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| 8-K - Puda Coal, Inc. | v205486_8k.htm |
EXECUTION
COPY
7,850,000
PUDA
COAL, INC.
Common
Stock, par value $0.001 per share
UNDERWRITING
AGREEMENT
December
8, 2010
Macquarie
Capital (USA) Inc.
As
Representative of the several
Underwriters
named in Schedule 1 attached hereto,
125 West
55th Street
New York,
New York 10019
Ladies
and Gentlemen:
Puda
Coal, Inc., a Delaware corporation (the “Company”), proposes to sell
7,850,000 shares (the “Firm
Stock”) of the Company’s common stock, par value $0.001 per share (the
“Common
Stock”). In addition, the Company proposes to grant to the
underwriters (the “Underwriters”) named in Schedule 1 attached
to this agreement (this “Agreement”) an option to
purchase up to 1,150,000 additional shares of the Common Stock on the terms set
forth in Section 3 (the “Option
Stock”). The Firm Stock and the Option Stock, if purchased,
are hereinafter collectively called the “Stock.” This is to
confirm the agreement concerning the purchase of the Stock from the Company by
the Underwriters.
1. Representations, Warranties and
Agreements of the Company. The Company represents, warrants
and agrees that, as of the date hereof and at the date of the closing of the
transactions contemplated herein (the “Closing Date”):
(a) A
registration statement on Form S-3 (File No. 333-168891) relating to the Stock
has (i) been prepared by the Company in conformity with the requirements of
the Securities Act of 1933, as amended (the “Securities Act”), and the
rules and regulations (the “Rules and Regulations”) of the
Securities and Exchange Commission (the “Commission”) thereunder;
(ii) been filed with the Commission under the Securities Act; and
(iii) become effective under the Securities Act. Copies of such
registration statement and any amendment thereto have been delivered by the
Company to you or are otherwise available to you as the representative (the
“Representative”) of the
Underwriters. As used in this Agreement:
(i) “Applicable Time” means 9:30
a.m. (New York City time) on the date of this Agreement;
(ii) “Effective Date” means the date
and time as of which such registration statement, or the most recent
post-effective amendment thereto, was declared effective by the
Commission;
(iii) “Issuer Free Writing
Prospectus” means each “free writing prospectus” (as defined in Rule 405
of the Rules and Regulations) prepared by or on behalf of the Company or used or
referred to by the Company in connection with the offering of the
Stock;
(iv) “Preliminary Prospectus” means
any preliminary prospectus relating to the Stock included in such registration
statement or filed with the Commission pursuant to Rule 424(b) of the Rules and
Regulations;
(v) “Pricing Disclosure Package”
means, as of the Applicable Time, the most recent Preliminary Prospectus,
together with each Issuer Free Writing Prospectus filed or used by the Company
on or before the Applicable Time, other than a road show that is an Issuer Free
Writing Prospectus but is not required to be filed under Rule 433 of the Rules
and Regulations.
(vi) “Prospectus” means the final
prospectus relating to the Stock, as filed with the Commission pursuant to Rule
424(b) of the Rules and Regulations; and
(vii) “Registration Statement” means
such registration statement, as amended as of the Effective Date, including any
Preliminary Prospectus or the Prospectus, all exhibits to such registration
statement and all documents incorporated by reference therein.
Any
reference to any Preliminary Prospectus or the Prospectus shall be deemed to
refer to and include any documents incorporated by reference therein pursuant to
Form S-3 under the Securities Act as of the date of such Preliminary Prospectus
or the Prospectus, as the case may be. Any reference to the “most recent Preliminary
Prospectus” shall be deemed to refer to the latest Preliminary Prospectus
included in the Registration Statement or filed pursuant to Rule 424(b) prior to
or on the date hereof. Any reference to any amendment or supplement
to any Preliminary Prospectus or the Prospectus shall be deemed to refer to and
include any document filed under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”),
after the date of such Preliminary Prospectus or the Prospectus, as the case may
be, and before the date of such amendment or supplement and incorporated by
reference in such Preliminary Prospectus or the Prospectus, as the case may be;
and any reference to any amendment to the Registration Statement shall be deemed
to include any annual report of the Company on Form 10-K filed with the
Commission pursuant to Section 13(a) or 15(d) of the Exchange Act after the
Effective Date and before the date of such amendment that is incorporated by
reference in the Registration Statement. The Commission has not
issued any order preventing or suspending the use of any Preliminary Prospectus
or the Prospectus or suspending the effectiveness of the Registration Statement,
and no proceeding or examination for such purpose has been instituted or, the
Company’s knowledge, threatened by the Commission.
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(b)
The Company was not at the time of initial filing of the Registration
Statement and at the earliest time thereafter that the Company or another
offering participant made a bona fide offer (within the
meaning of Rule 164(h)(2) of the Rules and Regulations) of the Stock, is not on
the date hereof and will not be on the applicable Delivery Date an “ineligible
issuer” (as defined in Rule 405). The Company has met all the
conditions for incorporation by reference pursuant to the General Instructions
to Form S-3.
(c) The
Registration Statement conformed and will conform in all material respects on
the Effective Date and on the applicable Delivery Date, and any amendment to the
Registration Statement filed after the date hereof will conform in all material
respects when filed, to the requirements of the Securities Act and the Rules and
Regulations. The Preliminary Prospectus conformed, and the Prospectus
will conform, in all material respects when filed with the Commission pursuant
to Rule 424(b) and on the applicable Delivery Date to the requirements of the
Securities Act and the Rules and Regulations. The documents
incorporated by reference in any Preliminary Prospectus or the Prospectus
conformed, when filed with the Commission, in all material respects to the
requirements of the Exchange Act or the Securities Act, as applicable, and the
rules and regulations of the Commission thereunder.
(d) The
Registration Statement did not, as of the Effective Date, 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 not misleading; provided that no
representation or warranty is made as to information contained in or omitted
from the Registration Statement in reliance upon and in conformity with written
information furnished to the Company through the Representative by or on behalf
of any Underwriter specifically for inclusion therein, which information is
specified in Section 8(e).
(e) The
Prospectus will not, as of its date and on the applicable Delivery Date, 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; provided that no
representation or warranty is made as to information contained in or omitted
from the Prospectus in reliance upon and in conformity with written information
furnished to the Company through the Representative by or on behalf of any
Underwriter specifically for inclusion therein, which information is specified
in Section 8(e).
(f) The
documents incorporated by reference in any Preliminary Prospectus or the
Prospectus did not, when filed with the Commission, 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.
(g) The
Pricing Disclosure Package (together with the information included on Schedule 4 hereto)
did not, as of the Applicable Time, 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; provided that no
representation or warranty is made as to information contained in or omitted
from the Pricing Disclosure Package in reliance upon and in conformity with
written information furnished to the Company through the Representative by or on
behalf of any Underwriter specifically for inclusion therein, which information
is specified in Section 8(e).
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(h) Each
Issuer Free Writing Prospectus (including, without limitation, any road show
that is a free writing prospectus under Rule 433), when considered together with
the Pricing Disclosure Package (together with the information included on Schedule 4 hereto) as
of the Applicable Time, 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. The foregoing does not apply to
information contained in or omitted from any Issuer Free Writing Prospectus in
reliance upon, and in conformity with, written information furnished to the
Company by the Representative on behalf of any Underwriter specifically for use
therein.
(i) Each
Issuer Free Writing Prospectus conformed or will conform in all material
respects to the requirements of the Securities Act and the Rules and Regulations
on the date of first use, and the Company has complied with all prospectus
delivery and any filing requirements applicable to such Issuer Free Writing
Prospectus pursuant to the Rules and Regulations. The Company has not
made any offer relating to the Stock that would constitute an Issuer Free
Writing Prospectus without the prior written consent of the Representative,
except as set forth on Schedule 4
hereto. The Company has retained in accordance with the Rules
and Regulations all Issuer Free Writing Prospectuses that were not required to
be filed pursuant to the Rules and Regulations. The Company has taken
all actions necessary so that any “road show” (as defined in Rule 433 of the
Rules and Regulations) in connection with the offering of the Stock will not be
required to be filed pursuant to the Rules and Regulations.
(j) The
Company had a reasonable basis for, and made in good faith, each
“forward-looking statement” (within the meaning of Section 27A of the Securities
Act or Section 21E of the Exchange Act) contained or incorporated by reference
in the Registration Statement, the Pricing Disclosure Package or the
Prospectus.
(k) Each
of the Company and Puda Investment Holding Limited (the “BVI Sub”), a subsidiary (as
defined in Section 17) of the Company organized under the laws of British Virgin
Islands has been duly organized, is validly existing and in good standing as a
corporation or other business entity under the laws of its jurisdiction of
organization and is duly qualified to do business and in good standing as a
foreign corporation or other business entity in each jurisdiction in which its
ownership or lease of property or the conduct of its businesses requires such
qualification, except where the failure to be so qualified or in good standing
could not, in the aggregate, reasonably be expected to have a material adverse
effect on the condition (financial or otherwise), results of operations,
stockholders’ equity, properties or business or prospects of the Company and its
subsidiaries taken as a whole (a “Material Adverse Effect”);
each of the Company and its subsidiaries has all power and authority necessary
to own or hold its properties and to conduct the businesses in which it is
engaged. The Company does not own or control, directly or indirectly,
any corporation, association or other entity other than the subsidiaries set
forth on Schedule 2 hereto.
4
(l) The
Company has an authorized capitalization as set forth in each of the most recent
Preliminary Prospectus and the Prospectus, and all of the issued shares of
capital stock of the Company have been duly authorized and validly issued, are
fully paid and non-assessable, conform to the description thereof contained in
the most recent Preliminary Prospectus and were issued in compliance with
federal and state securities laws and not in violation of any preemptive right,
resale right, right of first refusal or similar right. All of the
Company’s options, warrants and other rights to purchase or exchange any
securities for shares of the Company’s capital stock have been duly authorized
and validly issued, conform to the description thereof contained in the most
recent Preliminary Prospectus and were issued in compliance with federal and
state securities laws. All of the issued shares of capital stock of
the Company and the BVI Sub have been duly authorized and validly issued, are
fully paid and non-assessable and are owned directly or indirectly by the
Company, free and clear of all liens, encumbrances, equities or claims, except
for such liens, encumbrances, equities or claims as could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(m) The
Company is not and during the past three years neither the Company nor any
predecessor was: (A) a blank check company as defined in Rule 419(a)(2) of the
Securities Act, or (B) a shell company, other than a business combination shell
company, each as defined in Rule 405 of the Securities Act.
