Attached files
| file | filename |
|---|---|
| S-1/A - ZHENG HUI INDUSTRY CORP. | v209262_rr-s1a.htm |
| EX-4.2 - ZHENG HUI INDUSTRY CORP. | v209262_ex4-2.htm |
UNDERWRITING
AGREEMENT
between
Zheng
Hui Industry Corporation,
its
Operating Entities listed on Annex 1 hereto,
and
RODMAN
& RENSHAW, LLC
and
NEWBRIDGE
SECURITIES CORPORATION
as
Representatives
ZHENG
HUI INDUSTRY CORPORATION
UNDERWRITING
AGREEMENT
New York,
New York
___________
__, 2011
Rodman
& Renshaw, LLC
1251
Avenue of the Americas, 20th
Floor
New York,
New York 10020
Newbridge
Securities Corporation
1451 West
Cypress Creek Road
Ft.
Lauderdale, FL 33309
Ladies
and Gentlemen:
The
undersigned, Zheng Hui Industry Corporation, a company formed under the laws of
the State of Nevada (the “Company”), hereby confirms its
agreement with Rodman & Renshaw, LLC and Newbridge Securities Corporation
(hereinafter referred to as “you” (including its correlatives) or the “Representatives”) and with the
other underwriters named on Schedule 1 hereto for which the Representatives are
acting as representatives (the Representatives and such other underwriters being
collectively called the “Underwriters” or,
individually, an “Underwriter”) as
follows:
|
1.
|
Purchase
and Sale of Securities.
|
1.1 Firm
Securities.
1.1.1. Nature and Purchase of Firm
Securities.
(i) On
the basis of the representations and warranties herein contained, but subject to
the terms and conditions herein set forth, the Company agrees to issue and sell,
severally and not jointly, to the several Underwriters, an aggregate of
_____________ shares of common stock (the “Firm Shares”), par value
$0.001 per share (the “Shares”).
(ii) 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 1
attached hereto and made a part hereof at a purchase price (net of discounts and
commissions) of [___] per Share (seven percent 7%
of the per Share offering price). The Firm Shares are to be offered initially to
the public (the “Offering”) at the offering
price set forth on the cover page of the Prospectus (as defined in Section 2.1.1
hereof). In addition, as set forth more fully in Section 3.10 below, the Company
shall pay the Representatives a corporate finance fee equal to one percent
(1.00%) of the gross proceeds of the Offering, or $____ per Firm Share. Such
corporate finance fee shall be paid to the Representatives to cover their
internal expenses in connection with the Offering.
1.1.2. Shares Payment and
Delivery.
(i) Delivery
and payment for the Firm Shares shall be made at 10:00 a.m., Eastern time, on
the third (3rd)
Business Day following the effective date (the “Effective Date”) of the
Registration Statement (as defined in Section 2.1.2 below) (or the fourth
(4th)
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 Pillsbury Winthrop
Shaw Pittman LLP counsel to the Underwriters (“Pillsbury”), or at such other
place (or remotely by facsimile or other electronic transmission) as shall be
agreed upon by the Representatives and the Company. 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.” The hour and date of
delivery and payment for the Firm Shares is called the “Closing
Date.”
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(ii) Payment
for the Firm Shares shall be made on the Closing Date by wire transfer in
Federal (same day) funds, payable to the order of the Company upon delivery of
the certificates (in form and substance satisfactory to the Underwriters)
representing the Firm Shares (or through the facilities of the Depository Trust
Company (“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 (2) full Business Days 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. The term
“Business Day” means any
day other than a Saturday, a Sunday or a legal holiday or a day on which banking
institutions are authorized or obligated by law to close in New York
City.
1.2 Over-allotment
Option.
1.2.1. Option
Shares. For the purposes of covering any over-allotments in
connection with the distribution and sale of the Firm Shares, the Underwriters
are hereby granted, an option to purchase up to [_______] Shares representing
fifteen percent (15%) of the Firm Shares sold in the offering from the Company
(the “Over-allotment
Option”). Such additional
[ ]
Shares, the net proceeds of which will be deposited with the Company’s
account, are hereinafter referred to as “Option Shares.” The purchase
price to be paid for the Option Shares will be the same price per Option Share
as the price per Firm Shares set forth in Section 1.1.1 hereof. The Firm Shares
and the Option Shares are hereinafter referred to collectively as the “Public Securities.”
1.2.2. Exercise of
Option. The Over-allotment Option granted pursuant to Section
1.2.1 hereof may be exercised by the Representatives as to all (at any time) or
any part (from time to time) of the Option Shares within 45 days after the
Effective Date. The Underwriters will not be under any obligation to purchase
any Option Shares prior to the exercise of the Over-allotment Option. The
Over-allotment Option granted hereby may be exercised by the giving of oral
notice to the Company from the Representatives, which must be confirmed in
writing by overnight mail or facsimile or other electronic 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 (the “Option Closing Date”), which
will not be later than five (5) full Business Days after the date of the notice
or such other time as shall be agreed upon by the Company and the
Representatives, at the offices of Pillsbury or at such other place (including
remotely by facsimile or other electronic transmission) 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 Option Closing Date will
be as set forth in the notice. 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.
1.2.3. Payment and
Delivery. Payment for the Option Shares will be made on the
Option Closing Date by wire transfer in Federal (same day) funds as follows:
$[ ]
per Option Share, [____ % of the per Option Share offering price], payable to
the order of the Company upon delivery to you of certificates (in form and
substance satisfactory to the Underwriters) representing the Option Shares (or
through the facilities of DTC) for the account of the Underwriters. The Option
Shares shall be registered in such name or names and in such authorized
denominations as the Representatives may request in writing at least two (2)
full Business Days prior to the Option Closing Date. The Company shall not be
obligated to sell or deliver the Option Shares except upon tender of payment by
the Representatives for applicable Option Shares.
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1.3 Representatives’
Warrants. The Company issued and sold to the Representatives
(and/or their respective designees) on the Effective Date the warrants (the
"Representatives’
Warrants") for the purchase of an aggregate of [________] Shares [[___]% of the Firm Shares] for an
initial exercise price of $[__________] per Share, which is equal to
one hundred sixty-five percent (165%) of the public offering price per Share.
The Representatives’ Warrants shall be exercisable, in whole or in part,
commencing on the Effective Date and expiring on the five-year anniversary of
the Effective Date. The Representatives’ Warrants and the Shares issuable upon
exercise thereof are hereinafter referred to collectively as the “Representatives’ Securities”).
The Representatives understand and agree that there are significant restrictions
pursuant to FINRA Rule 5110 against transferring the Representatives’ Warrants
and the underlying Shares during the six (6) months after the Effective Date and
by its acceptance thereof shall agree that it will not sell, transfer, assign,
pledge or hypothecate the Representatives’ Warrants, or any portion thereof, or
be the subject of any hedging, short sale, derivative, put or call transaction
that would result in the effective economic disposition of such securities for a
period of six (6) months following the Effective Date to anyone other than (i)
an Underwriter or a selected dealer in connection with the Offering, or (ii) a
bona fide officer or partner of a Representative or of any such Underwriter or
selected dealer; and only if any such transferee agrees to the foregoing lock-up
restrictions (the “Representatives’ Lock-Up”). The Representatives will enforce
the Representatives’ Lock-Up and issue stop-transfer instructions to the
Transfer Agent (as defined below) for the Representatives’ Securities with
respect to any transaction or contemplated transaction that would constitute a
breach of or default under the applicable Representatives’
Lock-Up.
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2. Representations and
Warranties of the Company. The Company represents and warrants
to the Underwriters as of the Applicable Time (as defined below), as of the
Closing Date and as of the Option Closing Date, if any, as follows:
2.1
Filing of
Registration Statement.
2.1.1. Pursuant to the
Act. The Company has filed with the Securities and Exchange
Commission (the “Commission”) a registration
statement and an amendment or amendments thereto, on Form S-1 (File No. 333-168073),
including any related prospectus or prospectuses, for the registration of the
Public Securities under the Securities Act of 1933, as amended (the “Act”), which registration
statement and amendment or amendments have been prepared by the Company in all
material respects in conformity with the requirements of the Act and the rules
and regulations of the Commission under the Act (the “Regulations”). Except as the
context may otherwise require, such registration statement on file with the
Commission at the time the registration statement becomes effective (including
the prospectus, financial statements, schedules, exhibits and all other
documents filed as a part thereof or incorporated therein and all information
deemed to be a part thereof as of the Effective Date pursuant to paragraph (b)
of Rule 430A of the Regulations), is referred to herein as the “Registration Statement.”
The prospectus, in the form in which it is to be filed with the
Commission pursuant to Rule 424(b) of the Regulations, or, if the prospectus is
not to be filed with the Commission pursuant to Rule 424(b) of the Regulations,
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) of the Regulations), 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. The Registration
Statement has been declared effective by the Commission on the date hereof.
“Applicable Time” means
[___ am/pm on _________________, 20__], on the Effective Date or such other time
as agreed to by the Company and the Representatives.
2.1.2. Pursuant to the Exchange
Act. The Company has filed with the Commission a Form 8-A
(File Number 000-[_________]) providing for the registration under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), of the Firm
Shares and the Option Shares. The registration of the Firm Shares and the Option
Shares under the Exchange Act has been declared effective by the Commission on
the date hereof.
2.1.3. Registration under the
Exchange Act and Stock Exchange Listing. The Shares are
registered pursuant to Section 12(b) of the Exchange Act and are listed on the
NASDAQ Capital Market (“NASDAQ”), and 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 delisting the Shares from
NASADAQ, nor has the Company received any notification that the Commission or
NASDAQ is contemplating terminating such registration or listing except as
described in the Registration Statement and Prospectus.
2.2 No Stop Orders,
etc. Neither the Commission nor, to the best of the Company’s
knowledge, any state regulatory authority has issued any order preventing or
suspending the use of the Prospectus or the Registration Statement or has
instituted or, to the best of the Company’s knowledge, threatened to institute
any proceedings with respect to such an order.
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2.3 Disclosures in Registration
Statement.
2.3.1. 10b-5
Representation. At the respective times the Registration
Statement, the Prospectus and any post-effective amendments thereto become
effective (and at the Closing Date and the Option Closing Date, if
any):
(i) The
Registration Statement, the Prospectus and any post-effective amendments thereto
did and will contain all material statements that are required to be stated
therein in accordance with the Act and the Regulations, and will in all material
respects conform to the requirements of the Act and the
Regulations;
(ii) Neither
the Registration Statement nor the Prospectus, nor any amendment or supplement
thereto, on such dates, do or will contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The representation and warranty made in
this Section 2.3.1(ii) does not apply to statements made or statements omitted
in reliance upon and in conformity with written information furnished to the
Company with respect to the Underwriters by the Representatives expressly for
use in the Registration Statement or Prospectus or any amendment thereof or
supplement thereto. The parties acknowledge and agree that such information
provided by or on behalf of any Underwriter consists solely of the following
disclosure contained in the “Underwriting” section of the Prospectus: the first
paragraph under the heading “Pricing of Securities,” (the “Underwriters’
Information”).
(iii) Neither:
(a) any Issuer General Free Writing Prospectus(es) (as defined below) issued at
or prior to the Time of Sale (as defined below) and the Statutory Prospectus (as
defined below), all considered together (collectively, the “Time of Sale Disclosure
Package”), nor (b) any individual Issuer Limited-Use Free Writing
Prospectus(es) (as defined below), when considered together with the Time of
Sale Disclosure Package, includes or included as of the Time of Sale, any untrue
statement of a material fact or omits or omitted as of the Time of Sale to state
any material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. The
preceding sentence does not apply to statements in or omissions from any
Prospectus included in the Registration Statement or any Issuer Free Writing
Prospectus based upon and in conformity with Underwriters’ Information furnished
to the Company by the Representatives specifically for use therein.
