Attached files
| file | filename |
|---|---|
| S-1/A - Trunkbow International Holdings Ltd | v206971_s1a.htm |
| EX-23.1 - Trunkbow International Holdings Ltd | v206971_ex23-1.htm |
[•]
SHARES
TRUNKBOW
INTERNATIONAL HOLDINGS LIMITED
UNDERWRITING
AGREEMENT
[•], 2011
ROTH
CAPITAL PARTNERS, LLC
24
Corporate Plaza Drive
Newport
Beach, California 92660
MERRIMAN
CAPITAL, INC.
135 East
57th
Street, 24th
Floor
New York,
New York 10022
As
Representatives of the Underwriters
named
on Schedule A
hereto
Ladies
and Gentlemen:
Trunkbow
International Holdings Limited, a corporation organized and existing under the
laws of State of Nevada (the “Company”), confirms its
agreement, subject to the terms and conditions set forth herein, with each of
the underwriters listed on Exhibit A hereto
(collectively, the “Underwriters”), for whom Roth
Capital Partners, LLC and Merriman Capital, Inc. are acting as representatives
(in such capacity, the “Representatives”), to sell and
issue to the Underwriters an aggregate of [•] shares of common stock,
$0.001 par value per share (the “Shares”), of the Company (the
“Firm
Shares”). The Firm Shares are more fully described in the
Registration Statement and Prospectus referred to below.
The
offering and sale of the Shares 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 to the several Underwriters, an aggregate of [•] Firm
Shares of the Company at a purchase price (net of discounts and commissions) of
$[•]
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 $[•] per Firm
Share.
Roth
Capital Partners, LLC
Merriman
Capital, Inc.
[•], 2011
Page 2 of
42
(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 Representatives and the Company at the offices of the Representatives or at
such other place as shall be agreed upon by the Representatives and the
Company. As used herein, the term “Business Day” shall mean any day other
than a Saturday, Sunday or any day on which the major stock exchanges in New
York, New York are not open for business. 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 Representatives’ election by
wire transfer in Federal (same day) 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 Representatives may request in
writing at least two Business Days prior to the Closing Date. The Company
will permit the Representatives 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 Representatives 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 Representatives on behalf of the
Underwriters are hereby granted an option to purchase up to an additional 15% of
the number of Firm Shares or [•] shares
(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 “Securities”. The
purchase price to be paid for the Option Shares (net of discounts and
commissions) will be $[•] per
Option Share.
(d) Exercise of
Option. The Over-allotment Option granted pursuant to
Section 1.1(c) hereof may be exercised by the Representatives as to all (at
any time) or any part (but not more than once) 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 Representatives,
which must be promptly 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 must be
at least one Business Day after the written notice is given and may not be
earlier than the Closing Date nor later than five Business Days after the date
of such notice or such other time as shall be agreed upon by the Company and the
Representatives, at the offices of the Representatives or at such other place as
shall be agreed upon by the Company and the Representatives. 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.
Roth
Capital Partners, LLC
Merriman
Capital, Inc.
[•], 2011
Page 3 of
42
(e) Payment and Delivery of
Option Shares. Payment for the Option Shares shall be made on the
Option Closing Date by wire transfer in Federal (same day) funds of the price
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 Representatives request 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 Representatives 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.
Roth
Capital Partners, LLC
Merriman
Capital, Inc.
[•], 2011
Page 4 of
42
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. 333-169942), 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 Shares (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 complied to the Commission’s satisfaction with 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, to the Company’s knowledge, threatened by the Commission. The
Company, if required by the Securities Act and the rules and regulations of the
Commission thereunder (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 of the Registration Statement, 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 so
filed. 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 10 providing for the registration
under the Exchange Act of the Shares. The registration of the Shares
under the Exchange Act has been declared effective by the
Commission.
Roth
Capital Partners, LLC
Merriman
Capital, Inc.
[•], 2011
Page 5 of
42
(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 filed or first used within
the meaning of the Rules and Regulations, when any supplement to or amendment of
the Prospectus is filed with the Commission, at all other subsequent times until
the completion of the public offer and sale of the Securities, and at the
Closing Date, 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, or the Rules and Regulations, as applicable, 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 the 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, or the Rules and Regulations, as applicable,
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 the light of the circumstances under which they
were made, not misleading. No representation and warranty is made in
this subsection (c), 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 Representatives
specifically for use therein. The parties acknowledge and agree that
such information provided by or on behalf of any Underwriter consists solely of
the names and corresponding share amounts set forth in the table of the
Underwriters under the caption “Underwriting”, the third, fourth, fifth and
sixth sentences of the fourth paragraph of text under the caption “Underwriting”
and the twelfth and thirteenth paragraphs of text under the caption
“Underwriting” (the “Underwriters’
Information”).
(d) Neither
the Prospectus and the Statutory Prospectus (as defined below), all considered
together (collectively, 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 based upon and in conformity with the
Underwriters’ Information furnished to the Company by the Representatives
specifically for use therein.
(e) Intentionally
omitted.
(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 Act to be distributed by the Company. The Company
agrees that it will not make any offer relating to the Securities that would
constitute a “free writing prospectus,” as defined in Rule 405 under the
Act.
Roth
Capital Partners, LLC
Merriman
Capital, Inc.
[•], 2011
Page 6 of
42
(g) Intentionally
omitted.
As used
in this Agreement, the terms set forth below shall have the following
meanings:
(i) “Time of Sale” means [•] [P.M.] (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 Act.
(h) Bernstein
& Pinchuk, LLP (“Bernstein & Pinchuk”), 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 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 (a “Material Adverse
Change”). Since the date of the latest balance sheet presented
in the Registration Statement, the General Disclosure Package and the
Prospectus, 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.
Roth
Capital Partners, LLC
Merriman
Capital, Inc.
[•], 2011
Page 7 of
42
(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 “Summary Consolidated Financial and
Operating Data” and, after giving effect to the Offering and the other
transactions (excluding the offer and sale of the Option 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, including the outstanding Shares and warrants 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
Shares or other security of the Company or any Subsidiary that is convertible
into, or exercisable or exchangeable for Shares or equity securities, or that
holds the right to acquire any Shares 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 Shares or any security convertible into Shares, or any
contracts or commitments to issue or sell Shares or any such options, warrants,
rights or convertible securities.
(k) The
Securities have been duly and validly authorized and, when issued, delivered and
paid for in accordance with this Agreement on the Closing Date or Option Closing
Date, as the case may be, 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 Securities in the Offering. The Securities
conform in all material respects to the descriptions thereof contained in the
Registration Statement, the General Disclosure Package and the
Prospectus. Except as disclosed in the Registration Statement, the
General Disclosure Package and the Prospectus, neither the Company nor any
Subsidiary has outstanding any Relevant Securities.
Roth
Capital Partners, LLC
Merriman
Capital, Inc.
