Attached files
| file | filename |
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| S-1/A - China For-Gen Corp. | v208850_s1a.htm |
| EX-23.1 - China For-Gen Corp. | v208850_ex23-1.htm |
Exhibit
1.1
4,000,000
SHARES OF COMMON STOCK
CHINA
FOR-GEN CORP.
UNDERWRITING
AGREEMENT
January
__, 2011
MAXIM
GROUP LLC
405
Lexington Avenue
New York,
NY 10174
As
Representative of the Underwriters
named on
Schedule A hereto
Ladies
and Gentlemen:
China
For-Gen Corp., a Delaware corporation (the “Company”), confirms its agreement,
subject to the terms and conditions set forth herein, with each of the
underwriters listed on Schedule A hereto (collectively, the “Underwriters”), for whom Maxim Group LLC is
acting as representative (in such capacity, the “Representative”), to sell and issue to the
Underwriters an aggregate of 4,000,000 shares of common stock, $0.001 par value
(the “Common Stock”) of the Company (the “Firm Shares”). In addition, the Company
proposes to sell to the Underwriters, upon the terms and conditions set forth
herein, Option Shares (as hereinafter defined). The Firm Shares and Option
Shares are more fully described in the Registration Statement and Prospectus
referred to below.
The
offering and sale of the Common Stock contemplated by this underwriting
agreement (this “Agreement”) is referred to herein as the
“Offering.”
1.1 Firm Shares; Over-Allotment
Option.
(a) Purchase
of Firm Shares. On the basis of the representations and warranties herein
contained, but subject to the terms and conditions herein set forth, the Company
agrees to issue and sell, severally and not jointly, to the several
Underwriters, an aggregate of 4,000,000 Firm Shares of the Company at a purchase
price (net of discounts and commissions) of $[X.XX] per Firm Share. The
Underwriters, severally and not jointly, agree to purchase from the Company the
number of Firm Shares set forth opposite their respective names on Schedule A
attached hereto and made a part hereof at a purchase price (net of discounts and
commissions) of $[X.XX] per Firm Share.
(b) Payment
and Delivery. Delivery and payment for the Firm Shares shall be made at 10:00
A.M., New York time, on the third Business Day following the effective date (the
“Effective Date”) of the Registration
Statement (or the fourth Business Day following the Effective Date, if the
Registration Statement is declared effective after 4:30 p.m.) or at such earlier
time as shall be agreed upon by the Representative and the Company at the
offices of the Representative or at such other place as shall be agreed upon by
the Representative and the Company. The hour and date of delivery and payment
for the Firm Shares is called the “Closing Date.” The closing of the
payment of the purchase price for, and delivery of certificates representing,
the Firm Shares is referred to herein as the “Closing.” Payment for the Firm
Shares shall be made on the Closing Date at the Representative’s election by
wire transfer in Federal (same day) funds or by certified or bank cashier’s
check(s) in New York Clearing House funds. Any remaining proceeds (less
commissions, expense allowance and actual expense payments or other fees payable
pursuant to this Agreement) shall be paid to the order of the Company upon
delivery to you of certificates (in form and substance satisfactory to the
Underwriters) representing the Firm Shares (or through the full fast transfer
facilities of the Depository Trust Company (the “DTC”)) for the account of the
Underwriters. The Firm Shares shall be registered in such name or names and in
such authorized denominations as the Representative may request in writing at
least two Business Days prior to the Closing Date. The Company will permit the
Representative to examine and package the Firm Shares for delivery, at least one
full Business Day prior to the Closing Date. The Company shall not be obligated
to sell or deliver the Firm Shares except upon tender of payment by the
Representative for all the Firm Shares.
(c) Option
Shares. For the purposes of covering any over-allotments in connection with the
distribution and sale of the Firm Shares, the Representative on behalf of the
Underwriters is, hereby granted, an option to purchase up to an additional 15%
of the number of Firm Shares, or 600,000 shares of Common Stock (the “Option Shares”) to be offered by the
Company in the Offering (the “Over-allotment Option”). The
Firm Shares and the Option Shares are hereinafter collectively referred to as
the “Shares”. The Shares are sometimes
referred to as the “Securities”. The purchase
price to be paid for the Option Shares (net of discounts and commissions) will
be $[X.XX] per Option Share.
(d) Exercise
of Option. The Over-allotment Option granted pursuant to Section 1.1(c) hereof
may be exercised by the Representative as to all (at any time) or any part (from
time to time) of the Option Shares within 45 days after the Effective Date. The
Underwriters will not be under any obligation to purchase any Option Shares
prior to the exercise of the Over-allotment Option. The Over-allotment Option
granted hereby may be exercised by the giving of oral notice to the Company from
the Representative, which must be confirmed in writing by overnight mail or
facsimile transmission setting forth the number of Option Shares to be purchased
and the date and time for delivery of and payment for the Option Shares, which
will not be later than five Business Days after the date of the notice or such
other time as shall be agreed upon by the Company and the Representative, at the
offices of the Representative or at such other place as shall be agreed upon by
the Company and the Representative. If such delivery and payment for the Option
Shares does not occur on the Closing Date, the date and time of the closing for
such Option Shares will be as set forth in the notice (hereinafter the “Option Closing Date”). Upon exercise of the
Over-allotment Option, the Company will become obligated to convey to the
Underwriters, and, subject to the terms and conditions set forth herein, the
Underwriters will become obligated to purchase, the number of Option Shares
specified in such notice.
(e) Payment
and Delivery of Option Shares. Payment for the Option Shares shall be made on
the Option Closing Date at the Representative’s election by wire transfer in
Federal (same day) funds or by certified or bank cashier’s check(s) in New York
Clearing House funds, by deposit of the sum of $[X.XX] per Option Share to the
Company upon delivery to the Underwriters of certificates (in form and substance
satisfactory to the Underwriters) representing the Option Shares (or through the
full fast transfer facilities of DTC) for the account of the Underwriters. The
certificates representing the Option Shares to be delivered will be in such
denominations and registered in such names as the Representative requests not
less than two Business Days prior to the Closing Date or the Option Closing
Date, as the case may be, and will be made available to the Representative for
inspection, checking and packaging at the aforesaid office of the Company’s
transfer agent or correspondent not less than one full Business Day prior to
such Closing Date or Option Closing Date.
(f) [Intentionally
Omitted]
2. Representations and
Warranties of the Company.
2.1 The
Company represents, warrants and covenants to, and agrees with, each of the
Underwriters that, as of the date hereof and as of the Closing
Date:
(a) The
Company has prepared and filed with the Securities and Exchange Commission (the
“Commission”) a
registration statement on Form S-1 (Registration No. 333-166868), and amendments
thereto, and related preliminary prospectuses for the registration under the
Securities Act of 1933, as amended (the “Securities Act”), of the
Securities which registration statement, as so amended (including post-effective
amendments, if any), has been declared effective by the Commission and copies of
which have heretofore been delivered to the Underwriters. The registration
statement, as amended at the time it became effective, including the prospectus,
financial statements, schedules, exhibits and other information (if any) deemed
to be part of the registration statement at the time of effectiveness pursuant
to Rule 430A under the Securities Act, is hereinafter referred to as the
“Registration Statement.” If the Company has filed or is required pursuant to
the terms hereof to file a registration statement pursuant to Rule 462(b) under
the Securities Act registering additional Common Stock (a “Rule 462(b) Registration
Statement”), then, unless otherwise specified, any reference herein to
the term “Registration Statement” shall be deemed to include such Rule 462(b)
Registration Statement. Other than a Rule 462(b) Registration Statement, which,
if filed, becomes effective upon filing, no other document with respect to the
Registration Statement has heretofore been filed with the Commission. All of the
Securities have been registered under the Securities Act pursuant to the
Registration Statement or, if any Rule 462(b) Registration Statement is filed,
will be duly registered under the Securities Act with the filing of such Rule
462(b) Registration Statement. The Company has responded to all requests of the
Commission for additional or supplemental information. Based on communications
from the Commission, no stop order suspending the effectiveness of either the
Registration Statement or the Rule 462(b) Registration Statement, if any, has
been issued and no proceeding for that purpose has been initiated or threatened
by the Commission. The Company, if required by the Securities Act and the rules
and regulations of the Commission (the “Rules and Regulations”),
proposes to file the Prospectus with the Commission pursuant to Rule 424(b)
under the Securities Act (“Rule
424(b)”). The prospectus, in the form in which it is to be filed with the
Commission pursuant to Rule 424(b), or, if the prospectus is not to be filed
with the Commission pursuant to Rule 424(b), the prospectus in the form included
as part of the Registration Statement at the time the Registration Statement
became effective, is hereinafter referred to as the “Prospectus,” except that if
any revised prospectus or prospectus supplement shall be provided to the
Underwriters by the Company for use in connection with the Offering which
differs from the Prospectus (whether or not such revised prospectus or
prospectus supplement is required to be filed by the Company pursuant to Rule
424(b)), the term “Prospectus” shall also refer to such revised prospectus or
prospectus supplement, as the case may be, from and after the time it is first
provided to the Underwriters for such use. Any preliminary prospectus or
prospectus subject to completion included in the Registration Statement or filed
with the Commission pursuant to Rule 424 under the Securities Act is hereafter
called a “Preliminary
Prospectus.” Any reference herein to the Registration Statement, any
Preliminary Prospectus or the Prospectus shall be deemed to refer to and include
the exhibits incorporated by reference therein pursuant to the Rules and
Regulations on or before the effective date of the Registration Statement, the
date of such Preliminary Prospectus or the date of the Prospectus, as the case
may be. Any reference herein to the terms “amend”, “amendment” or “supplement”
with respect to the Registration Statement, any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include: (i) the filing of any
document under the Securities Exchange Act of 1934, as amended, and together
with the Rules and Regulations promulgated thereunder (the “Exchange Act”) after the
Effective Date, the date of such Preliminary Prospectus or the date of the
Prospectus, as the case may be, which is incorporated therein by reference, and
(ii) any such document files as such with the Commission. All references in this
Agreement to the Registration Statement, the Rule 462 (b) Registration
Statement, a Preliminary Prospectus and the Prospectus, or any amendments or
supplements to any of the foregoing shall be deemed to include any copy thereof
filed with the Commission pursuant to its Electronic Data Gathering, Analysis
and Retrieval System (“EDGAR”).
(b) The
Company has filed with the Commission a Form 8-A (File Number 001-_________)
providing for the registration under the Exchange Act of the Common Stock (the
“8-A”). The registration of the Common Stock under the Exchange Act has been
declared effective by the Commission on the date hereof.
(c) At
the time of the effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement or the effectiveness of any post-effective amendment to
the Registration Statement, when the Prospectus is first filed with the
Commission pursuant to Rule 424(b), when any supplement to or amendment of the
Prospectus is filed with the Commission, when any document filed under the
Exchange Act was or is filed, at all other subsequent times until the completion
of the public offer and sale of the Securities, and at the Closing Date (as
hereinafter defined), if any, the Registration Statement and the Prospectus and
any amendments thereof and supplements or exhibits thereto complied or will
comply in all material respects with the applicable provisions of the Securities
Act, the Exchange Act and the Rules and Regulations, and did not and will not
contain an untrue statement of a material fact and did not and will not omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein: (i) in the case of the Registration Statement, not
misleading, and (ii) in the case of the Prospectus in light of the circumstances
under which they were made, not misleading. When any Preliminary Prospectus was
first filed with the Commission (whether filed as part of the registration
statement for the registration of the Securities or any amendment thereto or
pursuant to Rule 424(a) under the Securities Act) and when any amendment thereof
or supplement thereto was first filed with the Commission, such Preliminary
Prospectus and any amendments thereof and supplements thereto complied in all
material respects with the applicable provisions of the Securities Act, the
Exchange Act and the Rules and Regulations and did not contain an untrue
statement of a material fact and did not omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. No representation and warranty is made in this subsection (b),
however, with respect to any information contained in or omitted from the
Registration Statement or the Prospectus or any related Preliminary Prospectus
or any amendment thereof or supplement thereto in reliance upon and in
conformity with information furnished in writing to the Company by or on behalf
of any Underwriter through the Representative specifically for use therein. The
parties acknowledge and agree that such information provided by or on behalf of
any Underwriter consists solely of the subsections of the “Underwriting” section
of the Prospectus captioned “Stabilization,” “Pricing of Securities,” the last
sentence of “Other Matters” and the penultimate paragraph on the cover page of
the Preliminary Prospectus and the Prospectus (the “Underwriters’
Information”).
(d) Neither:
(i) any Issuer-Represented General Free Writing Prospectus(es) (as defined
below) issued at or prior to the Time of Sale (as defined below) and the
Statutory Prospectus (as defined below), all considered together (collectively,
the “General Disclosure
Package”), nor (ii) any individual
Issuer-Represented Limited-Use Free Writing Prospectus(es) (as defined below),
when considered together with the General Disclosure Package, includes or
included as of the Time of Sale, any untrue statement of a material fact or
omits or omitted as of the Time of Sale to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. The preceding sentence does not apply to
statements in or omissions from any Statutory Prospectus included in the
Registration Statement or any Issuer-Represented Free Writing Prospectus (as
defined below) based upon and in conformity with written information furnished
to the Company by the Representative for use therein.
(e) Each
Issuer-Represented Free Writing Prospectus, as of its issue date and at all
subsequent times through the completion of the public offer and sale of the
Securities or until any earlier date that the Company notified or notifies the
Representative as described in the next sentence, did not, does not and will not
include any information that conflicted, conflicts or will conflict with the
information contained in the Registration Statement, any Statutory Prospectus or
the Prospectus. If at any time following issuance of an Issuer-Represented Free
Writing Prospectus there occurred or occurs an event or development as a result
of which such Issuer-Represented Free Writing Prospectus conflicted or would
conflict with the information contained in the Registration Statement, any
Statutory Prospectus or the Prospectus relating to the Securities or included or
would include an untrue statement of a material fact or omitted or would omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances prevailing at that subsequent time, not misleading,
the Company has notified or will notify promptly the Representative so that any
use of such Issuer-Represented Free Writing Prospectus may cease until it is
promptly amended or supplemented by the Company, at its own expense, to
eliminate or correct such conflict, untrue statement or omission. The foregoing
two sentences do not apply to statements in or omissions from any
Issuer-Represented Free Writing Prospectus based upon and in conformity with
written information furnished to the Company by the Representative for use
therein.