(iv) Each
Issuer Free Writing Prospectus, as of its issue date and at all subsequent times
through the completion of the Offering or until any earlier date that the
Company notified or notifies the Representatives as described in the next
sentence, did not, does not and will not include any information that
conflicted, conflicts or will conflict with the information contained in the
Registration Statement or the Prospectus. If at any time following
issuance of an Issuer Free Writing Prospectus there occurred or occurs an event
or development as a result of which such Issuer Free Writing Prospectus
conflicted or would conflict with the information contained in the Registration
Statement or the Prospectus relating to the Securities or included, or would
include an untrue statement of a material fact or omitted or would omit to state
a material fact necessary in order to make the statements therein, in the light
of the circumstances prevailing at that subsequent time, not misleading, the
Company has notified or will notify promptly the Representatives so that any use
of such Issuer Free Writing Prospectus may cease until it is promptly amended or
supplemented by the Company, at its own expense, to eliminate or correct such
conflict, untrue statement or omission. The foregoing two sentences
do not apply to statements in or omissions from any Issuer Free Writing
Prospectus based upon and in conformity with Underwriters’ Information furnished
to the Company by the Representatives specifically for use
therein.
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(v) As
used herein, the terms set forth below shall have the following
meanings:
(a) “Time of Sale” means __:00
[P.M./A.M.] (Eastern Time) on the date hereof.
(b) “Issuer Free Writing
Prospectus” means any “issuer free writing prospectus,” as defined in
Rule 433 under the Act, relating to the Public Securities that (A) is required
to be filed with the Commission by the Company, or (B) is exempt from filing
pursuant to Rule 433(d)(5)(i) under the Act because it contains a description of
the Public Securities or of the offering that does not reflect the final terms
or pursuant to Rule 433(d)(8)(ii) because it is a “bona fide electronic road
show,” as defined in Rule 433 of the Regulations, in each case in the form filed
or required to be filed with the Commission or, if not required to be filed, in
the form retained in the Company’s records pursuant to Rule 433(g) under the
Act.
(c) “Issuer General Free Writing
Prospectus” means any Issuer Free Writing Prospectus that is intended for
general distribution to prospective investors, as evidenced by its being
specified in Schedule 2 to this Agreement.
(d) “Issuer Limited-Use Free Writing
Prospectus” means any Issuer Free Writing Prospectus that is not an
Issuer General Free Writing Prospectus. The term Issuer Limited-Use
Free Writing Prospectus also includes any “bona fide electronic road show,” as
defined in Rule 433 of the Regulations, that is made available without
restriction pursuant to Rule 433(d)(8)(ii), even though not required to be filed
with the Commission.
(e) “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 of the
Regulations 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) of the Regulations.
2.3.2. Disclosure of
Agreements. The agreements and documents described in the
Registration Statement, the Time of Sale Disclosure Package and the Prospectus
conform to the descriptions thereof contained therein and there are no
agreements or other documents required by the Act and the Regulations to be
described in the Registration Statement, the Time of Sale Disclosure Package and
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 it is or may be bound or affected and (i) that is
referred to in the Prospectus, or (ii) is material to the Company’s
business, including, without limitation, this Agreement, has been duly
authorized 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 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 therefore may be brought. Except as described
in the Registration Statement, none of such agreements or instruments has been
assigned by the Company, and neither the Company nor, to the best of the
Company’s knowledge, any other party is in material default thereunder and, to
the best of the Company’s knowledge, no event has occurred that, with the lapse
of time or the giving of notice, or both, would constitute a default thereunder.
To the best of 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.
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2.3.3. Prior Securities
Transactions. No securities of the Company have been sold by
the Company or by or on behalf of, or for the benefit of, any person or persons
controlling, controlled by, or under common control with the Company, except as
disclosed in the Registration Statement.
2.3.4. Regulations. The
disclosures in the Registration Statement concerning the effects of Federal,
State, local and all foreign regulation on the Company’s business as currently
contemplated are correct in all material respects.
2.4 Changes After Dates in
Registration Statement.
2.4.1. No Material Adverse
Change. Since the respective dates as of which information is
given in the Registration Statement and the Time of Sale Disclosure Package,
except as otherwise specifically stated therein: (i) there has been no
material adverse change in the condition, financial or otherwise, or business
prospects of the Company; (ii) there have been no material transactions
entered into by the Company, other than as contemplated pursuant to this
Agreement; and (iii) no officer or director of the Company has resigned
from any position with the Company.
2.4.2. Recent Securities
Transactions, etc. Subsequent to the respective dates as of
which information is given in the Registration Statement and the Prospectus, and
except as may otherwise be indicated or contemplated herein or disclosed in the
Registration Statement and the Time of Sale Disclosure Package, the Company has
not: (i) issued any securities or incurred any liability or obligation,
direct or contingent, for borrowed money other than in the ordinary course of
business; or (ii) declared or paid any dividend or made any other
distribution on or in respect to its capital stock.
2.5 Independent
Accountants. To the knowledge of the Company, EFP Rotenberg,
LLP (“EFP Rotenberg”),
whose report is filed with the Commission as part of the Registration Statement,
are independent registered public accountants as required by the Act and the
Regulations. EFP Rotenberg has not, during the periods covered by the
financial statements included in the Prospectus, provided to the Company any
non-audit services, as such term is used in Section 10A(g) of the Exchange
Act.
2.6 Financial Statements,
etc. The financial statements, including the notes thereto and
supporting schedules included in the Registration Statement and Prospectus
fairly present the financial position and the results of operations of the
Company at the dates and for the periods to which they apply; and such financial
statements have been prepared in conformity with United States generally
accepted accounting principles (“GAAP”), consistently applied
throughout the periods involved except as disclosed therein; and the supporting
schedules included in the Registration Statement present fairly the information
required to be stated therein. The Registration Statement discloses all material
off-balance sheet transactions, arrangements, obligations (including contingent
obligations), and other relationships of the Company with unconsolidated
entities or other persons that may have a material current or future effect on
the Company’s financial condition, changes in financial condition, results of
operations, liquidity, capital expenditures, capital resources, or significant
components of revenues or expenses. Except as disclosed in the Registration
Statement, the Time of Sale Disclosure Package and the Prospectus, (a) neither
the Company nor any of its operating entities listed on Annex 1 hereto (each an
“Operating Entity” and
together the “Operating
Entities”), has incurred any material liabilities or obligations, direct
or contingent, or entered into any material transactions other than in the
ordinary course of business, (b) the Company has not declared or paid any
dividends or made any distribution of any kind with respect to its capital
stock; (c) there has not been any change in the capital stock of the Company or
any of its Operating Entities or any grants under any stock compensation plan
and, (d) there has not been any material adverse change in the Company’s
long-term or short-term debt. Since the date of the latest balance sheet
presented in the Registration Statement, and the Time of Sale Disclosure
Package, neither the Company nor any Operating Entity 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 Operating Entities taken as a whole, except for liabilities,
obligations and transactions which are disclosed in the Registration Statement
and the Prospectus.
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2.7 Authorized Capital; Options,
etc. The Company had, at the date or dates indicated in the
Prospectus, the duly authorized, issued and outstanding capitalization as set
forth in the Registration Statement, the Time of Sale Disclosure Package and the
Prospectus. Based on the assumptions stated in the Registration Statement, the
Time of Sale Disclosure Package and the Prospectus, the Company will have on the
Closing Date the adjusted stock capitalization set forth therein. Except as set
forth in, or contemplated by, the Registration Statement and the Prospectus, on
the Effective Date and on the Closing Date, there will be no outstanding
options, warrants, or other rights to purchase or otherwise acquire any
authorized, but unissued Shares of the Company or any security convertible into
Shares of the Company, or any contracts or commitments to issue or sell Shares
or any such options, warrants, rights or convertible securities.
2.8 Valid Issuance of
Securities, etc.
2.8.1. Outstanding
Securities. All issued and outstanding securities of the
Company issued prior to the transactions contemplated by this Agreement have
been duly authorized
and validly issued and are fully paid and non-assessable; the holders
thereof have no rights of rescission with respect thereto, and are not subject
to personal liability by reason of being such holders; and none of such
securities were issued in violation of the preemptive rights of any holders of
any security of the Company or similar contractual rights granted by the
Company. The authorized Shares conform in all material respects to all
statements relating thereto contained in the Registration Statement, the Time of
Sale Disclosure Package and the Prospectus. The offers and sales of the
outstanding Shares were at all relevant times either registered under the Act
and the applicable state securities or Blue Sky laws or, based in part on the
representations and warranties of the purchasers of such Shares, exempt from
such registration requirements.
2.8.2. Securities Sold Pursuant to
this Agreement. The Public Securities and Representatives’
Securities have
been duly authorized for issuance and sale and, when issued and paid for, will
be validly issued, fully paid and non-assessable; the holders thereof are not
and will not be subject to personal liability by reason of being such holders;
the Public Securities and Representatives’ Securities are not and will not be
subject to the preemptive rights of any holders of any security of the Company
or similar contractual rights granted by the Company; and all corporate action
required to be taken for the authorization, issuance and sale of the Securities
has been duly and validly taken. The Public Securities and Representatives’
Securities conform in all material respects to all statements with respect
thereto contained in the Registration Statement. When paid for and
issued in accordance with the Representatives’ Warrants, the underlying Shares
will be validly issued, fully paid and non-assessable; the holders thereof are
not and will not be subject to personal liability by reason of being such
holders; the underlying Shares are not and will not be subject to the preemptive
rights of any holders of any security of the Company or similar contractual
rights granted by the Company; and all corporate action required to be taken for
the authorization, issuance and sale of the Representatives’ Warrants has been
duly and validly taken.
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2.9 Registration Rights of Third
Parties. Except as set forth in the Registration Statement,
the Time of Sale Disclosure Package 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.
2.10 Validity and Binding Effect
of Agreements. This Agreement and the Representatives’
Warrants have been duly and validly authorized by the Company and, when executed
and delivered, will constitute the valid and binding agreements of the Company,
enforceable against the Company in accordance with their respective terms,
except: (i) as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting creditors’ rights
generally; (ii) as enforceability of any indemnification or contribution
provision may be limited under the federal and state securities laws; and
(iii) that the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to the equitable defenses and to the
discretion of the court before which any proceeding therefore may be
brought.
2.11
No Conflicts,
etc. The execution, delivery, and performance by the Company
of this Agreement, the Representatives’ Warrants and all ancillary documents,
the consummation by the Company of the transactions herein and therein
contemplated and the compliance by the Company with the terms hereof and thereof
do not and will not, with or without the giving of notice or the lapse of time
or both: (i) result in a material breach of, or conflict with any of the
terms and provisions of, or constitute a material default under, or result in
the creation, modification, termination or imposition of any lien, charge or
encumbrance upon any property or assets of the Company pursuant to the terms of
any agreement or instrument to which the Company is a party; (ii) result in
any violation of the provisions of the Amended and Restated Certificate of
Incorporation of the Company (as the same may be amended from time to time, the
“Certificate of
Incorporation”), the bylaws of the Company or the certificate or articles
of incorporation, bylaws, certificate of formation, limited liability company
agreement, joint venture agreement, partnership agreement or other
organizational documents of the Operating Entities; or (iii) violate in any
material respect 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 properties or business constituted
as of the date hereof.
2.12 No Defaults;
Violations. Except as disclosed in the Prospectus, no material
default exists in the due performance and observance of any term, covenant or
condition of any material license, contract, indenture, mortgage, deed of trust,
note, loan or credit agreement, or any other agreement or instrument evidencing
an obligation for borrowed money, or any other material agreement or instrument
to which the Company is a party or by which the Company may be bound or to which
any of the properties or assets of the Company is subject. The Company is not in
violation of any term or provision of its Certificate of Incorporation or
bylaws, or in violation of any franchise, license, permit, applicable law, rule,
regulation, judgment or decree of any governmental agency or court, domestic or
foreign, having jurisdiction over the Company or any of its properties or
businesses.