[•], 2011
Page 8 of
42
(l) The
descriptions of the ownership structure of the Company and its subsidiaries as
set forth in Exhibit 21.1 to the Registration Statement (collectively, the
“Subsidiaries”) are
accurate and complete. All consents, approvals, authorizations or orders of, or
registrations or filings with any U.S. or PRC governmental authority required
for the performance by the Company of its obligations under this Agreement have
been duly obtained, and none of such governmental authorizations has been
withdrawn or revoked nor, to the Company’s knowledge, are there circumstances
which may give rise to such governmental authorizations being withdrawn or
revoked, or is subject to any condition precedent which has not been fulfilled
or performed, except for such consents, approvals, authorizations, orders,
registrations or filings, the failure of which to obtain or make, as the case
may be, would not result in a Material Adverse Effect (as defined
below).
(m) 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. 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 Shares.
(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 (any
such effect being a “Material
Adverse Effect”).
Roth
Capital Partners, LLC
Merriman
Capital, Inc.
[•], 2011
Page 9 of
42
(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 (in the case of clauses (ii) and (iii) above) for any defaults or
violations that would not have a Material Adverse Effect.
(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 obligations of the Company and is enforceable against the Company in
accordance with its 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 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, except for such Consents the failure of which to hold would not
have a Material Adverse Effect, and each such Consent is valid and in full force
and 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.
Roth
Capital Partners, LLC
Merriman
Capital, Inc.
[•], 2011
Page 10
of 42
(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 a Material Adverse Effect.
(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 NASDAQ Global Market, where the
Shares have been approved for listing, and the Financial Industry Regulatory
Authority, Inc. (“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 generally accepted accounting principles of the United States and 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 in all material respects 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 in
all material respects 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.
Roth
Capital Partners, LLC
Merriman
Capital, Inc.
[•], 2011
Page 11
of 42
(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.
(x) The
statistical, industry-related and market-related data obtained by the
Company included in the Registration Statement, the General Disclosure
Package and the Prospectus are based on or derived from sources which the
Company 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 Shares are registered
pursuant to Section 12(b) of the Exchange Act and the outstanding Shares are
listed on the NASDAQ Global Market. The Company has taken no action
designed to, or likely to have the effect of, terminating the registration of
the Shares under the Exchange Act or de-listing the Shares from the NASDAQ
Global Market, nor has the Company received any notification that the Commission
or NASDAQ Global Market is contemplating terminating such registration or
listing. Since February 10, 2010, the Company has timely filed all
reports, schedules, forms, statements and other documents required to be filed
by it with the Commission pursuant to the reporting requirements of the Exchange
Act (all of the foregoing, and all other documents and registration statements
heretofore filed by the Company with the Commission being hereinafter referred
to as the “SEC
Documents”). None of the SEC
Documents, at the time they were filed with the Commission (except those SEC
Documents that were subsequently amended), contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. As of their
respective dates, the financial statements of the Company included (or
incorporated by reference) in the SEC Documents complied in all material
respects with applicable accounting requirements and the published rules and
regulations of the Commission or other applicable rules and regulations with
respect thereto (except those SEC Documents that were subsequently
amended).
(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.
Roth
Capital Partners, LLC
Merriman
Capital, Inc.
[•], 2011
Page 12
of 42
(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, 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
NASDAQ Global Market and the Board of Directors and/or audit committee has
adopted a charter that satisfies the requirements of the rules and regulations
of the NASDAQ Global Market. 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, to its knowledge, any of its Affiliates (as defined in Rule 144
under the Securities Act) 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, to its knowledge, 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, to its
knowledge, 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 Shares 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.
Roth
Capital Partners, LLC
Merriman
Capital, Inc.
[•], 2011
Page 13
of 42
(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
Representatives 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 in any material
respect.
(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 for 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 such Form, have been
satisfied.
(ii) The
Company is not and after giving effect to the 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.
(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, in violation of the Sarb-Ox directly
or indirectly, including through a Subsidiary (other than as permitted under the
Sarb-Ox for depositary institutions), 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.
Roth
Capital Partners, LLC
Merriman
Capital, Inc.
[•], 2011
Page 14
of 42
(kk) The
Company is in compliance with the applicable provisions of Sarb-Ox and the Rules
and Regulations promulgated thereunder and related or similar rules and
regulations promulgated by the NASDAQ Global Market 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, the
Prospectus and that certain engagement letter entered into between the Company
and Roth Capital Partners, LLC, 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 lease 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 Statement and the Prospectus. Neither
the Company nor the Subsidiaries own any real property. 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 against the continued possession of any real property,
whether held under lease or sublease by the Company or any
Subsidiary.
Roth
Capital Partners, LLC
Merriman
Capital, Inc.
[•], 2011
Page 15
of 42
(nn) The
Company and each Subsidiary: (i) owns or possesses adequate rights 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, except for such intellectual property, the failure of which to own
or possess, as the case may be, would not result in a Material Adverse Effect,
and (ii) have no knowledge that the conduct of their respective businesses do or
will materially conflict with, and they have not received any notice of any
claim of conflict with, any such right of others. To the Company’s knowledge,
all material technical information developed by and belonging to the Company or
any Subsidiary which has not been patented has been kept confidential so as,
among other things, all such information may be deemed proprietary to the
Company. 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 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 in all material respects 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.
Roth
Capital Partners, LLC
Merriman
Capital, Inc.
[•], 2011
Page 16
of 42
(pp) Each
of the Company and the Subsidiaries has accurately prepared and timely filed all
federal, state, foreign, including the People’s Republic of China (the “PRC”) and the Hong Kong
Special Administrative Region (“Hong Kong”), 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 (whether or not such amounts are shown as due on any tax
return). 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 and Hong Kong, 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. Neither the
Company nor any Subsidiary is required to make any tax filings in the British
Virgin Islands.
(qq) No
labor disturbance by the employees of the Company or any Subsidiary currently
exists or, to the Company’s knowledge, is imminent.
(rr) The
Company and each Subsidiary have at all times operated their respective
businesses (i) in compliance with all applicable federal, state, local, PRC and
other foreign laws and regulations relating to the protection of human health
and safety, the environment or hazardous or toxic substances or wastes,
pollutants or contaminants (“Environmental Laws”), (ii)
have received and are in compliance with all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) have not received notice of any actual or
potential liability under any environmental law, except where such
non-compliance with Environmental Laws, failure to receive required permits,
licenses or other approvals, or liability would not, individually or in the
aggregate, have a Material Adverse Effect.
(ss) 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 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.
Roth
Capital Partners, LLC
Merriman
Capital, Inc.
[•], 2011
Page 17
of 42
(tt) Neither
the Company nor any of its Subsidiaries is required to perform any of
obligations under the U.S. Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations thereunder. Except as required by
applicable laws and as disclosed in the Registration Statement, the General
Disclosure Package and the Prospectus, none of the Company and its Subsidiaries
has, or is obligated to provide, any Benefit Plan. For purposes
hereof, “Benefit Plan”
means any plan, contract or other arrangement, formal or informal, whether oral
or written, providing any benefit to any present or former officer, director or
employee, or dependent or beneficiary thereof, including any profit sharing,
deferred compensation, share option, performance share, employee share purchase,
severance, retirement, health, death or disability benefits or insurance plan.
No employee of the Company and its Subsidiaries is owed any back wages or other
compensation for services rendered except as set forth on the Company’s
consolidated financial statements. Each of the Company and its
Subsidiaries has complied in all material respects with all applicable laws
related to employment, the Benefit Plans and other employee benefits. The
execution of this Agreement, the Representatives’ Warrants or consummation of
the Offering does not constitute a triggering event under any Benefit 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.
