fixed, or maximum ranges for prices for
securities shall have been required, on the New York Stock Exchange or the
Nasdaq Stock Market, by such exchange or by order of the Commission or any other
Governmental Authority having jurisdiction, (v) a banking moratorium shall
have been declared by federal or state authorities, or (vi) there shall
have occurred any attack on, outbreak or escalation of hostilities or act of
terrorism involving the United States and/or the PRC, any declaration by the
United States and/or the PRC of a national emergency or war, any change in
financial markets, any substantial change or development involving a prospective
substantial change in United States and/or the PRC or international political,
financial or economic conditions, or any other calamity or crisis that, in your
judgment, is material and adverse and makes it impractical or inadvisable to
proceed with the completion of the sale of and payment for the
Securities. Any such termination shall be without liability of any
party to any other party except that the provisions of Section 4(h) and
Section 6 hereof shall at all times be effective and shall survive such
termination.
(b) If
you elect to terminate this Agreement as provided in this Section, the Company
shall be notified promptly by you by telephone, confirmed by
letter.
10.
Default by
the Company.
If the Company shall fail at the First
Closing Date to sell and deliver the number of Securities which it is obligated
to sell hereunder, then this Agreement shall terminate without any liability on
the part of any Underwriter or, except as provided in Section 4(h) and Section 6
hereof, any non-defaulting party.
No action taken pursuant to this
Section shall relieve the Company from liability, if any, in respect of such
default.
11.
Notices. Except
as otherwise provided herein, all communications hereunder shall be in writing
and, if to the Underwriters, shall be mailed or delivered to the Representative
at (i) ▇▇▇▇ Capital Partners, LLC, ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇
▇▇▇▇▇, Attention: General Counsel, except that notices given to an Underwriter
pursuant to Section 6 hereof shall be sent to such Underwriter at the address
furnished by such Underwriter in connection with this offering; if to the
Company, shall be mailed or delivered to it at Winner Industrial Park, Bulong Road,
Longhua, Shenzhen City, 518109, People’s Republic of China,
Attention: Chairman, 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.
12.
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 6. 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 Securities
from any of the Underwriters.
-34-
13.
Absence of
Fiduciary Relationship. The Company acknowledges and agrees
that: (a) the Representative has been retained solely to act as an underwriter
in connection with the sale of the Securities and that no fiduciary, advisory or
agency relationship between the Company and the Representative has been created
in respect of any of the transactions contemplated by this Agreement,
irrespective of whether the Representative has advised or is advising the
Company on other matters; (b) the price and other terms of the Securities set
forth in this Agreement were established by the Company following discussions
and arms-length negotiations with the Representative 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 the Representative and its affiliates are engaged in a broad range
of transactions which may involve interests that differ from those of the
Company and that the Representative has no obligation to disclose such interest
and transactions to the Company by virtue of any fiduciary, advisory or agency
relationship; and (d) it has been advised that the Representative is acting, in
respect of the transactions contemplated by this Agreement, solely for the
benefit of the Underwriters, and not on behalf of the Company.
14.
Governing
Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
15.
Submission
to Jurisdiction. In connection with any action involving
the Company arising out of or relating to this Agreement, the courts of the
State of New York located in the City and County of New York or in the United
States District Court for the Southern District of New York (each, a “New York
Court”) shall have
jurisdiction over the adjudication of such matters, and the Company consents to
the jurisdiction of such courts and personal service with respect
thereto. The Company hereby consents to personal jurisdiction,
service and venue in any court in which any claim arising out of or in any way
relating to this Agreement is brought by any third party against any Underwriter
or any indemnified party. The Company (on its behalf and, to the
extent permitted by applicable law, on behalf of its stockholders and
affiliates) waives all right to trial by jury in any action, proceeding or
counterclaim (whether based upon contract, tort or otherwise) in any way arising
out of or relating to this Agreement. The Company agrees that a final
judgment in any such action, proceeding or counterclaim brought in any such
court shall be conclusive and binding upon the Company and may be enforced in
any other courts to the jurisdiction of which said Company is or may be subject,
by suit upon such judgment.