(f) The
Company has not distributed and will not distribute any prospectus or other
offering material in connection with the offering and sale of the Securities
other than the General Disclosure Package or the Prospectus or other materials
permitted by the Securities Act to be distributed by the Company. Unless the
Company obtains the prior consent of the Representative, the Company has not
made and will not make any offer relating to the Securities that would
constitute an “issuer free writing prospectus,” as defined in Rule 433 under the
Securities Act, or that would otherwise constitute a “free writing prospectus,”
as defined in Rule 405 under the Securities Act, required to be filed with the
Commission. The Company has complied and will comply with the requirements of
Rules 164 and 433 under the Securities Act applicable to any Issuer-Represented
Free Writing Prospectus as of its issue date and at all subsequent times through
the completion of the public offer and sale of the Securities, including timely
filing with the Commission where required, legending and record keeping. The
Company has satisfied and will satisfy the conditions in Rule 433 under the
Securities Act to avoid a requirement to file with the Commission any electronic
road show.
(g) Each
Underwriter agrees that, unless it obtains the prior written consent of the
Company, it will not make any offer relating to the Securities that would
constitute an Issuer-Represented Free Writing Prospectus (as defined below) or
that would otherwise (without taking into account any approval, authorization,
use or reference thereto by the Company) constitute a “free writing prospectus”
required to be filed by the Company with the Commission (as defined herein) or
retained by the Company under Rule 433 of the Securities Act; provided that the
prior written consent of the Company hereto shall be deemed to have been given
in respect of any Issuer-Represented General Free Writing Prospectuses
referenced on Schedule C attached hereto
As used
in this Agreement, the terms set forth below shall have the following
meanings:
(i) “Time of Sale” means [___] (Eastern
time) on the date of this Agreement.
(ii) “Statutory Prospectus” as of any time means the
prospectus that is included in the Registration Statement immediately prior to
that time. For purposes of this definition, information contained in a form of
prospectus that is deemed retroactively to be a part of the Registration
Statement pursuant to Rule 430A or 430B shall be considered to be included in
the Statutory Prospectus as of the actual time that form of prospectus is filed
with the Commission pursuant to Rule 424(b) under the Securiteis
Act.
(iii) “Issuer-Represented Free Writing
Prospectus” means any “issuer free writing prospectus,” as defined in
Rule 433 under the Act, relating to the Securities that (A) is required to be
filed with the Commission by the Company, or (B) is exempt from filing pursuant
to Rule 433(d)(5)(i) under the Securities Act because it contains a description
of the Securities or of the offering that does not reflect the final terms or
pursuant to Rule 433(d)(8)(ii) because it is a “bona fide electronic road show,”
as defined in Rule 433 of the Regulations, in each case in the form filed or
required to be filed with the Commission or, if not required to be filed, in the
form retained in the Company’s records pursuant to Rule 433 (g) under the
Securities Act.
(iv) “Issuer-Represented General Free
Writing Prospectus” means any Issuer-Represented Free Writing Prospectus
that is intended for general distribution to prospective investors, as evidenced
by its being specified in Schedule C to this Agreement.
(v) “Issuer-Represented Limited-Use Free
Writing Prospectus” means any
Issuer-Represented Free Writing Prospectus that is not an Issuer-Represented
General Free Writing Prospectus. The term Issuer-Represented Limited-Use Free
Writing Prospectus also includes any “bona fide electronic road show,” as
defined in Rule 433 of the Regulations, that is made available without
restriction pursuant to Rule 433(d)(8)(ii), even though not required to be filed
with the Commission.
(h) Paritz
& Company (“Paritz”), whose reports
relating to the Company are included in the Registration Statement, are
independent public accountants as required by the Securities Act, the Exchange
Act and the Rules and Regulations and, to the Company’s knowledge, such
accountants are not in violation of the auditor independence requirements of the
Sarbanes-Oxley Act of 2002 (“Sarb-Ox”).
(i) Subsequent
to the respective dates as of which information is presented in the Registration
Statement, the General Disclosure Package and the Prospectus, and except as
disclosed in the Registration Statement, the General Disclosure Package and the
Prospectus: (i) the Company has not declared, paid or made any dividends or
other distributions of any kind on or in respect of its capital stock, and (ii)
there has been no material adverse change (or, to the knowledge of the Company,
any development which has a high probability of involving a material adverse
change in the future), whether or not arising from transactions in the ordinary
course of business, in or affecting: (A) the business, condition (financial or
otherwise), results of operations, shareholders’ equity, properties or prospects
of the Company and its Subsidiaries (as defined below), taken as a whole; (B)
the long-term debt or capital stock of the Company or any of its Subsidiaries;
or (C) the Offering or consummation of any of the other transactions
contemplated by this Agreement, the Registration Statement, the General
Disclosure Package and the Prospectus (a “Material Adverse
Change”). Since the date of the
latest balance sheet presented in the Registration Statement, the General
Disclosure Package and the Prospectus, and other than in the ordinary course of
their respective businesses, neither the Company nor any Subsidiary has incurred
or undertaken any liabilities or obligations, whether direct or indirect,
liquidated or contingent, matured or unmatured, or entered into any
transactions, including any acquisition or disposition of any business or asset,
which are material to the Company and the Subsidiaries taken as a whole, except
for liabilities, obligations and transactions which are disclosed in the
Registration Statement and the Prospectus.
(j) As
of the dates indicated in the Registration Statement, the General Disclosure
Package and the Prospectus, the authorized, issued and outstanding shares of
capital stock of the Company were as set forth in the Registration Statement,
the General Disclosure Package and the Prospectus in the column headed “Actual”
under the section thereof captioned “Capitalization” and, after giving effect to
the Offering and the other transactions (excluding the offer and sale of the
Over-allotment Shares) contemplated by this Agreement, the Registration
Statement, the General Disclosure Package and the Prospectus, will be as set
forth in the column headed “As Adjusted” in such section. All of the issued and
outstanding shares of capital stock of the Company, as well as any securities
convertible or exercisable for capital stock of the Company, are fully paid and
non-assessable and have been duly and validly authorized and issued, in
compliance with all applicable state, federal and foreign securities laws and
not in violation of or subject to any preemptive or similar right that does or
will entitle any Person (as defined below), upon the issuance or sale of any
security, to acquire from the Company or any Subsidiary any Relevant Security.
As used herein, the term “Relevant Security” means any
Common Stock or other security of the Company or any Subsidiary that is
convertible into, or exercisable or exchangeable for Common Stock or equity
securities, or that holds the right to acquire any Common Stock or equity
securities of the Company or any Subsidiary or any other such Relevant Security,
except for such rights as may have been fully satisfied or waived prior to the
effectiveness of the Registration Statement. As used herein, the term “Person” means any foreign or
domestic individual, corporation, trust, partnership, joint venture, limited
liability company or other entity. Except as set forth in, or contemplated by,
the Registration Statement, the General Disclosure Package and the Prospectus,
on the Effective Date and on the Closing Date, there will be no options,
warrants, or other rights to purchase or otherwise acquire any authorized, but
unissued Common Stock or any security convertible into Common Stock, or any
contracts or commitments to issue or sell Common Stock or any such options,
warrants, rights or convertible securities.
(k) The
Shares have been duly and validly authorized and, when issued, delivered and
paid for in accordance with this Agreement on the Closing Date, will be duly and
validly issued, fully paid and non-assessable, will have been issued in
compliance with all applicable state, federal and foreign securities laws and
will not have been issued in violation of or subject to any preemptive or
similar right that does or will entitle any Person to acquire any Relevant
Security from the Company or any Subsidiary upon issuance or sale of the Shares
in the Offering. The Common Stock conforms to the descriptions thereof contained
in the Registration Statement, the General Disclosure Package and the
Prospectus. Except as disclosed in the Registration Statement and the
Prospectus, neither the Company nor any Subsidiary has outstanding warrants,
options to purchase, or any preemptive rights or other rights to subscribe for
or to purchase, or any contracts or commitments to issue or sell, any Relevant
Security.
(l) [Intentionally
Omitted]
(m) The
subsidiaries of the Company (the “Subsidiaries”) are Liaoning Shengsheng
Biotechnological Co., Ltd. (“Liaoning Shengsheng”) and Karamai Pusheng Forest
and Wood Industry, LLC (“Pusheng”). Liaoning Shengsheng is owned 100%
by the Company and Pusheng is owned 100% by Liaoning Shengsheng. Liaoning
Shengsheng and Pusheng are each organized under the laws of the People’s
Republic of China (the “PRC”), and they are the only subsidiaries of the Company
within the meaning of Rule 405 under the Securities Act. Except for the
Subsidiaries, the Company holds no ownership or other interest, nominal or
beneficial, direct or indirect, in any corporation, partnership, joint venture
or other business entity. Except as set forth in the Registration Statement and
the Prospectus, all of the issued and outstanding shares of capital stock of, or
other ownership interests in, each Subsidiary have been duly and validly
authorized and issued and are fully paid and non-assessable and are owned,
directly or indirectly, by the Company, free and clear of any lien, charge,
mortgage, pledge, security interest, claim, equity, trust or other encumbrance,
preferential arrangement, defect or restriction of any kind whatsoever (any
“Lien”). No director, officer or
key employee of the Company named in the Prospectus holds any direct equity,
debt or other pecuniary interest in any Subsidiary or any Person with whom the
Company or any Subsidiary does business or is in privity of contract with, other
than, in each case, indirectly through the ownership by such individuals of
Common Stock.
(n) Each
of the Company and the Subsidiaries has been duly incorporated, formed or
organized, and validly exists as a corporation, partnership or limited liability
company in good standing under the laws of its jurisdiction of incorporation,
formation or organization. Each of the Company and the Subsidiaries has all
requisite power and authority to carry on its business as it is currently being
conducted and as described in the Registration Statement, the General Disclosure
Package and the Prospectus, and to own, lease and operate its respective
properties. Each of the Company and the Subsidiaries is duly qualified to do
business and is in good standing as a foreign corporation, partnership or
limited liability company in each jurisdiction in which the character or
location of its properties (owned, leased or licensed) or the nature or conduct
of its business makes such qualification necessary, except, in each case, for
those failures to be so qualified or in good standing which (individually and in
the aggregate) would not reasonably be expected to have a material adverse
effect on: (i) the business, condition (financial or otherwise), results of
operations, shareholders’ equity, properties or prospects of the Company and the
Subsidiaries, taken as a whole; (ii) the long-term debt or capital stock of the
Company or any Subsidiary; or (iii) the Offering or consummation of any of the
other transactions contemplated by this Agreement, the Registration Statement,
the General Disclosure Package and the Prospectus (any such effect being a
“Material Adverse
Effect”).
(o) Neither
the Company nor any Subsidiary: (i) is in violation of its certificate or
articles of incorporation, memorandum and articles of association, by-laws,
certificate of formation, limited liability company agreement, joint venture
agreement, partnership agreement or other organizational documents, (ii) is in
default under, and no event has occurred which, with notice or lapse of time or
both, would constitute a default under or result in the creation or imposition
of any Lien upon any of its property or assets pursuant to, any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which it is a party or by which it is bound or to which any of its property or
assets is subject or (iii) is in violation in any respect of any law, rule,
regulation, ordinance, directive, judgment, decree or order of any judicial,
regulatory or other legal or governmental agency or body, foreign or domestic,
except for any Lien or violation disclosed in the Registration Statement, the
General Disclosure Package and the Prospectus.
(p) The
Company has full right, power and authority to execute and deliver this
Agreement and all other agreements, documents, certificates and instruments
required to be delivered pursuant to this Agreement. The Company has duly and
validly authorized this Agreement and each of the transactions contemplated by
this Agreement. This Agreement has been duly and validly executed and delivered
by the Company and constitutes the legal, valid and binding obligation of the
Company and is enforceable against the Company in accordance with their terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ rights generally
and except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
(q) The
execution, delivery, and performance of this Agreement and all other agreements,
documents, certificates and instruments required to be delivered pursuant to
this Agreement, and consummation of the transactions contemplated by this
Agreement do not and will not: (i) conflict with, require consent under or
result in a breach of any of the terms and provisions of, or constitute a
default (or an event which with notice or lapse of time, or both, would
constitute a default) under, or result in the creation or imposition of any Lien
upon any property or assets of the Company or any Subsidiary pursuant to, any
indenture, mortgage, deed of trust, loan agreement or other agreement,
instrument, franchise, license or permit to which the Company or any Subsidiary
is a party or by which the Company or any Subsidiary or their respective
properties, operations or assets may be bound or (ii) violate or conflict with
any provision of the certificate or articles of incorporation, by-laws,
certificate of formation, limited liability company agreement, partnership
agreement or other organizational documents of the Company or any Subsidiary, or
(iii) violate or conflict with any law, rule, regulation, ordinance, directive,
judgment, decree or order of any judicial, regulatory or other legal or
governmental agency or body, domestic or foreign, except in the case of
subsections (i) and (iii) for any default, conflict or violation that would not
have or reasonably be expected to have a Material Adverse Effect.
(r) Each
of the Company and the Subsidiaries has all consents, approvals, authorizations,
orders, registrations, qualifications, licenses, filings and permits of, with
and from all judicial, regulatory and other legal or governmental agencies and
bodies and all third parties, foreign and domestic (collectively, the “Consents”), to own, lease and
operate its properties and conduct its business as it is now being conducted and
as disclosed in the Registration Statement, the General Disclosure Package and
the Prospectus, and each such Consent is valid and in full force and effect,
except to the extent the failure to obtain same is not reasonably expected to
have a Material Adverse Effect. Neither the Company nor any Subsidiary has
received notice of any investigation or proceedings which results in or, if
decided adversely to the Company or any Subsidiary, could reasonably be expected
to result in, the revocation of, or imposition of a materially burdensome
restriction on, any Consent. No Consent contains a materially burdensome
restriction not adequately disclosed in the Registration Statement, the General
Disclosure Package and the Prospectus.
(s) Each
of the Company and the Subsidiaries is in compliance with all applicable laws,
rules, regulations, ordinances, directives, judgments, decrees and orders,
foreign and domestic, except for any non-compliance the consequences of which
would not have or reasonably be expected to have a Material Adverse Effect.