(n) The
Company conducts substantially all of its operations and generates substantially
all of its revenue through (i) Shanxi Putai Resources Limited (“Putai”), a wholly-owned
enterprise formed under the laws of the People’s Republic of China (“PRC”), and (ii) Shanxi Puda
Coal Group Co., Ltd., a foreign-invested enterprise formed under the laws of the
PRC that is 90% owned by Putai (“Shanxi Coal” and, together
with Putai, the “PRC
Entities”).
(o) Each
of the PRC Entities has been duly established, is validly existing as a company
in good standing under the laws of the PRC, has the corporate power and
authority to own its property and to conduct its business as described in the
Registration Statement, the Pricing Disclosure Package and the Prospectus, and
is duly qualified to transact business in each jurisdiction in which the conduct
of its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or be in
good standing would not, singly or in the aggregate, have a Material Adverse
Effect. Each PRC Entity has applied for and obtained all requisite
business licenses, clearance and permits required under PRC law as necessary for
the conduct of its businesses, and each PRC Entity has complied in all material
respects with all PRC laws in connection with foreign exchange, including
without limitation, carrying out all relevant filings, registrations and
applications for relevant permits with the PRC State Administration of Foreign
Exchange and any other relevant authorities, and all such permits are validly
subsisting. The registered capital of each PRC Entity has been fully
paid up in accordance with the schedule of payment stipulated in its respective
articles of association, approval document, certificate of approval and legal
person business license (hereinafter referred to as the “Establishment Documents”) and
in compliance with PRC laws and regulations, and there is no outstanding capital
contribution commitment for any PRC Entity. The Establishment
Documents of the PRC Entities have been duly approved in accordance with the
laws of the PRC and are valid and enforceable. The business scope
specified in the Establishment Documents of each PRC Entity complies with the
requirements of all relevant PRC laws and regulations. The
outstanding equity interests of each PRC Entity is owned of record by the
respective entities or individuals identified as the registered holders thereof
in the Registration Statement, the Pricing Disclosure Package and the
Prospectus.
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(p) None
of the PRC Entities nor any of their properties, assets or revenues are entitled
to any right of immunity on the grounds of sovereignty from any legal action,
suit or proceeding, from set-off or counterclaim, from the jurisdiction of any
court, from services of process, from attachment prior to or in aid of execution
of judgment, or from any other legal process or proceeding for the giving of any
relief or for the enforcement of any judgment.
(q) It
is not necessary that this Agreement, the Registration Statement, the Pricing
Disclosure Package, the Prospectus or any other document be filed or recorded
with any governmental agency, court or other authority in the PRC.
(r) To
the knowledge of the Company, no transaction, stamp, capital or other issuance,
registration, transaction, transfer or withholding taxes or duties are payable
in the PRC by or on behalf of the Underwriter to any PRC taxing authority in
connection with (i) the issuance, sale and delivery of the Shares by the Company
and the delivery of the Shares to or for the account of the Underwriter, (ii)
the purchase from the Company and the initial sale and delivery by the
Underwriter of the Shares to purchasers thereof, or (iii) the execution and
delivery of this Agreement.1
(s) The
Company has taken all necessary steps to comply with, and to ensure compliance
by all of the Company’s direct or indirect shareholders and option holders who
are PRC residents and hold 5% or more of the total outstanding shares of the
Company with, any applicable rules and regulations of the PRC State
Administration of Foreign Exchange of the PRC (the “SAFE Rules and Regulations”),
including, without limitation, requiring each shareholder and option holder that
is, or is directly or indirectly owned or controlled by, a PRC resident to
complete any registration and other procedures required under applicable SAFE
Rules and Regulations.
(t) The
issuance and sale of the Stock, the listing and trading of the Stock on the NYSE
Amex Exchange (the “NYSE
Amex”) and the consummation of the transactions contemplated by this
Agreement, the Registration Statement, the Pricing Disclosure Package and the
Prospectus are not and will not be, as of the date hereof and on the Closing
Date, affected by the M&A Rules or any official clarifications, guidance,
interpretations or implementation rules that have been published or of which the
Company is otherwise aware in connection with or related to the M&A Rules,
including the guidance and notices issued by the CSRC on September 8 and
September 21, 2006 (together with the M&A Rules, the “M&A Rules and Related
Clarifications”).
1 UW
request that Company PRC counsel confirm that no such tax or duty would be
applicable to the transaction.
6
(u) The
Company has taken all necessary steps to ensure compliance by each of its
shareholders, option holders, directors, officers and employees that is, or is
directly or indirectly owned or controlled by, a PRC resident or citizen who
holds 5% or more of the total outstanding shares of the Company, with any
applicable rules and regulations of the relevant PRC government agencies
(including but not limited to the PRC Ministry of Commerce, the PRC National
Development and Reform Commission and the PRC State Administration of Foreign
Exchange) relating to overseas investment by PRC residents and citizens (the
“PRC Overseas Investment and
Listing Regulations”), including, requesting each shareholder, option
holder, director, officer, employee and participant that is, or is directly or
indirectly owned or controlled by, a PRC resident or citizen to complete any
registration and other procedures required under applicable PRC Overseas
Investment and Listing Regulations.
(v) As
of the date hereof, the M&A Rules and Related Clarifications do not require
the Company to obtain the approval of the CSRC prior to the issuance and sale of
the Stock, the listing and trading of the Stock on the NYSE Amex, or the
consummation of the transactions contemplated by this Agreement, the
Registration Statement, the Pricing Disclosure Package or the
Prospectus.
(w) The
shares of the Stock to be issued and sold by the Company to the Underwriters
hereunder have been duly authorized and, upon payment and delivery in accordance
with this Agreement, will be validly issued, fully paid and non-assessable, will
conform to the description thereof contained in the most recent Preliminary
Prospectus, will be issued in compliance with federal and state securities laws
and will be free of statutory and contractual preemptive rights, rights of first
refusal and similar rights.
(x) The
Company has all requisite corporate power and authority to execute, deliver and
perform its obligations under this Agreement in accordance with its
terms. This Agreement has been duly and validly authorized, executed
and delivered by the Company.
(y) The
execution, delivery and performance of this Agreement by the Company, the
consummation of the transactions contemplated hereby and the application of the
proceeds from the sale of the Stock as described under “Use of Proceeds” in the
most recent Preliminary Prospectus will not (i) conflict with or result in
a breach or violation of any of the terms or provisions of, impose any lien,
charge or encumbrance upon any property or assets of the Company and its
subsidiaries, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement, license 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 except to the extent that such
conflict, default, termination or acceleration is not likely result in a
Material Adverse Effect; (ii) result in any violation of the provisions of
the charter or by-laws (or similar organizational documents) of the Company or
any of its subsidiaries; or (iii) result in any violation of any statute or
any order, rule or regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or any of their
properties or assets except to the extent that such violations are not likely to
result in a Material Adverse Effect.
7
(z) No
consent, approval, authorization or order of, or filing or registration with,
any court or governmental agency or body having jurisdiction over the Company or
any of its subsidiaries or any of their properties or assets is required for the
execution, delivery and performance of this Agreement by the Company, the
consummation of the transactions contemplated hereby, the application of the
proceeds from the sale of the Stock as described under “Use of Proceeds” in the
most recent Preliminary Prospectus, except for the registration of the Stock
under the Securities Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under the Exchange Act and
applicable state securities laws in connection with the purchase and sale of the
Stock by the Underwriters, other than such consents, approvals, orders and
authorizations, the failure of which to make or obtain is not reasonably likely
to result in a Material Adverse Effect.
(aa) There
are no contracts, agreements or understandings between the Company and any
person granting such person the right to require the Company to file a
registration statement under the Securities Act with respect to any securities
of the Company owned or to be owned by such person or to require the Company to
include such securities in the securities registered pursuant to the
Registration Statement or in any securities being registered pursuant to any
other registration statement filed by the Company under the Securities
Act.
(bb) The
Company has not sold or issued any securities that would be integrated with the
offering of the Stock contemplated by this Agreement pursuant to the Securities
Act, the Rules and Regulations or the interpretations thereof by the
Commission.
(cc) Except
as disclosed in the Company’s filings with the Commission, neither the Company
nor any of its subsidiaries has sustained, since the date of the latest audited
financial statements included or incorporated by reference in the most recent
Preliminary Prospectus, any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree, and since
such date, there has not been any change in the capital stock, net current
assets, or long-term debt of the Company or any of its subsidiaries or any
adverse change, or any development involving a prospective adverse change, in or
affecting the condition (financial or otherwise), results of operations,
stockholders’ equity, properties, management, business or prospects of the
Company and its subsidiaries taken as a whole, in each case except as could not,
in the aggregate, reasonably be expected to have a Material Adverse
Effect.
8
(dd) Except
as disclosed in the Company’s filings with the Commission, since the date as of
which information is given in the most recent Preliminary Prospectus, the
Company has not (i) incurred any liability or obligation, direct or
contingent, other than liabilities and obligations that were incurred in the
ordinary course of business, (ii) entered into any material transaction not in
the ordinary course of business or (iii) declared or paid any dividend on its
capital stock.
(ee) The
historical financial statements (including the related notes and supporting
schedules) included or incorporated by reference in the most recent Preliminary
Prospectus comply as to form in all material respects with the requirements of
Regulation S-X under the Securities Act and present fairly the financial
condition, results of operations and cash flows of the entities purported to be
shown thereby at the dates and for the periods indicated and have been prepared
in conformity with accounting principles generally accepted in the United States
applied on a consistent basis throughout the periods involved.
(ff) Moore
Stephens Wurthfrazer and Torbet, LLP (“Moore Stephens”), who have
certified certain financial statements of the Company and its consolidated
subsidiaries, whose report appears in the most recent Preliminary Prospectus or
is incorporated by reference therein and who have delivered the initial letter
referred to in Section 6(h) hereof, are independent public accountants as
required by the Securities Act and the Rules and Regulations.