9
2.13 Corporate Power; Licenses;
Consents.
2.13.1. Conduct of
Business. Except as described in the Registration Statement,
the Time of Sale Disclosure Package and the Prospectus, the Company has all
requisite corporate power and authority, and has all necessary authorizations,
approvals, orders, licenses, certificates and permits of and from all
governmental regulatory officials and bodies that it needs as of the date hereof
to conduct its business purpose as described in the Prospectus, except where any
failures to possess the same, singularly or in the aggregate, would have a
material adverse effect. The disclosures in the Registration Statement
concerning the effects of federal, state, local and foreign regulation on this
Offering and the Company’s business purpose as currently contemplated are
correct in all material respects.
2.13.2. Transactions Contemplated
Herein. The Company has all corporate power and authority to
enter into this Agreement and to carry out the provisions and conditions hereof,
and all consents, authorizations, approvals and orders required in connection
therewith have been obtained. No consent, authorization or order of, and no
filing with, any court, government agency or other body is required for the
valid issuance, sale and delivery of the Securities and the consummation of the
transactions and agreements contemplated by this Agreement and the
Representatives’ Warrants and as contemplated by
the Prospectus, except with respect to applicable federal and state securities
laws and the rules and regulations of the Financial Industry Regulatory
Authority, Inc. (“FINRA”).
2.14 D&O
Questionnaires. To the Company’s knowledge, all information
contained in the questionnaires (the “Questionnaires”) completed by
each of the Company’s directors and officers immediately prior to the Offering
(the “Insiders”) as well
as in the Lock-Up Agreement provided to the Underwriters is true and correct in
all respects and the Company has not become aware of any information which would
cause the information disclosed in the questionnaires completed by each Insider
to become inaccurate and incorrect.
2.15 Litigation; Governmental
Proceedings. There is no action, suit, proceeding, inquiry,
arbitration, investigation, litigation or governmental proceeding pending or, to
the Company’s knowledge, threatened against, or involving the Company or, to the
Company’s knowledge, any executive officer or director which has not been
disclosed in the Registration Statement, the Time of Sale Disclosure Package and
the Prospectus or in connection with the Company’s listing application for the
listing of the Shares on NASDAQ and which (i) is required to be disclosed in the
Registration Statement or the Time of Sale Disclosure Package, (ii) if
determined adversely to the Company would, individually or in the aggregate,
reasonably be expected to result in a material adverse effect or (iii) would,
individually or in the aggregate, reasonably be expected to materially and
adversely affect the consummation of the transactions contemplated by this
Agreement or the performance by the Company of its obligations
hereunder.
2.16 Good
Standing. The Company has been duly organized and is validly
existing as a corporation and is in good standing under the laws of the State of
Nevada and, in the case of the Operating Entities, their respective
jurisdictions of formation, as of the date hereof, and is duly qualified to do
business and is in good standing in each jurisdiction in which its ownership or
lease of property or the conduct of business requires such qualification, except
where the failure to qualify would not have a material adverse effect on the
assets, business or operations of the Company.
2.17 Transactions Affecting
Disclosure to FINRA.
2.17.1. Finder’s
Fees. Except as described in the Registration Statement, the
Time of Sale Disclosure Package and the Prospectus, there are no claims,
payments, arrangements, agreements or understandings relating to the payment of
a finder’s, consulting or origination fee by the Company or any Insider with
respect to the sale of the Public Securities hereunder or any other
arrangements, agreements or understandings of the Company or, to the Company’s
knowledge, any of its shareholders that may affect the Underwriters’
compensation, as determined by FINRA.
10
2.17.2. Payments Within Twelve
Months. Except as described in the Registration Statement, the
Time of Sale Disclosure Package and the Prospectus, the Company has not made any
direct or indirect payments (in cash, securities or otherwise) to: (i) any
person, as a finder’s fee, consulting fee or otherwise, in consideration of such
person’s raising capital for the Company or introducing to the Company persons
who raised or provided capital to the Company; (ii) to any FINRA member; or
(iii) to any person or entity that has any direct or indirect affiliation
or association with any FINRA member, within the twelve months prior to the
Effective Date, other than advances to cover expenses of the Representatives,
and payment to the Underwriters as provided hereunder in connection with the
Offering.
2.17.3. Use of
Proceeds. None of the net proceeds of the Offering will be
paid by the Company to any participating FINRA member or its affiliates, except
as specifically authorized herein.
2.17.4. FINRA
Affiliation. To the Company’s knowledge, no officer, director
or any beneficial owner of the Company’s unregistered securities has any direct
or indirect affiliation or association with any FINRA member (as determined in
accordance with the rules and regulations of FINRA). The Company will advise the
Representatives and Pillsbury if it learns that any officer, director or owner
of at least 5% of the Company’s outstanding Shares (or securities convertible
into Shares) is or becomes an affiliate or associated person of a FINRA member
participating in the Offering.
2.18 Foreign Corrupt Practices
Act. Neither the Company nor any of the directors , employees
or officers of the Company or any other person acting on behalf of the Company
has, directly or indirectly, given or agreed to give any money, gift or similar
benefit (other than legal price concessions to customers in the ordinary course
of business) to any customer, supplier, employee or agent of a customer or
supplier, or official or employee of any governmental agency or instrumentality
of any government (domestic or foreign) or any political party or candidate for
office (domestic or foreign) or other person who was, is, or may be in a
position to help or hinder the business of the Company (or assist it in
connection with any actual or proposed transaction) that (i) might subject
the Company to any damage or penalty in any civil, criminal or governmental
litigation or proceeding, (ii) if not given in the past, might have had a
material adverse effect on the assets, business or operations of the Company as
reflected in any of the financial statements contained in the Prospectus or
(iii) if not continued in the future, might adversely affect the assets,
business, operations or prospects of the Company. The Company has taken
reasonable steps to ensure that its accounting controls and procedures are
sufficient to cause the Company to comply in all material respects with the
Foreign Corrupt Practices Act of 1977, as amended.
2.19 Officers’
Certificate. Any certificate signed by any duly authorized
officer of the Company and delivered to you or to Pillsbury shall be deemed a
representation and warranty by the Company to the Underwriters as to the matters
covered thereby.
2.20 Lock-Up
Period.
2.20.1. Each
of the Company’s officers, directors and the principal shareholder has agreed
pursuant to executed Lock-Up Agreements in the form attached hereto as Exhibit A
that for a period of twelve (12) months from the Effective Date (the “D&O Lock-Up Period”), and
each of the other shareholders of the Company (together with the Company’s
officers, directors and the principal shareholder the “Lock-Up Parties” as listed on
Schedule 3 hereto) has agreed pursuant to executed Lock-Up Agreements in the
form attached hereto as Exhibit A that for a period of six (6) months from the
Effective Date (the “Other
Shareholder Lock-Up Period” and together with the D&O Lock-Up Period,
the “Lock-Up Period”),
such persons shall not offer, pledge, sell, contract to sell, grant, lend or
otherwise transfer or dispose of, directly or indirectly, any Shares, or any
securities convertible into or exercisable or exchangeable for Shares, without
the consent of the Representatives. The Representatives may consent to an early
release from the Lock-Up Period if, in its opinion, the market for the Shares
would not be adversely impacted by sales and in cases of financial emergency of
an officer, director or other stockholder. The Company has caused each of the
Lock-Up Parties to deliver to the Representatives the agreements of each of the
Lock-Up Parties to the foregoing effect prior to the date that the Company
requests that the Commission declare the Registration Statement effective under
the Act. The Company will enforce the terms of each Lock-Up Agreement
and issue stop-transfer instructions to the Transfer Agent (as defined below)
for the Shares with respect to any transaction or contemplated transaction that
would constitute a breach of or default under the applicable Lock-Up
Agreement.
11
2.20.2. Notwithstanding
the foregoing, if (i) the Company issues an earnings release or material news,
or a material event relating to the Company occurs, during the last 17 days of
the Lock-Up Period, or (ii) prior to the expiration of the Lock-Up Period, the
Company announces that it will release earnings results during the 16-day period
beginning on the last day of the Lock-Up Period, the restrictions imposed by
Section 2.20 shall continue to apply until the expiration of the 18-day period
beginning on the issuance of the earnings release or the occurrence of the
material news or material event, unless the Representatives waive such
extension.
2.21 Operating
Entities. Annex 1 to this agreement sets forth the list of all
Operating Entities. All Operating Entities of the Company are duly organized and
in good standing under the laws of the place of organization or incorporation,
and each such Operating Entity is in good standing in each jurisdiction in which
its ownership or lease of property or the conduct of business requires such
qualification, except where the failure to qualify would not have a material
adverse effect on the assets, business or operations of the Company taken as a
whole. The Company’s ownership and/or control of each Operating
Entity is as described in the Registration Statement, the Time of Sale
Disclosure Package and the Prospectus.
2.22 Related Party
Transactions. Except as disclosed in the Registration
Statement, the Time of Sale Disclosure Package and the Prospectus, there are no
business relationships or related party transactions involving the Company or
any other person required to be described in the Registration Statement, Time of
Sale Disclosure Package or the Prospectus that have not been described as
required.
2.23 Board of
Directors. The Board of Directors of the Company is comprised
of the persons set forth under the heading of the Prospectus captioned
“Management.” The qualifications of the persons serving as board members and the
overall composition of the board comply with the Sarbanes-Oxley Act of 2002 and
the rules promulgated thereunder applicable to the Company and the rules of
NASDAQ. At least one member of the Board of Directors of the Company qualifies
as a “financial expert” as such term is defined under the Sarbanes-Oxley Act of
2002 and the rules promulgated thereunder and the rules of NASDAQ. In addition,
at least a majority of the persons serving on the Board of Directors qualify as
“independent” as defined under the rules of NASDAQ.
2.24 Sarbanes-Oxley
Compliance.
2.24.1. Disclosure
Controls. The Company has developed and currently maintains
disclosure controls and procedures that will comply with Rule 13a-15 or 15d-15
of the Exchange Act, and such controls and procedures are effective to ensure
that all material information concerning the Company will be made known on a
timely basis to the individuals responsible for the preparation of the Company’s
Exchange Act filings and other public disclosure documents.
12
2.24.2. Compliance. The
Company is, or on the Effective Date will be, in material compliance with the
provisions of the Sarbanes-Oxley Act of 2002 applicable to it, and has
implemented or will implement such programs and taken reasonable steps to ensure
the Company’s future compliance (not later than the relevant statutory and
regulatory deadlines therefore) with all the material provisions of the
Sarbanes-Oxley Act of 2002.
2.25 No Investment Company
Status. The Company is not and, after giving effect to the
Offering and sale of the Firm Shares and the application of the proceeds thereof
as described in the Registration Statement, the Time of Sale Disclosure Package
and the Prospectus, will not be, an “investment company” as defined in the
Investment Company Act of 1940, as amended.
2.26 No Labor
Disputes. No labor dispute with the employees of the Company
or any of its Operating Entities exists or, to the knowledge of the Company, is
imminent.
2.27 Intellectual
Property. The Company and each of its Operating Entities own
or possess or have valid right to use all patents, patent applications,
trademarks, service marks, trade names, trademark registrations, service mark
registrations, copyrights, licenses, inventions, trade secrets and similar
rights (“Intellectual
Property”) necessary for the conduct of the business of the Company and
its Operating Entities as currently carried on and as described in the
Registration Statement, the Time of Sale Disclosure Package and the
Prospectus. To the knowledge of the Company, no action or use by the
Company or any of its Operating Entities will involve or give rise to any
infringement of, or license or similar fees for, any Intellectual Property of
others. Neither the Company nor any of its Operating Entities has
received any notice alleging any such infringement or fee.