Neither the Company, nor any of its Affiliates (within the meaning of Rule 144
under the Securities Act) (“Affiliates”) has received any notice
or other information from any regulatory or other legal or governmental agency
which could reasonably be expected to result in any default or potential
decertification by the Company, or any of its Affiliates.
(t) No
Consent of, with or from any judicial, regulatory or other legal or governmental
agency or body or any third party, foreign or domestic is required for the
execution, delivery and performance of this Agreement or consummation of each of
the transactions contemplated by this Agreement, including the issuance, sale
and delivery of the Securities to be issued, sold and delivered hereunder,
except the registration under the Securities Act of the Securities, which has
become effective, and such Consents as may be required under state securities or
blue sky laws or the by-laws and rules of the NYSE Amex, where the Common Stock
have been approved for listing, and FINRA in connection with the
purchase and distribution of the Securities by the Underwriters, each of which
has been obtained and is in full force and effect.
(u) Except
as disclosed in the Registration Statement, the General Disclosure Package and
the Prospectus, there is no judicial, regulatory, arbitral or other legal or
governmental proceeding or other litigation or arbitration, domestic or foreign,
pending to which the Company or any Subsidiary is a party or of which any
property, operations or assets of the Company or any Subsidiary is the subject
which, individually or in the aggregate, if determined adversely to the Company
or any Subsidiary, would reasonably be expected to have a Material Adverse
Effect. To the Company’s knowledge, no such proceeding, litigation or
arbitration is threatened or contemplated; and the defense of all such
proceedings, litigation and arbitration against or involving the Company or any
Subsidiary would not reasonably be expected to have a Material Adverse
Effect.
(v) The
financial statements, including the notes thereto, and the supporting schedules
included in the Registration Statement, the General Disclosure Package and the
Prospectus comply in all material respects with the requirements of the
Securities Act, the Exchange Act and present fairly the financial position as of
the dates indicated and the cash flows and results of operations for the periods
specified of the Company and its consolidated Subsidiaries. Except as otherwise
stated in the Registration Statement, the General Disclosure Package and the
Prospectus, said financial statements have been prepared in conformity with
United States generally accepted accounting principles applied on a consistent
basis throughout the periods involved, except in the case of unaudited
financials which are subject to normal year end adjustments and do not contain
certain footnotes. The supporting schedules included in the Registration
Statement, the General Disclosure Package and the Prospectus present fairly the
information required to be stated therein. No other financial statements or
supporting schedules are required to be included or incorporated by reference in
the Registration Statement, the General Disclosure Package or the Prospectus.
The other financial and statistical information included in the Registration
Statement, the General Disclosure Package and the Prospectus present fairly the
information included therein and have been prepared on a basis consistent with
that of the financial statements that are included in the Registration
Statement, the General Disclosure Package and the Prospectus and the books and
records of the respective entities presented therein.
(w) There
are no pro forma or as adjusted financial statements which are required to be
included in the Registration Statement, the General Disclosure Package and the
Prospectus in accordance with Regulation S-X which have not been included as so
required. The pro forma and pro forma as adjusted financial information included
in the Registration Statement, the General Disclosure Package and the Prospectus
has been properly compiled and prepared in accordance with the applicable
requirements of the Securities Act and the Rules and Regulations and include all
adjustments necessary to present fairly in accordance with generally accepted
accounting principles the pro forma and as adjusted financial position of the
respective entity or entities presented therein at the respective dates
indicated and their cash flows and the results of operations for the respective
periods specified. The assumptions used in preparing the pro forma and pro forma
as adjusted financial information included in the Registration Statement, the
General Disclosure Package and the Prospectus provide a reasonable basis for
presenting the significant effects directly attributable to the transactions or
events described therein. The related pro forma and pro forma as adjusted
adjustments give appropriate effect to those assumptions; and the pro forma and
pro forma as adjusted financial information reflect the proper application of
those adjustments to the corresponding historical financial statement
amounts.
(x) The
statistical, industry-related and market-related data included in the
Registration Statement, the General Disclosure Package and the Prospectus are
based on or derived from sources which the Company reasonably and in good faith
believes are reliable and accurate, and such data agree with the sources from
which they are derived.
(y) The
Company is subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act and files reports with the Commission on the EDGAR system. The
Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange
Act and, as of the Closing Date, the outstanding Common Stock will be listed on
the NYSE Amex stock market (the “NYSE Amex”). The Company has taken no action
designed to, or likely to have the effect of, terminating the registration of
the Common Stock under the Exchange Act or de-listing the Common Stock, Units
and Warrants from the NYSE Amex, nor has the Company received any notification
that the Commission or NYSE Amex is contemplating terminating such registration
or listing.
(z) The
Company has established and maintains disclosure controls and procedures (as
defined in Rules 13a-14 and 15d-14 under the Exchange Act) and such controls and
procedures are effective in ensuring that material information relating to the
Company, including its subsidiaries, is made known to the principal executive
officer and the principal financial officer. The Company has utilized such
controls and procedures in preparing and evaluating the disclosures in the
Registration Statement, in the General Disclosure Package and in the
Prospectus.
(aa) Except
as disclosed in the Registration Statement, the General Disclosure Package and
the Prospectus, the Company and the Subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurances that (A)
transactions are executed in accordance with management’s general or specific
authorization; (B) transactions are recorded as necessary to permit preparation
of financial statements in conformity with United States generally accepted
accounting principles and to maintain accountability for assets; (C) access to
assets is permitted only in accordance with management’s general or specific
authorization; and (D) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences. Except as described in the Registration Statement,
the General Disclosure Package or in the Prospectus, since April 28, 2009, there
has been no change in the Company’s internal control over financial reporting
that has materially affected, or is reasonably likely to materially affect, the
Company’s internal control over financial reporting.
(bb) The
Company’s Board of Directors has validly appointed an audit committee whose
composition satisfies the requirements of the rules and regulations of the NYSE
Amex and the Board of Directors and/or audit committee has adopted a charter
that satisfies the requirements of the rules and regulations of the NYSE Amex.
The audit committee has reviewed the adequacy of its charter within the past
twelve months. Except as disclosed in the Registration Statement, the General
Disclosure Package and the Prospectus, the Board of Directors nor the audit
committee has been informed, nor is any director of the Company aware, of: (i)
any significant deficiencies and material weaknesses in the design or operation
of internal control over financial reporting which are reasonably likely to
adversely affect the Company’s ability to record, process, summarize and report
financial information; or (ii) any fraud, whether or not material, that involves
management or other employees who have a significant role in the Company’s
internal control over financial reporting.
(cc) Neither
the Company nor any of its Affiliates has taken, directly or indirectly, any
action which constitutes or is designed to cause or result in, or which could
reasonably be expected to constitute, cause or result in, the stabilization or
manipulation of the price of any security to facilitate the sale or resale of
the Securities.
(dd) Neither
the Company nor any of its Affiliates has, prior to the date hereof, made any
offer or sale of any securities which are required to be “integrated” pursuant
to the Securities Act or the Rules and Regulations with the offer and sale of
the Securities pursuant to the Registration Statement. Except as disclosed in
the Registration Statement, the General Disclosure Package, the Prospectus,
neither Company nor any of its Affiliates has sold or issued any Relevant
Security during the six-month period preceding the date of the Prospectus,
including but not limited to any sales pursuant to Rule 144A or Regulation D or
S under the Securities Act, other than Common Stock issued pursuant to employee
benefit plans, qualified stock option plans or the employee compensation plans
or pursuant to outstanding options, rights or warrants as described in the
Registration Statement, the General Disclosure Package and the
Prospectus.
(ee) All
information contained in the questionnaires completed by each of the Company’s
officers and directors immediately prior to the Offering and provided to the
Representative as well as the biographies of such individuals in the
Registration Statement is true and correct in all material respects and the
Company has not become aware of any information which would cause the
information disclosed in the questionnaires completed by the directors and
officers to become inaccurate and incorrect.
(ff) No
director or officer of the Company is subject to any non-competition agreement
or non-solicitation agreement with any employer or prior employer which could
materially affect his ability to be and act in his respective capacity of the
Company.
(gg) Except
as disclosed in the Registration Statement, the General Disclosure Package and
the Prospectus, no holder of any Relevant Security has any rights to require
registration of any Relevant Security as part or on account of, or otherwise in
connection with, the offer and sale of the Securities contemplated hereby, and
any such rights so disclosed have either been fully complied with by the Company
or effectively waived by the holders thereof, and any such waivers remain in
full force and effect.
(hh) The
conditions for use of Form S-1 to register the Offering under the Securities
Act, as set forth in the General Instructions to Form S-1, have been
satisfied.
(ii) The
Company is not and, at all times up to and including consummation of the
transactions contemplated by this Agreement, and after giving effect to
application of the net proceeds of the Offering, will not be, subject to
registration as an “investment company” under the Investment Company Act of
1940, as amended, and is not and will not be an entity “controlled” by an
“investment company” within the meaning of such act.
(jj) No
relationship, direct or indirect, exists between or among any of the Company or
any Affiliate of the Company, on the one hand, and any director, officer,
shareholder, customer or supplier of the Company or any affiliate of the
Company, on the other hand, which is required by the Securities Act, the
Exchange Act or the Rules and Regulations to be described in the Registration
Statement or the Prospectus which is not so described as required. There are no
outstanding loans, advances (except normal advances for business expenses in the
ordinary course of business) or guarantees of indebtedness by the Company to or
for the benefit of any of the officers or directors of the Company or any of
their respective family members, except as described in the Registration
Statement, the General Disclosure Package and the Prospectus. The Company has
not, directly or indirectly, including through a Subsidiary, extended or
maintained credit, arranged for the extension of credit, or renewed an extension
of credit, in the form of a personal loan to or for any director or executive
officer of the Company.
(kk) The
Company is in material compliance with the provisions of Sarb-Ox currently
applicable to it and the Rules and Regulations promulgated thereunder and
related or similar rules and regulations promulgated by the NYSE Amex or any
other governmental or self regulatory entity or agency, except for such
violations which, singly or in the aggregate, would not have a Material Adverse
Effect. Without limiting the generality of the foregoing: (i) all members of the
Company’s board of directors who are required to be “independent” (as that term
is defined under applicable laws, rules and regulations), including, without
limitation, all members of the audit committee of the Company’s board of
directors, meet the qualifications of independence as set forth under applicable
laws, rules and regulations and (ii) the audit committee of the Company’s board
of directors has at least one member who is an “audit committee financial
expert” (as that term is defined under applicable laws, rules and
regulations).
(ll) Except
as disclosed in the Registration Statement, the General Disclosure Package and
the Prospectus, there are no contracts, agreements or understandings between the
Company and any Person that would give rise to a valid claim against the Company
or any Underwriter for a brokerage commission, finder’s fee or other like
payment in connection with the transactions contemplated by this Agreement or,
to the Company’s knowledge, any arrangements, agreements, understandings,
payments or issuance with respect to the Company or any of its officers,
directors, shareholders, partners, employees, Subsidiaries or Affiliates that
may affect the Underwriters’ compensation as determined by
FINRA.
(mm) The
Company and each Subsidiary owns or leases all such properties as are necessary
to the conduct of its business as presently operated and as proposed to be
operated as described in the Registration and the Prospectus. The Company and
the Subsidiaries have good and marketable title in fee simple to all real
property and good and marketable title to all personal property owned by them,
in each case free and clear of all Liens except such as are described in the
Registration Statement, the General Disclosure Package and the Prospectus or
such as do not (individually or in the aggregate) materially affect the business
or prospects of the Company or any of the Subsidiaries. Any real property and
buildings held under lease or sublease by the Company and the Subsidiaries are
held by them under valid, subsisting and enforceable leases with such exceptions
as are not material to, and do not interfere with, the use made and proposed to
be made of such property and buildings by the Company and the Subsidiaries.
Neither the Company nor any Subsidiary has received any notice of any claim
adverse to its ownership of any real or personal property or of any claim
against the continued possession of any real property, whether owned or held
under lease or sublease by the Company or any Subsidiary.
(nn) The
Company and each Subsidiary: (i) owns or possesses adequate right to use all
patents, patent applications, trademarks, service marks, trade names, trademark
registrations, service mark registrations, copyrights, licenses, formulae,
customer lists, and know-how and other intellectual property (including trade
secrets and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures, “Intellectual Property”)
necessary for the conduct of their respective businesses as being
conducted and as described in the Registration Statement, the General Disclosure
and Prospectus and (ii) have no knowledge that the conduct of their respective
businesses do or will conflict with, and they have not received any notice of
any claim of conflict with, any such right of others. Except as set forth in the
Registration Statement, the General Disclosure Package or the Prospectus,
neither the Company nor any Subsidiary has granted or assigned to any other
Person any right to sell the current products and services of the Company and
its Subsidiaries or those products and services described in the Registration
Statement and Prospectus. To the Company’s best knowledge, there is no
infringement by third parties of any such Intellectual Property; there is no
pending or, to the Company’s knowledge, threatened action, suit, proceeding or
claim by others challenging the Company’s or any Subsidiary’s rights in or to
any such Intellectual Property, and the Company is unaware of any facts which
would form a reasonable basis for any such claim; and there is no pending or, to
the Company’s knowledge, threatened action, suit, proceeding or claim by others
that the Company or any Subsidiary infringes or otherwise violates any patent,
trademark, copyright, trade secret or other proprietary rights of others, and
the Company is unaware of any other fact which would form a reasonable basis for
any such claim.
(oo) The
agreements and documents described in the Registration Statement, the General
Disclosure Package and the Prospectus conform to the descriptions thereof
contained therein and there are no agreements or other documents required to be
described in the Registration Statement, the General Disclosure Package or the
Prospectus or to be filed with the Commission as exhibits to the Registration
Statement, that have not been so described or filed. Each agreement or other
instrument (however characterized or described) to which the Company is a party
or by which its property or business is or may be bound or affected and (i) that
is referred to in the Registration Statement, the General Disclosure Package or
the Prospectus or attached as an exhibit thereto, or (ii) is material to the
Company’s business, has been duly and validly executed by the Company, is in
full force and effect in all material respects and is enforceable against the
Company and, to the Company’s knowledge, the other parties thereto, in
accordance with its terms, except (x) as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting creditors’
rights generally, (y) as enforceability of any indemnification or contribution
provision may be limited under the foreign, federal and state securities laws,
and (z) that the remedy of specific performance and injunctive and other forms
of equitable relief may be subject to the equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought, and
none of such agreements or instruments has been assigned by the Company, and
neither the Company nor, to the Company’s knowledge, any other party is in
breach or default thereunder and, to the Company’s knowledge, no event has
occurred that, with the lapse of time or the giving of notice, or both, would
constitute a breach or default thereunder. To the Company’s knowledge,
performance by the Company of the material provisions of such agreements or
instruments will not result in a violation of any existing applicable law, rule,
regulation, judgment, order or decree of any governmental agency or court,
domestic or foreign, having jurisdiction over the Company or any of its assets
or businesses, including, without limitation, those relating to environmental
laws and regulations.