(gg) The
Company and each of its subsidiaries have good and marketable title
to all real and personal property described in the Prospectus as
being owned by them, in each case free and clear of all liens, encumbrances and
defects, except such as are described in the most recent Preliminary Prospectus
or such as do not materially affect the value of such property and do not
materially interfere with the use made and proposed to be made of such property
by the Company and its subsidiaries; and all assets held under lease by the
Company and its subsidiaries are held by them under valid, subsisting and
enforceable leases, with such exceptions as do not materially interfere with the
use made and proposed to be made of such assets by the Company and its
subsidiaries.
(hh) The
Company and each of its subsidiaries carry, or are covered by, insurance from
insurers of recognized financial responsibility in such amounts and covering
such risks as is adequate for the conduct of their respective businesses and the
value of their respective properties and as is customary for companies engaged
in similar businesses in similar industries in the territory where the operation
of the Company and such subsidiary is located. All policies of
insurance of the Company and its subsidiaries are in full force and effect; the
Company and its subsidiaries are in compliance with the terms of such policies
in all material respects; and neither the Company nor any of its subsidiaries
has received notice from any insurer or agent of such insurer that capital
improvements or other expenditures are required or necessary to be made in order
to continue such insurance; 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;
and neither the Company nor any such subsidiary has any reason to believe that
it will not be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business at a cost that could not reasonably be
expected to have a Material Adverse Effect.
9
(ii) The
statistical and market-related data included under the captions “Summary” in the
most recent Preliminary Prospectus, are based on or derived from sources that
the Company believes to be reliable and accurate in all material
respects.
(jj) Neither
the Company nor any subsidiary is, and as of the applicable Delivery Date and,
after giving effect to the offer and sale of the Stock and the application of
the proceeds therefrom as described under “Use of Proceeds” in the most recent
Preliminary Prospectus and the Prospectus, none of them will be, (i) an
“investment company” within the meaning of such term under the Investment
Company Act of 1940, as amended (the “Investment Company Act”), and
the rules and regulations of the Commission thereunder or (ii) a “business
development company” (as defined in Section 2(a)(48) of the Investment Company
Act).
(kk) There
are no legal or governmental proceedings pending to which the Company or any of
its subsidiaries is a party or of which any property or assets of the Company or
any of its subsidiaries is the subject that could, in the aggregate, reasonably
be expected to have a Material Adverse Effect or could, in the aggregate,
reasonably be expected to have a material adverse effect on the performance of
this Agreement or the consummation of the transactions contemplated hereby; and
to the Company’s knowledge, no such proceedings are threatened or contemplated
by governmental authorities or others.
(ll) There
are no legal or governmental proceedings or contracts or other documents of a
character required to be described in the Registration Statement or the most
recent Preliminary Prospectus or, in the case of documents, to be filed as
exhibits to the Registration Statement, that are not described and filed as
required.
(mm) No
supplier, customer, distributor or sales agent of the Company has notified the
Company that it intends to discontinue or decrease the rate of business done
with the Company, except where such decrease is not reasonably likely to result
in a Material Adverse Effect.
(nn) There
are no claims, payments, issuances, arrangements or understandings for services
in the nature of a finder’s, consulting or origination fee with respect to the
introduction of the Company to the Underwriter or the sale of the Shares
hereunder or any other arrangements, agreements, understandings, payments or
issuances with respect to the Company that may affect the Underwriter’s
compensation, as determined by the Financial Industry Regulatory Authority, Inc.
(“FINRA”).
(oo) Except
as disclosed to the Underwriters in writing, the Company has not made any direct
or indirect payments (in cash, securities or otherwise) to (i) any person, as a
finder’s fee, investing fee or otherwise, in consideration of such person
raising capital for the Company or introducing to the Company persons who
provided capital to the Company, (ii) any FINRA member, or (iii) any person or
entity that has any direct or indirect affiliation or association with any FINRA
member within the 6-month period prior to the date on which the Registration
Statement was filed with the Commission (“Filing Date”) or
thereafter.
10
(pp) None
of the net proceeds of the offering will be paid by the Company to any
participating FINRA member or any affiliate or associate of any participating
FINRA member, except to the Underwriters or as specifically authorized
herein.
(qq) To
the Company’s knowledge, no (i) officer or director of the Company or its
subsidiaries, (ii) owner of 5% or more of the Company’s unregistered securities
or that of its subsidiaries or (iii) owner of any amount of the Company’s
unregistered securities acquired within the 180-day period prior to the Filing
Date, has any direct or indirect affiliation or association with any FINRA
member. The Company will advise the Underwriters and their counsel if
it becomes aware that any officer, director or stockholder of the Company or its
subsidiaries is or becomes an affiliate or associated person of a FINRA member
participating in the offering.
(rr) Other
than the Underwriters, no person has the right to act as an underwriter or as a
financial advisor to the Company in connection with the transactions
contemplated hereby.
(ss) No
relationship, direct or indirect, exists between or among the Company, on the
one hand, and the directors, officers, stockholders, customers or suppliers of
the Company, on the other hand, that is required to be described in the most
recent Preliminary Prospectus which is not so described.
(tt) No
labor disturbance by the employees of the Company or its subsidiaries exists or,
to the knowledge of the Company, is imminent that could reasonably be expected
to have a Material Adverse Effect.
(uu) The
Company and each of its subsidiaries have filed all federal, state, local and
foreign income and franchise tax returns required to be filed prior to the date
hereof, subject to permitted extensions, and have paid all taxes shown as due
thereon or imposed on or assessed against the Company or any subsidiary, and no
tax deficiency has been determined adversely to the Company or any of its
subsidiaries, nor does the Company have any knowledge of any tax deficiencies
that could, in the aggregate, reasonably be expected to have a Material Adverse
Effect.
(vv) There
are no transfer taxes or other similar fees or charges under Federal law or the
laws of any state, or any political subdivision thereof, required to be paid by
the Company or any subsidiary in connection with the execution and delivery of
this Agreement or the issuance by the Company or sale by the Company of the
Stock.
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(ww) Neither
the Company nor any of its subsidiaries (i) is in violation of its charter or
by-laws (or similar organizational documents), (ii) is in default, and no event
has occurred that, with notice or lapse of time or both, would constitute such a
default, in the due performance or observance of any term, covenant or condition
contained in any indenture, mortgage, deed of trust, loan agreement, license or
other agreement or instrument to which it is a party or by which it is bound or
to which any of its properties or assets is subject or (iii) is in violation of
any statute or any order, rule or regulation of any court or governmental agency
or body having jurisdiction over it or its property or assets or has failed to
obtain any license, permit, certificate, franchise or other governmental
authorization or permit necessary to the ownership of its property or to the
conduct of its business, except in the case of clauses (ii) and (iii), to the
extent any such conflict, breach, violation or default could not, in the
aggregate, reasonably be expected to have a Material Adverse
Effect.
(xx) The
Company and each of its subsidiaries (i) make and keep accurate books and
records and (ii) maintain and has maintained since September 30, 2009 effective
internal control over financial reporting as defined in Rule 13a-15 under the
Exchange Act and a system of internal accounting controls sufficient to provide
reasonable assurance that (A) transactions are executed in accordance with
management’s general or specific authorization, (B) transactions are recorded as
necessary to permit preparation of the Company’s financial statements in
conformity with accounting principles generally accepted in the United States
and to maintain accountability for its assets, (C) access to the Company’s
assets is permitted only in accordance with management’s general or specific
authorization and (D) the recorded accountability for the Company’s assets is
compared with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
(yy) (i)
The Company and each of its subsidiaries have established and maintained since
September 30, 2009 disclosure controls and procedures (as such term is defined
in Rule 13a-15 under the Exchange Act), (ii) such disclosure controls and
procedures are designed to ensure that the information required to be disclosed
by the Company and its subsidiaries in the reports they will file or submit
under the Exchange Act is accumulated and communicated to management of the
Company and its subsidiaries, including their respective principal executive
officers and principal financial officers, as appropriate, to allow timely
decisions regarding required disclosure to be made and (iii) such disclosure
controls and procedures are effective in all material respects to perform the
functions for which they were established.
(zz) Since
the date of the most recent balance sheet of the Company and its consolidated
subsidiaries reviewed or audited by Moore Stephens and the audit committee of
the board of directors of the Company, (i) the Company has not been advised of
(A) any significant deficiencies in the design or operation of internal
controls that could adversely affect the ability of the Company and each of its
subsidiaries to record, process, summarize and report financial data, or any
material weaknesses in internal controls and (B) any fraud, whether or not
material, that involves management or other employees who have a significant
role in the internal controls of the Company and each of its subsidiaries, and
(ii) since that date, there have been no significant changes in internal
controls or in other factors that could significantly affect internal controls,
including any corrective actions with regard to significant deficiencies and
material weaknesses.
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(aaa)
There is and has been no failure on the part of the Company and any of the
Company’s directors or officers, in their capacities as such, to comply in all
material respects with the provisions of the Sarbanes-Oxley Act of 2002 and the
rules and regulations promulgated in connection therewith.
(bbb)
The Company and each of its subsidiaries have such permits, licenses, patents,
franchises, certificates of need and other approvals or authorizations of
governmental or regulatory authorities (“Permits”) as are necessary
under applicable law to own their properties and conduct their businesses in the
manner described in the most recent Preliminary Prospectus, except for any of
the foregoing that could not, in the aggregate, reasonably be expected to have a
Material Adverse Effect; each of the Company and its subsidiaries has fulfilled
and performed all of its obligations with respect to the Permits, and no event
has occurred that allows, or after notice or lapse of time would allow,
revocation or termination thereof or results in any other impairment of the
rights of the holder or any such Permits, except for any of the foregoing that
could not reasonably be expected to have a Material Adverse Effect.
(ccc)
The Company and each of its subsidiaries own or possess adequate rights to use
all material patents, patent applications, trademarks, service marks, trade
names, trademark registrations, service mark registrations, copyrights,
licenses, know-how, software, systems and technology (including trade secrets
and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures) necessary for the conduct of their
respective businesses as currently carried on and described in the latest
Preliminary Prospectus and have no reason to believe that the conduct of their
respective businesses will conflict with, and have not received any notice of
any claim of conflict with, any such rights of others that will result in a
Material Adverse Effect.