(uu) 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 applicable law, or
(ii) made any payment to any federal or state governmental officer or official,
including in the PRC, or other Person acting in an official capacity charged
with similar public duties, other than payments that are not prohibited by the
laws of the United States or any jurisdiction thereof.
(vv) 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.
(ww) The
Company is in compliance with all applicable PRC and other foreign and U.S.
laws, rules, regulations, ordinances, directives, judgments, decrees and orders
(including, without limitation, all securities and tax laws, rules and
regulations of the PRC), except for such non-compliance as would not have a
Material Adverse Effect. As of the date hereof and as of the Closing
Date and Option Closing Date, if any, and except as contemplated by this
Agreement, neither the Company nor any Subsidiary operates within the United
States or any state or territory thereof.
Roth
Capital Partners, LLC
Merriman
Capital, Inc.
[•], 2011
Page 18
of 42
(xx) As
of the date hereof and as of the Closing Date and Option Closing Date, if any,
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.
(yy) Each
of the Company and Subsidiaries, and to the knowledge of the Company, each of
its Affiliates and any of the respective officers, directors, supervisors,
managers, agents or employees of each of the foregoing, has not violated, its
participation in the offering will not violate, and the Company has instituted
and maintains policies and procedures designed to ensure continued compliance
with, each of the following laws: (a) anti-bribery laws, including,
but not limited to, any applicable law, rule, or regulation of any locality,
including but not limited to any law, rule, or regulation promulgated to
implement the OECD Convention on Combating Bribery of Foreign Public Officials
in International Business Transactions, signed December 17, 1997, including
the U.S. Foreign Corrupt Practices Act of 1977, as amended, or any other law,
rule or regulation of similar purposes and scope, (b) anti-money laundering
laws, including but not limited to, applicable federal, state, international,
foreign or other laws, regulations or government guidance regarding anti-money
laundering, including, without limitation, U.S. Currency and Foreign
Transactions Reporting Act of 1970, Title 18 US. Code section 1956 and 1957, the
Patriot Act, the Bank Secrecy Act, and international anti-money laundering
principles or procedures by an intergovernmental group or organization, such as
the Financial Action Task Force on Money Laundering, of which the United States
and/or PRC is a member and with which designation representative of the United
States and/or PRC to the group or organization continues to concur, all as
amended, and any executive order, directive, or regulation pursuant to the
authority of any of the foregoing, or any orders or licenses issued thereunder
(collectively, the “Money
Laundering Laws”) or (c) laws and regulations imposing U.S. economic
sanctions measures, including, but not limited to, the International Emergency
Economic Powers Act, the Trading with the Enemy Act, the United Nations
Participation Act and the Syria Accountability and Lebanese Sovereignty Act, all
as amended, and any executive order, directive, or regulation pursuant to the
authority of any of the foregoing, including the regulations of the United
States Treasury Department set forth under 31 CFR, Subtitle B, Chapter V, as
amended, or any orders or licenses issued thereunder. The operations of the
Company and its Subsidiaries are and have been conducted at all times in
compliance in all material respects with applicable financial recordkeeping and
reporting requirements of the Money Laundering Laws and no action, suit or
proceeding by or before any court or governmental agency, authority or body or
any arbitrator involving the Company or any of its Subsidiaries with respect to
the Money Laundering Laws is pending or, to the knowledge of the Company,
threatened.
Roth
Capital Partners, LLC
Merriman
Capital, Inc.
[•], 2011
Page 19
of 42
(zz) 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 Act or to
include any such securities in a registration statement to be filed by the
Company.
(aaa) Neither
the Company nor, to the knowledge of the Company, any director, officer, agent,
employee or Affiliate of the Company 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.
(bbb) None
of the Subsidiaries is currently prohibited, directly or indirectly, from paying
any dividends to the Company, from making any other distribution on such
Subsidiary’s share capital, from repaying to the Company any loans or advances
to such Subsidiary from the Company or from transferring any of such
Subsidiary’s property or assets to the Company or any other Subsidiary, except
as described in or contemplated by the Registration Statement, the General
Disclosure Package and the Prospectus; and all such dividends and distributions
will not be subject to withholding or other taxes under PRC laws and regulations
and are otherwise free and clear of any other tax, withholding or deduction in
the PRC, and without the necessity of obtaining any governmental authorization
in the PRC.
(ccc) Except
as described in the Registration Statement, the General Disclosure Package and
the Prospectus, each of the Company and Subsidiaries has taken or is in the
process of taking all reasonable steps (to the extent required of the Company
and each such Subsidiary under PRC laws and regulations) to comply in all
material respects with, and used its commercially reasonable efforts to ensure
compliance in all material respects by each of (i) its principal stockholders as
disclosed in the Registration Statement, the General Disclosure Package and the
Prospectus, and (ii) any other persons known to the Company that are required to
comply (in connection with their interests in the Company) with applicable rules
and regulations of the relevant PRC governmental agencies (including, without
limitation, the Ministry of Commerce, National Development and Reform Commission
and the State Administration of Foreign Exchange) relating to overseas
investment by PRC residents and citizens or overseas listing by offshore special
purpose vehicles controlled directly or indirectly by PRC companies and
individuals, such as the Company (the “PRC Overseas Investment and Listing
Regulations”), including, without limitation, requesting such persons to
complete any registration and other procedures required under applicable PRC
Overseas Investment and Listing Regulations.
Roth
Capital Partners, LLC
Merriman
Capital, Inc.
[•], 2011
Page 20
of 42
(ddd) As
of the date hereof, as of the date of the Prospectus, the Closing Date and the
Option Closing Date, if any, the Rules on Mergers and Acquisitions of Domestic
Enterprises by Foreign Investors jointly promulgated by the Ministry of
Commerce, the State Assets Supervision and Administration Commission,
the State Tax Administration, the State Administration of Industry and Commerce,
the China Securities Regulatory Commission (“CSRC”) and the State
Administration of Foreign Exchange of the PRC on August 8, 2006 (the “M&A Rules”) or any
official clarifications, guidance, interpretations or implementation rules in
connection with or related to the M&A Rules did not and do not apply to the
issuance and sale of the Securities, the quotation and trading of the Securities
on the NASDAQ Global Market or the consummation of the transactions contemplated
by this Agreement. Nor is CSRC or other PRC government approval required in
connection with the above.
(eee) Approval
of the shareholders of the Company under the rules and regulations of the NASDAQ
Global Market or other applicable laws and regulations is not required for the
Company to issue and deliver the Securities to the several
Underwriters.
(fff) Except
as may have been disclosed in the FINRA questionnaires provided to the
Underwriters, there are no affiliations or associations between (i) any member
of the FINRA and (ii) the Company or, to the knowledge of the Company, any of
the Company’s officers, directors or 5% or greater security holders or any
beneficial owner of the Company’s unregistered equity securities that were
acquired at any time on or after the 180th day immediately preceding the date
the Prospectus was initially filed with the Commission, except as disclosed in
the General Disclosure Package and in the Prospectus.