(pp) No
securities of the Company have been sold by the Company or by or on behalf of,
or for the benefit of, any person or persons controlling, controlled by, or
under common control with the Company since January 1, 2008, except as disclosed
in the Registration Statement, the General Disclosure Package and the
Prospectus.
(qq) The
disclosures in the Registration Statement, the General Disclosure Package and
the Prospectus concerning the effects of foreign, federal, state and local
regulation on the Company’s business as currently contemplated are correct in
all material respects and do not omit to state a material fact necessary to make
the statements therein, in light of the circumstances in which they were made,
not misleading.
(rr) Each
of the Company and the Subsidiaries has accurately prepared and timely filed all
federal, state, foreign, including the PRC, and other tax returns that are
required to be filed by it and has paid or made provision for the payment of all
taxes, assessments, governmental or other similar charges, including without
limitation, all sales and use taxes and all taxes which the Company or any
Subsidiary is obligated to withhold from amounts owing to employees, creditors
and third parties, with respect to the periods covered by such tax returns. No
deficiency assessment with respect to a proposed adjustment of the Company’s or
any Subsidiary’s federal, state, local or foreign, including the PRC, taxes is
pending or, to the Company’s knowledge, threatened. The accruals and reserves on
the books and records of the Company and the Subsidiaries in respect of tax
liabilities for any taxable period not finally determined are adequate to meet
any assessments and related liabilities for any such period and, since the date
of the Company’s most recent audited financial statements, the Company and the
Subsidiaries have not incurred any liability for taxes other than in the
ordinary course of its business. There is no tax lien, whether imposed by any
federal, state, foreign or other taxing authority, outstanding against the
assets, properties or business of the Company or any Subsidiary.
(ss) No
labor disturbance by the employees of the Company or any Subsidiary currently
exists or, to the Company’s knowledge, is likely to occur.
(tt) Except
as disclosed in the Registration Statement, the General Disclosure Package and
the Prospectus, the Company and each Subsidiary have at all times operated their
respective businesses in material compliance with all Environmental Laws, and no
material expenditures are or will be required in order to comply therewith.
Neither the Company nor any Subsidiary has received any notice or communication
that relates to or alleges any actual or potential violation or failure to
comply with any Environmental Laws that will result in a Material Adverse
Effect. As used herein, the term “Environmental Laws” means all applicable
laws and regulations, including any licensing, permits or reporting
requirements, and any action by a federal state or local government entity
pertaining to the protection of the environment, protection of public health,
protection of worker health and safety, or the handling of hazardous materials,
including without limitation, the Clean Air Act, 42 U.S.C. § 7401, et seq., the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. § 9601, et seq., the Federal Water Pollution Control Act, 33 U.S.C. §
1321, et seq., the Hazardous Materials Transportation Act, 49 U.S.C. § 1801, et
seq., the Resource Conservation and Recovery Act, 42 U.S.C. § 690-1, et seq.,
and the Toxic Substances Control Act, 15 U.S.C. § 2601, et seq. or similar laws
and regulations, to the extent applicable, under the laws and regulations of the
PRC.
(uu) Except
as set forth in the Registration Statement, the General Disclosure Package or
the Prospectus, neither the Company nor any Subsidiary is a party to an
“employee benefit plan,” as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974 (“ERISA”) or similar rules and
regulations of the PRC which: (i) is subject to any provision of ERISA or such
rules and regulations of the PRC and (ii) is or was at any time maintained,
administered or contributed to by the Company or any Subsidiary and covers any
employee or former employee of the Company or any Subsidiary or any ERISA
Affiliate (as defined hereafter). These plans are referred to collectively
herein as the “Employee
Plans.” For
purposes of this Section, “ERISA Affiliate” of any person or entity
means any other person or entity which, together with that person or entity,
could be treated as a single employer under Section 414(m) of the Internal
Revenue Code of 1986, as amended (the “Code”), or is an “affiliate,”
whether or not incorporated, as defined in Section 407(d)(7) of ERISA, of the
person or entity.
(vv) The
Registration Statement, the General Disclosure Package and the Prospectus
identify each employment, severance or other similar agreement, arrangement or
policy and each material plan or arrangement providing for insurance coverage
(including any self- insured arrangements), workers’ compensation, disability
benefits, severance benefits, supplemental unemployment benefits, vacation
benefits, retirement benefits or for deferred compensation, profit-sharing,
bonuses, stock options, stock appreciation or other forms of incentive
compensation, or post-retirement insurance, compensation or benefits which: (i)
is not an Employee Plan, (ii) is entered into, maintained or contributed to, as
the case may be, by the Company or any Subsidiary or any of their respective
ERISA Affiliates, and (iii) covers any employee or former employee of the
Company or any Subsidiary or any of their respective ERISA Affiliates. These
contracts, plans and arrangements are referred to collectively in this Agreement
as the “Benefit
Arrangements.” Each Benefit Arrangement
has been maintained in substantial compliance with its terms and with
requirements prescribed by any and all statutes, orders, rules and regulations
that are applicable to that Benefit Arrangement.
(ww) Except
as set forth in the Registration Statement, the General Disclosure Package or
the Prospectus, there is no liability in respect of post-retirement health and
medical benefits for retired employees of the Company or any Subsidiary or any
of their respective ERISA Affiliates other than medical benefits required to be
continued under applicable law, determined using assumptions that are reasonable
in the aggregate, over the fair market value of any fund, reserve or other
assets segregated for the purpose of satisfying such liability (including for
such purposes any fund established pursuant to Section 40 1(h) of the Code).
With respect to any of the Company’s or any Subsidiaries’ Employee Plans which
are “group health plans” under Section 4980B of the Code and Section 607(1) of
ERISA, there has been material compliance with all requirements imposed there
under such that the Company or any Subsidiary or their respective ERISA
Affiliates have no (and will not incur any) loss, assessment, tax penalty, or
other sanction with respect to any such plan.
(xx) As
set forth in the Registration Statement, the General Disclosure Package or the
Prospectus, neither the Company nor any Subsidiary is a party to or subject to
any employment contract or arrangement providing for annual future compensation,
or the opportunity to earn annual future compensation (whether through fixed
salary, bonus, commission, options or otherwise) of more than $120,000 to any
officer, consultant, director or employee.
(yy) The
execution of this Agreement or consummation of the Offering does not constitute
a triggering event under any Employee Plan or any other employment contract,
whether or not legally enforceable, which (either alone or upon the occurrence
of any additional or subsequent event) will or may result in any payment (of
severance pay or otherwise), acceleration, increase in vesting, or increase in
benefits to any current or former participant, employee or director of the
Company or any Subsidiary other than an event that is not material to the
financial condition or business of the Company or any Subsidiary, either
individually or taken as a whole.
(zz) No
“prohibited transaction” (as defined in either Section 406 of the ERISA or
Section 4975 of Code), “accumulated funding deficiency” (as defined in Section
302 of ERISA) or other event of the kind described in Section 4043(b) of ERISA
(other than events with respect to which the 30-day notice requirement under
Section 4043 of ERISA has been waived) has occurred with respect to any employee
benefit plan for which the Company or any Subsidiary would have any liability;
each employee benefit plan of the Company or any Subsidiary is in compliance in
all material respects with applicable law, including (without limitation) ERISA
and the Code; the Company has not incurred and does not expect to incur
liability under Title IV of ERISA with respect to the termination of, or
withdrawal from any “pension plan”; and each employee benefit plan of the
Company or any Subsidiary that is intended to be qualified under Section 401(a)
of the Code is so qualified and nothing has occurred, whether by action or by
failure to act, which could cause the loss of such qualification.
(aaa) Neither
the Company, any Subsidiary nor, to the Company’s knowledge, any of their
respective employees or agents has at any time during the last five (5) years:
(i) made any unlawful contribution to any candidate for foreign office, or
failed to disclose fully any contribution in violation of law, or (ii) made any
payment to any federal or state governmental officer or official, including the
PRC, or other Person charged with similar public or quasi-public duties, other
than payments that are not prohibited by the laws of the United States of any
jurisdiction thereof.
(bbb) The
Company has not offered, or caused the Underwriters to offer, the Firm Shares to
any Person or entity with the intention of unlawfully influencing: (i) a
customer or supplier of the Company or any Subsidiary to alter the customer’s or
supplier’s level or type of business with the Company or any Subsidiary or (ii)
a journalist or publication to write or publish favorable information about the
Company, any Subsidiary or its products or services.
(ccc) As
of the date hereof and as of the Closing Date, and except as contemplated by
this Agreement, neither the Company nor any Subsidiary operates within the
United States or any state or territory thereof in such a manner so as to
subject the Company or its operations or businesses to registration as a foreign
company doing business in any state within the United States or to any of the
following laws in any material respect: (i) the Bank Secrecy Act, as amended,
(ii) the Uniting and Strengthening of America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 2001, as amended, (iii) the
Foreign Corrupt Practices Act of 1977, as amended, (iv) the Currency and Foreign
Transactions Reporting Act of 1970, as amended, (v) the Employee Retirement
Income Security Act of 1974, as amended, (vi) the Money Laundering Control Act
of 1986, as amended (vii) the rules and regulations promulgated under any such
law, or any successor law, or any judgment, decree or order of any applicable
administrative or judicial body relating to such law and (viii) any
corresponding law, rule, regulation, ordinance, judgment, decree or order of any
state or territory of the United States or any administrative or judicial body
thereof.
(ddd) The
operations of the Company and its Subsidiaries are and have been conducted at
all times in compliance with applicable financial record keeping and reporting
requirements and money laundering statutes of the PRC and the United States and,
to the Company’s knowledge, all other jurisdictions to which the Company and its
Subsidiaries are subject, the rules and regulations thereunder and any related
or similar rules, regulations or guidelines, issued, administered or enforced by
any applicable 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 best knowledge of the Company,
threatened.
(eee) Except
as set forth in the Registration Statement and the Prospectus, no holders of any
securities of the Company or any rights exercisable for or convertible or
exchangeable into securities of the Company have the right to require the
Company to register any such securities of the Company under the Securities Act
or to include any such securities in a registration statement to be filed by the
Company.
(fff) Neither
the Company nor, to the knowledge of the Company, any director, officer, agent,
employee or affiliate of the Company (as such term is defined under Rule 144
under the Securities Act, an “Affiliate”) 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 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.
(ggg) The
establishment of Pusheng and the acquisition of the equity interest of Pusheng
by Liaoning Shengsheng in 2007 fully complied with the PRC laws and regulations.
All the necessary approvals and registrations for Liaoning Shengsheng’s
acquisition of the equity interest in Pusheng had been obtained.
(hhh) Except
as disclosed in the Registration Statement, General Disclosure Package and the
Prospectus, none of the entities or natural persons holding any shares or other
equity securities of the Company, directly or indirectly, immediately before the
Offering, is a PRC resident which shall be subject to the approval and
registration requirements under the PRC laws and regulations in connection with
its holding of shares or equity securities in the Company, including the Notice
on Issues Relating to Administration of Foreign Exchange in Fund-raising and
Reverse Investment Activities of Domestic Residents Conducted via Offshore
Special Purpose Companies and any implementing rules and guidelines related
thereto.
(iii) As
used in this Agreement, references to matters being “material” with respect to the
Company or its Subsidiaries shall mean a material event, change, condition,
status or effect related to the condition (financial or otherwise), properties,
assets (including intangible assets), liabilities, business, prospects,
operations or results of operations of the Company or the applicable
Subsidiaries, either individually or taken as a whole, as the context
requires.
(jjj) As
used in this Agreement, the term “knowledge of the Company” (or similar language)
shall mean the knowledge of the officers and directors of the Company and the
applicable Subsidiaries who are named in the Prospectus, with the assumption
that such officers and directors shall have made reasonable and diligent inquiry
of the matters presented (with reference to what is customary and prudent for
the applicable individuals in connection with the discharge by the applicable
individuals of their duties as officers, directors or managers of the Company or
the applicable Subsidiaries).
Any
certificate signed by or on behalf of the Company and delivered to the
Underwriters or to Loeb & Loeb LLP (“Underwriters’ Counsel”) shall be deemed to be a
representation and warranty by the Company to each Underwriter listed on
Schedule A hereto as to the matters covered thereby.
3. Reserved.
4. Offering. Upon
authorization of the release of the Firm Shares by the Representative, the
Underwriters propose to offer the Shares for sale to the public upon the terms
and conditions set forth in the Prospectus.
5. Covenants of the
Company. The Company acknowledges, covenants and agrees with the
Underwriters that:
(a) The
Registration Statement and any amendments thereto have been declared effective,
and if Rule 430A is used or the filing of the Prospectus is otherwise required
under Rule 424(b), the Company will file the Prospectus (properly completed if
Rule 430A has been used) pursuant to Rule 424(b) within the prescribed time
period and will provide evidence satisfactory to the Representative of such
timely filing.
(b) During
the period beginning on the date hereof and ending on the later of the Closing
Date or such date, as in the opinion of counsel for the Underwriter, the
Prospectus is no longer required by law to be delivered (or in lieu thereof the
notice referred to in Rule 173(a) under the Securities Act is no longer required
to be provided), in connection with sales by an underwriter or dealer (the
“Prospectus Delivery
Period”), prior to amending or supplementing the Registration Statement,
the General Disclosure Package or the Prospectus, the Company shall furnish to
the Underwriter for review a copy of each such proposed amendment or supplement,
and the Company shall not file any such proposed amendment or supplement to
which the Underwriter reasonably object within 36 hours of delivery thereof to
the Underwriter and its counsel.