(ddd)
The Company and each of its subsidiaries (i) are, and at all times prior hereto
were, in compliance with all laws, regulations, ordinances, rules, orders,
judgments, decrees, permits or other legal requirements of any governmental
authority, including without limitation any international, national, state,
provincial, regional, or local authority, relating to the protection of human
health or safety, the environment, or natural resources, or to hazardous or
toxic substances or wastes, pollutants or contaminants (“Environmental Laws”)
applicable to such entity, which compliance includes, without limitation,
obtaining, maintaining and complying with all permits and authorizations and
approvals required by Environmental Laws to conduct their respective businesses,
except where the failure to be in compliance is not reasonably expected to
result in a Material Adverse Effect, and (ii) have not received notice of
any actual or alleged violation of Environmental Laws, or of any potential
liability for or other obligation concerning the presence, disposal or release
of hazardous or toxic substances or wastes, pollutants or
contaminants. There are no proceedings that are pending, or known by
the Company to be contemplated, against the Company or any of its subsidiaries
under Environmental Laws in which a governmental authority is also a party,
other than such proceedings regarding which it is reasonably believed no
monetary sanctions of $100,000 or more will be imposed, the Company and its
subsidiaries are not aware of any issues regarding compliance with Environmental
Laws, or liabilities or other obligations under Environmental Laws or concerning
hazardous or toxic substances or wastes, pollutants or contaminants, that could
reasonably be expected to have a material effect on the capital expenditures,
earnings or competitive position of the Company and its subsidiaries, and none
of the Company and its subsidiaries anticipates material capital expenditures
relating to Environmental Laws.
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(eee) Neither
the Company nor any subsidiary is in violation of or has received notice of any
violation with respect to any Chinese law relating to discrimination in the
hiring, promotion or pay of employees nor Chinese wage and hour
laws, the violation of any of which could reasonably be expected to
have a Material Adverse Affect.
(fff) No
subsidiary 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 capital stock, 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 the most recent Preliminary
Prospectus.
(ggg) Neither
the Company nor any of its subsidiaries, nor, to the knowledge of the Company,
any director, officer, agent, employee or representative acting on behalf of the
Company or any of its subsidiaries, has (i) used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expense relating to
political activity; (ii) made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds; (iii)
violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977; or (iv) made any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment.
(hhh) 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 Currency and Foreign Transactions Reporting Act of 1970, as
amended, the money laundering statutes of all jurisdictions, the rules and
regulations thereunder and any related or similar rules, regulations or
guidelines, issued, administered or enforced by any governmental agency
(collectively, 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, threatened, except, in each case,
as would not reasonably be expected to have a Material Adverse
Effect.
(iii) Neither
the Company nor any of its subsidiaries nor, to the knowledge of the Company,
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. Treasury Department (“OFAC”); 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 currently subject to any U.S. sanctions administered by
OFAC.
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(jjj) The
Company has not distributed and, prior to the later to occur of any Delivery
Date and completion of the distribution of the Stock, will not distribute any
offering material in connection with the offering and sale of the Stock other
than any Preliminary Prospectus, the Prospectus, any Issuer Free Writing
Prospectus to which the Representative has consented in accordance with Section
1(i) or 6(a)(vi) and any Issuer Free Writing Prospectus set forth on Schedule 4
hereto
(kkk) The
Company has not taken and will not take, directly or indirectly, any action
designed to or that has constituted or that could reasonably be expected to
cause or result in the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the shares of the
Stock.
Any
certificate signed by any officer of the Company and delivered to the
Representative or counsel for the Underwriters in connection with the offering
of the Stock shall be deemed a representation and warranty by the Company, as to
matters covered thereby, to each Underwriter.
2. Purchase of the Stock by the
Underwriters. On the basis of the representations and
warranties contained in, and subject to the terms and conditions of, this
Agreement, the Company agrees to sell 7,850,000 shares of the Firm Stock to the
several Underwriters, and each of the Underwriters, severally and not jointly,
agrees to purchase the number of shares of the Firm Stock set forth opposite
that Underwriter’s name in Schedule 1
hereto. The respective purchase obligations of the Underwriters with
respect to the Firm Stock shall be rounded among the Underwriters to avoid
fractional shares, as the Representative may determine.
In
addition, the Company grants to the Underwriters an option to purchase up to
1,150,000 additional shares of Option Stock. Such option is
exercisable in the event that the Underwriters sell more shares of Common Stock
than the number of Firm Stock in the offering and as set forth in Section 5
hereof. Each Underwriter agrees, severally and not jointly, to
purchase the number of shares of Option Stock (subject to such adjustments to
eliminate fractional shares as the Representatives may determine) that bears the
same proportion to the total number of shares of Option Stock to be sold on such
Delivery Date as the number of shares of Firm Stock set forth in Schedule 1 hereto
opposite the name of such Underwriter bears to the total number of shares of
Firm Stock.
The price
of both the Firm Stock and any Option Stock purchased by the Underwriters shall
be $11.28 per share.
The
Company shall not be obligated to deliver any of the Firm Stock or Option Stock
to be delivered on the applicable Delivery Date, except upon payment for all
such Stock to be purchased on such Delivery Date as provided
herein.
3. Offering
of Stock by the Underwriters. Upon authorization by the
Representative of the release of the Firm Stock, the several Underwriters
propose to offer the Firm Stock for sale upon the terms and conditions to be set
forth in the Prospectus.
15
4. Delivery of and Payment for
the Stock. Delivery of and
payment for the Firm Stock shall be made at 10:00 A.M., New York City time,
on December 13, 2010 or at such other date or place as shall be determined by
agreement between the Representative and the Company. This date and
time are sometimes referred to as the “Initial Delivery
Date.” Delivery of the Firm Stock shall be made to the
Representative for the account of each Underwriter against payment by the
several Underwriters through the Representative and of the respective aggregate
purchase prices of the Firm Stock being sold by the Company to or upon the order
of the Company of the purchase price by wire transfer in immediately available
funds to the accounts specified by the Company. Time shall be of the essence,
and delivery at the time and place specified pursuant to this Agreement is a
further condition of the obligation of each Underwriter
hereunder. The Company shall deliver the Firm Stock through the
facilities of DTC unless the Representative shall otherwise
instruct.
The
option granted in Section 2 will expire 30 days after the date of this Agreement
and may be exercised only once in whole or in part, by written notice being
given to the Company by the Representative; provided that if such date
falls on a day that is not a business day, the option granted in Section 2 will
expire on the next succeeding business day. Such notice shall set
forth the aggregate number of shares of Option Stock as to which the option is
being exercised, the names in which the shares of Option Stock are to be
registered, the denominations in which the shares of Option Stock are to be
issued and the date and time, as determined by the Representative, when the
shares of Option Stock are to be delivered; provided, however, that this
date and time shall not be earlier than the Initial Delivery Date nor earlier
than the second business day after the date on which the option shall have been
exercised nor later than the fifth business day after the date on which the
option shall have been exercised. Each date and time the shares of
Option Stock are delivered is sometimes referred to as an “Option Stock Delivery Date,”
and the Initial Delivery Date and any Option Stock Delivery Date are sometimes
each referred to as a “Delivery
Date.”
Delivery
of the Option Stock by the Company and payment for the Option Stock by the
several Underwriters through the Representative shall be made at
10:00 A.M., New York City time, on the date specified in the corresponding
notice described in the preceding paragraph or at such other date or place as
shall be determined by agreement between the Representative and the
Company. On the Option Stock Delivery Date, the Company shall deliver
or cause to be delivered the Option Stock to the Representative for the account
of each Underwriter against payment by the several Underwriters through the
Representative and of the respective aggregate purchase prices of the Option
Stock being sold by the Company of the purchase price by wire transfer in
immediately available funds to the accounts specified by the
Company. Time shall be of the essence, and delivery at the time and
place specified pursuant to this Agreement is a further condition of the
obligation of each Underwriter hereunder. The Company shall deliver
the Option Stock through the facilities of DTC unless the Representative shall
otherwise instruct.
5. Further Agreements of the Company
and the Underwriters.