(ggg) The
Registration Statement, the General Disclosure Package and the Prospectus each
fairly and accurately describe in all material respects all material trends,
demands, commitments and events known to the Company, and uncertainties, and the
potential effects thereof, that the Company believes would materially affect its
liquidity and are reasonably likely to occur. As used herein, the
phrase “reasonably likely” refers to a disclosure threshold lower than “more
likely than not.”
(hhh) None
of the Company, Subsidiary or any of their respective properties or assets has
any immunity from the jurisdiction of any court or from any legal process
(whether through service or notice, attachment prior to judgment, attachment in
aid of execution or otherwise) under the laws of the PRC, British Virgin
Islands, Hong Kong, New York, Nevada or United States federal law; and, to the
extent that the Company, any of the Subsidiaries or any of their respective
properties, assets or revenues may have or may hereafter become entitled to any
such right of immunity in any such court in which proceedings may at any time be
commenced, each of the Company and its Subsidiaries waive and will waive such
right to the extent permitted by law.
Roth
Capital Partners, LLC
Merriman
Capital, Inc.
[•], 2011
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(iii) The
statement set forth in the Registration Statement, the General Disclosure
Package and the Prospectus under the captions “Risk Factors— Risks Associated
with Doing Business in Greater China — The approval of the China
Securities Regulatory Commission may be required in connection with this
offering under a regulation adopted in August 2006, and, if required, we cannot
predict whether we will be able to obtain such approval” is a fair and accurate
summary in all material respects of the matters described therein, and nothing
has been omitted from such summary which would make the same misleading in any
material respect.
(jjj) 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.
(kkk) 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).
(lll) Any
certificate signed by or on behalf of the Company and delivered to the
Underwriters or to Pillsbury Winthrop Shaw Pittman 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. Offering. Upon
authorization of the release of the Firm Shares by the Representatives, the
Underwriters propose to offer the Shares for sale to the public upon the terms
and conditions set forth in the Prospectus. Each Underwriter agrees
that it will not make any offer relating to the Securities that would constitute
a “free writing prospectus,” as defined in Rule 405 under the
Act.
Roth
Capital Partners, LLC
Merriman
Capital, Inc.
[•], 2011
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4. 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 Representatives of such
timely filing.
(b) During
the period beginning on the date hereof and ending on the later of the Closing
Date (or Option Closing Date, if any) if in the reasonable opinion of
counsel for the Underwriters, 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
Underwriters 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 Underwriters reasonably object within 36 hours of delivery thereof to
the Underwriters and their counsel.
(c) After
the date of this Agreement, the Company shall promptly advise the Underwriters
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,
or the Prospectus, or of any proceedings to remove, suspend or terminate from
listing the Shares from any securities exchange upon which they are 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) were received in
a timely manner by the Commission (without reliance on Rule
424(b)(8)).
Roth
Capital Partners, LLC
Merriman
Capital, Inc.
[•], 2011
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(d) (i)
During the Prospectus Delivery Period, the Company will comply with all
applicable 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 Underwriters or counsel to the
Underwriters to amend the Registration Statement or supplement the Prospectus
(or if the Prospectus is not yet available to prospective purchasers, the
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 Underwriters 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) The
Company will promptly deliver to the Underwriters and Underwriters’ Counsel,
upon their request, 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.
(e) 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.
(f) 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 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).
(g) The
Company will use its reasonable best efforts, in cooperation with the
Representatives, 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 Representatives 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.
Roth
Capital Partners, LLC
Merriman
Capital, Inc.
[•], 2011
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(h) 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.
(i)
Following the Closing Date, the Company and the
individuals listed on Schedule B hereto
(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
Representatives the agreements of Lock-Up Parties to the foregoing effect prior
to the Closing Date, which agreements shall be substantially in the forms
attached hereto as Annex I(a) and Annex I(b). The
Company will enforce the terms of each lock-up agreement and issue stop-transfer
instructions to the transfer agent for the Ordinary Shares with respect to any
transaction or contemplated transaction that would constitute a breach of or
default under the applicable lock-up agreement.
(h) To
the extent the Company remains subject to Sarb-Ox, the Company and its
Subsidiaries will maintain such controls and other procedures, including without
limitation those required by Sections 302 and 906 of Sarb-Ox and the applicable
regulations thereunder, that are designed to ensure that information required to
be disclosed by the Company in the reports that it files or submits under the
Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the Commission’s rules and forms, including without
limitation, controls and procedures designed to ensure that information required
to be disclosed by the Company in the reports that it files or submits under the
Exchange Act is accumulated and communicated to the Company’s management,
including its principal executive officer and its principal financial officer,
or persons performing similar functions, as appropriate to allow timely
decisions regarding required disclosure, to ensure that material information
relating to Company, including its Subsidiaries, is made known to them by others
within those entities.
(j) During
the period of three (3) years from the Closing Date (or Option Closing Date, if
any), to the extent such information is not available on EDGAR, 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 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.
Roth
Capital Partners, LLC
Merriman
Capital, Inc.
[•], 2011
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(k) Prior
to the Closing Date, the Company will not issue any press release or other
communication directly or indirectly or hold any press conference with respect
to the Company and/or its Subsidiaries, their condition, financial or otherwise,
or the earnings, business, operations or prospects of any of them, or the
offering of the Securities (except for routine oral marketing communications in
the ordinary course of business and consistent with the past practices of the
Company and of which the Underwriters are notified), without the prior written
consent of the Representatives at least two Business Days prior to the date of
dissemination, which such consent shall not be unreasonably
withheld.
(l)
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 Representatives, 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.
(m) The
Company will use its reasonable best efforts to effect and maintain the listing
of the Securities on the NASDAQ Global Market, the New York Stock Exchange or
NYSE/Amex. If the Company fails to maintain the listing of its Shares
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.
(n) The
Company, during the period when the Prospectus is required to be delivered under
the Securities Act or the Exchange Act, will 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.
(o) The
Company will use its reasonable 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 (or Option Closing Date, if any), and to satisfy all conditions
precedent to the delivery of the Securities.
(p) The
Company will not take, and will use its reasonable best efforts to 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.
Roth
Capital Partners, LLC
Merriman
Capital, Inc.
[•], 2011
Page 26
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(q) The
Company shall cause to be prepared and delivered to the Representatives, 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 Representatives, 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 Representatives, 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 Representatives 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.
(r) Intentionally
omitted.
(s) The
Company and its Subsidiaries will comply in all material respects with all
applicable provisions of Sarb-Ox.
5. Consideration; Payment of
Expenses.
(a) The
Representatives reserve 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.
(b) At
Closing, the Company will reimburse Roth Capital Partners, LLC for up to
$100,000 of its out-of-pocket expenses incurred in connection with the purchase
and sale of the Securities. In addition, on the Closing Date and
Option Closing Date, if applicable, the Company will issue to Roth Capital
Partners, LLC warrants to purchase a number of Shares equal to 5% of the Firm
Shares and Option Shares, as the case may be. The warrants will have a term
of three years, have an exercise price equal to 120% of the public offering
price of the Securities, will provide for cashless exercise at all times and, in
accordance with FINRA Rule 5110(g)(1), may not be sold, transferred, assigned,
pledged or hypothecated, or be the subject of any hedging, short sale,
derivative, put or call transaction that would result in the effective economic
disposition of such warrant by any person for a period of 180 days immediately
following the effective date of the registration statement, except as provided
in FINRA Rule 5110(g)(2).