(c) After
the date of this Agreement, the Company shall promptly advise the Underwriter in
writing (i) of the receipt of any comments of, or requests for additional or
supplemental information from, the Commission, (ii) of the time and date of any
filing of any post- effective amendment to the Registration Statement or any
amendment or supplement to any Prospectus, the General Disclosure Package or the
Prospectus, (iii) of the time and date that any post-effective amendment to the
Registration Statement becomes effective and (iv) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or any post-effective amendment thereto or of any order preventing or
suspending its use or the use of any Prospectus, the General Disclosure Package,
the Prospectus or any Issuer- Represented Free Writing Prospectus, or of any
proceedings to remove, suspend or terminate from listing the Common Stock from
any securities exchange upon which it is listed for trading, or of the
threatening or initiation of any proceedings for any of such purposes. If the
Commission shall enter any such stop order at any time, the Company will use its
reasonable efforts to obtain the lifting of such order at the earliest possible
moment. Additionally, the Company agrees that it shall comply with the
provisions of Rules 424(b), 430A and 430B, as applicable, under the Securities
Act and will use its reasonable efforts to confirm that any filings made by the
Company under Rule 424(b) or Rule 433 were received in a timely manner by the
Commission (without reliance on Rule 424(b)(8) or Rule 164(b)).
(d) (i)
During the Prospectus Delivery Period, the Company will comply as far as it is
able with all requirements imposed upon it by the Securities Act, as now and
hereafter amended, and by the Rules and Regulations, as from time to time in
force, and by the Exchange Act so far as necessary to permit the continuance of
sales of or dealings in the Securities as contemplated by the provisions hereof,
the General Disclosure Package, and the Registration Statement and the
Prospectus. If during such period any event occurs as a result of which the
Prospectus (or if the Prospectus is not yet available to prospective purchasers,
the General Disclosure Package ) would include an untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein,
in the light of the circumstances then existing, not misleading, or if during
such period it is necessary or appropriate in the opinion of the Company or its
counsel or the Underwriter or counsel to the Underwriter to amend the
Registration Statement or supplement the Prospectus (or if the Prospectus is not
yet available to prospective purchasers, the General Disclosure Package ) to
comply with the Securities Act or to file under the Exchange Act any document
which would be deemed to be incorporated by reference in the Prospectus in order
to comply with the Securities Act or the Exchange Act, the Company will promptly
notify the Underwriter and will amend the Registration Statement or supplement
the Prospectus (or if the Prospectus is not yet available to prospective
purchasers, the General Disclosure Package) or file such document (at the
expense of the Company) so as to correct such statement or omission or effect
such compliance.
(ii) If
at any time following issuance of an Issuer-Represented Free Writing Prospectus
there occurred or occurs an event or development as a result of which such
Issuer-Represented Free Writing Prospectus conflicted or would conflict with the
information contained in the Registration Statement, the Statutory Prospectus or
the Prospectus or included or would include an untrue statement of a material
fact or omitted or would omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances prevailing at
that subsequent time, not misleading, the Company will promptly notify the
Underwriter and will promptly amend or supplement, at its own expense, such
Issuer-Represented Free Writing Prospectus to eliminate or correct such
conflict, untrue statement or omission.
(e) The
Company will promptly deliver to the Underwriters and Underwriters’ Counsel a
signed copy of the Registration Statement, as initially filed and all amendments
thereto, including all consents and exhibits filed therewith, and will maintain
in the Company’s files manually signed copies of such documents for at least
five (5) years after the date of filing thereof. The Company will promptly
deliver to each of the Underwriters such number of copies of any Preliminary
Prospectus, the Prospectus, the Registration Statement, and all amendments of
and supplements to such documents, if any, and all documents which are exhibits
to the Registration Statement and Prospectus or any amendment thereof or
supplement thereto, as the Underwriters may reasonably request. Prior to 10:00
A.M., New York time, on the business day next succeeding the date of this
Agreement and from time to time thereafter, the Company will furnish the
Underwriters with copies of the Prospectus in New York City in such quantities
as the Underwriters may reasonably request.
(f) The
Company consents to the use and delivery of the Preliminary Prospectus by the
Underwriters in accordance with Rule 430 and Section 5(b) of the Securities
Act.
(g) If
the Company elects to rely on Rule 462(b) under the Securities Act, the Company
shall both file a Rule 462(b) Registration Statement with the Commission in
compliance with Rule 462(b) and pay the applicable fees in accordance with Rule
111 of the Securities Act by the earlier of: (i) 10:00 p.m., New York City time,
on the date of this Agreement, and (ii) the time that confirmations are given or
sent, as specified by Rule 462(b)(2).
(h) The
Company will use its best efforts, in cooperation with the Representative, at or
prior to the time of effectiveness of the Registration Statement, to qualify the
Securities for offering and sale under the securities laws relating to the
offering or sale of the Securities of such jurisdictions, domestic or foreign,
as the Representative may designate and to maintain such qualification in effect
for so long as required for the distribution thereof; except that in no event
shall the Company be obligated in connection therewith to qualify as a foreign
corporation or to execute a general consent to service of process or to subject
itself to taxation if it is otherwise not so subject.
(i) The
Company will make generally available to its security holders as soon as
practicable, but in any event not later than 15 months after the end of the
Company’s current fiscal quarter, an earnings statement (which need not be
audited) covering a 12-month period that shall satisfy the provisions of Section
11(a) of the Securities Act and Rule 158 of the Rules and
Regulations.
(j) Except
with respect to (i) securities of the Company which may be issued in connection
with an acquisition of another entity (or the assets thereof), (ii) the issuance
of securities of the Company intended to provide the Company with proceeds to
acquire anther entity (or the assets thereof), or (iii) the issuance of
securities at fair market value (as defined in such plan) under the Company’s
stock option plans in effect from time to time, during the nine (9) months
following the Closing Date, the Company or any successor to the Company shall
not undertake any public or private offerings of any equity securities of the
Company (including equity-linked securities) without the written consent of the
Representative, which consent shall not be unreasonably withheld.
(k) Except
with respect to (i) securities of the Company which may be issued in connection
with an acquisition of another entity (or the assets thereof), (ii) the issuance
of securities of the Company intended to provide the Company with proceeds to
acquire anther entity (or the assets thereof), during the nine (9) months
following the Closing Date, without the consent of the Representative which
shall not be unreasonably withheld: (i) the Company will not file any
registration statement relating to the offer or sale of any of the Company’s
securities, except Form S-8 filed with the Commission in connection with any
Company Stock Option Plan. [Pending discussion with
Maxim]
(l) Following
the Closing Date, the Company and any of the individuals listed on Schedules B-1
and B-2 hereto (collectively, the “Lock-Up Parties”) shall not
sell or otherwise dispose of any securities of the Company, whether publicly or
in a private placement during the period that their respective lock-up
agreements are in effect. The Company will deliver to the Representative the
agreements of Lock-Up Parties to the foregoing effect prior to the Closing Date,
which agreements shall be substantially in the form attached hereto as Annex II
with respect to the persons listed on Schedule B-I and Annex II-A with respect
to the persons named on Schedule B-II.
(m) For
a period of one (1) year from the effective date of the Registration Statement,
the Company, at its expense, shall provide the Representative on a weekly basis
with a copy of the Company’s weekly transfer sheets from the previous week and
securities positions listings. [Pending discussion with
Maxim]
(n) If
the Company fails to maintain the listing of its Common Stock on a nationally
recognized exchange, for a period of three (3) years from the effective date of
the Registration Statement, the Company, at its expense, shall obtain and keep
current a listing in the Standard & Poor’s Corporation Records Services or
the Moody’s Industrial Manual; provided that Moody’s OTC Industrial Manual is
not sufficient for these purposes. [Pending discussion with
Maxim]
(o) During
the period of three (3) years from the effective date of the Registration
Statement, the Company will make available to the Underwriters copies of all
reports or other communications (financial or other) furnished to security
holders or from time to time published or publicly disseminated by the Company,
and will deliver to the Underwriters: (i) as soon as they are available, copies
of any reports, financial statements and proxy or information statements
furnished to or filed with the Commission or any national securities exchange on
which any class of securities of the Company is listed; and (ii) such additional
information concerning the business and financial condition of the Company as
the Representative may from time to time reasonably request (such financial
information to be on a consolidated basis to the extent the accounts of the
Company and the Subsidiaries are consolidated in reports furnished to its
security holders generally or to the Commission).
(p) The
Company will not issue press releases or engage in any other publicity relating
to the offering, without the Representative’ prior written consent, for a period
ending at 5:00 p.m. Eastern time on the first business day following the
forty-fifth (45th) day following the Closing Date, other than normal and
customary releases issued in the ordinary course of the Company’s
business.
(q) Prior
to the consummation of the Offering, the Company will engage or continue to
engage (for no less than two (2) years from the date of the Closing Date) a
financial public relations firm mutually acceptable to the Company and the
Representative. The Company further agrees to consult with the Representative as
is customary within the securities industry prior to distribution to third
parties of any financial information, news releases, and/or other publicity
regarding the Company, its business, or any terms of the proposed Offering, it
being agreed that the Company shall give the Representative no less than twelve
(12) hours prior notice of any such distribution and a reasonable opportunity
during or prior to such period to review the contents of the proposed
distribution. [Pending
discussion with Maxim]
(r) The
Company has or will retain Continental Stock Transfer (or a transfer agent of
similar competence and quality) as transfer agent for the Securities and shall
continue to retain such transfer agent for a period of three (3) years following
the Closing Date. [Pending discussion with
Maxim]
(s) The
Company will apply the net proceeds from the sale of the Securities as set forth
under the caption “Use of Proceeds” in the Prospectus. Without the written
consent of the Representative, no proceeds of the Offering will be used to pay
outstanding loans from officers, directors or shareholders or to pay any accrued
salaries or bonuses to any employees or former employees.
(t) The
Company will use its best efforts to effect and maintain the listing of the
Securities on the NYSE Amex for at least three (3) years after the Closing
Date.
(u) The
Company, during the period when the Prospectus is required to be delivered under
the Securities Act or the Exchange Act, will use its best efforts to file all
documents required to be filed with the Commission pursuant to the Securities
Act, the Exchange Act and the Rules and Regulations within the time periods
required thereby.
(v) The
Company will use its best efforts to do and perform all things required to be
done or performed under this Agreement by the Company prior to the Closing Date,
and to satisfy all conditions precedent to the delivery of the Firm
Shares.
(w) The
Company will not take, and will cause its Affiliates not to take, directly or
indirectly, any action which constitutes or is designed to cause or result in,
or which could reasonably be expected to constitute, cause or result in, the
stabilization or manipulation of the price of any security to facilitate the
sale or resale of the Securities.
(x) The
Company shall cause to be prepared and delivered to the Representative, at its
expense, within one (1) business day from the effective date of this Agreement,
an Electronic Prospectus to be used by the Underwriters in connection with the
Offering. As used herein, the term “Electronic Prospectus” means a form of
prospectus, and any amendment or supplement thereto, that meets each of the
following conditions: (i) it shall be encoded in an electronic format,
satisfactory to the Representative, that may be transmitted electronically by
the other Underwriters to offerees and purchasers of the Securities for at least
the period during which a Prospectus relating to the Securities is required to
be delivered under the Securities Act; (ii) it shall disclose the same
information as the paper prospectus and prospectus filed pursuant to EDGAR,
except to the extent that graphic and image material cannot be disseminated
electronically, in which case such graphic and image material shall be replaced
in the electronic prospectus with a fair and accurate narrative description or
tabular representation of such material, as appropriate; and (iii) it shall be
in or convertible into a paper format or an electronic format, satisfactory to
the Representative, that will allow recipients thereof to store and have
continuously ready access to the prospectus at any future time, without charge
to such recipients (other than any fee charged for subscription to the Internet
as a whole and for on-line time). The Company hereby confirms that it has
included or will include in the Prospectus filed pursuant to EDGAR or otherwise
with the Commission and in the Registration Statement at the time it was
declared effective an undertaking that, upon receipt of a request by an investor
or his or her representative within the period when a prospectus relating to the
Securities is required to be delivered under the Securities Act, the Company
shall transmit or cause to be transmitted promptly, without charge, a paper copy
of the Prospectus.
(y)
The Company represents and agrees that, unless it obtains the prior written
consent of the Representative, and the Representative represents and agrees
that, unless it obtains the prior written consent of the Company, it has not
made and will not make any offer relating to the Securities that would
constitute an “issuer free writing prospectus,” as defined in Rule 433 under the
Securities Act, or that would otherwise constitute a “free writing prospectus,”
as defined in Rule 405 under the Securities Act, required to be filed with the
Commission; provided that the prior written consent of the parties hereto shall
be deemed to have been given in respect of the free writing prospectuses
included in Schedule C. Any such free writing prospectus consented to by the
Company and the Representative is hereinafter referred to as a “Permitted Free
Writing Prospectus.” The Company represents that it has treated or agrees that
it will treat each Permitted Free Writing Prospectus as an “issuer free writing
prospectus,” as defined in Rule 433, and has complied and will comply with the
requirements of Rule 433 applicable to any Permitted Free Writing Prospectus,
including timely Commission filing where required, legending and record
keeping.
6. Consideration; Payment of
Expenses.
(a) In
consideration of the services to be provided for hereunder, the Company shall
pay to the Underwriters or their respective designees their pro rata portion
(based on the Securities purchased) of the following compensation with respect
to the Shares which they are offering:
(i) An
underwriting discount of eight percent (8%).
(b) The
Company grants the Representative the right of participation to act as lead
underwriter or placement agent for a period of twenty-four (24) months from the
Closing Date, for any and all public and private equity and debt offerings,
excluding ordinary course of business financings such as bank lines of credit,
accounts receivable, factoring and financing generated by the Company or any
successor to or any subsidiary of the Company. The Company shall provide written
notice to Representative with terms of such offering and if Representative fails
to accept in writing any such proposal for such public or private sale within 20
days after receipt of a written notice from the Company containing such
proposal, then Representative will have no claim or right with respect to any
such sale contained in any such notice. [Pending discussion with
Maxim]
(c) The
Representative reserves the right to reduce any item of compensation or adjust
the terms thereof as specified herein in the event that a determination shall be
made by FINRA to the effect that the Underwriters’ aggregate compensation is in
excess of FINRA Rules or that the terms thereof require adjustment.