(a) The
Company agrees:
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(i) To
prepare the Prospectus in a form approved by the Representative (such approval
not to be unreasonably withheld or delayed) and to file such Prospectus pursuant
to Rule 424(b) under the Securities Act not later than the Commission’s close of
business on the second business day following the execution and delivery of this
Agreement; to make no further amendment or any supplement to the Registration
Statement or the Prospectus prior to the last Delivery Date except as provided
herein; to advise the Representative, promptly after it receives notice thereof,
of the time when any amendment or supplement to the Registration Statement or
the Prospectus has been filed and to furnish the Representative with copies
thereof; to advise the Representative, promptly after it receives notice
thereof, of the issuance by the Commission of any stop order or of any order
preventing or suspending the use of the Prospectus or any Issuer Free Writing
Prospectus, of the suspension of the qualification of the Stock for offering or
sale in any jurisdiction, of the initiation or threatening of any proceeding or
examination for any such purpose or of any request by the Commission for the
amending or supplementing of the Registration Statement, the Prospectus or any
Issuer Free Writing Prospectus or for additional information; and, in the event
of the issuance of any stop order or of any order preventing or suspending the
use of the Prospectus or any Issuer Free Writing Prospectus or suspending any
such qualification, to use promptly its best reasonable efforts to obtain its
withdrawal;
(ii) If
requested by the Representative, to furnish promptly to the Representative and
to counsel for the Underwriters a signed copy of the Registration Statement as
originally filed with the Commission, and each amendment thereto filed with the
Commission, including all consents and exhibits filed therewith;
(iii) To
deliver promptly to the Representative such number of the following documents as
the Representative shall reasonably request: (A) conformed copies of
the Registration Statement as originally filed with the Commission and each
amendment thereto (in each case excluding exhibits other than this Agreement and
the computation of per share earnings), (B) each Preliminary Prospectus, the
Prospectus and any amended or supplemented Prospectus, (C) each Issuer Free
Writing Prospectus and (D) any document incorporated by reference in any
Preliminary Prospectus or the Prospectus; and, if the delivery of a prospectus
is required at any time after the date hereof in connection with the offering or
sale of the Stock or any other securities relating thereto and if at such time
any events shall have occurred as a result of which the Prospectus as then
amended or supplemented would include an untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made when such
Prospectus is delivered, not misleading, or, if for any other reason it shall be
necessary to amend or supplement the Prospectus in order to comply with the
Securities Act, to notify the Representative and, upon its request, to file such
document and to prepare and furnish without charge to each Underwriter and to
any dealer in securities as many copies as the Representative may from time to
time reasonably request of an amended or supplemented Prospectus that will
correct such statement or omission or effect such compliance;
(iv) Prior
to the last Delivery Date, to file promptly with the Commission any amendment or
supplement to the Registration Statement or the Prospectus that may, in the
judgment of the Company or the Representative, be required by the Securities Act
or requested by the Commission;
17
(v) Prior
to the last Delivery Date, before filing with the Commission any amendment or
supplement to the Registration Statement, the Prospectus, any document
incorporated by reference in the Prospectus or any amendment to any document
incorporated by reference in the Prospectus, to furnish a copy thereof to the
Representative and counsel for the Underwriters and obtain the consent of the
Representative to the filing (such consent not to be unreasonably withheld or
delayed);
(vi) Not
to make any offer relating to the Stock that would constitute an Issuer Free
Writing Prospectus without the prior written consent of the
Representative;
(vii) To
comply with all applicable requirements of Rule 433 with respect to any Issuer
Free Writing Prospectus; and if at any time after the date hereof any events
shall have occurred as a result of which any Issuer Free Writing Prospectus, as
then amended or supplemented, would conflict with the information in the
Registration Statement, the most recent Preliminary Prospectus or the Prospectus
or would include an untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading, or, if for any
other reason it shall be necessary to amend or supplement any Issuer Free
Writing Prospectus, to notify the Representative and, upon its request, to file
such document and to prepare and furnish without charge to each Underwriter as
many copies as the Representative may from time to time reasonably request of an
amended or supplemented Issuer Free Writing Prospectus that will correct such
conflict, statement or omission or effect such compliance;
(viii) Promptly
from time to time to take such action as the Representative may reasonably
request to qualify the Stock for offering and sale under the securities laws of
Canada and such other jurisdictions as the Representative may reasonably request
and to comply in all material respects with such laws so as to permit the
continuance of sales and dealings therein in such jurisdictions for as long as
may be necessary to complete the distribution of the Stock; provided that in connection
therewith the Company shall not be required to (i) qualify as a foreign
corporation in any jurisdiction in which it would not otherwise be required to
so qualify, (ii) file a general consent to service of process in any such
jurisdiction or (iii) subject itself to taxation in any jurisdiction in which it
would not otherwise be subject;
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(ix) For
a period commencing on the date hereof and ending on the 90th day after the date
of the Prospectus (the “Lock-Up
Period”), not to, directly or indirectly, (1) offer for sale, sell,
pledge or otherwise dispose of (or enter into any transaction or device that is
designed to, or could be expected to, result in the disposition by any person at
any time in the future of) any shares of Common Stock or securities convertible
into or exchangeable for Common Stock (other than the Stock and shares issued
pursuant to employee benefit plans, stock option plans or other
employee compensation plans existing on the date hereof or shares issued upon
exercise of options, rights or warrants existing on the date hereof, or sell or
grant options, rights or warrants with respect to any shares of Common Stock or
securities convertible into or exchangeable for Common Stock (2) enter into any
swap or other derivatives transaction that transfers to another, in whole or in
part, any of the economic benefits or risks of ownership of such shares of
Common Stock, whether any such transaction described in clause (1) or (2) above
is to be settled by delivery of Common Stock or other securities, in cash or
otherwise, (3) file or cause to be filed a registration statement, including any
amendments, with respect to the registration of any shares of Common Stock or
securities convertible, exercisable or exchangeable into Common Stock or any
other securities of the Company (other than registration statements on Form S-8)
or (4) publicly disclose the intention to do any of the foregoing, in each case
without the prior written consent of the Representative, on behalf of the
Underwriters, and to cause each officer, director and stockholder of the Company
set forth on Schedule
3 hereto to furnish to the Representative, prior to the Initial Delivery
Date, a letter or letters, substantially in the form of Exhibit A hereto (the
“Lock-Up Agreements”);
notwithstanding the foregoing, if (1) during the last 17 days of the Lock-Up
Period, the Company issues an earnings release or material news or a material
event relating to the Company occurs or (2) prior to the expiration of the
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 imposed in the preceding paragraph shall continue to apply
until the expiration of the 18-day period beginning on the issuance of the
earnings release or the announcement of the material news or the occurrence of
the material event, unless the Representative, on behalf of the Underwriters,
waive such extension in writing.
(x) To
apply the net proceeds from the sale of the Stock being sold by the Company as
set forth in the Prospectus.
(b) Each
Underwriter severally agrees that such Underwriter shall not include any “issuer
information” (as defined in Rule 433) in any “free writing prospectus” (as
defined in Rule 405) used or referred to by such Underwriter without the prior
written consent of the Company (any such issuer information with respect to
whose use the Company has given its consent, “Permitted Issuer
Information”); provided that (i) no such
consent shall be required with respect to any such issuer information contained
in any document filed by the Company with the Commission prior to the use of
such free writing prospectus and (ii) “issuer information,” as used in this
Section 6(b), shall not be deemed to include information prepared by or on
behalf of such Underwriter on the basis of or derived from issuer
information.
19
6. Expenses. The
Company agrees, whether or not the transactions contemplated by this Agreement
are consummated or this Agreement is terminated, to pay all reasonable costs,
expenses, and fees actually incurred in connection with (a) the authorization,
issuance, sale and delivery of the Stock and any stamp duties or other taxes
payable in that connection, and the preparation and printing of certificates for
the Stock; (b) the preparation, printing and filing under the Securities Act of
the Registration Statement (including any exhibits thereto), any Preliminary
Prospectus, the Prospectus, any Issuer Free Writing Prospectus and any amendment
or supplement thereto; (c) the distribution of the Registration Statement
(including any exhibits thereto), any Preliminary Prospectus, the Prospectus,
any Issuer Free Writing Prospectus and any amendment or supplement thereto, or
any document incorporated by reference therein, all as provided in this
Agreement; (d) the production and distribution of this Agreement, any
supplemental agreement among Underwriters, and any other related documents in
connection with the offering, purchase, sale and delivery of the Stock; (e) any
required review by FINRA of the terms of sale of the Stock (including related
fees and expenses of counsel to the Underwriters in an amount that, taken
together with any fees and expenses of counsel to the Underwriters pursuant to
clause (g), is not greater than $5,000; (f) the listing of the Stock on the NYSE
Amex and/or any other exchange; (g) the qualification of the Stock under the
securities laws of the several jurisdictions as provided in Section 5(a)(viii)
and the preparation, printing and distribution of a Blue Sky Memorandum
(including related fees and expenses of counsel to the Underwriters in an amount
that, taken together with any fees and expenses of counsel to the Underwriters
pursuant to clause (e), is not greater than the amount specified in clause (e));
(h) the preparation, printing and distribution of one or more versions of the
Preliminary Prospectus and the Prospectus for distribution in Canada (often in
the form of a Canadian “wrapper”); (i) the investor presentations on any “road
show” undertaken in connection with the marketing of the Stock, including,
without limitation, expenses associated with any electronic roadshow, travel and
lodging expenses of the representatives and officers of the Company and the cost
of any aircraft chartered in connection with the road show; and (j) all other
reasonable costs and expenses actually incurred in connection with the
performance of the obligations of the Company. Except as set forth in
this Section 6 or in Section 8 or 11, the Underwriters agree to pay for any
fees, disbursements, changes or expenses incurred by the Underwriters or their
counsel in connection wit the transactions contemplated hereby.
7. Conditions of Underwriters’
Obligations. The respective obligations of the Underwriters
hereunder are subject to the accuracy in all material respects (except for those
representations and warranties which are qualified by materiality, in which case
such representations and warranties shall be true and correct in all respects),
when made and on each Delivery Date, of the representations and warranties of
the Company contained herein, to the performance by the Company of its
obligations hereunder, and to each of the following additional terms and
conditions:
(a) The
Prospectus shall have been timely filed with the Commission in accordance with
Section 5(a)(i); the Company shall have complied with all filing requirements
applicable to any Issuer Free Writing Prospectus used or referred to after the
date hereof; no stop order suspending the effectiveness of the Registration
Statement or preventing or suspending the use of the Prospectus or any Issuer
Free Writing Prospectus shall have been issued and no proceeding or examination
for such purpose shall have been initiated or threatened by the Commission; and
any request of the Commission for inclusion of additional information in the
Registration Statement or the Prospectus or otherwise shall have been complied
with.
(b) No
Underwriter shall have discovered and disclosed to the Company on or prior to
such Delivery Date that the Registration Statement, the Prospectus or the
Pricing Disclosure Package, or any amendment or supplement thereto, contains an
untrue statement of a fact which, in the opinion of Morrison & Foerster LLP,
counsel for the Underwriters, is material or omits to state a fact which, in the
opinion of such counsel, is material and is required to be stated therein or is
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
20
(c) All
corporate proceedings and other legal matters in connection with the
authorization, form and validity of this Agreement, the Stock, the Registration
Statement, the Prospectus and any Issuer Free Writing Prospectus, and all other
legal matters relating to this Agreement and the transactions contemplated
hereby shall be reasonably satisfactory in all material respects to counsel for
the Underwriters, and the Company shall have furnished to such counsel all
documents and information that they may reasonably request to enable them to
pass upon such matters.
(d) Goodwin
Procter LLP shall have furnished to the Representative its written opinion, as
U.S. counsel to the Company, addressed to the Underwriters and dated such
Delivery Date, in form and substance reasonably satisfactory to the
Representative, substantially in the form attached hereto as Exhibit
B-1.
(e) Shanxi
Bingyu Law Firm shall, special PRC counsel to the Company, have
furnished to the Representative its written opinion, as counsel to the Company,
addressed to the Underwriters and dated such Delivery Date, in form and
substance reasonably satisfactory to the Representative, substantially in the
form attached hereto as Exhibit
B-2.
(f)
Ogier, special British Islands counsel to the Company, shall have furnished to
the Representative its written opinion, as counsel to the Company, addressed to
the Underwriters and dated such Delivery Date, in form and substance reasonably
satisfactory to the Representative, substantially in the form attached hereto as
Exhibit B-3.