(c) 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:
Roth
Capital Partners, LLC
Merriman
Capital, Inc.
[•], 2011
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(i) all
expenses in connection with the preparation, printing, formatting for EDGAR and
filing of the Registration Statement, any Preliminary Prospectus, General
Disclosure Package and the Prospectus and any and all exhibits, amendments and
supplements thereto and the mailing and delivering of a sufficient quantity of
copies thereof to the Underwriters and dealers as the Representatives may
reasonably request;
(ii) all
fees and expenses in connection with the filing of Corporate Offerings Business
& Regulatory Analysis (“COBRADesk”) filings with
FINRA, including the reasonable fees and disbursements of counsel for the
Underwriters in connection with such filing;
(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
expenses in connection with the qualifications of the Securities for offering
and sale under state or foreign securities or blue sky laws, including the fees
and disbursements of counsel for the Underwriters in connection with such
qualification and in connection with any blue by survey undertaken by such
counsel;
(vi) all
fees and expenses in connection with listing the Securities on the NASDAQ Global
Market;
(vii) all
travel expenses of the Company’s officers and employees and any other expense of
the Company incurred in connection with attending or hosting meetings with
prospective purchasers of the Securities;
(viii) any
stock transfer taxes incurred in connection with this Agreement or the
Offering;
(ix) the
cost of preparing stock certificates representing the Securities;
(x) the
cost and charges of any transfer agent or registrar for the Securities;
and
Roth
Capital Partners, LLC
Merriman
Capital, Inc.
[•], 2011
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(xi) all
other costs and expenses incident to the performance of the Company obligations
hereunder which are not otherwise specifically provided for in this Section
5.
Except as set forth herein, the
Underwriters shall be responsible for all expenses incurred by them in
connection with the Offering.
6. 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 performance by the Company of its obligations hereunder,
and (iii) each of the following additional conditions set forth
below. For purposes of this Section 6, 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 Representatives. 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 or the Prospectus shall have been issued; no proceedings for
the issuance of such an order shall have been initiated or, to the Company’s
knowledge, threatened; any request of the Commission for additional information
(to be included in the Registration Statement, the General Disclosure Package,
the Prospectus or otherwise) shall have been complied with to the
Representatives’ satisfaction; and FINRA shall have raised no objection to the
fairness and reasonableness of the underwriting terms and
arrangements.
(b) The
Representatives 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, contains an untrue
statement of fact which, in the Representatives’ reasonable opinion, is
material, or omits to state a fact which, in the Representatives’ reasonable
opinion, is material and is required to be stated therein or necessary to make
the statements therein not misleading.
Roth
Capital Partners, LLC
Merriman
Capital, Inc.
[•], 2011
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(c) The
Representatives shall have received (i) the written opinion of Loeb & Loeb,
LLP, United States legal counsel for the Company, dated as of the Closing Date,
addressed to the Representatives of the Underwriters substantially in the form
attached hereto as Annex II, (ii) the
written opinion of Lewis and Roca LLP, legal counsel for the Company with
respect to the laws of the State of Nevada dated as of the Closing Date,
addressed to the Representatives of the Underwriters substantially in the form
attached hereto as Annex III and (iii)
the written opinion of Han Kun Law Offices, legal counsel for the Company with
respect to the laws of the PRC dated as of the Closing Date, addressed to the
Representatives of the Underwriters substantially in the form attached hereto as
Annex
IV.
(d) All
proceedings taken in connection with the sale of the Securities herein
contemplated shall be satisfactory in form and substance to the Representatives
and to Underwriters’ Counsel.
(e) The
Representatives 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 6 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 Sections 1
and 2 hereof are 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) 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, to the Company’s knowledge,
threatened by the Commission, and (v) 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.
(f) On
the date of this Agreement and on the Closing Date, the Representatives shall
have received a “cold comfort” letter from Bernstein & Pinchuk as of
the date of the date of delivery and addressed to the Underwriters and in form
and substance satisfactory to the Representatives and Underwriters’ Counsel,
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 three (3) 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.
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Capital Partners, LLC
Merriman
Capital, Inc.
[•], 2011
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(g) 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 Representatives, 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).
(h) The
Representatives 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.
(i)
The Securities shall have been
approved for listing on the NASDAQ Global Market.
(j)
FINRA shall have confirmed that it has not
raised any objection with respect to the fairness and reasonableness of the
underwriting terms and arrangements.
(k) The
Representatives shall have received a certificate of the Company’s Secretary,
dated such Closing Date, in form and substance reasonably satisfactory to the
Representatives.
(l)
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.
If any of
the conditions specified in this Section 6 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 Representatives or to
Underwriters’ Counsel pursuant to this Section 6 shall not be reasonably
satisfactory in form and substance to the Representatives and to Underwriters’
Counsel, all obligations of the Underwriters hereunder may be cancelled by the
Representatives 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.
Roth
Capital Partners, LLC
Merriman
Capital, Inc.
[•], 2011
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7. 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 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 (i) 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, in reliance upon
and in conformity with the Underwriters Information, or (ii) the Underwriters’
failure to deliver a final prospectus or notice of registration in accordance
with Rule 173 of the Securities Act.
(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 (i) 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 or (ii) the Underwriters’ failure to deliver a final
prospectus or notice of registration in accordance with Rule 173 of the
Securities Act; 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 Representatives consists solely of the material referred to in the last
sentence of Section 2.1(c) hereof.
Roth
Capital Partners, LLC
Merriman
Capital, Inc.
[•], 2011
Page 32 of
42
(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 7 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 advance 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, or (iii) 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 7 or Section 8 hereof (whether or not the indemnified party is an actual
or potential party thereto), unless 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.
Roth
Capital Partners, LLC
Merriman
Capital, Inc.
[•], 2011
Page 33 of
42
8. Contribution. In
order to provide for contribution in circumstances in which the indemnification
provided for in Section 7 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 8 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 8 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 8: (i) no Underwriter shall be required to contribute
any amount in excess of the amount by which the discounts and commissions
applicable to the Securities 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 8, 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 8 or
otherwise. The obligations of the Underwriters to contribute pursuant
to this Section 8 are several in proportion to the respective number of
Securities to be purchased by each of the Underwriters hereunder and not
joint.
Roth
Capital Partners, LLC
Merriman
Capital, Inc.
[•], 2011
Page 34 of
42
9. 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 Representatives 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 Representatives in their sole discretion shall
make.
(b)
In the event that the aggregate number of Default
Shares exceeds 10% of the number of Firm Shares, the Representatives 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 Representatives do
not arrange for the purchase of the Default Shares as provided in this Section
9, the Representatives shall notify the Company, at which time the Company shall
have the option to procure, within three calendar days of receiving such notice,
another underwriter or underwriters reasonably acceptable to the Underwriters to
purchase the Default Shares. If at the expiration of such three
calendar day period the Company does not procure another underwriter or
underwriters in accordance with the immediately preceding sentence, this
Agreement shall thereupon terminate, without liability on the part of the
Company with respect thereto (except in each case as provided in Sections 4, 6,
7, 9 and 11(d)) or the Underwriters.