(d) Whether
or not the transactions contemplated by this Agreement, the Registration
Statement and the Prospectus are consummated or this Agreement is terminated,
the Company hereby agrees to pay all costs and expenses incident to the
performance of its obligations hereunder, including the following:
(i) all
expenses in connection with the preparation, printing, formatting for EDGAR and
filing of the Registration Statement, any Preliminary Prospectus and the
Prospectus and any and all amendments and supplements thereto and the mailing
and delivering of copies thereof to the Underwriters and dealers;
(ii) all
fees and expenses in connection with the filing of Corporate Offerings Business
& Regulatory Analysis (“COBRADesk”) filings with
FINRA;
(iii) all
fees and expenses in connection with filing of the Registration Statement and
Prospectus with the Commission;
(iv) the
fees, disbursements and expenses of the Company’s counsel and accountants in
connection with the registration of the Securities under the Securities Act and
the Offering;
(v) all
fees and expenses in connection with listing the Securities on the NYSE
Amex;
(vi) [Intentionally
Omitted];
(vii) any
stock transfer taxes incurred in connection with this Agreement or the
Offering
(viii) the
cost of preparing stock certificates representing the
Securities;
(ix) [Intentionally
Omitted]
(x) the
cost of (a) two (2) “tombstone” advertisements to be placed in appropriate daily
or weekly periodicals of the Representative’s choice (i.e., The Wall Street
Journal and The New York Times); and (b) as many bound volumes of the Offering
documents and commemorative lucite (or other reasonable form) memorabilia as the
Representative may reasonably request;
(xi) up
to $150,000 for the Representative’s legal fees and disbursements;
and
(xii) all
other costs and expenses incident to the performance of the Company obligations
hereunder which are not otherwise specifically provided for in this Section
6.
(e) In
addition to the costs and expenses set forth in Section 6(d), at the Time of
Delivery the Company will pay to the Representative a non-accountable expense
allowance equal to one percent (1.00%) of the gross proceeds received by the
Company from the sale of the Firm Shares by deduction from the proceeds of the
Offering; provided however, that $[50,000] in the
aggregate that was previously paid by the Company to the Representative shall be
deducted from the non-accountable expense allowance payable to the
Representative at the Time of Delivery.
(f) It
is understood, however, that except as provided in this Section, and Sections 7,
8 and 12(d) hereof, the Underwriters will pay all of their own costs and
expenses, including the fees of their counsel. Notwithstanding anything to the
contrary in this Section 6, in the event that this Agreement is terminated
pursuant to Section 6 or 12(b) hereof, or subsequent to a Material Adverse
Change, the Company will pay, up to $[150,000] (less any advances previously
paid), all out-of-pocket expenses of the Underwriters (including but not limited
to fees and disbursements of counsel to the Underwriters) incurred in connection
herewith which shall be limited to expenses which are actually incurred as
allowed under FINRA Rule 5110.
(g) The
Company agrees that the Representative shall either (i) designate one individual
who meets the independence criteria of NYSE Amex to serve on the Company’s board
of directors for the three-year period following the Closing Date or (ii) in the
event that the individual designated by the Representative is not elected to the
Company’s Board of Directors, have a designee of the Representative attend all
meetings of the Company’s Board of Directors as an observer during such
three-year period. Such director or observer, as the case may be, shall attend
meetings of the Company’s Board of Directors, receive all notices and other
correspondence and communications sent by the Company to its directors, and such
director shall receive compensation equal to the highest compensation of other
non-employee directors of the Company, excluding the Chairman of the Audit
Committee. The Company agrees, to the fullest extent permitted by law, to
indemnify and hold such board member or observer, as the case may be, harmless
against any and all claims, actions, damages, costs and expenses, and judgments
arising solely out of the attendance and participation of such persons at any
such persons at any such meeting described herein or in their capacity as a
director of the Company. Additionally, the Company shall maintain a
liability insurance policy affording coverage for the acts of its officers and
directors, and it agrees, if possible, to include such board member or observer,
as the case may be, as an insured under such policy.
7. Conditions of Underwriters’
Obligations. The obligations of the Underwriters to purchase and pay for
the Firm Shares or Option Shares, as the case may be, as provided herein shall
be subject to: (i) the accuracy of the representations and warranties of the
Company herein contained, as of the date hereof and as of the Closing Date (ii)
the absence from any certificates, opinions, written statements or letters
furnished to the Representative or to Underwriters’ Counsel pursuant to this
Section 7 of any misstatement or omission (iii) the performance by the Company
of its obligations hereunder, and (iv) each of the following additional
conditions. For purposes of this Section 7, the terms “Closing Date” and
“Closing” shall refer to the Closing Date for the Firm Shares or Option Shares,
as the case may be, and each of the foregoing and following conditions must be
satisfied as of each Closing.
(a) The
Registration Statement shall have become effective and all necessary regulatory
or listing approvals shall have been received not later than 5:30 P.M., New York
time, on the date of this Agreement, or at such later time and date as shall
have been consented to in writing by the Representative. If the Company shall
have elected to rely upon Rule 430A under the Securities Act, the Prospectus
shall have been filed with the Commission in a timely fashion in accordance with
the terms hereof and a form of the Prospectus containing information relating to
the description of the Securities and the method of distribution and similar
matters shall have been filed with the Commission pursuant to Rule 424(b) within
the applicable time period; and, at or prior to the Closing Date or the actual
time of the Closing, no stop order suspending the effectiveness of the
Registration Statement or any part thereof, or any amendment thereof, nor
suspending or preventing the use of the General Disclosure Package, the
Prospectus or any Issuer Free Writing Prospectus shall have been issued; no
proceedings for the issuance of such an order shall have been initiated or
threatened; any request of the Commission for additional information (to be
included in the Registration Statement, the General Disclosure Package, the
Prospectus, any Issuer Free Writing Prospectus or otherwise) shall have been
complied with to the Representative’s satisfaction; and FINRA shall have raised
no objection to the fairness and reasonableness of the underwriting terms and
arrangements.
(b) The
Representative shall not have reasonably determined, and advised the Company,
that the Registration Statement, the General Disclosure Package or the
Prospectus, or any amendment thereof or supplement thereto, or any Issuer Free
Writing Prospectus, contains an untrue statement of fact which, in the
Representative’s reasonable opinion, is material, or omits to state a fact
which, in the Representative’s reasonable opinion, is material and is required
to be stated therein or necessary to make the statements therein not
misleading.
(c) The
Representative shall have received (i) the favorable written opinion of each of
Ellenoff Grossman & Schole LLP, United States legal counsel for the Company,
dated as of the Closing Date addressed to the Underwriters in the form attached
hereto as Annex II and (ii) the favorable written opinion of Global Law Office,
legal counsel for the Company with respect to the laws of the PRC dated as of
the Closing Date, addressed to the Underwriters in the form attached hereto as
Annex III.
(d) The
Representative shall have received a certificate of the Chief Executive Officer
and Chief Financial Officer of the Company, dated as of each Closing Date to the
effect that: (i) the condition set forth in subsection (a) of this Section 7 has
been satisfied, (ii) as of the date hereof and as of the applicable Closing
Date, the representations and warranties of the Company set forth in Section 2
hereof is accurate, (iii) as of the applicable Closing Date, all agreements,
conditions and obligations of the Company to be performed or complied with
hereunder on or prior thereto have been duly performed or complied with, (iv)
the Company and the Subsidiaries have not sustained any material loss or
interference with their respective businesses, whether or not covered by
insurance, or from any labor dispute or any legal or governmental proceeding,
(v) no stop order suspending the effectiveness of the Registration Statement or
any post-effective amendment thereof has been issued and no proceedings therefor
have been initiated or threatened by the Commission, (vi) there are no pro forma
or as adjusted financial statements that are required to be included or
incorporated by reference in the Registration Statement and the Prospectus
pursuant to the Rules and Regulations which are not so included or incorporated
by reference and (vii) subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus there has
not been any Material Adverse Change or any development involving a prospective
Material Adverse Change, whether or not arising from transactions in the
ordinary course of business.
(e) On
the date of this Agreement and on the Closing Date, the Representative shall
have received a “cold comfort” letter from Paritz as of the date of the date of
delivery and addressed to the Underwriters and in form and substance reasonably
satisfactory to the Representative, confirming that they are independent
certified public accountants with respect to the Company and its Subsidiaries
within the meaning of the Securities Act and the Rules and Regulations, and
stating, as of the date of delivery (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
five (5) days prior to the date of such letter), the conclusions and findings of
such firm with respect to the financial information and other matters relating
to the Registration Statement covered by such letter.
(f) Subsequent
to the execution and delivery of this Agreement or, if earlier, the dates as of
which information is given in the Registration Statement (exclusive of any
amendment thereof) and the Prospectus (exclusive of any supplement thereto),
there shall not have been any change in the capital stock or long-term debt of
the Company or any Subsidiary or any change or development involving a change,
whether or not arising from transactions in the ordinary course of business, in
the business, condition (financial or otherwise), results of operations,
shareholders’ equity, properties or prospects of the Company and the
Subsidiaries, taken as a whole, including but not limited to the occurrence of
any fire, flood, storm, explosion, accident, act of war or terrorism or other
calamity, the effect of which, in any such case described above, is, in the sole
judgment of the Representative, so material and adverse as to make it
impracticable or inadvisable to proceed with the Offering on the terms and in
the manner contemplated in the Prospectus (exclusive of any
supplement).
(g) The
Representative shall have received a lock-up agreement from each Lock-Up Party,
duly executed by the applicable Lock-Up Party, in each case substantially in the
form attached as Annex I.
(h) The
Securities shall have been approved for quotation on the NYSE Amex.
(i)
FINRA shall have confirmed that it has not raised any objection with respect to
the fairness and reasonableness of the underwriting terms and
arrangements.
(j)
No action shall have been taken and no statute, rule, regulation or order shall
have been enacted, adopted or issued by any federal, state or foreign
governmental or regulatory authority that would, as of the Closing Date, prevent
the issuance or sale of the Securities; and no injunction or order of any
federal, state or foreign court shall have been issued that would, as of the
Closing Date, prevent the issuance or sale of the Securities.
(k) The
Company shall have furnished the Underwriters and Underwriters’ Counsel with
such other certificates, opinions or other documents as they may have reasonably
requested.
If any of
the conditions specified in this Section 7 shall not have been fulfilled when
and as required by this Agreement, or if any of the certificates, opinions,
written statements or letters furnished to the Representative or to
Underwriters’ Counsel pursuant to this Section 7 shall not be reasonably
satisfactory in form and substance to the Representative and to Underwriters’
Counsel, all obligations of the Underwriters hereunder may be cancelled by the
Representative at, or at any time prior to, the consummation of the Closing.
Notice of such cancellation shall be given to the Company in writing, or by
telephone. Any such telephone notice shall be confirmed promptly thereafter in
writing.
8. Indemnification.
(a) The
Company agrees to indemnify and hold harmless the Underwriters and each Person,
if an, who controls each Underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, against any losses, claims,
damages or liabilities to which such party may become subject, under the
Securities Act or otherwise (including in settlement of any litigation if such
settlement is effected with the written consent of the Company), insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon (i) an untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, including the information
deemed to be a part of the Registration Statement at the time of effectiveness
and at any subsequent time pursuant to Rules 430A and 430B of the Rules and
Regulations, the General Disclosure Package, the Prospectus, or any amendment or
supplement thereto (including any documents filed under the Exchange Act and
deemed to be incorporated by reference into the Prospectus), any Issuer Free
Writing Prospectus or in any materials or information provided to investors by,
or with the approval of, the Company in connection with the marketing of the
offering of the Shares (“Marketing Materials”), including any roadshow or
investor presentations made to investors by the Company (whether in person or
electronically) or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse such
indemnified party for any legal or other expenses reasonably incurred by it in
connection with investigating or defending against such loss, claim, damage,
liability or action; or (ii) in whole or in part upon any inaccuracy in the
representations and warranties of the Company contained herein; or (iii) in
whole or in part upon any failure of the Company to perform its obligations
hereunder or under law; provided, however, that the Company shall not be liable
in any such case to the extent that any such loss, claim, damage, liability or
action arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in the Registration Statement,
any Preliminary Prospectus, the General Disclosure Package, the Prospectus, or
any such amendment or supplement, any Issuer Free Writing Prospectus or in any
Marketing Materials, in reliance upon and in conformity with the Underwriters
Information.
(b) Each
Underwriter, severally and not jointly, shall indemnify and hold harmless the
Company, each of the directors of the Company, each of the officers of the
Company who shall have signed the Registration Statement, and each other Person,
if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, against any losses,
liabilities, claims, damages and expenses whatsoever as incurred (including but
not limited to attorneys’ fees and any and all expenses whatsoever incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever, and any and all amounts paid in settlement
of any claim or litigation), joint or several, to which they or any of them may
become subject under the Securities Act, the Exchange Act or otherwise, insofar
as such losses, liabilities, claims, damages or expenses (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, as
originally filed or any amendment thereof, or any related Preliminary Prospectus
or the Prospectus, or in any amendment thereof or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
any such loss, liability, claim, damage or expense arises out of or is based
upon any such untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity with the
Underwriters’ Information; provided, however, that in no
case shall any Underwriter be liable or responsible for any amount in excess of
the underwriting discount applicable to the Securities to be purchased by such
Underwriter hereunder. The parties agree that such information provided by or on
behalf of any Underwriter through the Representative consists solely of the
material referred to in the last sentence of Section 1(b) hereof.
(c) Promptly
after receipt by an indemnified party under subsection (a) or (b) above of
notice of any claims or the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify each party against whom indemnification is
to be sought in writing of the claim or the commencement thereof (but the
failure so to notify an indemnifying party shall not relieve the indemnifying
party from any liability which it may have under this Section 8 to the extent
that it is not materially prejudiced as a result thereof and in any event shall
not relieve it from any liability that such indemnifying party may have
otherwise than on account of the indemnity agreement hereunder). In case any
such claim or action is brought against any indemnified party, and it notifies
an indemnifying party of the commencement thereof, the indemnifying party will
be entitled to participate, at its own expense in the defense of such action,
and to the extent it may elect by written notice delivered to the indemnified
party promptly after receiving the aforesaid notice from such indemnified party,
to assume the defense thereof with counsel satisfactory to such indemnified
party; provided however, that counsel to the indemnifying party shall not
(except with the written consent of the indemnified party) also be counsel to
the indemnified party. Notwithstanding the foregoing, the indemnified party or
parties shall have the right to employ its or their own counsel in any such
case, but the fees and expenses of such counsel shall be at the expense of such
indemnified party or parties unless (i) the employment of such counsel shall
have been authorized in writing by one of the indemnifying parties in connection
with the defense of such action, (ii) the indemnifying parties shall not have
employed counsel to have charge of the defense of such action within a
reasonable time after notice of commencement of the action, (iii) the
indemnifying party does not diligently defend the action after assumption of the
defense, or (iv) such indemnified party or parties shall have reasonably
concluded that there may be defenses available to it or them which are different
from or additional to those available to one or all of the indemnifying parties
(in which case the indemnifying parties shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties), in any of
which events such fees and expenses shall be borne by the indemnifying parties.