(g) The
Representative shall have received from Morrison & Foerster LLP, counsel for
the Underwriters, such opinion or opinions (including a negative assurance
letter), dated such Delivery Date, with respect to the issuance and sale of the
Stock, the Registration Statement, the Prospectus and the Pricing Disclosure
Package and other related matters as the Representative may reasonably require,
and the Company shall have furnished to such counsel such documents as they
reasonably request for the purpose of enabling them to pass upon such
matters.
(h) At
the time of execution of this Agreement, the Representative shall have received
from Moore Stephens a letter, in form and substance satisfactory to the
Representatives, addressed to the Underwriters and dated the date hereof (i)
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 qualification of accountants under Rule 2-01 of Regulation
S-X of the Commission, and (ii) stating, as of the date hereof (or, with respect
to matters involving changes or developments since the respective dates as of
which specified financial information is given in the most recent Preliminary
Prospectus, as of a date not more than three days prior to the date hereof), the
conclusions and findings of such firm with respect to the financial information
and other matters ordinarily covered by accountants’ “comfort letters” to
underwriters in connection with registered public offerings.
21
(i) With
respect to the letter of Moore Stephens referred to in the preceding paragraph
and delivered to the Representative concurrently with the execution of this
Agreement (the “initial
letter”), the Company shall have furnished to the Representative a letter
(the “bring-down
letter”) of such accountants, addressed to the Underwriters and dated
such Delivery Date (i) 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 qualification of accountants under
Rule 2-01 of Regulation S-X of the Commission, (ii) stating, as of the date
of the bring-down letter (or, with respect to matters involving changes or
developments since the respective dates as of which specified financial
information is given in the Prospectus, as of a date not more than three days
prior to the date of the bring-down letter), the conclusions and findings of
such firm with respect to the financial information and other matters covered by
the initial letter and (iii) confirming in all material respects the
conclusions and findings set forth in the initial letter.
(j) The
Company shall have furnished to the Representative a certificate, dated such
Delivery Date, of its Chief Executive Officer and its Chief Financial Officer
stating, in their capacity as officers of the Company, that:
(i) The
representations, warranties and agreements of the Company in Section 1 are
true and correct on and as of such Delivery Date, and the Company has complied
with all its agreements contained herein and satisfied all the conditions on its
part to be performed or satisfied hereunder at or prior to such Delivery
Date;
(ii) No
stop order suspending the effectiveness of the Registration Statement has been
issued; and no proceedings or examination for that purpose have been instituted
or, to the knowledge of such officers, threatened; and
(iii) They
have carefully examined the Registration Statement, the Prospectus and the
Pricing Disclosure Package, and, in their opinion, (A) (1) the Registration
Statement, as of the Effective Date, (2) the Prospectus, as of its date and on
the applicable Delivery Date, or (3) the Pricing Disclosure Package (together
with the information included on Schedule 4 hereto),
as of the Applicable Time, did not and do not contain any untrue statement of a
material fact and did not and do not omit to state a material fact required to
be stated therein or necessary to make the statements therein (except in the
case of the Registration Statement, in the light of the circumstances under
which they were made) not misleading, and (B) since the Effective Date, no event
has occurred that should have been set forth or incorporated by reference in a
supplement or amendment to the Registration Statement, the Prospectus or any
Issuer Free Writing Prospectus that has not been so set forth or incorporated by
reference;
(k) (i)
Neither the Company nor any of its subsidiaries shall have sustained, since the
date of the latest audited financial statements included or incorporated by
reference in the most recent Preliminary Prospectus, any loss or interference
with its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental action,
order or decree or (ii) since such date there shall not have been any change in
the capital stock, net current assets or long-term debt of the Company or any of
its subsidiaries or any change, or any development involving a prospective
change, in or affecting the condition (financial or otherwise), results of
operations, stockholders’ equity, properties, management and
business of the Company and its subsidiaries taken as a whole, the
effect of which, in any such case described in clause (i) or (ii), is, in the
reasonable judgment of the Representative, so material and adverse as to make it
impracticable or inadvisable to proceed with the public offering or the delivery
of the Stock being delivered on such Delivery Date on the terms and in the
manner contemplated in the Prospectus.
22
(l) Subsequent
to the execution and delivery of this Agreement there shall not have occurred
any of the following: (i) trading in securities generally on the New
York Stock Exchange or the American Stock Exchange or in the
over-the-counter market, or trading in any securities of the Company on any
exchange or in the over-the-counter market, shall have been suspended or
materially limited or the settlement of such trading generally shall have been
materially disrupted or minimum prices shall have been established on any such
exchange or such market by the Commission, by such exchange or by any other
regulatory body or governmental authority having jurisdiction, (ii) a banking
moratorium shall have been declared by federal or New York state authorities,
(iii) the United States shall have become engaged in hostilities, there shall
have been an escalation in hostilities involving the United States or there
shall have been a declaration of a national emergency or war by the United
States or (iv) there shall have occurred such a material adverse change in
general economic, political or financial conditions, including, without
limitation, as a result of terrorist activities after the date hereof (or the
effect of international conditions on the financial markets in the United States
shall be such), as to make it, in the judgment of the Representative,
impracticable or inadvisable to proceed with the public offering or delivery of
the Stock being delivered on such Delivery Date on the terms and in the manner
contemplated in the Prospectus.
(m) The
NYSE Amex shall have approved the Stock for listing, subject only to official
notice of issuance.
(n) The
Lock-Up Agreements between the Representative and the officers, directors and
stockholders of the Company set forth on Schedule 3, delivered
to the Representative on or before the date of this Agreement, shall be in full
force and effect on such Delivery Date.
All
opinions, letters, evidence and certificates mentioned above or elsewhere in
this Agreement shall be deemed to be in compliance with the provisions hereof
only if they are in form and substance reasonably satisfactory to counsel for
the Underwriters unless a form is specifically agreed upon as an exhibit hereto,
in which case the opinion, letters, evidence and certificates shall be deemed in
compliance with the provision hereof if they are substantially in the form as
provided in the exhibits.
23
8. Indemnification and
Contribution.
(a) The
Company shall indemnify and hold harmless each Underwriter, its directors,
officers and employees and each person, if any, who controls any Underwriter
within the meaning of Section 15 of the Securities Act, from and against any
loss, claim, damage or liability, joint or several, or any action in respect
thereof (including, but not limited to, any loss, claim, damage, liability or
action relating to purchases and sales of Stock), to which that Underwriter,
director, officer, employee or controlling person may become subject, under the
Securities Act or otherwise, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained in (A) any Preliminary Prospectus,
the Registration Statement, the Prospectus, any Issuer Free Writing Prospectus
or in any amendment or supplement thereto, or (B) any Permitted Issuer
Information used or referred to in any “free writing prospectus” (as defined in
Rule 405) used or referred to by any Underwriter or (C) any “road show” (as
defined in Rule 433) not constituting an Issuer Free Writing Prospectus (a
“Non-Prospectus Road
Show”), (ii) the omission or alleged omission to state in any Preliminary
Prospectus, the Registration Statement, the Prospectus, any Issuer Free Writing
Prospectus or in any amendment or supplement thereto or in any Permitted Issuer
Information or any Non-Prospectus Road Show, any material fact required to be
stated therein or necessary to make the statements therein not misleading or
(iii) any act or failure to act or any alleged act or failure to act by any
Underwriter in connection with, or relating in any manner to, the Stock or the
offering contemplated hereby, and which is included as part of or referred to in
any loss, claim, damage, liability or action arising out of or based upon
matters covered by clause (i) or (ii) above (provided that the Company
shall not be liable under this clause (iii) to the extent that it is
determined in a final judgment by a court of competent jurisdiction that such
loss, claim, damage, liability or action resulted directly from any such acts or
failures to act undertaken or omitted to be taken by such Underwriter through
its gross negligence or willful misconduct), and shall reimburse each
Underwriter and each such director, officer, employee or controlling person
promptly upon demand for any legal or other expenses reasonably incurred by that
Underwriter, director, officer, employee or controlling person in connection
with investigating or defending or preparing to defend against any such loss,
claim, damage, liability or action as such expenses are incurred; provided, however, that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage, liability or action arises out of, or is based upon, any untrue
statement or alleged untrue statement or omission or alleged omission made in
any Preliminary Prospectus, the Registration Statement, the Prospectus, any
Issuer Free Writing Prospectus or in any such amendment or supplement thereto or
in any Permitted Issuer Information or any Non-Prospectus Road Show, in reliance
upon and in conformity with written information concerning such Underwriter
furnished to the Company through the Representative by or on behalf of any
Underwriter specifically for inclusion therein, which information consists
solely of the information specified in Section 8(e). The foregoing
indemnity agreement is in addition to any liability which the Company may
otherwise have to any Underwriter or to any director, officer, employee or
controlling person of that Underwriter.
24
(b) Each
Underwriter, severally and not jointly, shall indemnify and hold harmless the
Company, its directors, officers and employees, and each person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act,
from and against any loss, claim, damage or liability, joint or several, or any
action in respect thereof, to which the Company or any such director, officer,
employee or controlling person may become subject, under the Securities Act or
otherwise, insofar as such loss, claim, damage, liability or action arises out
of, or is based upon, (i) any untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement, the Prospectus, any Issuer Free Writing Prospectus or in any
amendment or supplement thereto or in any Non-Prospectus Road Show, or (ii) the
omission or alleged omission to state in any Preliminary Prospectus, the
Registration Statement, the Prospectus, any Issuer Free Writing Prospectus or in
any amendment or supplement thereto or in any Non-Prospectus Road Show, any
material fact required to be stated therein or necessary to make the statements
therein not misleading, but in each case only to the extent that the untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information concerning such
Underwriter furnished to the Company through the Representative by or on behalf
of that Underwriter specifically for inclusion therein, which information is
limited to the information set forth in Section 8(e). The foregoing
indemnity agreement is in addition to any liability that any Underwriter may
otherwise have to the Company or any such director, officer, employee or
controlling person.