Roth
Capital Partners, LLC
Merriman
Capital, Inc.
[•], 2011
Page 35 of
42
(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 Representatives 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 9 with like effect as if it had
originally been a party to this Agreement with respect to such Firm
Shares.
10. Survival of Representations
and Agreements. All representations, warranties, and
agreements of the Company herein or in certificates delivered pursuant hereto,
including, but not limited to, the agreements of the several Underwriters and
the Company contained in Sections 7 and 8 hereof, shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
any Underwriter or any controlling person thereof, or the Company or any of its
officers, directors, or controlling persons, and shall survive delivery of, and
payment for, the Securities to and by the Underwriters hereunder.
11. Effective Date of Agreement;
Termination.
(a)
This Agreement shall become effective upon the later of: (i) receipt
by the Representatives 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 11 and of Sections 1, 4, 6, 7 and 11 through 16,
inclusive, shall remain in full force and effect at all times after the
execution hereof.
(b)
The Representatives 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 Representatives 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 Global Market or the NYSE
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 NASDAQ Global Market or 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; (iv) any downgrading shall have occurred in the
Company’s corporate credit rating or the rating accorded the Company’s debt
securities or trust preferred stock by any “nationally recognized statistical
rating organization” (as defined for purposes of Rule 436(g) under the
Securities Act) or if any such organization shall have been publicly announced
that it has under surveillance or review, with possible negative implications,
its rating of any of the Company’s debt securities; or (v) (A) there shall have
occurred 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 Representatives,
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.
Roth
Capital Partners, LLC
Merriman
Capital, Inc.
[•], 2011
Page 36 of
42
(c)
Any notice of termination pursuant to
this Section 11 shall be in writing.
(d) If
this Agreement shall be terminated pursuant to any of the provisions hereof
(other than pursuant to Section 9(b) hereof), or if the sale of the Securities
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
Representatives, 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 $100,000 less any amounts
previously paid by the Company.
12. Notices. All
communications hereunder, except as may be otherwise specifically provided
herein, shall be in writing, and:
(a)
if sent to the Representatives or any Underwriter, shall be
mailed, delivered, or faxed and confirmed in writing, to Roth Capital Partners,
LLC, 24 Corporate Plaza Drive, Newport Beach, CA 92660, Attention: General
Counsel, and to Merriman Capital, Inc., 135 East 57th Street,
24th
Floor, New York, New York 10022, Attention: Michael Marrus, Managing
Director of Investment Banking, with a copy to Underwriters’ Counsel at
Pillsbury Winthrop Shaw Pittman LLP, 1540 Broadway, New York, New York 10036,
Attention: Ali Panjwani, 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, provided, however, that any
notice to an Underwriter pursuant to Section 7 shall be delivered or sent by
mail or facsimile transmission to such Underwriter at its address set forth in
its acceptance facsimile to the Representatives, which address will be supplied
to any other party hereto by the Representatives upon request. Any
such notices and other communications shall take effect at the time of receipt
thereof.
Roth
Capital Partners, LLC
Merriman
Capital, Inc.
[•], 2011
Page 37 of
42
13. 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 Sections 7 and
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 Representatives, 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 Securities from any of the
Underwriters.
14. 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
Underwriters, 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.
15. 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.
Roth
Capital Partners, LLC
Merriman
Capital, Inc.
[•], 2011
Page 38 of
42
16. 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.
17. Amendment. This
Agreement may only be amended by a written instrument executed by each of the
parties hereto.
18. 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.
19. 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 Securities; 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.
Roth
Capital Partners, LLC
Merriman
Capital, Inc.
[•], 2011
Page 39 of
42
20. 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.
21. 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.
22. Time is of the
Essence. Time shall be of the essence of this
Agreement.
23. FINRA. The
Underwriters acknowledge, understand and agree to comply with all applicable
rules promulgated by FINRA and the National Association of Securities Dealers
(“NASD”), including, but
not limited to, (i) NASD Rule 2420 and (ii) until such time as when FINRA Rule
5141 is declared effective by the Commission, NASD Rules 2730, 2740 and 2750,
and following such effective time, FINRA Rule 5141.
[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.
|
Very
truly yours,
|
||
|
TRUNKBOW
INTERNATIONAL HOLDINGS LIMITED
|
||
|
By:
|
|
|
|
Name:
|
||
|
Title:
|
||
Accepted
by the Representatives, acting for themselves and as
Representatives
of the Underwriters named on Schedule A attached
hereto,
as
of the date first written above:
|
ROTH
CAPITAL PARTNERS, LLC
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
|
|
MERRIMAN
CAPITAL, INC.
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
|
SCHEDULE
A
Underwriters
|
Underwriter
|
Number of Firm Shares
to be Purchased from the
Company
|
Over-Allotment
Option Shares
|
||
|
Roth
Capital Partners, LLC
|
[•]
|
[•]
|
||
|
Merriman
Capital, Inc.
|
[•]
|
[•]
|
||
|
Total
|
|
[•]
|
|
[•]
|
A-1
SCHEDULE
B
Lock-Up
Parties
Chief
Honour Investments Limited
Capital
Melody Limited
VeriFone,
Inc.
HPCG
Trunkbow Holdings, L.P.
Bay Peak
LLC
Dr. Hou
WanChun
Li
Qiang
Ye Yuan
Jun
Dr. An
ChungMing
Bao
Jihong
Wang
Xin
Cory
Roberts
Albert
Liu
Regis
Kwong
Dr. Tan
Kok Hui
Iris
Geng
Dr. Lv
Ting Jie
Huang
Zhaoxing
Li
Dong
Larry
Gilmore
A-2
ANNEX
I(a)
Company Lock-Up
Agreement
______, 2011
ROTH
CAPITAL PARTNERS, LLC
24
Corporate Plaza Drive
Newport
Beach, CA 92660
MERRIMAN
CAPITAL, INC.
135 East
57th
Street, 24th
Floor
New York,
NY 10022
as
representatives of the several underwriters
Re: Trunkbow International Holdings
Limited
Ladies
and Gentlemen:
As an inducement to the underwriters
(the “Underwriters”)
to execute an underwriting agreement (the “Underwriting
Agreement”) providing for a public offering (the “Offering”)
of shares of common stock, $0.001 par value per share (the “Shares”),
of Trunkbow International Holdings Limited, a corporation organized and existing
under the laws of State of Nevada (the “Company”),
the undersigned hereby agrees that without, in each case, the prior written
consent of Roth Capital Partners, LLC and Merriman Capital, Inc. (collectively,
the “Representatives”)
during the period specified in the second succeeding paragraph (the “Lock-Up
Period”), the undersigned will not (1) offer, pledge, announce the
intention to sell, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase, make any short sale or otherwise transfer or dispose of,
directly or indirectly, any Shares or any securities convertible into,
exercisable or exchangeable for or that represent the right to receive Shares
(including, without limitation, Shares which may be deemed to be beneficially
owned by the undersigned in accordance with the rules and regulations of the
Securities and Exchange Commission and securities which may be issued upon
exercise of a stock option or warrant) whether now owned or hereafter acquired
(the “Undersigned’s
Securities”) or (2) enter into any swap or other agreement that
transfers, in whole or in part, any of the economic consequences of ownership of
the Undersigned’s Securities, whether any such transaction described in clause
(1) or (2) above is to be settled by delivery of Shares or such other
securities, in cash or otherwise. The foregoing restriction is
expressly agreed to preclude the undersigned from engaging in any hedging or
other transaction which is designed to or which reasonably could be expected to
lead to or result in a sale or disposition of the Undersigned’s Securities even
if such Undersigned’s Securities would be disposed of by someone other than the
undersigned. Such prohibited hedging or other transactions would
include, without limitation, any short sale or any purchase, sale or grant of
any right (including without limitation any put or call option) with respect to
any of the Undersigned’s Securities or with respect to any security that
includes, relates to, or derives any significant part of its value from such
Undersigned’s Securities.