No indemnifying party shall, without the prior written consent of the
indemnified parties, effect any settlement or compromise of, or consent to the
entry of judgment with respect to, any pending or threatened claim,
investigation, action or proceeding in respect of which indemnity or
contribution may be or could have been sought by an indemnified party under this
Section 8 or Section 9 hereof (whether or not the indemnified party is an actual
or potential party thereto), unless (x) such settlement, compromise or judgment
(i) includes an unconditional release of the indemnified party from all
liability arising out of such claim, investigation, action or proceeding and
(ii) does not include a statement as to or an admission of fault, culpability or
any failure to act, by or on behalf of the indemnified party, and (y) the
indemnifying party confirms in writing its indemnification obligations hereunder
with respect to such settlement, compromise or judgment.
9. Contribution. In
order to provide for contribution in circumstances in which the indemnification
provided for in Section 8 hereof is for any reason held to be unavailable from
any indemnifying party or is insufficient to hold harmless a party indemnified
thereunder, the Company and the Underwriters shall contribute to the aggregate
losses, claims, damages, liabilities and expenses of the nature contemplated by
such indemnification provision (including any investigation, legal and other
expenses incurred in connection with, and any amount paid in settlement of, any
action, suit or proceeding or any claims asserted, but after deducting in the
case of losses, claims, damages, liabilities and expenses suffered by the
Company, any contribution received by the Company from Persons, other than the
Underwriters, who may also be liable for contribution, including Persons who
control the Company within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, officers of the Company who signed the
Registration Statement and directors of the Company) as incurred to which the
Company and one or more of the Underwriters may be subject, in such proportions
as is appropriate to reflect the relative benefits received by the Company and
the Underwriters from the Offering or, if such allocation is not permitted by
applicable law, in such proportions as are appropriate to reflect not only the
relative benefits referred to above but also the relative fault of the Company
and the Underwriters in connection with the statements or omissions which
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations. The relative benefits received by
the Company and the Underwriters shall be deemed to be in the same proportion as
(x) the total proceeds from the Offering (net of underwriting discounts and
commissions but before deducting expenses) received by the Company bears to (y)
the underwriting discount or commissions received by the Underwriters, in each
case as set forth in the table on the cover page of the Prospectus. The relative
fault of each of the Company and of the Underwriters shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the Underwriters and the
parties’ relative intent, 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 contribution pursuant to this
Section 9 were determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to above in
this Section. The aggregate amount of losses, liabilities, claims, damages and
expenses incurred by an indemnified party and referred to above in this Section
9 shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any judicial, regulatory or
other legal or governmental agency or body, commenced or threatened, or any
claim whatsoever based upon any such untrue or alleged untrue statement or
omission or alleged omission. Notwithstanding the provisions of this Section 9:
(i) no Underwriter shall be required to contribute any amount in excess of the
amount by which the discounts and commissions applicable to the Shares
underwritten by it and distributed to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission and (ii)
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. For purposes of this
Section 9, each Person, if any, who controls an Underwriter within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have
the same rights to contribution as such Underwriter, and each Person, if any,
who controls the Company within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act, each officer of the Company who shall have
signed the Registration Statement and each director of the Company shall have
the same rights to contribution as the Company, subject in each case to clauses
(i) and (ii) of the immediately preceding sentence. Any party entitled to
contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim for
contribution may be made against another party or parties, notify each party or
parties from whom contribution may be sought, but the omission to so notify such
party or parties shall not relieve the party or parties from whom contribution
may be sought from any obligation it or they may have under this Section 9 or
otherwise. The obligations of the Underwriters to contribute pursuant to this
Section 9 are several in proportion to the respective number of Shares to be
purchased by each of the Underwriters hereunder and not joint.
10. Underwriter
Default.
(a) If
any Underwriter or Underwriters shall default in its or their obligation to
purchase Firm Shares hereunder, and if the Firm Shares with respect to which
such default relates (the “Default Shares”) do not (after
giving effect to arrangements, if any, made by the Representative pursuant to
subsection (b) below) exceed in the aggregate 10% of the number of Firm Shares,
each non-defaulting Underwriter, acting severally and not jointly, agrees to
purchase from the Company that number of Default Shares that bears the same
proportion of the total number of Default Shares then being purchased as the
number of Firm Shares set forth opposite the name of such Underwriter on
Schedule A hereto bears to the aggregate number of Firm Shares set forth
opposite the names of the non-defaulting Underwriters, subject, however, to such
adjustments to eliminate fractional shares as the Representative in its sole
discretion shall make.
(b) In
the event that the aggregate number of Default Shares exceeds 10% of the number
of Firm Shares, the Representative may in their discretion arrange for
themselves or for another party or parties (including any non-defaulting
Underwriter or Underwriters who so agree) to purchase the Default Shares on the
terms contained herein. In the event that within five calendar days after such a
default the Representative does not arrange for the purchase of the Default
Shares as provided in this Section 10, this Agreement shall thereupon terminate,
without liability on the part of the Company with respect thereto or the
Underwriters, but nothing in this Agreement shall relieve a defaulting
Underwriter or Underwriters of its or their liability, if any, to the other
Underwriters and the Company for damages occasioned by its or their default
hereunder.
(c) In
the event that any Default Shares are to be purchased by the non-defaulting
Underwriters, or are to be purchased by another party or parties as aforesaid,
the Representative or the Company shall have the right to postpone the Closing
Date for a period, not exceeding five (5) business days, in order to effect
whatever changes may thereby be made necessary in the Registration Statement or
the Prospectus or in any other documents and arrangements, and the Company
agrees to file promptly any amendment or supplement to the Registration
Statement or the Prospectus which, in the reasonable opinion of Underwriters’
Counsel, may thereby be made necessary or advisable. The term “Underwriter” as
used in this Agreement shall include any party substituted under this Section 10
with like effect as if it had originally been a party to this Agreement with
respect to such Firm Shares.
11. Survival of Representations
and Agreements. All representations and warranties, covenants
and agreements of the Company and the Underwriters contained in this Agreement
or in certificates of officers of the Company or any Subsidiary submitted
pursuant hereto, including the agreements contained in Section 6, the indemnity
agreements contained in Section 8 and the contribution agreements contained in
Section 9 hereof, shall remain operative and in full force and effect regardless
of any investigation made by or on behalf of any Underwriter or any controlling
Person thereof or by or on behalf of the Company, any of its officers and
directors or any controlling Person thereof, and shall survive delivery of and
payment for the Shares to and by the Underwriters. The representations contained
in Section 2 hereof and the covenants and agreements contained in Sections 5, 6,
8, 9, this Section 11 and Sections 15 and 16 hereof shall survive any
termination of this Agreement, including termination pursuant to Section 10 or
12 hereof for a period
of six (6) months.
12. Effective Date of Agreement;
Termination.
(a) This
Agreement shall become effective upon the later of: (i) receipt by the
Representative and the Company of notification of the effectiveness of the
Registration Statement or (ii) the execution of this Agreement. Notwithstanding
any termination of this Agreement, the provisions of this Section 12 and of
Sections 1, 5, 7, 8 and 12 through 17, inclusive, shall remain in full force and
effect at all times after the execution hereof.
(b) The
Representative shall have the right to terminate this Agreement at any time
prior to the consummation of the Closing if: (i) any domestic or international
event or act or occurrence has materially disrupted, or in the opinion of the
Representative will in the immediate future materially disrupt, the market for
the Company’s securities or securities in general; or (ii) trading on the New
York Stock Exchange, the NASDAQ or the AMEX shall have been suspended or been
made subject to material limitations, or minimum or maximum prices for trading
shall have been fixed, or maximum ranges for prices for securities shall have
been required, on the New York Stock Exchange, the NYSE Amex or by order of the
Commission or any other governmental authority having jurisdiction; or (iii) a
banking moratorium has been declared by any state or federal authority or if any
material disruption in commercial banking or securities settlement or clearance
services shall have occurred; or (iv) (A) any outbreak or escalation of
hostilities or acts of terrorism involving the United States or there is a
declaration of a national emergency or war by the United States or (B) there
shall have been any other calamity or crisis or any change in political,
financial or economic conditions if the effect of any such event in (A) or (B),
in the judgment of the Representative, is so material and adverse that such
event makes it impracticable or inadvisable to proceed with the offering, sale
and delivery of the Firm Shares on the terms and in the manner contemplated by
the Prospectus.
(c) Any
notice of termination pursuant to this Section 12 shall be in
writing.
(d) If
this Agreement shall be terminated pursuant to any of the provisions hereof
(other than pursuant to Section 10(b) hereof), or if the sale of the Shares
provided for herein is not consummated because any condition to the obligations
of the Underwriters set forth herein is not satisfied or because of any refusal,
inability or failure on the part of the Company to perform any agreement herein
or comply with any provision hereof, the Company will, subject to demand by the
Representative, reimburse the Underwriters for only those out-of-pocket expenses
(including the fees and expenses of their counsel), actually incurred by the
Underwriters in connection herewith up to $150,000 less any amounts previously
paid by the Company.
13. Notices. All
communications hereunder, except as may be otherwise specifically provided
herein, shall be in writing, and:
(a) if
sent to the Representative or any Underwriter, shall be mailed, delivered, or
faxed and confirmed in writing, to Maxim Group LLC, 405 Lexington Avenue, New
York, New York 10174, Attention: Clifford A. Teller, Director of Investment
Banking, with a copy to Underwriters’ Counsel at Loeb & Loeb LLP, 345 Park
Ave, New York, NY 10154, Attention: Mitchell Nussbaum, Esq.; and
(b) if
sent to the Company, shall be mailed, delivered, or faxed and confirmed in
writing to the Company and its counsel at the addresses set forth in the
Registration Statement.
14. Parties; Limitation of
Relationship. This Agreement shall inure solely to the benefit of, and
shall be binding upon, the Underwriters, the Company and the controlling
Persons, directors, officers, employees and agents referred to in Section 8
hereof, and their respective successors and assigns, and no other Person shall
have or be construed to have any legal or equitable right, remedy or claim under
or in respect of or by virtue of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the parties hereto and said
controlling Persons and their respective successors, officers, directors, heirs
and legal Representative, and it is not for the benefit of any other Person. The
term “successors and assigns” shall not include a purchaser, in its capacity as
such, of Units from any of the Underwriters.
15. Governing
Law. This Agreement shall be deemed to have been executed and delivered in New
York and both this Agreement and the transactions contemplated hereby shall be
governed as to validity, interpretation, construction, effect, and in all other
respects by the laws of the State of New York, without regard to the conflicts
of laws principals thereof (other than Section 5-1401 of The New York General
Obligations Law). Each of the Underwriters and the Company: (a) agrees that any
legal suit, action or proceeding arising out of or relating to this Agreement
and/or the transactions contemplated hereby shall be instituted exclusively in
the Supreme Court of the State of New York, New York County, or in the United
States District Court for the Southern District of New York, (b) waives any
objection which it may have or hereafter to the venue of any such suit, action
or proceeding, and (c) irrevocably consents to the jurisdiction of Supreme Court
of the State of New York, New York County, or in the United States District
Court for the Southern District of New York in any such suit, action or
proceeding. Each of the Underwriters and the Company further agrees to accept
and acknowledge service of any and all process which may be served in any such
suit, action or proceeding in the Supreme Court of the State of New York, New
York County, or in the United States District Court for the Southern District of
New York and agrees that service of process upon the Company mailed by certified
mail to the Company’s address or delivered by Federal Express via overnight
delivery shall be deemed in every respect effective service of process upon the
Company, in any such suit, action or proceeding, and service of process upon the
Underwriters mailed by certified mail to the Underwriters’ address or delivered
by Federal Express via overnight delivery shall be deemed in every respect
effective service process upon the Underwriter, in any such suit, action or
proceeding. THE COMPANY (ON BEHALF OF ITSELF, THE SUBSIDIARIES AND, TO THE
FULLEST EXTENT PERMITTED BY LAW, ON BEHALF OF ITS RESPECTIVE EQUITY HOLDERS AND
CREDITORS) HEREBY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY CLAIM BASED UPON, ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT AND
THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, THE REGISTRATION STATEMENT AND
THE PROSPECTUS.
16. Entire Agreement.
This Agreement, together with the schedule and exhibits attached hereto and as
the same may be amended from time to time in accordance with the terms hereof,
contains the entire agreement among the parties hereto relating to the subject
matter hereof and there are no other or further agreements outstanding not
specifically mentioned herein.
17. Severability. If any
term or provision of this Agreement or the performance thereof shall be invalid
or unenforceable to any extent, such invalidity or unenforceability shall not
affect or render invalid or unenforceable any other provision of this Agreement
and this Agreement shall be valid and enforced to the fullest extent permitted
by law.
18. Amendment. This
Agreement may only be amended by a written instrument executed by each of the
parties hereto.
19. Waiver, etc. The
failure of any of the parties hereto to at any time enforce any of the
provisions of this Agreement shall not be deemed or construed to be a waiver of
any such provision, nor to in any way effect the validity of this Agreement or
any provision hereof or the right of any of the parties hereto to thereafter
enforce each and every provision of this Agreement. No waiver of any breach,
non-compliance or non-fulfillment of any of the provisions of this Agreement
shall be effective unless set forth in a written instrument executed by the
party or parties against whom or which enforcement of such waiver is sought; and
no waiver of any such breach, non-compliance or non-fulfillment shall be
construed or deemed to be a waiver of any other or subsequent breach,
non-compliance or non-fulfillment.