(c) Promptly
after receipt by an indemnified party under this Section 8 of notice of any
claim or the commencement of any action, the indemnified party shall, if a claim
in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party in writing of the claim or the
commencement of that action; provided, however, that the failure to
notify the indemnifying party shall not relieve it from any liability which it
may have under this Section 8 except to the extent it has been materially
prejudiced by such failure and, provided, further, that the failure to
notify the indemnifying party shall not relieve it from any liability which it
may have to an indemnified party otherwise than under this Section
8. If any such claim or action shall be brought against an
indemnified party, and it shall notify the indemnifying party thereof, the
indemnifying party shall be entitled to participate therein and, to the extent
that it wishes, jointly with any other similarly notified indemnifying party, to
assume the defense thereof with counsel reasonably satisfactory to the
indemnified party. After notice from the indemnifying party to the
indemnified party of its election to assume the defense of such claim or action,
the indemnifying party shall not be liable to the indemnified party under this
Section 8 for any legal or other expenses subsequently incurred by the
indemnified party in connection with the defense thereof other than reasonable
costs of investigation; provided, however, that the
indemnified party shall have the right to employ counsel to represent jointly
the indemnified party and those other indemnified parties and their respective
directors, officers, employees and controlling persons who may be subject to
liability arising out of any claim in respect of which indemnity may be sought
under this Section 8 if (i) the indemnified party and the indemnifying party
shall have so mutually agreed; (ii) the indemnifying party has failed within a
reasonable time to retain counsel reasonably satisfactory to the indemnified
party; (iii) the indemnified party and its directors, officers, employees and
controlling persons shall have reasonably concluded that there may be legal
defenses available to them that are different from or in addition to those
available to the indemnifying party; or (iv) the named parties in any such
proceeding (including any impleaded parties) include both the indemnified
parties or their respective directors, officers, employees or controlling
persons, on the one hand, and the indemnifying party, on the other hand, and
representation of both sets of parties by the same counsel would be
inappropriate due to actual or potential differing interests between them, and
in any such event the fees and expenses of such separate counsel shall be paid
by the indemnifying party. No indemnifying party shall
(i) without the prior written consent of the indemnified parties (which
consent shall not be unreasonably withheld), settle or compromise or consent to
the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement, compromise or
consent includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding and does not
include any findings of fact or admissions of fault or culpability as to the
indemnified party, or (ii) be liable for any settlement of any such action
effected without its written consent (which consent shall not be unreasonably
withheld), but if settled with the consent of the indemnifying party or if there
be a final judgment for the plaintiff in any such action, the indemnifying party
agrees to indemnify and hold harmless any indemnified party from and against any
loss or liability by reason of such settlement or judgment.
25
(d) If
the indemnification provided for in this Section 8 shall for any reason be
unavailable to or insufficient to hold harmless an indemnified party under
Section 8(a) or 8(b) in respect of any loss, claim, damage or liability, or any
action in respect thereof, referred to therein, then each indemnifying party
shall, in lieu of indemnifying such indemnified party, contribute to the amount
paid or payable by such indemnified party as a result of such loss, claim,
damage or liability, or action in respect thereof, (i) in such proportion as
shall be appropriate to reflect the relative benefits received by the Company,
on the one hand, and the Underwriters, on the other, from the offering of the
Stock 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, with respect
to the statements or omissions that resulted in such loss, claim, damage or
liability, or action in respect thereof, 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, with respect to such offering
shall be deemed to be in the same proportion as the total net proceeds from the
offering of the Stock purchased under this Agreement (before deducting expenses)
received by the Company, as set forth in the table on the cover page of the
Prospectus, on the one hand, and the total underwriting discounts and
commissions received by the Underwriters with respect to the shares of the Stock
purchased under this Agreement, as set forth in the table on the cover page of
the Prospectus, on the other hand. The relative fault shall be
determined by reference to whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company or the Underwriters, the intent of the
parties and their relative knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and the
Underwriters agree that it would not be just and equitable if contributions
pursuant to this Section 8(f) 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 that does not take into account the equitable
considerations referred to herein. The amount paid or payable by an
indemnified party as a result of the loss, claim, damage or liability, or action
in respect thereof, referred to above in this Section 8(f) shall be deemed to
include, for purposes of this Section 8(f), any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions
of this Section 8(f), no Underwriter shall be required to contribute any amount
in excess of the amount by which the net proceeds from the sale of the Stock
underwritten by it exceeds the amount of any damages that such Underwriter has
otherwise paid or become liable to pay by reason of any 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
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters’
obligations to contribute as provided in this Section 8(d) are several in
proportion to their respective underwriting obligations and not
joint.
26
(e) The
Underwriters severally confirm and the Company acknowledges and agrees that the
statements regarding delivery of shares by the Underwriters set forth on the
cover page of, and the concession and reallowance figures and the paragraph
relating to stabilization by the Underwriters appearing under the caption
“Underwriting” in, the most recent Preliminary Prospectus and 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 any Preliminary Prospectus, the Registration
Statement, the Prospectus, any Issuer Free Writing Prospectus or in any
amendment or supplement thereto.
9. Defaulting
Underwriters. If, on any Delivery Date, any Underwriter
defaults in the performance of its obligations under this Agreement, the
remaining non-defaulting Underwriters shall be obligated to purchase the Stock
that the defaulting Underwriter agreed but failed to purchase on such Delivery
Date in the respective proportions which the number of shares of the Firm Stock
set forth opposite the name of each remaining non-defaulting Underwriter in
Schedule 1
hereto bears to the total number of shares of the Firm Stock set forth opposite
the names of all the remaining non-defaulting Underwriters in Schedule 1 hereto;
provided, however, that
the remaining non-defaulting Underwriters shall not be obligated to purchase any
of the Stock on such Delivery Date if the total number of shares of the Stock
that the defaulting Underwriter or Underwriters agreed but failed to purchase on
such date exceeds 10.0% of the total number of shares of the Stock to be
purchased on such Delivery Date, and any remaining non-defaulting Underwriter
shall not be obligated to purchase more than 110% of the number of shares of the
Stock that it agreed to purchase on such Delivery Date pursuant to the terms of
Section 3. If the foregoing maximums are exceeded, the remaining
non-defaulting Underwriters, or those other underwriters satisfactory to the
Representative and the Company who so agree, shall have the right, but shall not
be obligated, to purchase, in such proportion as may be agreed upon among them,
all the Stock to be purchased on such Delivery Date. If the remaining
Underwriters or other underwriters satisfactory to the Representative and the
Company do not elect to purchase the shares that the defaulting Underwriter or
Underwriters agreed but failed to purchase on such Delivery Date, this Agreement
(or, with respect to any Option Stock Delivery Date, the obligation of the
Underwriters to purchase, and of the Company to sell, the Option Stock) shall
terminate without liability on the part of any non-defaulting Underwriter or the
Company, except that the Company will continue to be liable for the payment of
expenses to the extent set forth in Sections 8 and 13. As used in
this Agreement, the term “Underwriter” includes, for all purposes of this
Agreement unless the context requires otherwise, any party not listed in Schedule 1 hereto
that, pursuant to this Section 9, purchases Stock that a defaulting Underwriter
agreed but failed to purchase.
27
Nothing
contained herein shall relieve a defaulting Underwriter of any liability it may
have to the Company for damages caused by its default. If other
Underwriters are obligated or agree to purchase the Stock of a defaulting or
withdrawing Underwriter, either the Representative or the Company may postpone
the Delivery Date for up to seven full business days in order to effect any
changes that in the opinion of counsel for the Company or counsel for the
Underwriters may be necessary in the Registration Statement, the Prospectus or
in any other document or arrangement.
10. Termination. The
obligations of the Underwriters hereunder may be terminated by the
Representative by written notice given to and received by the Company prior to
delivery of and payment for the Firm Stock if, prior to that time, any of the
events described in Section 7(k) or 7(l) shall have occurred or if the
Underwriters shall decline to purchase the Stock for any reason permitted under
this Agreement.
11. Reimbursement of Underwriters’
Expenses. If the Company shall fail to tender the Stock for
delivery to the Underwriters for any reason or (b) the Underwriters shall
decline to purchase the Stock for any reason permitted under this Agreement, the
Company will reimburse the Underwriters for all reasonable out-of-pocket
expenses (including fees and disbursements of counsel) actually incurred by the
Underwriters in connection with this Agreement and the proposed purchase of the
Stock in an amount not to exceed $70,000 in the
aggregate. If this Agreement is terminated pursuant to Section 9 by
reason of the default of one or more Underwriters, the Company shall not be
obligated to reimburse any defaulting Underwriter on account of those
expenses.
12. Research Analyst Independence.
The Company acknowledges that the Underwriters’ research analysts and
research departments are required to be independent from their respective
investment banking divisions and are subject to certain regulations and internal
policies, and that such 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 such
Underwriters’ investment banking divisions. The Company acknowledges
that each of the Underwriters is a full service securities firm and as such from
time to time, subject to applicable securities laws, may effect transactions for
its own account or the account of its customers and hold long or short positions
in debt or equity securities of the companies that may be the subject of the
transactions contemplated by this Agreement.
28
13. No Fiduciary
Duty. The Company acknowledges and agrees that in connection
with this offering, sale of the Stock or any other services the Underwriters may
be deemed to be providing hereunder, notwithstanding any preexisting
relationship, advisory or otherwise, between the parties or any oral
representations or assurances previously or subsequently made by the
Underwriters: (i) no fiduciary or agency relationship between the
Company and the Underwriters, exists; (ii) the Underwriters are not acting as
advisors, expert or otherwise, to the Company, including, without limitation,
with respect to the determination of the public offering price of the Stock, and
such relationship between the Company, and the
Underwriters, is entirely and solely commercial, based on arms-length
negotiations; (iii) any duties and obligations that the Underwriters may have to
the Company shall be limited to those duties and obligations specifically stated
herein; and (iv) the Underwriters and their respective affiliates may have
interests that differ from those of the Company. The Company hereby
waives any claims that the Company may have against the Underwriters with
respect to any breach of fiduciary duty in connection with this
offering.
14. Notices, Etc. All
statements, requests, notices and agreements hereunder shall be in writing,
and:
(a) if
to the Underwriters, shall be delivered or sent by mail to Macquarie Capital
(USA) Inc., 125 West 55th Street, New York, New York, 10019, Attention:
Syndicate Registration, with a copy, in the case of any notice pursuant to
Section 8(d), to the Director of Litigation, Office of the General Counsel,
Macquarie Capital (USA) Inc., 125 West 55th Street, New York, New York,
10019;
(b) if
to the Company, shall be delivered or sent by mail or facsimile transmission to
the address of the Company set forth in the Registration Statement, Attention:
Qiong Wu (Email: labywu@gmail.com); and
Any such
statements, requests, notices or agreements shall take effect at the time of
receipt thereof. The Company shall be entitled to act and rely upon
any request, consent, notice or agreement given or made on behalf of the
Underwriters by the Representative, on behalf of the
Representatives.