-35-
16.
Research
Analyst Independence. The Company acknowledges
that the Underwriters’ research analysts and research departments are required
to be independent from their investment banking divisions and are subject to
certain regulations and internal policies, and that the Underwriters’ research
analysts may hold views and make statements or investment recommendations and/or
publish research reports with respect to the Company and/or the offering that
differ from the views of their respective investment banking
divisions. The Company hereby waives and releases, to the fullest
extent permitted by law, any claims that the Company may have against the
Underwriters with respect to any conflict of interest that may arise from the
fact that the views expressed by their independent research analysts and
research departments may be different from or inconsistent with the views or
advice communicated to the Company by the Underwriters’ investment banking
divisions. The Company acknowledges that the Underwriters are full
service securities firms and as such, from time to time, subject to applicable
securities laws, rules and regulations, may effect transactions for their own
accounts or the accounts of their customers and hold long or short positions in
debt or equity securities of the Company; provided, however, that nothing in
this Section 16 shall relieve any Underwriter of any responsibility or liability
it may otherwise bear in connection with activities in violation of applicable
securities laws, rules and regulations.
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.
18.
General
Provisions. This Agreement constitutes the entire agreement of
the parties to this Agreement and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations with respect to
the subject matter hereof. This Agreement may not be amended or
modified unless in writing by all of the parties hereto, and no condition herein
(express or implied) may be waived unless waived in writing by each party whom
the condition is meant to benefit. The Section headings herein are
for the convenience of the parties only and shall not affect the construction or
interpretation of this Agreement. 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 hereof.
[Signature
Page Follows]
-36-
Please sign and return to the Company
the enclosed duplicates of this Agreement whereupon it will become a binding
agreement between the Company and the Underwriter in accordance with its
terms.
|
Very
truly yours,
|
||
|
By
|
/s/ ▇▇▇▇▇▇▇▇ ▇▇
|
|
|
▇▇▇▇▇▇▇▇
▇▇
|
||
|
Chief
Executive Officer
|
||
Confirmed
as of the date first
above
mentioned, on behalf of
itself
and the other
Underwriters
named in Schedule I
hereto:
|
▇▇▇▇
CAPITAL PARTNERS, LLC
|
||
|
By
|
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
|
|
|
▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇
|
||
|
Head
of Equity Capital Markets
|
||
SCHEDULE
I
|
Underwriter
|
Number of Firm Shares (1)
|
|||
|
▇▇▇▇
Capital Partners, LLC
|
1,035,000 | |||
|
Maxim
Group LLC
|
345,000 | |||
|
Total
|
1,380,000 | |||
|
(1)
|
The
Underwriters may purchase up to an additional 207,000 Option Shares, to
the extent the option described in Section 3(b) of the Agreement is
exercised, in the proportions and in the manner described in the
Agreement.
|
SCHEDULE
II
Issuer
General Free Writing Prospectuses
None.
SCHEDULE
III
Pricing
Information
|
1.
|
The
initial price to the public: US$6.10 per
share.
|
|
2.
|
Number
of shares offered: 1,380,000.
|
|
3.
|
Overallotment
option: 207,000.
|
|
4.
|
Underwriting
discounts and commissions:
5.5%.