2.28 Taxes. Each
of the Company and its Operating Entities has filed all returns (as hereinafter
defined) required to be filed with taxing authorities prior to the date hereof
or has duly obtained extensions of time for the filing thereof. Each
of the Company and its Operating Entities has paid all taxes (as hereinafter
defined) shown as due on such returns that were filed and has paid all taxes
imposed on or assessed against the Company or such respective Operating
Entity. The provisions for taxes payable, if any, shown on the
financial statements filed with or as part of the Registration Statement are
sufficient for all accrued and unpaid taxes, whether or not disputed, and for
all periods to and including the dates of such consolidated financial
statements. Except as disclosed in writing to the Underwriters, (i)
no issues have been raised (and are currently pending) by any taxing authority
in connection with any of the returns or taxes asserted as due from the Company
or its Operating Entities, and (ii) no waivers of statutes of limitation with
respect to the returns or collection of taxes have been given by or requested
from the Company or its Operating Entities. The term “taxes” mean all
federal, state, local, foreign, and other net income, gross income, gross
receipts, sales, use, ad valorem, transfer, franchise, profits, license, lease,
service, service use, withholding, payroll, employment, excise, severance,
stamp, occupation, premium, property, windfall profits, customs, duties or other
taxes, fees, assessments, or charges of any kind whatever, together with any
interest and any penalties, additions to tax, or additional amounts with respect
thereto. The term “returns” means all
returns, declarations, reports, statements, and other documents required to be
filed in respect to taxes.
13
2.29 VIE
Representations. (i) Each of the VIE Parties
(as defined below) has the legal right, power and authority (corporate or other,
as the case may be) to enter into and perform his, her, or its respective
obligations under each of the agreements described under “Our History and
Corporate Structure” in the Registration Statement and the Time of Sale
Disclosure Package relating to the Company’s corporate structure (the “VIE Agreements”) to which he,
she, or it is a party, and has taken all necessary corporate or other action to
authorize the execution, delivery and performance of, and has authorized,
executed and delivered, each such VIE Agreement. “VIE Parties” means,
collectively, the Operating Entities, Junfeng Shan, Yufen Zhang, Yan Wang and Li
Qian; and each, a “VIE
Party.” Each of the VIE Agreements constitutes a valid and
legally binding obligation of the parties thereto, enforceable in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws of general
applicability affecting creditors’ rights or by equitable principles relating to
enforceability and except as disclosed in the Registration Statement and the
Time of Sale Disclosure Package. The execution and delivery by the
VIE Parties, and the performance by the VIE Parties of their respective
obligations under, each of the VIE Agreements to which he, she, or it is a
party, and the consummation by the VIE Parties of the transactions contemplated
therein (the “Restructuring”) did not, does
not and will not: (A) conflict with or result in a breach or violation of any of
the terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, lease, loan agreement or other agreement or instrument
to which such VIE Party is a party or by which such VIE Party is bound or to
which any of the properties or assets of such VIE Party are subject; (B) result
in any violation of the provisions of constitutive documents or business
licenses of such VIE Party, as the case may be; or (C) result in any violation
of any statute of the People’s Republic of China (“PRC”) or any order, rule or
regulation of any PRC governmental agency having jurisdiction over such VIE
Party or any of its respective properties, except, in the case of clauses (A)
and (C), as would not reasonably be expected, individually or in the aggregate,
to have a material adverse effect.
(ii) No consent, approval,
authorization or order of, or filing or registration with, any person (including
any governmental agency or body or any court) is required for the performance of
the obligations under any VIE Agreement by the parties thereto. Each
VIE Agreement is in full force and effect and none of the parties thereto is in
breach or default in the performance of any of the terms or provisions of such
VIE Agreement. There is no legal or governmental proceeding, inquiry
or investigation pending against the Company or any VIE Party in any
jurisdiction challenging the validity of any of the VIE Agreements and, to the
best knowledge of the Company, no such proceeding, inquiry or investigation is
threatened or contemplated in any jurisdiction.
2.30 The
statistical, industry-related and market-related data included in the
Registration Statement, the Time of Sale Disclosure Package and the Prospectus
are based on or derived from sources which the Company reasonably and in good
faith believes are reliable and accurate, and such data agree with the sources
from which they are derived. The Company has obtained the written
consent to the use of such data from such sources to the extent
necessary.
2.31 The
Company’s Board of Directors has validly appointed an audit committee whose
composition satisfies the requirements of the rules and regulations of NASDAQ
and the Board of Directors and/or audit committee has adopted a charter that
satisfies the requirements of the rules and regulations of
NASDAQ. The audit committee has reviewed the adequacy of its charter
within the past twelve months. Neither 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.
14
2.32 Neither
the Company nor the Operating Entities has, prior to the date hereof, made any
offer or sale of any securities which are required to be “integrated” pursuant
to the Act or the Regulations with the offer and sale of the Public Securities
pursuant to the Registration Statement. Except as disclosed in the
Registration Statement and the Time of Sale Disclosure Package, neither the
Company nor the Operating Entities has sold or issued any Shares or any
securities convertible into, exercisable or exchangeable for Shares, or other
equity securities, or any rights to acquire any Shares or other equity
securities of the Company or any of the Operating Entities, 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 and the Time of
Sale Disclosure Package.
2.33 No
director or officer of the Company is subject to any non-competition agreement
or non-solicitation agreement with any employer or prior employer which could
materially affect his ability to be and act in his respective capacity of the
Company.
2.34 The
conditions for use of Form S-1 to register the Offering under the Act, as set
forth in the General Instructions to such Form, have been
satisfied.
2.35 No
relationship, direct or indirect, exists between or among any of the Company or
the Operating Entities, on the one hand, and any director, officer, shareholder,
customer or supplier of the Company or the Operating Entities, on the other
hand, which is required by the Act, the Exchange Act or the 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 disclosed in the Registration Statement and the
Prospectus. The Company has not, in violation of the Sarbanes-Oxley
Act of 2002 directly or indirectly, including through an Operating Entity (other
than as permitted 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.
2.36 The
Company and each Operating Entity owns or leases all such properties as are
necessary to the conduct of its business as presently operated and as proposed
to be operated as described in the Registration Statement and the
Prospectus. The Company and the Operating Entities have good and
marketable title in fee simple to all real property and good and marketable
title to all personal property owned by them, in each case free and clear of all
Liens, except such as are described in the Registration Statement and the Time
of Sale Disclosure Package or such as do not (individually or in the aggregate)
materially affect the value of such property and do not interfere with the use
made or proposed to be made of such property by the Company or any of the
Operating Entities. Any real property and buildings held under lease
or sublease by the Company and the Operating Entities 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 Operating
Entities. Neither the Company nor any Operating Entity has received
any written notice of any claim adverse to its ownership of any real or personal
property or of any claim against the continued possession of any real property,
whether owned or held under lease or sublease by the Company or any Operating
Entity.
2.37 No
securities of the Company have been sold by the Company or by or on behalf of,
or for the benefit of, any person or persons controlling, controlled by, or
under common control with the Company since the date of the Company’s formation,
except as disclosed in the Registration Statement.
2.38 The
disclosures in the Registration Statement and the Time of Sale Disclosure
Package concerning the effects of foreign, federal, state and local regulation
on the Company’s business as currently contemplated are correct in all material
respects and do not omit to state a material fact necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading.
15
2.39 The
Company and each Operating Entity have at all times operated their respective
businesses (i) in compliance in all material respects with any and all
applicable foreign, federal, state and local 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 in all material respects 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.
2.40 As
set forth in the Registration Statement and the Time of Sale Disclosure Package,
neither the Company nor any Operating Entity 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.
2.41 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 Operating Entity to alter the
customer’s or supplier’s level or type of business with the Company or any
Operating Entity or (ii) a journalist or publication to write or publish
favorable information about the Company, any Operating Entity or its products or
services.
2.42 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 except as contemplated by this Agreement, neither the Company nor any
Operating Entity operates within the United States or any state or territory
thereof.
2.43 Each
of the Company and Operating Entities, 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, 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 the Operating
Entities are and have been conducted at all times in compliance with applicable
financial recordkeeping and reporting requirements of the Money Laundering Laws
and no action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company or any of the
Operating Entities with respect to the Money Laundering Laws is pending or, to
the knowledge of the Company, threatened, except, in each case, as would not
reasonably be expected to cause a material adverse change.
16
2.44 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.
2.45 None
of the Operating Entities is currently prohibited, directly or indirectly, from
paying any dividends to the Company, from making any other distribution on such
Operating Entity’s share capital, from repaying to the Company any loans or
advances to such Operating Entity from the Company or from transferring any of
such Operating Entity’s property or assets to the Company or any other Operating
Entity, except as described in the Registration Statement and in or contemplated
by the Time of Sale Disclosure Package; except as described in the Time of Sale
Disclosure Package and the Registration Statement, any dividends and other
distributions declared with respect to after-tax retained earnings on the equity
interests of the Operating Entities may under PRC laws and regulations be paid
to the Company; 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 except as
described in the Registration Statement.
2.46 Except
as described in the Registration Statement and the Time of Sale Disclosure
Package, each of the Company and Operating Entities has taken or is in the
process of taking all reasonable steps (to the extent required of the Company
and each such Operating Entity under PRC laws and regulations) to comply with,
and to ensure compliance by each of (i) its principal stockholders as disclosed
in the Registration Statement and the Time of Sale Disclosure Package, 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.
2.47 It
is not necessary that this Agreement, the Registration Statement, the Prospectus
or any other document be filed or recorded with any court, regulatory body,
administrative agency or other governmental authority in the PRC.
2.48 The
entry into, and performance or enforcement of the this Agreement in accordance
with its terms will not subject the Underwriters to any requirement to be
licensed or otherwise qualified to do business in the PRC, nor will the
Underwriters be deemed to be resident, domiciled, carrying on business through
an establishment or place in the PRC or in breach of any laws or regulations in
the PRC by reason of entry into, performance or enforcement of this
Agreement.
17
2.49 Each
of the Company and each of the Company’s directors that signed the Registration
Statement is aware of and has been advised as to, the content of the Rules on
Mergers and Acquisitions of Domestic Enterprises by Foreign Investors jointly
promulgated by the Ministry of Commerce (the “MOFCOM”), the State Assets
Supervision and Administration Commission, the State Tax Administration, the
State Administration of Industry and Commerce, the China Securities Regulatory
Commission (the “CSRC”)
and the State Administration of Foreign Exchange of the PRC on August 8, 2006
(the “M&A Rules”),
in particular the relevant provisions thereof which purport to require offshore
special purpose vehicles, or SPVs, formed for listing purposes and controlled
directly or indirectly by PRC companies or individuals, to obtain the approval
of the CSRC prior to the listing and trading of their securities on an overseas
stock exchange, and the relevant provisions thereof which purport to require
foreign companies acquiring PRC companies to obtain the approval of MOFCOM prior
to the acquisition by the foreign company of such PRC company in case the
foreign company and the PRC company are affiliated to each other; the Company
has received legal advice specifically with respect to the M&A Rules from
its PRC counsel and the Company understands such legal advice; and the Company
has fully communicated such legal advice from its PRC counsel to each of its
directors that signed the Registration Statement and each director has confirmed
that he or she understands such legal advice; and as of the date of the
Prospectus and as of the date of this Agreement, the M&A Rules did not and
do not apply to the issuance and sale of the Shares, the listing and trading of
the Shares on NASDAQ, the consummation of the transactions contemplated by this
Agreement, nor is the CSRC, MOFCOM or other PRC governmental approval required
in connection with the above. The Company and the Operating Entities
have received all proper and necessary approvals, permits and authorizations
from government bodies for its business transactions. Nothing has
come to the attention of the Company that would lead it to believe that the CSRC
is taking any action to require the Company to seek its approval for the
consummation of the transactions contemplated under this Agreement or that would
otherwise cause a material adverse change.
2.50 Approval
of the shareholders of the Company under the rules and regulations of NASDAQ or
other applicable laws and regulations is not required for the Company to issue
and deliver the Public Securities to the several Underwriters.