I-1
In addition, the undersigned agrees
that, without the prior written consent of the
Representatives, it
will not, during the Lock-Up Period, make any demand for or exercise any right
with respect to, the registration of any Shares or any security convertible into
or exercisable or exchangeable for Shares other than as contemplated in the
registration statement relating to the Offering.
The
initial Lock-Up Period will commence on the date of this Lock-Up Agreement and
continue and include the date 180 days after the date of the final prospectus
used to sell Shares in the Offering pursuant to the Underwriting Agreement,
provided, however, that if (1) during the last 17 days of the initial Lock-Up
Period, the Company releases earnings results or material news or a material
event relating to the Company occurs or (2) prior to the expiration of the
initial Lock-Up Period, the Company announces that it will release earnings
results during the 16-day period beginning on the last day of the initial
Lock-Up Period, then in each case the Lock-Up Period will be extended until the
expiration of the 18-day period beginning on the date of release of the earnings
results or the occurrence of the material news or material event, as applicable,
unless the
Representatives waive, in writing, such
extension.
Notwithstanding
the foregoing, (1) the Company may grant options to purchase securities of the
Company pursuant to option plans currently in effect which have been approved by
the Board of Directors of the Company, (2) the undersigned may transfer the
Undersigned’s Securities (i) as a bona fide gift or gifts and
(ii) to any trust for the direct or indirect benefit of the undersigned, or (3)
if the undersigned is a corporation, company, business trust, association,
limited liability company, partnership, limited liability partnership, limited
liability limited partnership or other entity (collectively, the “Entities”
or, individually, the “Entity”),
the undersigned may transfer Shares or securities convertible into or
exchangeable or exercisable for any Shares to any person or Entity which
controls, is directly or indirectly controlled by, or is under common control
with the undersigned; provided, in each case of
transfer pursuant to clause (1), (2), or (3), that (x) such transfer shall
not involve a disposition for value, (y) the transferee agrees in writing with
the Underwriters to be bound by the terms of this Lock-Up Agreement, and (z) no
filing by any party under Section 16(a) of the Securities Exchange Act of 1934,
as amended (the “Exchange
Act”), shall be required or shall be made voluntarily in connection with
such transfer.
In
addition, the foregoing restrictions shall not apply to (i) the exercise of
stock options granted pursuant to the Company’s equity incentive plans; provided that it shall apply
to any of the Undersigned’s Securities issued upon such exercise, or
(ii) the establishment of any contract, instruction or plan (a “Plan”)
that satisfies all of the requirements of Rule 10b5-1(c)(1)(i)(B) under the
Exchange Act; provided
that no sales of the Undersigned’s Securities shall be made pursuant to such a
Plan prior to the expiration of the Lock-Up Period (as such may have been
extended pursuant to the provisions hereof), and such a Plan may only be
established if no public announcement of the establishment or existence thereof
and no filing with the Securities and Exchange Commission or other regulatory
authority in respect thereof or transactions thereunder or contemplated thereby,
by the undersigned or any other person, shall be required, and no such
announcement or filing is made voluntarily, by the undersigned or any other
person, prior to the expiration of the Lock-Up Period (as such may have been
extended pursuant to the provisions hereof).
I-2
In
furtherance of the foregoing, the Company and its transfer agent and registrar
are hereby authorized to decline to make any transfer of Shares if such transfer
would constitute a violation or breach of this Lock-Up Agreement.
The
undersigned understands that it shall be released from all obligations under
this Lock-Up Agreement if (i) the Company or the Underwriters inform the
other that it does not intend to proceed with the Offering, (ii) the
Registration Statement does not become effective, or if the Underwriting
Agreement (other than the provisions thereof which survive termination) shall
terminate or be terminated prior to payment for and delivery of the Shares to be
sold thereunder, or (iii) the Offering is not completed by February 15,
2011.
The
undersigned understands that the Underwriters are entering into the Underwriting
Agreement and proceeding with the Offering in reliance upon this Lock-Up
Agreement.
This
Lock-Up Agreement shall be governed by, and construed in accordance with, the
laws of the State of New York.
Whether
or not the Offering actually occurs depends on a number of factors, including
market conditions. Any Offering will only be made pursuant to the
Underwriting Agreement, the terms of which are subject to negotiation among the
parties thereto.
[Signature
Page Follows]
I-3
The
undersigned hereby represents and warrants that the undersigned has full power
and authority to enter into this Lock-Up Agreement and that, upon request, the
undersigned will execute any additional documents necessary in connection with
the enforcement hereof. All authority herein conferred or agreed to
be conferred and any obligations of the undersigned shall be binding upon the
successors, assigns, heirs or personal representatives of the
undersigned.
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Very
truly yours,
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Printed
Name of Holder
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By:
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Signature
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Printed
Name of Person Signing
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(and
indicate capacity of person signing if signing as custodian,
trustee, or on behalf of an
entity)
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I-4
ANNEX
I(b)
Form of Lock-Up
Agreement
______, 2011
ROTH
CAPITAL PARTNERS, LLC
24
Corporate Plaza Drive
Newport
Beach, CA 92660
MERRIMAN
CAPITAL, INC.