|
SCHEDULE
IV
Stockholders
Subject to Lockup Agreements
▇▇▇▇▇▇▇▇
▇▇
EXHIBIT
A
Form
of Lock-Up Agreement
[ Ÿ ],
2010
▇▇▇▇
CAPITAL PARTNERS, LLC
▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
as
Representative of the Underwriters
named
in the Underwriting Agreement
Ladies
and Gentlemen:
As an inducement to the underwriters
(the “Underwriters”)
to execute a purchase agreement (the “Purchase
Agreement”) providing for a public offering (the “Offering”)
of common stock, par value $0.001 per share (the “Common
Stock”), of Winner Medical Group Inc., a Nevada corporation (the “Company”),
the undersigned hereby agrees that without, in each case, the prior written
consent of ▇▇▇▇ Capital Partners, LLC (the “Representative”),
during the period specified in the second succeeding paragraph (the “Lock-Up
Period”), the undersigned will not (1) offer, pledge, announce the
intention to sell, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase, make any short sale or otherwise transfer or dispose of,
directly or indirectly, any shares of Common Stock or any securities convertible
into, exercisable or exchangeable for or that represent the right to receive
Common Stock (including without limitation, Common Stock which may be deemed to
be beneficially owned by the undersigned in accordance with the rules and
regulations of the Securities and Exchange Commission and securities which may
be issued upon exercise of a stock option or warrant) whether now owned or
hereafter acquired (the “Undersigned’s
Securities”) or (2) enter into any swap or other agreement that
transfers, in whole or in part, any of the economic consequences of ownership of
the Undersigned’s Securities, whether any such transaction described in clause
(1) or (2) above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise. The foregoing restriction is
expressly agreed to preclude the undersigned from engaging in any hedging or
other transaction which is designed to or which reasonably could be expected to
lead to or result in a sale or disposition of the Undersigned’s Securities even
if such Undersigned’s Securities would be disposed of by someone other than the
undersigned. Such prohibited hedging or other transactions would
include without limitation any short sale or any purchase, sale or grant of any
right (including without limitation any put or call option) with respect to any
of the Undersigned’s Securities or with respect to any security that includes,
relates to, or derives any significant part of its value from such Undersigned’s
Securities.
A-1
In addition, the undersigned agrees
that, without the prior written consent of the Representative, it will not, during the
Lock-Up Period, make any demand for, or exercise any right with respect to, the
registration of any Common Stock or any security convertible into or exercisable
or exchangeable for Common Stock.
The
initial Lock-Up Period will commence on the date of this Lock-Up Agreement and
continue and include the date 90 days after the date of the final prospectus
used to sell Common Stock in the Offering pursuant to the Purchase Agreement,
provided, however, that if (1) during the last 17 days of the initial Lock-Up
Period, the Company releases earnings results or material news or a material
event relating to the Company occurs or (2) prior to the expiration of the
initial Lock-Up Period, the Company announces that it will release earnings
results during the 16-day period beginning on the last day of the initial
Lock-Up Period, then in each case the Lock-Up Period will be extended until the
expiration of the 18-day period beginning on the date of release of the earnings
results or the occurrence of the material news or material event, as applicable,
unless the
Representative waives, in writing, such
extension.
The
undersigned hereby acknowledges that the Company will be requested to agree in
the Purchase Agreement to provide written notice to the undersigned of any event
that would result in an extension of the Lock-Up Period pursuant to the previous
paragraph and agrees 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 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
Lock-Up Period (as may have been extended pursuant to the previous paragraph)
has expired.
Notwithstanding
the foregoing, (1) the undersigned may transfer the Undersigned’s Securities (i)
as a bona fide gift or
gifts and (ii) to any trust for the direct or indirect benefit of the
undersigned or the immediate family of the undersigned, or (2) if the
undersigned is a corporation, company, business trust, association, limited
liability company, partnership, limited liability partnership, limited liability
limited partnership or other entity (collectively, the “Entities”
or, individually, the “Entity”),
the undersigned may transfer shares of Common Stock or securities convertible
into or exchangeable or exercisable for any shares of Common Stock to any person
or Entity which controls, is directly or indirectly controlled by, or is under
common control with the undersigned and, if the undersigned is a partnership or
limited liability company, it may transfer the Common Stock or securities
convertible into or exchangeable or exercisable for any shares of Common Stock
to its partners, former partners or an affiliated partnership (or members,
former members or an affiliated limited liability company) managed by the same
manager or managing partner (or managing member, as the case may be) or
management company, or managed by an entity controlling, controlled by, or under
common control with, such manager or managing partner (or managing member) or
management company in accordance with partnership (or membership) interests;
provided, in each case
of transfer pursuant to clause (1) or (2), that (x) such transfer shall not
involve a disposition for value, (y) the transferee agrees in writing with the
Representative to be bound by the terms of this Lock-Up Agreement, and (z) no
filing by any party under Section 16(a) of the Securities Exchange Act of 1934,
as amended (the “Exchange
Act”), shall be required or shall be made voluntarily in connection with
such transfer. For purposes of this Lock-Up Agreement, “immediate
family” shall mean any relationship by blood, marriage or adoption, not more
remote than first cousin.