2.51 The
Registration Statement and the Time of Sale Disclosure Package each fairly and
accurately describe 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.”
2.52 None
of the Company, Operating Entities or any of their respective properties or
assets has any immunity from the jurisdiction of any court or from any legal
process (whether through service or notice, attachment prior to judgment,
attachment in aid of execution or otherwise) under the laws of the PRC, Nevada,
New York or United States federal law; and, to the extent that the Company, any
of the Operating Entities 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 the Operating Entities waive and will waive such right to the extent
permitted by law.
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2.53 The
Company and the Operating Entities carry or are entitled to the benefits of
insurance with respect to their assets, properties and operations, with
financially sound and reputable insurers, in such amounts and covering such
risks as is generally maintained by companies of established repute engaged in
the same or similar business in China, and all such insurance is in full force
and effect.
2.54 The
statements in the Time of Sale Disclosure Package and the Prospectus under the
captions “Business – Government Regulation,” “Certain Relationships and Related
Transactions,” “Shares Eligible for Future Sale,” “Taxation” and “Underwriting”
insofar as such statements purport to describe the provisions of the laws and
documents referred to therein, are accurate, complete and fair.
2.55 The
statements in the Time of Sale Disclosure Package under the caption “Description
of Capital Stock” insofar as such statements purport to summarize the terms of
the Securities are accurate, complete and fair.
2.56 No
forward-looking statement (within the meaning of Section 27A of the Act and
Section 21E of the Exchange Act) contained in either the Time of Sale Disclosure
Package has been made or reaffirmed without a reasonable basis or has been
disclosed other than in good faith.
2.57 (i)
At the time of filing the Registration Statement, and (ii) at the date hereof,
the Company was not and is not an “ineligible issuer,” as defined in Rule 405 of
the Regulations, including (but not limited to) the Company or any of the
Operating Entities in the preceding three (3) years not having been convicted of
a felony or misdemeanor or having been made the subject of a judicial or
administrative decree or order as described in Rule 405 of the
Regulations.
2.58 The
Company does not expect to be a Passive Foreign Investment Company (“PFIC”) within the meaning of
Section 1297(a) of the United States Internal Revenue Code of 1986, as amended,
and the regulations and published interpretations thereunder for the year ending
[December 31, 2011], and has no plan or intention to conduct its business in a
manner that would be reasonably expected to result in the Company becoming a
PFIC in the future under current laws and regulations.
2.59 The
minute books of the Company and each of the Operating Entities have been made
available to the Underwriters and Pillsbury, and such books (i) contain a
complete summary of all meetings and actions of the board of directors
(including each board committee) and shareholders of the Company (or analogous
governing bodies and interest holders, as applicable), and each of the Operating
Entities since the time of its respective incorporation or organization through
the date of the latest meeting and action, and (ii) accurately in all material
respects reflect all transactions referred to in such minutes.
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3.
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Covenants of the
Company. The Company covenants and agrees as
follows:
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3.1 Amendments to Registration
Statement. The Company will deliver to the Representatives,
prior to filing, any amendment or supplement to the Registration Statement or
Prospectus proposed to be filed after the Effective Date and not file any such
amendment or supplement to which the Representatives shall reasonably object in
writing.
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3.2 Federal Securities
Laws.
3.2.1. Compliance. During
the time when a Prospectus is required to be delivered under the Act, the
Company will use its best efforts to comply with all requirements imposed upon
it by the Act, the Regulations and the Exchange Act and by the regulations under
the Exchange Act, as from time to time in force, so far as necessary to permit
the continuance of sales of or dealings in the Public Securities in accordance
with the provisions hereof and the Prospectus. If at any time when a Prospectus
relating to the Public Securities is required to be delivered under the Act, any
event shall have occurred as a result of which, in the opinion of counsel for
the Company or counsel for the Underwriters, the Prospectus, as then amended or
supplemented, includes an untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, or if it is necessary at any time to amend the Prospectus to
comply with the Act, the Company will notify the Representatives promptly and
prepare and file with the Commission, subject to Section 3.1 hereof, an
appropriate amendment or supplement in accordance with Section 10 of the
Act.
3.2.2. Filing of Final
Prospectus. The Company will file the Prospectus (in form and
substance satisfactory to the Representatives) with the Commission pursuant to
the requirements of Rule 424 of the Regulations.
3.2.3. Exchange Act
Registration. For a period of three years from the Effective
Date, the Company will use its best efforts to maintain the registration of the
Shares under the Exchange Act. The Company will not deregister the Shares under
the Exchange Act without the prior written consent of the
Representatives.
3.2.4. Free Writing
Prospectuses. The Company represents and agrees that it has
not made and will not make any offer relating to the Public Securities that would constitute an
Issuer Free Writing Prospectus, as defined in Rule 433 of the Regulations,
without the prior consent of the Representatives. The Company represents that it
will treat each Issuer Free Writing Prospectus as an “issuer free writing
prospectus” as defined in Rule 433, and has complied and will comply with the
applicable requirements of Rule 433, including timely Commission filing where
required, legending and record keeping. If at any time following
issuance of an Issuer Free Writing Prospectus there occurred or occurs an
event or development as a result of which such Issuer Free Writing Prospectus
conflicted or would conflict with the information contained in the Registration
Statement or the Prospectus or included or would include an untrue statement of
a material fact or omitted or would omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
prevailing at that subsequent time, not misleading, the Company will promptly
notify the Representatives and will promptly amend or supplement, at its own
expense, such Issuer Free Writing Prospectus to eliminate or correct such
conflict, untrue statement or omission.
3.3 Delivery to the Underwriters
of Prospectuses. The Company will deliver to each of the
Underwriters, without charge, from time to time during the period when the
Prospectus is required to be delivered under the Act or the Exchange Act such
number of copies of each Prospectus as such Underwriters may reasonably request
and, as soon as the Registration Statement or any amendment or supplement
thereto becomes effective, deliver to you two original executed Registration
Statements, including exhibits, and all post-effective amendments thereto and
copies of all exhibits filed therewith or incorporated therein by reference and
all original executed consents of certified experts.
3.4 Effectiveness and Events
Requiring Notice to the Representatives. The Company will use
its best efforts to cause the Registration Statement to remain effective with a
current prospectus for at least nine (9) months from the Applicable Time and
will notify the Representatives immediately and confirm the notice in writing:
(i) of the effectiveness of the Registration Statement and any amendment
thereto; (ii) of the issuance by the Commission of any stop order or of the
initiation, or the threatening, of any proceeding for that purpose;
(iii) of the issuance by any state securities commission of any proceedings
for the suspension of the qualification of the Securities for offering or sale
in any jurisdiction or of the initiation, or the threatening, of any proceeding
for that purpose; (iv) of the mailing and delivery to the Commission for
filing of any amendment or supplement to the Registration Statement or
Prospectus; (v) of the receipt of any comments or requests for any
additional information from the Commission; and (vi) of the happening of
any event during the period described in this Section 3.4 hereof that, in the
judgment of the Company, makes any statement of a material fact made in the
Registration Statement or the Prospectus untrue or that requires the making of
any changes in the Registration Statement or the Prospectus in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. If the Commission or any state securities commission shall enter
a stop order or suspend such qualification at any time, the Company will make
every reasonable effort to obtain promptly the lifting of such
order.
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3.5 Review of Financial
Statements. For a period of five (5) years from the Effective
Date, the Company, at its expense, shall cause its regularly engaged independent
certified public accountants to review (but not audit) the Company’s financial
statements for each of the first three fiscal quarters prior to the announcement
of quarterly financial information.
3.6 Secondary Market Trading and
Standard & Poor’s. If the Company fails to maintain
the listing of the Public Securities on NASDAQ or another nationally recognized
exchange, for a period of three (3) years from the effective date of the
Registration Statement, the Company will apply to be included in Standard &
Poor’s Daily News and Corporation Records Corporate Descriptions for a period of
five (5) years immediately thereafter.
3.7 Financial Public Relations
Firm. As of the Effective Date, the Company shall have
retained a financial public relations firm reasonably acceptable to the
Representatives and the Company, which shall initially be ICR, LLC which firm
will be experienced in assisting issuers in public offerings of securities and
in their relations with their security holders, and shall retain such firm or
another firm reasonably acceptable to the Representatives for a period of not
less than two (2) years after the Effective Date.
3.8 Reports to the
Representatives.
3.8.1 Periodic Reports,
etc. For a period of three (3) years from the Effective Date,
the Company will furnish to the Representatives copies of such financial
statements and other periodic and special reports as the Company from time to
time furnishes generally to holders of any class of its securities and also
promptly furnish to the Representatives: (i) a copy of each periodic report the
Company shall be required to file with the Commission; (ii) a copy of every
press release and every news item and article with respect to the Company or its
affairs which was released by the Company; (iii) a copy of each Form 8-K
prepared and filed by the Company; (iv) five copies of each registration
statement filed by the Company under the Act; (v) such additional documents and
information with respect to the Company and the affairs of any future Operating
Entities of the Company as the Representatives may from time to time reasonably
request; provided the Representatives shall sign, if requested by the Company, a
Regulation FD compliant confidentiality agreement which is reasonably acceptable
to the Representatives and Pillsbury in connection with the Representatives’
receipt of such information. Documents filed with the Commission pursuant to its
EDGAR system shall be deemed to have been delivered to the Representatives
pursuant to this Section.
3.8.2. Transfer
Sheets. For a period of three (3) years from the Effective
Date, the Company shall retain a transfer agent and registrar acceptable to the
Representatives (the “Transfer Agent”) and will
furnish to the Representatives at the Company’s sole cost and expense such
transfer sheets of the Company’s securities as the Representatives may
reasonably request, including the daily and monthly consolidated transfer sheets
of the Transfer Agent and DTC. Continental Stock Transfer & Trust
Company is acceptable to the Representatives to act as Transfer Agent for the
Company’s Shares.
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3.8.3. Trading
Reports. During such time as the Public Securities are listed on NASDAQ,
the Company shall provide to the Representatives, at the Company’s expense, such
reports published by the [__________] relating to price trading of
the Public Securities, as the Representatives shall reasonably
request.
3.9 Payment of
Expenses.
3.9.1. General Expenses Related to
the Offering. Subject to Section 8.3, the Company hereby
agrees to pay on each of the Closing Date and the Option Closing Date, if any,
to the extent not paid at the Closing Date, all expenses incident to the
performance of the obligations of the Company under this Agreement, including,
but not limited to: all filing fees and communication expenses relating to the
registration of the Public Securities with the Commission and the filing of the
offering materials with FINRA; all fees and expenses relating to the listing of
such Shares on the New York Stock Exchange, NASDAQ Global Market or, if
necessary, the NASDAQ Capital Market, or the NYSE Amex and on such stock
exchanges as the Company and the Representatives together determine; all fees,
expenses and disbursements relating to background checks of the Company’s
officers and directors (payable concurrently with the filing of the Registration
Statement); all fees, expenses and disbursements relating to the registration or
qualification of such Shares under the “blue sky” securities laws of such states
and other jurisdictions as the Representatives may reasonably designate
(including, without limitation, all filing and registration fees, and the fees
and disbursements of Pillsbury; it being agreed that: (i) if the Offering is
commenced on either the NASDAQ Global Market or the NYSE Amex exchange, the
Company shall make a one time payment of $5,000 to such counsel at Closing; or
(ii) if the Offering is commenced on the NASDAQ Capital Market, the Company
shall issue an initial payment of $10,000 to such counsel and a payment to cover
all filing fees upon the commencement of “blue sky” work by such counsel, with
the balance of such counsel’s fees and expenses, not to exceed $7,500, to be due
on the Closing); the costs of all mailing and printing of the underwriting
documents (including this Agreement, any blue sky surveys and, if appropriate,
any agreement among Underwriters, selected dealers’ agreement, Underwriters’
questionnaire and power of attorney) and Registration Statements, Prospectuses
and all amendments, supplements and exhibits thereto and as many preliminary and
final Prospectuses as the Representatives may reasonably deem necessary; the
costs and expenses of the public relations firm referred to in Section 3.7
hereof; the costs of preparing, printing and delivering certificates
representing the Public Securities; fees and expenses of the Transfer Agent for
the Public Securities; stock transfer taxes, if any, payable upon the transfer
of securities from the Company to the Representatives; the costs associated with
two post-Closing advertisements of the Offering (“Tombstones”) in the national
editions of the Wall Street Journal and New York Times; the costs associated
with I-Deal and Net Roadshow; the reasonable fees and expenses of the Company’s
accountants and the reasonable fees and expenses of the Company’s legal counsel
and other agents and representatives. Upon the Representative’s
request, the Company shall provide funds to pay all such fees, expenses and
disbursements in advance. The Underwriters may also deduct from the net proceeds
of the Offering payable to the Company on the Closing Date, or the Option
Closing Date, if any, the expenses set forth herein to be paid by the Company to
the Underwriters.