20. No Fiduciary
Relationship. The Company hereby acknowledges that the Underwriters are
acting solely as underwriters in connection with the offering of the Company’s
securities. The Company further acknowledge that the Underwriters are acting
pursuant to a contractual relationship created solely by this Agreement entered
into on an arm’s length basis and in no event do the parties intend that the
Underwriters act or be responsible as a fiduciary to the Company, its
management, shareholders, creditors or any other person in connection with any
activity that the Underwriters may undertake or have undertaken in furtherance
of the offering of the Company’s securities, either before or after the date
hereof,. The Underwriters hereby expressly disclaim any fiduciary or similar
obligations to the Company, either in connection with the transactions
contemplated by this Agreement or any matters leading up to such transactions,
and the Company hereby confirms its understanding and agreement to that effect.
The Company hereby further confirms its understand that no Underwriter has
assumed an advisory or fiduciary responsibility in favor of the Company with
respect to the Offering contemplated hereby or the process leading thereto,
including any negotiation related to the pricing of the Units; and the Company
has consulted its own legal and financial advisors to the extent it has deemed
appropriate in connection with this Agreement and the Offering. The Company and
the Underwriters agree that they are each responsible for making their own
independent judgments with respect to any such transactions, and that any
opinions or views expressed by the Underwriters to the Company regarding such
transactions, including but not limited to any opinions or views with respect to
the price or market for the Company’s securities, do not constitute advice or
recommendations to the Company. 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 breach or alleged breach of any fiduciary
or similar duty to the Company in connection with the transactions contemplated
by this Agreement or any matters leading up to such transactions.
21. Counterparts. This
Agreement may be executed in any number of counterparts, each of which shall be
deemed to be an original, but all such counterparts shall together constitute
one and the same instrument. Delivery of a signed counterpart of this Agreement
by facsimile transmission shall constitute valid and sufficient delivery
thereof.
22. 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.
[Signature
Pages Follow]
If the
foregoing correctly sets forth your understanding, please so indicate in the
space provided below for that purpose, whereupon this letter shall constitute a
binding agreement among us.
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Very
truly yours,
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CHINA
FOR-GEN CORP.
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By:
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Name:
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Title:
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Accepted
by the Representative, acting for themselves and as Representative of the
Underwriters named on Schedule A attached hereto, as of the date first written
above:
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MAXIM
GROUP LLC
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By:
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Name:
Clifford A. Teller
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Title: Executive Managing Director — Investment Banking
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SCHEDULE
A
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Underwriters
|
Number of Firm Shares
to be Purchased from
Allotment
|
Number of Secondary
Offering Units to be
Purchased
|
Over Option
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|||
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Maxim
Group LLC
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||||||
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Chardan
Capital Markets, LLC
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||||||
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TOTAL
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SCHEDULE
B
Lock-Up
Parties
Mingwang
Lu Liyong Qu
Yi
Lu
Qihong
Zhang Ping Li
Zheyu
Chen Yingxin Fan Harry Edelson J.P. Huang
Kwok
Keung Wong
Yunlong
Wang Maotong Xu
Oasis
Green Investment Group Plumpton Group Limited Honest Joy Group
Limited
SCHEDULE
C
Issuer-Represented
General Free Writing Prospectus
[None]
ANNEX II
(1) The
Company has been duly organized and is validly existing as a corporation and is
in good standing under the laws of the State of Delaware with the requisite
corporate power to own or lease, as the case may be, and operate its respective
properties, and to conduct its business, as described in the Registration
Statement and the Prospectus. The Company and each such Subsidiary is duly
registered or qualified to do business as a foreign corporation and is in good
standing under the laws of the States of Delaware.
(2) All
issued and outstanding securities of the Company have been duly authorized and
validly issued and are fully paid and non-assessable and none of such securities
were issued in violation of the preemptive rights of any stockholder of the
Company arising by operation of law or under the Company’s currently effective
Certificate of Incorporation and Bylaws (the “Organizational Documents”). The
offers and sales of the outstanding securities were at all relevant times either
registered under the Securities Act or exempt from such registration
requirements. The authorized and, outstanding Shares of the Company is as set
forth in the Prospectus.
(3) The
Shares have been duly authorized and, when issued and paid for, will be validly
issued and to our knowledge, fully paid and non-assessable; the holders thereof
are not and will not be subject to personal liability solely by reason of being
such holders. The Shares are not and will not be subject to the
preemptive rights of any holders of any security of the Company arising by
operation of law or under the Organizational Documents. The
Over-allotment Option constitutes the valid and binding obligation of
the Company to issue and sell, upon exercise thereof and payment therefore, the
number of Shares called for thereby, and the Over-allotment Option is
enforceable against the Company in accordance with its terms, except (a) as such
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors’ rights generally; (b) as enforceability of any
indemnification or contribution provision may be limited under the Federal and
state securities laws and (c) that the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to the equitable
defenses and to the discretion of the court before which any proceeding
therefore may be brought.
(4) The
issuance of the Firm Shares has been duly authorized and, when issued and paid
for by you pursuant to this Agreement, the Firm Shares will be validly issued,
fully paid and nonassessable. The holders of outstanding shares of
capital of the Company are not entitled to any preemptive right, right of first
offer or right of first refusal (i) set forth in or provided for by the
Organizational Documents, or (ii) granted by the Company in any currently
effective written agreement.
(5) The
Agreementhas been duly and validly authorized and executed by the Company and
constitutes the valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms, except (a) as such enforceability may
be limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors’ rights generally, (b) as enforceability of any indemnification or
contribution provisions may be limited under the Federal and state securities
laws, and (c) that the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to the equitable defenses and to the
discretion of the court before which any proceeding therefore may be
brought.
(6) The
execution, delivery and performance of the Agreement, the agreements of Lock-Up
Parties, and compliance by the Company with the terms and provisions thereof and
the consummation of the transactions contemplated thereby, and the issuance and
sale of the Securities thereunder, do not and will not, with or without the
giving of notice or the lapse of time, or both, (a) conflict with, or
result in a breach of, any of the terms or provisions of, or constitute a
default under, or result in the creation or modification of any lien, security
interest, charge or encumbrance upon any of the properties or assets of the
Company pursuant to the terms of, any mortgage, deed of trust, note, indenture,
loan, contract, commitment or other agreement or instrument filed as an exhibit
to the Registration Statement, (b) result in any violation of the
provisions of the Organizational Documents, or (c) violate any statute or
any judgment, order or decree, rule or regulation applicable to the Company of
any court, domestic or foreign, or of any federal, state or other regulatory
authority or other governmental body having jurisdiction over the Company, its
properties or assets.
(7) The
Registration Statement and the Prospectus and any post-effective amendments or
supplements thereto (other than the financial statements included therein, as to
which no opinion need be rendered) each as of their respective dates complied as
to form in all material respects with the requirements of the Securities Act and
Rules and Regulations. The Securities offered pursuant to the Prospectus conform
in all material respects to the description thereof contained in the
Registration Statement and the Prospectus. No United States or state statute or
regulation required to be described in the Prospectus is not described as
required (except as to the Blue Sky laws of the various states, as to which such
counsel expresses no opinions), nor are any contracts or documents of a
character required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement not so
described or filed as required.
(8) The
Registration Statement has been declared effective by the
Commission. We have been orally advised by the Staff of the
Commission that no stop order suspending the effectiveness of the Registration
Statement has been issued, and to our knowledge, no proceedings for that purpose
have been instituted or overtly threatened by the Commission. Any
required filing of the Prospectus, and any required supplement thereto, pursuant
to Rule 424(b) under the Securities Act, has been made in the manner and within
the time period required by Rule 424(b).
(9) The
Company is not and, after giving effect to the Offering and sale of the
Securities and the application of the proceeds thereof as described in the
Registration Statement and the Prospectus, will not be, an “investment company”
as defined in the Investment Company Act of 1940, as amended.
(10) No
consent, approval, authorization or filing with or order of the NYSE Amex stock
market, any U.S. Federal, State of New York or State of Delaware court or
governmental agency or body having jurisdiction over the Company is required,
under the laws, rules and regulations of the United States of America and the
States of Delaware and New York for the consummation by the Company of the
transactions contemplated by the Agreement, except (i) such as have been made
with or obtained by the NYSE Amex (ii) such as have been made or obtained under
the Securities Act and (iii) such as may be required under the blue sky laws of
any jurisdiction in connection with the purchase and distribution of the Shares
by you in the manner contemplated in the Agreement and in the Prospectus, as to
which we express no opinion.
(11) The
Shares have been approved for listing on the NYSE Amex stock market upon
official notice of issuance.
ANNEX
III
(ii) [Insert
for each the PRC Subsidiary] [●] has been duly organized and is validly existing
as a [●] under the laws and regulations of the PRC; [●]’s business license is in
full force and effect; [●] of the equity interests of [●] are owned by [●], and
to our Knowledge, such equity interests are free and clear of all liens,
encumbrances, equities or claims; and the articles of association, the business
license and other constituent documents of [●] comply with the requirements of
applicable the PRC laws and regulations and are in full force and
effect.
(iii) Except
as set forth in the Registration Statement and the Prospectus, each of the PRC
Subsidiaries, has full corporate right, power and authority and has all
necessary governmental authorizations of and from, and has made all necessary
declarations and filings with, all governmental agencies to own, lease, license
and use its properties, assets and conduct its business, and such governmental
authorizations contain no materially burdensome restrictions or conditions; to
our Knowledge, none of the PRC Subsidiaries has any reason to believe that any
regulatory body is considering modifying, suspending, revoking or not renewing
any such governmental authorizations; and each of the PRC Subsidiaries is in
compliance in all material respects with the provisions of all such governmental
authorizations and conducts its business in all material respects in accordance
with any the PRC laws and regulations to which it is subject or by which it is
bound.
(iv) Except
as set forth in the Registration Statement and the Prospectus, none of the PRC
Subsidiaries has taken any action nor have any steps been taken or legal or
administrative proceedings been commenced or threatened for the winding up,
dissolution or liquidation of any of the PRC Subsidiaries or for the suspension,
withdrawal, revocation or cancellation of any of their respective business
license.
(v) The
ownership structure of the PRC Subsidiaries does not violate any prohibitory
provisions of the applicable the PRC laws and regulations and the transactions
conducted in the PRC involving the PRC Subsidiaries relating to the
establishment of such ownership structure, in each case, did not and do not
violate any explicit provisions of the applicable the PRC laws and
regulations.
(vi) Except
as set forth in the Registration Statement and the Prospectus, each of the PRC
Subsidiaries owns or otherwise has the legal right to use, or can acquire on
reasonable terms, the intellectual property (“Intellectual Property”) as
currently used or as currently contemplated to be used by the PRC
Subsidiaries.
(vii) Except
as set forth in the Registration Statement and the Prospectus, to our Knowledge,
none of the PRC Subsidiaries is infringing, misappropriating or violating any
intellectual property right of any third party in the PRC; no Intellectual
Property is subject to any outstanding decree, order, injunction, judgment or
ruling restricting the use of such Intellectual Property in the PRC that would
impair the validity or enforceability of such Intellectual Property; and none of
the Company or any of the PRC Subsidiaries has received any notice of any claim
of infringement or conflict with any such rights of others.
(viii) Except
as set forth in the Registration Statement and the Prospectus, there are no
legal, arbitration or governmental proceedings in progress or pending or, to our
Knowledge, threatened, in the PRC to which the Company, or any the PRC
Subsidiary is a party or of which any property of any the PRC Subsidiary is
subject.
(ix) As
a matter of the laws and regulations of the PRC, none of the PRC Subsidiaries or
their properties, assets or revenues has any right of immunity, on any grounds,
from any legal action, suit or proceeding, from the giving of any relief in any
such legal action, suit or proceeding, from setoff or counterclaim, from the
jurisdiction of any court, from service of process, attachment upon or prior to
judgment, or attachment in aid of execution of judgment, or from execution of a
judgment, or other legal process or proceeding for the giving of any relief with
respect to their respective obligations, liabilities or any other matter under
or arising out of or in connection with the transactions contemplated by the
Agreement.
(x) The
sale of the Shares and the compliance by the Company with all of the provisions
of the Agreement and the consummation of the transactions contemplated thereby
do not result in any violation of the provisions of the articles of association,
business license or any other constituent documents of any of the PRC
Subsidiaries or any applicable statute or any order, rule or regulation, of any
governmental agency having jurisdiction over any of the PRC Subsidiaries or any
of its properties. No governmental authorization of any governmental
agency in the PRC is required for the consummation of the transactions
contemplated by the Agreement, other than those already obtained.
(xi) No
stamp or other issuance or transfer taxes or duties and no capital gains,
income, withholding or other taxes are payable by the Underwriter to the
government of the PRC or to any political subdivision or taxing authority
thereof or therein in connection with the execution and delivery of the
Agreement, the sale and delivery by the Company of the Firm Shares to or for the
account of the Underwriter, the sale and delivery outside the PRC by the
Underwriter of the Firm Shares to the purchasers thereof in the manner
contemplated in the Agreement, or the consummation of any other transaction
contemplated in the Agreement.
(xii) Although
we do not assume any responsibility for the accuracy, completeness or fairness
of the statements contained in the Registration Statement, or the Prospectus, we
have no reason to believe, that (a) when it became of effective, any part of the
Registration Statement (other than the financial statements and related
schedules therein, as to which we express no opinion) describing or summarizing
the PRC laws and regulations or documents, agreements or proceedings governed by
the PRC laws and regulations contained an untrue statement of a material fact or
omitted to state a material fact necessary to make the statements therein not
misleading; (b) as of the date of the Agreement and the date hereof, any part of
the Prospectus (other than the financial statements and related schedules
therein, as to which we express no opinion) describing or summarizing the PRC
laws and regulations or documents, agreements or proceedings governed by the PRC
laws and regulations contained any untrue statement of a material fact or
omitted to state any material fact necessary in order to make the statements
therein not misleading; or (c) at the time the Prospectus was filed with the
Commission or at the date hereof, any part of the Prospectus (other than the
financial statements and related schedules therein, as to which we express no
opinion) describing or summarizing the PRC laws and regulations or documents,
agreements or proceedings governed by the PRC laws and regulations contained or
contains an untrue statement of a material fact or omitted or omits to state a
material fact necessary to make the statements therein not
misleading. The term “Knowledge” as used in this opinion shall mean
the actual knowledge of the attorneys who have been involved in representing the
Company after due and reasonable inquiry.