A-2
In
addition, the foregoing restrictions shall not apply to (i) the exercise of
stock options granted pursuant to the Company’s equity incentive plans; provided that it shall apply
to any of the Undersigned’s Securities issued upon such exercise, or
(ii) the establishment of any contract, instruction or plan (a “Plan”)
that satisfies all of the requirements of Rule 10b5-1(c)(1)(i)(B) under the
Exchange Act; provided
that no sales of the Undersigned’s Securities shall be made pursuant to such a
Plan prior to the expiration of the Lock-Up Period (as such may have been
extended pursuant to the provisions hereof), and such a Plan may only be
established if no public announcement of the establishment or existence thereof
and no filing with the Securities and Exchange Commission or other regulatory
authority in respect thereof or transactions thereunder or contemplated thereby,
by the undersigned, the Company or any other person, shall be required, and no
such announcement or filing is made voluntarily, by the undersigned, the Company
or any other person, prior to the expiration of the Lock-Up Period (as such may
have been extended pursuant to the provisions hereof).
In
furtherance of the foregoing, the Company and its transfer agent and registrar
are hereby authorized to decline to make any transfer of shares of Common Stock
if such transfer would constitute a violation or breach of this Lock-Up
Agreement.
The
undersigned understands that the undersigned shall be released from all
obligations under this Lock-Up Agreement if (i) the Company or the
Underwriters inform the other that it does not intend to proceed with the
Offering, (ii) the Purchase Agreement does not become effective, or if the
Purchase Agreement (other than the provisions thereof which survive termination)
shall terminate or be terminated prior to payment for and delivery of the Common
Stock to be sold thereunder, or (iii) the Offering is not completed by May
15, 2010.
The
undersigned understands that the Underwriters are entering into the Purchase
Agreement and proceeding with the Offering in reliance upon this Lock-Up
Agreement.
This
Lock-Up Agreement shall be governed by, and construed in accordance with, the
laws of the State of New York.
Whether
or not the Offering actually occurs depends on a number of factors, including
market conditions. Any Offering will only be made pursuant to the
Purchase Agreement, the terms of which are subject to negotiation among the
parties thereto.
[Signature
Page Follows]
A-3
The
undersigned hereby represents and warrants that the undersigned has full power
and authority to enter into this Lock-Up Agreement and that, upon request, the
undersigned will execute any additional documents necessary in connection with
the enforcement hereof. All authority herein conferred or agreed to
be conferred and any obligations of the undersigned shall be binding upon the
successors, assigns, heirs or personal representatives of the
undersigned.
|
Very
truly yours,
|
||
|
Printed
Name of Holder
|
||
|
By:
|
||
|
Signature
|
||
|
Printed Name of Person
Signing
|
||
| (and indicate capacity of person signing if | ||
| signing
as custodian, trustee, or on behalf of an entity) |
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EXHIBIT
B
FORM
OF ISSUER COUNSEL US OPINION
B-1
EXHIBIT
C
FORM
OF ISSUER COUNSEL NEVADA OPINION
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EXHIBIT
D
FORM
OF ISSUER COUNSEL PRC OPINION
D-1
EXHIBIT
E
FORM
OF US FDA COUNSEL OPINION
E-1
EXHIBIT
F
FORM
OF EU FDA COUNSEL OPINION
F-1
EXHIBIT
G
FORM
OF JAPAN FDA COUNSEL OPINION
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