3.10 Corporate Finance
Fee. The Company further agrees that, on the Closing Date (or
the Option Closing Date with respect to any Option Shares) it will pay to the
Representatives, by deduction from the proceeds of the Offering, a corporate
finance fee allowance equal to one percent (1%) of the gross proceeds received
by the Company from the sale of the Firm Shares and the Option Shares, if
any.
3.11 Application of Net
Proceeds. The Company will apply the net proceeds from the
Offering received by it in a manner consistent with the application described
under the caption “Use Of Proceeds” in the Prospectus.
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3.12 Delivery of Earnings
Statements to Security Holders. The Company will make
generally available to its security holders as soon as practicable, but not
later than the first day of the fifteenth full calendar month following the
Effective Date, an earnings statement (which need not be certified by
independent public or independent certified public accountants unless required
by the Act or the Regulations, but which shall satisfy the provisions of Rule
158(a) under Section 11(a) of the Act) covering a period of at least twelve
consecutive months beginning after the Effective Date.
3.13 Stabilization. Neither
the Company, nor, to its knowledge, any of its employees, directors or
shareholders (without the consent of the Representatives) has taken or will
take, directly or indirectly, any action designed to or that has constituted or
that might reasonably be expected to cause or result in, under the Exchange Act,
or otherwise, stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Shares.
3.14 Internal
Controls. The Company will maintain a system of internal
accounting controls sufficient to provide reasonable assurances that:
(i) transactions are executed in accordance with management’s general or
specific authorization; (ii) transactions are recorded as necessary in
order to permit preparation of financial statements in accordance with GAAP and
to maintain accountability for assets; (iii) access to assets is permitted
only in accordance with management’s general or specific authorization; and
(iv) the recorded accountability for assets is compared with existing
assets at reasonable intervals and appropriate action is taken with respect to
any differences.
3.15 Accountants. As
of the Effective Date, the Company shall retain an independent public
accountants reasonably acceptable to the Representatives, and the Company shall
continue to retain a nationally recognized independent certified public
accounting firm for a period of at least three (3) years after the Effective
Date. The Representatives acknowledge that EFP Rotenberg is
acceptable to the Representatives.
3.16 FINRA. The
Company shall advise the Representatives (who shall make an appropriate filing
with FINRA) if it is aware that any 5% or greater shareholder of the Company
becomes an affiliate or associated person of an FINRA member participating in
the distribution of the Public Securities.
3.17 No Fiduciary
Duties. The Company acknowledges and agrees that the
Underwriters’ responsibility to the Company is solely contractual in nature and
that none of the Underwriters or their affiliates or any selling agent shall be
deemed to be acting in a fiduciary capacity, or otherwise owes any fiduciary
duty to the Company or any of its affiliates in connection with the Offering and
the other transactions contemplated by this Agreement.
4. Conditions of Underwriters’
Obligations. The obligations of the Underwriters to purchase
and pay for the Shares, as provided herein, shall be subject to (i) the
continuing accuracy of the representations and warranties of the Company as of
the date hereof and as of each of the Closing Date and the Option Closing Date,
if any; (ii) the accuracy of the statements of officers of the Company made
pursuant to the provisions hereof; (iii) the performance by the Company of its
obligations hereunder and (iv) the following conditions:
4.1 Regulatory
Matters.
4.1.1. Effectiveness of
Registration Statement. The Registration Statement shall have
become effective not later than 5:00 P.M., Eastern time, on the date of this
Agreement or such later date and time as shall be consented to in writing by
you, and, at each of the Closing Date and the Option Closing Date, if any, no
stop order suspending the effectiveness of the Registration Statement shall have
been issued and no proceedings for that purpose shall have been instituted or
shall be pending or contemplated by the Commission and any request on the part
of the Commission for additional information shall have been complied with to
the reasonable satisfaction of Pillsbury.
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4.1.2. FINRA
Clearance. By the Effective Date, the Representatives shall
have received clearance from FINRA as to the amount of compensation allowable or
payable to the Underwriters as described in the Registration
Statement.
4.1.3. NASDAQ Clearance. On
the Closing Date, the Company’s Shares, including the Firm Shares, shall have
been approved for listing on NASDAQ.
4.1.4. Free Writing
Prospectuses. The Representatives covenant with the Company
that the Underwriters will not use, authorize the use of, refer to, or
participate in the planning for the use of a “free writing prospectus” as
defined in Rule 405 under the 1933 Act, which term includes use of any written
information furnished by the Commission to the Company and not incorporated by
reference into the Registration Statement, without the prior written consent of
the Company. Any such free writing prospectus consented to by the Company is
hereinafter referred to as an “Underwriter Free Writing
Prospectus.”
4.2 Company Counsel
Matters.
4.2.1. Closing Date Opinion of U.S.
Counsel. On the Closing Date, the Representatives shall have
received the favorable opinion of McLaughlin & Stern LLP, United States
counsel to the Company (“Company Counsel”), dated the
Closing Date, addressed to the Representatives, in the form attached hereto as
Exhibit
B.
4.2.2. Closing Date Opinion of PRC
Counsel. On the Closing Date, the Representatives shall have
received the favorable opinion of B & D Law Firm, PRC counsel to the
Company, reasonably acceptable to the Representatives, related to,
among other things, the descriptions of laws of the PRC and the organization of
the Company’s PRC affiliates and ownership structure, dated the Closing Date and
addressed to the Company .
4.2.3. Option Closing Date Opinions
of Counsel. On the Option Closing Date, if any, the Representatives shall
have received the favorable opinions of each counsel listed in Sections 4.2.1
through 4.2.2, dated the Option Closing Date, addressed to the Representatives
and in form and substance reasonably satisfactory to the Representatives,
confirming as of the Option Closing Date, the statements made by such counsels
in their respective opinions delivered on the Closing Date.
4.2.4. Reliance. In
rendering such opinions, such counsel may rely: (i) as to matters involving
the application of laws other than the laws of the United States and
jurisdictions in which they are admitted, to the extent such counsel deems
proper and to the extent specified in such opinion, if at all, upon an opinion
or opinions (in form and substance reasonably satisfactory to the
Representatives) of other counsel reasonably acceptable to the Representatives,
familiar with the applicable laws; and (ii) as to matters of fact, to the
extent they deem proper, on certificates or other written statements of officers
of the Company and officers of departments of various jurisdiction having
custody of documents respecting the corporate existence or good standing of the
Company, provided that copies of any such statements or certificates shall be
delivered to Pillsbury if requested. The opinions of Company Counsel and any
opinion relied upon by Company Counsel shall include a statement to the effect
that it may be relied upon by counsel for the Underwriters in its opinion
delivered to the Underwriters.
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4.3 Cold Comfort
Letter. At the time this Agreement is executed, and at each of
the Closing Date and the Option Closing Date, if any, you shall have received a
cold comfort letter, addressed to the Representatives and in form and substance
satisfactory in all respects to you and to Pillsbury from EFP Rotenberg dated, respectively, as
of the date of this Agreement and as of the Closing Date and the Option Closing
Date, if any.
4.4 Officers’
Certificates.
4.4.1. Officers’
Certificate. At each of the Closing Date and the Option
Closing Date, if any, the Representatives shall have received a certificate of
the Company signed by the Chief Executive Officer and Chief Financial
Officer of the Company, dated the Closing Date or the Option Closing Date, as
the case may be, respectively, to the effect that the Company has performed all
covenants and complied with all conditions required by this Agreement to be
performed or complied with by the Company prior to and as of the Closing Date,
or the Option Closing Date, as the case may be, and that the conditions set
forth in Section 4.5 hereof have been satisfied as of such date and that, as of
the Closing Date and the Option Closing Date, as the case may be, the
representations and warranties of the Company set forth in Section 2 hereof are
true and correct. In addition, the Representatives will have received such other
and further certificates of officers of the Company as the Representatives may
reasonably request.
4.4.2. Secretary’s
Certificate. At each of the Closing Date and the Option
Closing Date, if any, the Representatives shall have received a certificate of
the Company signed by the Secretary or Assistant Secretary of the Company, dated
the Closing Date or the Option Closing Date, as the case may be, respectively,
certifying: (i) that the Certificate of Incorporation and bylaws are true and complete,
have not been modified and are in full force and effect; (ii) that the
resolutions of the Company’s Board of Directors relating to the public offering
contemplated by this Agreement are in full force and effect and have not been
modified; (iii) as to the accuracy and completeness of all correspondence
between the Company or its counsel and the Commission; and (iv) as to the
incumbency of the officers of the Company. The documents referred to in such
certificate shall be attached to such certificate.
4.5 No Material
Changes. Prior to and on each of the Closing Date and the
Option Closing Date, if any: (i) there shall have been no material adverse
change or development involving a prospective material adverse change in the
condition or prospects or the business activities, financial or otherwise, of
the Company from the latest dates as of which such condition is set forth in the
Registration Statement and Prospectus; (ii) no action suit or proceeding,
at law or in equity, shall have been pending or threatened against the Company
or any Insider before or by any court or federal or state commission, board or
other administrative agency wherein an unfavorable decision, ruling or finding
may materially adversely affect the business, operations, prospects or financial
condition or income of the Company, except as set forth in the Registration
Statement and Prospectus; (iii) no stop order shall have been issued under
the Act and no proceedings therefore shall have been initiated or threatened by
the Commission; and (iv) the Registration Statement and the Prospectus and
any amendments or supplements thereto shall contain all material statements
which are required to be stated therein in accordance with the Act and the
Regulations and shall conform in all material respects to the requirements of
the Act and the Regulations, and neither the Registration Statement nor the
Prospectus nor any amendment or supplement thereto shall contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
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4.6 Delivery of
Agreements.
4.6.1. Effective Date
Deliveries. On the Effective Date, the Company shall have
delivered to the Representatives executed copies of this Agreement and the
Lock-Up Agreements.
4.6.2. Closing Date
Deliveries. On the Effective Date, the Company shall have
delivered to the Representatives executed copies of the Representatives’
Warrants.
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5.
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Indemnification.
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5.1 Indemnification of the
Underwriters.