15. Persons Entitled to Benefit of
Agreement. This Agreement shall inure to the benefit of and be
binding upon the Underwriters, the Company and their respective
successors. This Agreement and the terms and provisions hereof are
for the sole benefit of only those persons, except that (A) the representations,
warranties, indemnities and agreements of the Company contained in this
Agreement shall also be deemed to be for the benefit of the directors, officers
and employees of the Underwriters and each person or persons, if any, who
control any Underwriter within the meaning of Section 15 of the Securities
Act and (B) the indemnity agreement of the Underwriters contained in
Section 8(b) of this Agreement shall be deemed to be for the benefit of the
directors the officers and employees of the Company and any person controlling
the Company within the meaning of Section 15 of the Securities
Act. Nothing in this Agreement is intended or shall be construed to
give any person, other than the persons referred to in this Section 15, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any provision contained herein.
16. Survival. The
respective indemnities, representations, warranties and agreements of the
Company and the Underwriters contained in this Agreement or made by or on behalf
of them, respectively, pursuant to this Agreement, shall survive the delivery of
and payment for the Stock and shall remain in full force and effect, regardless
of any investigation made by or on behalf of any of them or any person
controlling any of them.
29
17. Definition of the Terms “Business
Day” and “Subsidiary”. For purposes of this Agreement, (a)
“business day” means
each Monday, Tuesday, Wednesday, Thursday or Friday that is not a day on which
banking institutions in New York are generally authorized or obligated by law or
executive order to close and (b) “subsidiary” has the meaning
set forth in Rule 405.
18. Governing
Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.
19. 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 but all such counterparts shall together constitute one and the same
instrument.
20. Headings. The
headings herein are inserted for convenience of reference only and are not
intended to be part of, or to affect the meaning or interpretation of, this
Agreement.
30
If the
foregoing correctly sets forth the agreement between the Company and the
Underwriters, please indicate your acceptance in the space provided for that
purpose below.
|
Very
truly yours,
|
||
|
PUDA
COAL, INC.
|
||
|
By:
|
/s/ Qiong Wu | |
|
Name: Qiong
Wu
|
||
|
Title: Chief
Financial Officer
|
||
31
|
Accepted:
|
||
|
MACQUARIE
CAPITAL (USA) INC.
|
||
|
For
itself and as Representative
|
||
|
of
the several Underwriters named
|
||
|
in
Schedule 1 hereto
|
||
|
By
MACQUARIE CAPITAL (USA) INC.
|
||
|
By:
|
/s/ Tim Bishop | |
|
Authorized
Representative
|
||
|
By:
|
/s/ Anna Boniface | |
|
Authorized
Representative
|
||
32
SCHEDULE
1
|
Underwriters
|
Number of Shares of
Firm Stock
|
|||
|
Macquarie
Capital (USA) Inc.
|
5,887,500 | |||
|
Brean,
Murray, Carret & Co. .
|
1,962,500 | |||
|
Total
|
7,850,000 | |||
SCHEDULE
2
SUBSIDIARIES
OF THE COMPANY
|
Subsidiary
|
Jurisdiction of
Organization
|
|
|
Puda
Investment Holding Ltd.
|
British
Virgin Islands
|
|
|
Shanxi
Putai Resources Limited
|
People’s
Republic of China
|
|
|
Shanxi
Puda Coal Group Ltd.
|
|
People’s
Republic of China
|
SCHEDULE
3
PERSONS
DELIVERING LOCK-UP AGREEMENTS
Directors
Ming
Zhao
Lawrence
S. Wizel
C. Mark
Tang
Jianfei
Ni
Officers
Liping
Zhu
Qiong
Wu
Pengxiang
Lang
Stockholders
Yao
Zhao
SCHEDULE
4
ORALLY
CONVEYED PRICING INFORMATION
|
1.
|
Public
offering price
|
|
2.
|
Number
of shares offered
|
|
3.
|
The
Free Writing Prospectus, dated as of December 8, 2010, and filed by the
Company pursuant to Rule 433 with the Commission on December 8,
2010.
|
Exhibit A
LOCK-UP
LETTER AGREEMENT
Macquarie
Capital (USA) Inc.
125 West
55th Street
New York,
New York 10019
Ladies
and Gentlemen:
The
undersigned understands that you and certain other firms (the “Underwriters”) propose to
enter into an Underwriting Agreement (the “Underwriting Agreement”)
providing for the purchase by the Underwriters of shares (the “Stock”) of Common Stock, par
value $0.001 per share (the “Common Stock”), of Puda Coal,
Inc., a Delaware corporation (the “Company”), and that the
Underwriters propose to reoffer the Stock to the public (the “Offering”).
In
consideration of the execution of the Underwriting Agreement by the
Underwriters, and for other good and valuable consideration, the undersigned
hereby irrevocably agrees that, without the prior written consent of you, as
representative and on behalf of the Underwriters, the undersigned will not,
directly or indirectly, (1) offer for sale, sell, pledge, or otherwise dispose
of (or enter into any transaction or device that is designed to, or could be
expected to, result in the disposition by any person at any time in the future
of) any shares of Common Stock (including, without limitation, shares of Common
Stock that may be deemed to be beneficially owned by the undersigned in
accordance with the rules and regulations of the Securities and Exchange
Commission and shares of Common Stock that may be issued upon exercise of any
options or warrants) or securities convertible into or exercisable or
exchangeable for Common Stock (other than the Stock), (2) enter into any swap or
other derivatives transaction that transfers to another, in whole or in part,
any of the economic benefits or risks of ownership of shares of Common Stock,
whether any such transaction described in clause (1) or (2) above is to be
settled by delivery of Common Stock or other securities, in cash or
otherwise, (3)
make any demand for or exercise any right or cause to be filed a registration
statement, including any amendments thereto, with respect to the registration of
any shares of Common Stock or securities convertible into or exercisable or
exchangeable for Common Stock or any other securities of the Company (other than
registration statements on Form S-8) or (4) publicly disclose the intention to
do any of the foregoing, for a period commencing on the date hereof and ending
on the 90th day after the date of the Prospectus relating to the Offering (such
90-day period, the “Lock-Up
Period”)[; provided, however, that the undersigned shall be permitted to
sell an maximum of 6,000 shares of Common Stock solely for the purpose of
satisfying tax obligations].2
2 Inserted
exception to be included in lock-up agreements of Messrs. Wizel and
Tang.
Notwithstanding
the foregoing, if (1) during the last 17 days of the Lock-Up Period, the Company
issues an earnings release or material news or a material event relating to the
Company occurs or (2) prior to the expiration of the 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 imposed
by this Lock-Up Letter Agreement shall continue to apply until the expiration of
the 18-day period beginning on the issuance of the earnings release or the
announcement of the material news or the occurrence of the material event,
unless waive such extension in writing; provided, however, that the proviso
above shall not apply if the research published or distributed on the Company is
compliant under Rule 139 of the Securities Act and the Company’s securities are
actually traded as defined in Rule 101(c)(1) of Regulation M of the Exchange
Act. The undersigned hereby further agrees that, prior to engaging in
any transaction or taking any other action that is subject to the terms of this
Lock-Up Letter Agreement during the period from the date of this Lock-Up Letter
Agreement to and including the 34th day
following the expiration of the 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 such may have been extended pursuant to this paragraph) has
expired.
Notwithstanding
the foregoing restriction, the undersigned may transfer the undersigned’s shares
of Common Stock (i) as a bona fide gift or gifts, provided that the donee
or donees thereof agree to be bound in writing by the restrictions set forth
herein, (ii) to any trust for the direct or indirect benefit of the
undersigned or the immediate family of the undersigned, provided that the
trustee of the trust agrees to be bound in writing by the restrictions set forth
herein, and provided further that any such transfer shall not involve a
disposition for value, (iii) pledged in a bona fide transaction outstanding
as of the date hereof to a lender to the undersigned, as disclosed in writing to
you, or (iv) with your prior written consent. In addition, notwithstanding
the foregoing restriction, the undersigned shall be permitted, during the
Lock-Up Period, (x) to exercise options, rights or warrants existing on the date
hereof (including on a cashless exercise basis), and (y) to transfer or sell
shares of Common Stock acquired in open market transactions by the undersigned
after the completion of the Offering. For purposes of this Lock-Up Letter
Agreement, “immediate family” shall mean any relationship by blood, marriage or
adoption, not more remote than first cousin. The undersigned agrees
that, without your prior written consent, it will not, during the Lock-Up
Period, make any demand for or exercise any right with respect to, the
registration of any shares of Common Stock or any security convertible into or
exercisable or exchangeable for Common Stock.
In
furtherance of the foregoing, the Company and its transfer agent are hereby
authorized to decline to make any transfer of securities if such transfer would
constitute a violation or breach of this Lock-Up Letter Agreement.
2
It is
understood that, if the Company notifies the Underwriters that it does not
intend to proceed with the Offering, if the Underwriting Agreement does not
become effective by January 31, 2010, or if the Underwriting Agreement (other
than the provisions thereof which survive termination) shall terminate or be
terminated prior to payment for and delivery of the Stock, the undersigned will
be released from its obligations under this Lock-Up Letter
Agreement.
The
undersigned understands that the Company and the Underwriters will proceed with the Offering
in reliance on this Lock-Up Letter Agreement.
Whether
or not the Offering actually occurs depends on a number of factors, including
market conditions. Any Offering will only be made pursuant to an
Underwriting Agreement, the terms of which are subject to negotiation between
the Company and the Underwriters.
[Signature
page follows]
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The
undersigned hereby represents and warrants that the undersigned has full power
and authority to enter into this Lock-Up Letter Agreement and that, upon
request, the undersigned will execute any additional documents reasonably
necessary in connection with the enforcement hereof. Any obligations
of the undersigned shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned.
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Very
truly yours,
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By:
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Name:
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Title:
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Dated:
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