135 East
57th
Street, 24th
Floor
New York,
NY 10022
as
representatives of the several underwriters
Re: Trunkbow International Holdings
Limited
Ladies
and Gentlemen:
As an inducement to the underwriters
(the “Underwriters”)
to execute an underwriting agreement (the “Underwriting
Agreement”) providing for a public offering (the “Offering”)
of shares of common stock, $0.001 par value per share (the “Shares”),
of Trunkbow International Holdings Limited, a corporation organized and existing
under the laws of State of Nevada (the “Company”),
the undersigned hereby agrees that without, in each case, the prior written
consent of Roth Capital Partners, LLC and Merriman Capital, Inc. (collectively,
the “Representatives”)
during the period specified in the second succeeding paragraph (the “Lock-Up
Period”), the undersigned will not (1) offer, pledge, announce the
intention to sell, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase, make any short sale or otherwise transfer or dispose of,
directly or indirectly, any Shares or any securities convertible into,
exercisable or exchangeable for or that represent the right to receive Shares
(including, without limitation, Shares which may be deemed to be beneficially
owned by the undersigned in accordance with the rules and regulations of the
Securities and Exchange Commission and securities which may be issued upon
exercise of a stock option or warrant) whether now owned or hereafter acquired
(the “Undersigned’s
Securities”) or (2) enter into any swap or other agreement that
transfers, in whole or in part, any of the economic consequences of ownership of
the Undersigned’s Securities, whether any such transaction described in clause
(1) or (2) above is to be settled by delivery of Shares or such other
securities, in cash or otherwise. The foregoing restriction is
expressly agreed to preclude the undersigned from engaging in any hedging or
other transaction which is designed to or which reasonably could be expected to
lead to or result in a sale or disposition of the Undersigned’s Securities even
if such Undersigned’s Securities would be disposed of by someone other than the
undersigned. Such prohibited hedging or other transactions would
include, without limitation, any short sale or any purchase, sale or grant of
any right (including without limitation any put or call option) with respect to
any of the Undersigned’s Securities or with respect to any security that
includes, relates to, or derives any significant part of its value from such
Undersigned’s Securities.
I-1
In addition, the undersigned agrees
that, without the prior written consent of the
Representatives, it
will not, during the Lock-Up Period, make any demand for or exercise any right
with respect to, the registration of any Shares or any security convertible into
or exercisable or exchangeable for Shares other than as contemplated in the
registration statement relating to the Offering.
The
initial Lock-Up Period will commence on the date of this Lock-Up Agreement and
continue and include the date 180 days after the date of the final prospectus
used to sell Shares in the Offering pursuant to the Underwriting Agreement,
provided, however, that if (1) during the last 17 days of the initial Lock-Up
Period, the Company releases earnings results or material news or a material
event relating to the Company occurs or (2) prior to the expiration of the
initial Lock-Up Period, the Company announces that it will release earnings
results during the 16-day period beginning on the last day of the initial
Lock-Up Period, then in each case the Lock-Up Period will be extended until the
expiration of the 18-day period beginning on the date of release of the earnings
results or the occurrence of the material news or material event, as applicable,
unless the
Representatives waive, in writing, such
extension.
The
undersigned hereby acknowledges that the Company will be requested to agree in
the Underwriting Agreement to provide written notice to the undersigned of any
event that would result in an extension of the Lock-Up Period pursuant to the
previous paragraph and agrees that any such notice properly delivered will be
deemed to have been given to, and received by, the undersigned. The
undersigned further agrees that, prior to engaging in any transaction or taking
any other action that is subject to the terms of this Lock-Up Agreement during
the period from the date of this Lock-Up Agreement to and including the 34th day
following the expiration of the initial Lock-Up Period, it will give notice
thereof to the Company and will not consummate such transaction or take any such
action unless it has received written confirmation from the Company that the
Lock-Up Period (as may have been extended pursuant to the previous paragraph)
has expired.
Notwithstanding
the foregoing, (1) the undersigned may transfer the Undersigned’s Securities (i)
as a bona fide gift or
gifts and (ii) to any trust for the direct or indirect benefit of the
undersigned or the immediate family of the undersigned, or (2) if the
undersigned is a corporation, company, business trust, association, limited
liability company, partnership, limited liability partnership, limited liability
limited partnership or other entity (collectively, the “Entities”
or, individually, the “Entity”),
the undersigned may transfer Shares or securities convertible into or
exchangeable or exercisable for any Shares to any person or Entity which
controls, is directly or indirectly controlled by, or is under common control
with the undersigned and, if the undersigned is a partnership or limited
liability company, it may transfer the Shares or securities convertible into or
exchangeable or exercisable for any Shares to its partners, former partners or
an affiliated partnership (or members, former members or an affiliated limited
liability company) managed by the same manager or managing partner (or managing
member, as the case may be) or management company, or managed by an entity
controlling, controlled by, or under common control with, such manager or
managing partner (or managing member) or management company in accordance with
partnership (or membership) interests; provided, in each case of
transfer pursuant to clause (1) or (2), that (x) such transfer shall not
involve a disposition for value, (y) the transferee agrees in writing with the
Underwriters to be bound by the terms of this Lock-Up Agreement, and (z) no
filing by any party under Section 16(a) of the Securities Exchange Act of 1934,
as amended (the “Exchange
Act”), shall be required or shall be made voluntarily in connection with
such transfer. For purposes of this Lock-Up Agreement, “immediate
family” shall mean any relationship by blood, marriage or adoption, not more
remote than first cousin.
I-2
In
addition, the foregoing restrictions shall not apply to (i) the exercise of
stock options granted pursuant to the Company’s equity incentive plans; provided that it shall apply
to any of the Undersigned’s Securities issued upon such exercise, or
(ii) the establishment of any contract, instruction or plan (a “Plan”)
that satisfies all of the requirements of Rule 10b5-1(c)(1)(i)(B) under the
Exchange Act; provided
that no sales of the Undersigned’s Securities shall be made pursuant to such a
Plan prior to the expiration of the Lock-Up Period (as such may have been
extended pursuant to the provisions hereof), and such a Plan may only be
established if no public announcement of the establishment or existence thereof
and no filing with the Securities and Exchange Commission or other regulatory
authority in respect thereof or transactions thereunder or contemplated thereby,
by the undersigned, the Company or any other person, shall be required, and no
such announcement or filing is made voluntarily, by the undersigned, the Company
or any other person, prior to the expiration of the Lock-Up Period (as such may
have been extended pursuant to the provisions hereof).
In
furtherance of the foregoing, the Company and its transfer agent and registrar
are hereby authorized to decline to make any transfer of Shares if such transfer
would constitute a violation or breach of this Lock-Up Agreement.
The
undersigned understands that the undersigned shall be released from all
obligations under this Lock-Up Agreement if (i) the Company or the
Underwriters inform the other that it does not intend to proceed with the
Offering, (ii) the Registration Statement does not become effective, or if
the Underwriting Agreement (other than the provisions thereof which survive
termination) shall terminate or be terminated prior to payment for and delivery
of the Shares to be sold thereunder, or (iii) the Offering is not completed
by February 15, 2011.
The
undersigned understands that the Underwriters are entering into the Underwriting
Agreement and proceeding with the Offering in reliance upon this Lock-Up
Agreement.
This
Lock-Up Agreement shall be governed by, and construed in accordance with, the
laws of the State of New York.
Whether
or not the Offering actually occurs depends on a number of factors, including
market conditions. Any Offering will only be made pursuant to the
Underwriting Agreement, the terms of which are subject to negotiation among the
parties thereto.
[Signature
Page Follows]
I-3
The
undersigned hereby represents and warrants that the undersigned has full power
and authority to enter into this Lock-Up Agreement and that, upon request, the
undersigned will execute any additional documents necessary in connection with
the enforcement hereof. All authority herein conferred or agreed to
be conferred and any obligations of the undersigned shall be binding upon the
successors, assigns, heirs or personal representatives of the
undersigned.
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Very
truly yours,
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Printed
Name of Holder
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By:
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Signature
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Printed
Name of Person Signing
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(and
indicate capacity of person signing if signing
as custodian, trustee, or on behalf of an
entity)
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II-1