5.1.1. General. Subject
to the conditions set forth below, the Company agrees to indemnify and hold
harmless each of the Underwriters, and each dealer selected by the
Representatives that participates in the offer and sale of the Public Securities
(each a “Selected
Dealer”) and each of their respective directors, officers and employees
and each person, if any, who controls any such Underwriter (“Controlling Person”) within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act, against
any and all loss, liability, claim, damage and expense whatsoever (including but
not limited to any and all legal or other expenses reasonably incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever, whether arising out of any action between
any of the Underwriters and the Company or between any of the Underwriters and
any third party or otherwise) to which they or any of them may become subject
under the Act, the Exchange Act or any other statute or at common law or
otherwise or under the laws of foreign countries, arising out of or based upon
any untrue statement or alleged untrue statement of a material fact contained in
(i) any preliminary prospectus, the Registration Statement or the Prospectus (as
from time to time each may be amended and supplemented); (ii) any materials or
information provided to investors by, or with the approval of, the Company in
connection with the marketing of the Offering, including any “road show” or
investor presentations made to investors by the Company (whether in person or
electronically); or (iii) any application or other document or written
communication (in this Section 5, collectively called “application”) executed by the
Company or based upon written information furnished by the Company in any
jurisdiction in order to qualify the Public Securities and Representatives’
Securities under the securities laws thereof or filed with the Commission, any
state securities commission or agency, NASDAQ or any securities exchange; or the
omission or alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, unless such statement
or omission was made in reliance upon and in conformity with written information
furnished to the Company with respect to an Underwriter by or on behalf of such
Underwriter expressly for use in any preliminary prospectus, the Registration
Statement or Prospectus, or any amendment or supplement thereof, or in any
application, as the case may be. With respect to any untrue statement or
omission or alleged untrue statement or omission made in a preliminary
prospectus, the indemnity agreement contained in this Section 5.1.1 shall not
inure to the benefit of any Underwriter to the extent that any loss, liability,
claim, damage or expense of such Underwriter results from the fact that a copy
of the Prospectus was not given or sent to the person asserting any such loss,
liability, claim or damage at or prior to the written confirmation of sale of
the Public Securities to such person as required by the Act and the Regulations,
and if the untrue statement or omission has been corrected in the Prospectus,
unless such failure to deliver the Prospectus was a result of non-compliance by
the Company with its obligations under Section 3.3 hereof. The Company agrees
promptly to notify the Representatives of the commencement of any litigation or
proceedings against the Company or any of its officers, directors or Controlling
Persons in connection with the issue and sale of the Public Securities or in
connection with the Registration Statement or Prospectus.
26
5.1.2. Procedure. If
any action is brought against an Underwriter, a Selected Dealer or a Controlling
Person in respect of which indemnity may be sought against the Company pursuant
to Section 5.1.1, such Underwriter, such Selected Dealer or Controlling Person,
as the case may be, shall promptly notify the Company in writing of the
institution of such action and the Company shall assume the defense of such
action, including the employment and fees of counsel (subject to the reasonable
approval of such Underwriter or such Selected Dealer, as the case may be) and
payment of actual expenses. Such Underwriter, such Selected Dealer or
Controlling Person 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 Underwriter, such Selected Dealer or Controlling Person unless (i) the
employment of such counsel at the expense of the Company shall have been
authorized in writing by the Company in connection with the defense of such
action, or (ii) the Company shall not have employed counsel to have charge of
the defense of such 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 the Company (in
which case the Company 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
the reasonable fees and expenses of not more than one additional firm of
attorneys selected by the Underwriter (in addition to local counsel), Selected
Dealer and/or Controlling Person shall be borne by the Company. Notwithstanding
anything to the contrary contained herein, if any Underwriter, Selected Dealer
or Controlling Person shall assume the defense of such action as provided above,
the Company shall have the right to approve the terms of any settlement of such
action which approval shall not be unreasonably withheld.
5.2 Indemnification of the
Company. Each Underwriter, severally and not jointly, agrees
to indemnify and hold harmless the Company, its directors, officers and
employees and agents who control the Company within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act against any and all loss, liability,
claim, damage and expense described in the foregoing indemnity from the Company
to the several Underwriters, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions made in any
preliminary prospectus, the Registration Statement or Prospectus or any
amendment or supplement thereto or in any application, in reliance upon, and in
strict conformity with, written information furnished to the Company with
respect to such Underwriter by or on behalf of the Underwriter expressly for use
in such preliminary prospectus, the Registration Statement or Prospectus or any
amendment or supplement thereto or in any such application. In case any action
shall be brought against the Company or any other person so indemnified based on
any preliminary prospectus, the Registration Statement or Prospectus or any
amendment or supplement thereto or any application, and in respect of which
indemnity may be sought against any Underwriter, such Underwriter shall have the
rights and duties given to the Company, and the Company and each other person so
indemnified shall have the rights and duties given to the several Underwriters,
by the provisions of Section 5.1.2.
27
5.3 Contribution.
5.3.1. Contribution
Rights. In order to provide for just and equitable
contribution under the Act in any case in which (i) any person entitled to
indemnification under this Section 5 makes claim for indemnification pursuant
hereto but it is judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to appeal
or the denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 5 provides for
indemnification in such case, or (ii) contribution under the Act, the Exchange
Act or otherwise may be required on the part of any such person in circumstances
for which indemnification is provided under this Section 5, then, and in each
such case, the Company and the Underwriters shall contribute to the aggregate
losses, liabilities, claims, damages and expenses of the nature contemplated by
said indemnity agreement incurred by the Company and the Underwriters, as
incurred, in such proportions that the Underwriters are responsible for that
portion represented by the percentage that the underwriting discount appearing
on the cover page of the Prospectus bears to the initial offering price
appearing thereon and the Company is responsible for the balance; provided, that
no person guilty of a fraudulent misrepresentation (within the meaning of
Section 11 (f) of the Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. Notwithstanding the
provisions of this Section 5.3.1, no Underwriter shall be required to contribute
any amount in excess of the amount by which the total price at which the
Securities underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages that such Underwriter has otherwise
been required to pay in respect of such losses, liabilities, claims, damages and
expenses. For purposes of this Section, each director, officer and employee of
an Underwriter or the Company, as applicable, and each person, if any, who
controls an Underwriter or the Company, as applicable, within the meaning of
Section 15 of the Act shall have the same rights to contribution as such
Underwriter or the Company, as applicable. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
5.3.2. Contribution
Procedure. Within fifteen days after receipt by any party to
this Agreement (or its representative) of notice of the commencement of any
action, suit or proceeding, such party will, if a claim for contribution in
respect thereof is to be made against another party (“contributing party”), notify
the contributing party of the commencement thereof, but the failure to so notify
the contributing party will not relieve it from any liability which it may have
to any other party other than for contribution hereunder. In case any such
action, suit or proceeding is brought against any party, and such party notifies
a contributing party or its representative of the commencement thereof within
the aforesaid fifteen days, the contributing party will be entitled to
participate therein with the notifying party and any other contributing party
similarly notified. Any such contributing party shall not be liable to any party
seeking contribution on account of any settlement of any claim, action or
proceeding affected by such party seeking contribution on account of any
settlement of any claim, action or proceeding affected by such party seeking
contribution without the written consent of such contributing party. The
contribution provisions contained in this Section 5.3.2 are intended to
supersede, to the extent permitted by law, any right to contribution under the
Act, the Exchange Act or otherwise available. Each Underwriter’s
obligations to contribute pursuant to this Section 5.3 are several and not
joint.
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6.
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Default by an
Underwriter.
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6.1 Default Not Exceeding 10% of
Firm Shares or Option Shares. If any Underwriter or Underwriters shall
default in its or their obligations to purchase the Firm Shares or the Option
Shares, if the Over-allotment Option is exercised, hereunder, and if the number
of the Firm Shares or Option Shares with respect to which such default relates
does not exceed in the aggregate 10% of the number of Firm Shares or Option
Shares that all Underwriters have agreed to purchase hereunder, then such Firm
Shares or Option Shares to which the default relates shall be purchased by the
non-defaulting Underwriters in proportion to their respective commitments
hereunder.
6.2 Default Exceeding 10% of
Firm Shares or Option Shares. In the event that the default addressed in
Section 6.1 relates to more than 10% of the Firm Shares or Option Shares, you
may in your discretion arrange for yourself or for another party or parties to
purchase such Firm Shares or Option Shares to which such default relates on the
terms contained herein. If, within one (1) Business Day after such default
relating to more than 10% of the Firm Shares or Option Shares, you do not
arrange for the purchase of such Firm Shares or Option Shares, then the Company
shall be entitled to a further period of one (1) Business Day within which to
procure another party or parties satisfactory to you to purchase said Firm
Shares or Option Shares on such terms. In the event that neither you nor the
Company arrange for the purchase of the Firm Shares or Option Shares to which a
default relates as provided in this Section 6, this Agreement will automatically
be terminated by you or the Company without liability on the part of the Company
(except as provided in Sections 3.10 and 5 hereof) or the several Underwriters
(except as provided in Section 5 hereof); provided, however, that if such
default occurs with respect to the Option Shares, this Agreement will not
terminate as to the Firm Shares; and provided further that nothing herein shall
relieve a defaulting Underwriter of its liability, if any, to the other
Underwriters and to the Company for damages occasioned by its default
hereunder.
28
6.3 Postponement of Closing
Date. In the event that the Firm Shares or Option Shares to
which the default relates are to be purchased by the non-defaulting
Underwriters, or are to be purchased by another party or parties as aforesaid,
you or the Company shall have the right to postpone the Closing Date or Option
Closing Date for a reasonable period, but not in any event 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 to the
Registration Statement or the Prospectus that in the opinion of counsel for the
Underwriter may thereby be made necessary. The term “Underwriter” as used in this
Agreement shall include any party substituted under this Section 6 with like
effect as if it had originally been a party to this Agreement with respect to
such Securities.
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7.
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Additional
Covenants.
|
7.1 Board Composition and Board
Designations. The Company shall ensure that: (i) the
qualifications of the persons serving as board members and the overall
composition of the board comply with the Sarbanes-Oxley Act of 2002 and the
rules promulgated thereunder and with the listing requirements of NASDAQ or any
other national securities exchange or national securities association, as the
case may be, in the event the Company seeks to have its Public Securities listed
on another exchange or quoted on an automated quotation system, and (ii) if
applicable, at least one member of the board of directors qualifies as a
“financial expert” as such term is defined under the Sarbanes-Oxley Act of 2002
and the rules promulgated thereunder.
7.2 Prohibition on Press
Releases and Public Announcements. The Company will not issue
press releases or engage in any other publicity, without the Representatives’
prior written consent, for a period ending at 5:00 p.m. Eastern time on the
first business day following the 45th day following the Closing Date, other than
normal and customary releases issued in the ordinary course of the Company’s
business.
7.3 FINRA
Compliance. 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 NASD Rules 2420, 2730, 2740 and 2750, and any successor rules
thereto.
7.4 D&O
Insurance. Within one (1) month of the Closing Date, the
Company will maintain Directors’ and Officers’ and Errors & Omissions
insurance with liability levels reasonably acceptable to the Representatives and
will have the Representatives added as named insureds to these
policies.
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8.
|
Effective Date of this
Agreement and Termination
Thereof.
|
8.1 Effective
Date. This Agreement shall become effective when the Company
and the Representatives have executed the same and delivered counterparts of
such signatures to the other party.
29
8.2 Termination. You
shall have the right to terminate this Agreement at any time prior to any
Closing, (i) if any domestic or international event or act or occurrence
has materially disrupted, or in your opinion will in the immediate future
materially disrupt, general securities markets in the United States; or
(ii) if trading on the New York Stock Exchange, the NASDAQ Global Market or
the NASDAQ Capital Market shall have been suspended or materially limited, or
minimum or maximum prices for trading shall have been fixed, or maximum ranges
for prices for securities shall have been required by FINRA or by order of the
Commission or any other government authority having jurisdiction, or
(iii) if the United States shall have become involved in a new war or an
increase in major hostilities, or (iv) if a banking moratorium has been
declared by a New York State or federal authority, or (v) if a moratorium
on foreign exchange trading has been declared which materially adversely impacts
the United States securities markets, or (vi) if the Company shall have
sustained a material loss by fire, flood, accident, hurricane, earthquake,
theft, sabotage or other calamity or malicious act which, whether or not such
loss shall have been insured, will, in your opinion, make it inadvisable to
proceed with the delivery of the Firm Shares or Option Shares, or (vii) if
the Company is in material breach of any of its representations, warranties or
covenants hereunder, or (viii) if the Representatives shall have become
aware after the date hereof of such a material adverse change in the conditions
or prospects of the Company, or such adverse material change in general market
conditions as in the Representatives’ judgment would make it impracticable to
proceed with the offering, sale and/or delivery of the securities or to enforce
contracts made by the Underwriters for the sale of the securities.
8.3 Expenses. Except
in the case of a default by the Underwriters, pursuant to Section 6.2 above, in
the event that this Agreement shall not be carried out for any reason
whatsoever, within the time specified herein or any extensions thereof pursuant
to the terms herein, the Company shall be obligated to pay to the Underwriters
their actual and accountable out of pocket expenses related to the transactions
contemplated herein then due and payable (including but not limited to the
expenses in connection with the I-Deal and Net Roadshow programs, counsel fees,
due diligence expenses and travel and lodging expenses in connection with road
shows (excluding 1.0% Corporate Finance Fee)) up to $185,000; provided, however,
that such expense cap in no way limits or impairs the indemnification and
contribution provisions of this Agreement).
8.4 Indemnification. Notwithstanding
any contrary provision contained in this Agreement, any election hereunder or
any termination of this Agreement, and whether or not this Agreement is
otherwise carried out, the provisions of Section 5 shall not be in any way
effected by, such election or termination or failure to carry out the terms of
this Agreement or any part hereof.
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9.
|
Miscellaneous.
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9.1 Notices. All
communications hereunder, except as herein otherwise specifically provided,
shall be in writing and shall be mailed (registered or certified mail, return
receipt requested), personally delivered or sent by facsimile transmission and
confirmed and shall be deemed given when so delivered or faxed and confirmed or
if mailed, two days after such mailing.
30
If to the
Representatives:
Rodman
& Renshaw, LLC
1251
Avenue of Americas, 20th Floor
New York,
NY 10020
Attn:
General Counsel
Fax No.:
646-841-1640
and
Newbridge
Securities Corporation
1451 West
Cypress Creek Road
Ft.
Lauderdale, FL 33309
Attn:
Anthony J. Sarkis
Copy
to:
Pillsbury
Winthrop Shaw Pittman LLP
2300 N
St. NW
Washington,
DC 20037
Attn:
Joseph R. Tiano, Esq.
If to the
Company:
To the
addresses set forth in the Registration Statement for the Company and its
counsel.
9.2 Headings. The
headings contained herein are for the sole purpose of convenience of reference,
and shall not in any way limit or affect the meaning or interpretation of any of
the terms or provisions of this Agreement.
9.3 Amendment. This
Agreement may only be amended by a written instrument executed by each of the
parties hereto.
9.4 Entire
Agreement. This Agreement (together with the other agreements
and documents being delivered pursuant to or in connection with this Agreement)
constitutes the entire agreement of the parties hereto with respect to the
subject matter hereof and thereof, and supersedes all prior agreements and
understandings of the parties, oral and written, with respect to the subject
matter hereof.
9.5 Binding
Effect. This Agreement shall inure solely to the benefit of
and shall be binding upon the Representatives, the Underwriters, the Company and
the Controlling Persons, directors and officers referred to in Section 5 hereof,
and their respective successors, legal representatives 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 provisions
herein contained. The term “successors and assigns” shall not include a
purchaser, in its capacity as such, of securities from any of the
Underwriters.
31
9.6 Governing
Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York, without giving
effect to conflict of laws principles thereof. The Company hereby agrees that
any action, proceeding or claim against it arising out of, or relating in any
way to this Agreement shall be brought and enforced in the New York Supreme
Court, County of New York, or in the United States District Court for the
Southern District of New York, and irrevocably submits to such jurisdiction,
which jurisdiction shall be exclusive. The Company hereby waives any objection
to such exclusive jurisdiction and that such courts represent an inconvenient
forum. Any such process or summons to be served upon the Company may be served
by transmitting a copy thereof by registered or certified mail, return receipt
requested, postage prepaid, addressed to it at the address set forth in Section
9.1 hereof. Such mailing shall be deemed personal service and shall be legal and
binding upon the Company in any action, proceeding or claim. The Company agrees
that the prevailing party(ies) in any such action shall be entitled to recover
from the other party(ies) all of its reasonable attorneys’ fees and expenses
relating to such action or proceeding and/or incurred in connection with the
preparation therefore. THE COMPANY (ON BEHALF OF ITSELF AND THE OPERATING
ENTITIES AND, TO THE FULLEST EXTENT PERMITTED BY LAW, EACH OF THEIR RESPECTIVE
EQUITY HOLDERS AND CREDITORS) HEREBY WAIVES ANY RIGHT IT 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.
9.7 Execution in
Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which shall be deemed to be an original, but all of which taken together
shall constitute one and the same agreement, and shall become effective when one
or more counterparts has been signed by each of the parties hereto and delivered
to each of the other parties hereto. Delivery of a signed counterpart of this
Agreement by facsimile or email/pdf transmission shall constitute valid and
sufficient delivery thereof.
9.8 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.
[SIGNATURE
PAGE FOLLOWS]
32
If the
foregoing correctly sets forth the understanding between the Underwriters and
the Company, please so indicate in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement between
us.
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Very
truly yours,
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|||
|
Zheng
Hui Industry Corporation
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|||
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By:
|
|||
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Name:
|
|||
|
Title:
|
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|
Beijing
CHENGMUJINMING Technology Service Co., LTD.
|
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By:
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|
Name:
|
|||
|
Title:
|
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|
Weifang
Jinzheng Poultry Co., Ltd.
|
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By:
|
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Name:
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|
Title:
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Accepted
on the date first above written.
|
||
|
Rodman
& Renshaw, LLC
|
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By:
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||
|
Name:
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||
|
Title:
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||
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Newbridge
Securities Corporation
|
||
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By:
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||
|
Name:
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||
|
Title:
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||
Zheng Hui
Underwriting Agreement
SCHEDULE
1
Underwriters
|
Underwriter
|
Number of Firm Shares to be
Purchased from the Company
|
Over-Allotment
Option Shares
|
||
|
Rodman
& Renshaw, LLC
|
||||
|
Newbridge
Securities Corporation
|
||||
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TOTAL
|
SCHEDULE
2
Issuer General Free Writing
Prospectuses
None
SCHEDULE
3
Lock-Up
Parties
Junfeng
Shan, Chief Executive Officer, President and Director
Xiaofang
Xue, Chief Financial Officer
Lilian
Jiang, Director
Yuan
Gong, Director
Jing Cao,
Director
Kunshan
Wang, Director
Shidian
Shan, Vice President
Yunqing
Wu, Vice President
Yongping
Shan, Deputy Manager
Zheng Hui
Holding Limited
Sino
Joint Holding Limited
King Rock
Group Limited
Sino
Spring Capital Holding Ltd.
Blue Net
Group Limited
EXHIBIT
A
Lock-Up
Agreement
___________
__, 20__
Rodman
& Renshaw, LLC
1251
Avenue of Americas, 20th Floor
New York,
NY 10020
Ladies
and Gentlemen:
The
undersigned understands that Rodman & Renshaw, LLC and Newbridge Securities
Corporation (the “Representatives”) propose to
enter into an Underwriting Agreement (the “Underwriting Agreement”) with
Zheng Hui Industry Corporation, a Nevada corporation (the “Company”), providing for the
public offering (the “Public
Offering”) by the Representatives of [_____] shares of common stock
(“Firm Shares”), par
value $_____ per share, of the Company.. For purposes of this letter
agreement, “Shares”
shall mean shares of the Company’s common stock.
To induce
the Representatives to continue their efforts in connection with the Public
Offering, the undersigned hereby agrees that, without the prior written consent
of the Representatives, it will not, during the period commencing on the date
hereof and ending on [ENTER DATE THAT IS 12 MONTHS [or 6 MONTHS] AFTER
COMMENCEMENT] after the date of the final prospectus (the “Prospectus”) relating to the
Public Offering (the “Lock-Up
Period”), (1) offer, pledge, sell, contract to sell, grant, lend, or
otherwise transfer or dispose of, directly or indirectly, any Shares or any
securities convertible into or exercisable or exchangeable for Shares, or (2)
enter into any swap or other arrangement that transfers to another, in whole or
in part, any of the economic consequences of ownership of the Shares, 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. Notwithstanding the foregoing, the undersigned may
transfer Shares without the prior consent of the Representatives in connection
with (a) transactions relating to Shares or other securities acquired in open
market transactions after the completion of the Public Offering, provided that no filing
under Section 16(a) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), shall
be required or shall be voluntarily made in connection with subsequent sales of
Shares or other securities acquired in such open market transactions, (b)
transfers of Shares or any security convertible into Shares as a bona fide gift,
by will or intestacy or to a family member or trust for the benefit of a family
member; provided that
in the case of any transfer or distribution pursuant to clause (b), (i)
each donee or distributee shall sign and deliver a lock-up letter substantially
in the form of this letter agreement and (ii) no filing under Section 16(a)
of the Exchange Act, reporting a reduction in beneficial ownership of Shares,
shall be required or shall be voluntarily made during the Lock-up Period, (c)
transfer of Shares to a charity or educational institution, or (d) if the
undersigned, directly or indirectly, controls a corporation, partnership,
limited liability company or other business entity, any transfers of Shares to
any shareholder, partner or member of, or owner of similar equity interests in,
the undersigned, as the case may be, if, in any such case, such transfer is not
for value.
In addition, the undersigned agrees
that during the Lock-Up Period, without the prior written consent of the
Representatives, it will not 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. The undersigned also agrees
and consents to the entry of stop transfer instructions with the Company’s
transfer agent and registrar against the transfer of the undersigned’s Shares
except in compliance with this Agreement.
If (i)
the Company issues an earnings release or material news, during the last 17 days
of the Lock-Up Period, or (ii) prior to the expiration of the Lock-Up Period,
the Company announces that it will release earnings results during the 16-day
period beginning on the last day of the Lock-Up Period, the restrictions imposed
by this agreement shall continue to apply until the expiration of the 18-day
period beginning on the issuance of the earnings release, unless the
Representatives waive such extension.
No
provision in this agreement shall be deemed to restrict or prohibit the exercise
or exchange by the undersigned of any option or warrant to acquire Shares, or
securities exchangeable or exercisable for or convertible into Shares, provided that the undersigned
does not transfer the Shares acquired on such exercise or exchange during the
Lock-Up Period, unless otherwise permitted pursuant to the terms of this letter
agreement. In addition, no provision herein shall be deemed to
restrict or prohibit the entry into or modification of a so-called “10b5-1” plan
at any time (other than the entry into or modification of such a plan in such a
manner as to cause the sale of any Shares or any securities convertible into or
exercisable or exchangeable for Shares within the Lock-Up Period).
The
undersigned understands that the Company and the Representatives are relying
upon this letter agreement in proceeding toward consummation of the Public
Offering. The undersigned further understands that this agreement is
irrevocable and shall be binding upon the undersigned’s heirs, legal
representatives, successors and assigns.
The
undersigned understands that 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 this
agreement shall be void and of no further force or effect.
Whether
or not the Public Offering actually occurs depends on a number of factors,
including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Company and the Representatives.
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Very
truly yours,
|
|
(Name):
|
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(Address)
|
EXHIBIT
B
Form
of Legal Opinion
|
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1.
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The
Company has been duly incorporated and is validly existing as a
corporation and is in good standing under the laws of its jurisdiction of
incorporation or organization. The Company has all power and
authority to own its properties and conduct its business as currently
being carried on and as described in the Registration Statement, the Time
of Sale Disclosure Package, any Issuer Free Writing Prospectus, and the
Prospectus.
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2.
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The
Company is duly qualified to do business as a foreign corporation in good
standing in each jurisdiction in which its ownership, lease or operation
of property or the conduct of its business requires such qualification,
except where any failure so to register or qualify does not have,
singularly or in the aggregate, a material adverse
effect.
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3.
|
The
Company has obtained all government permits necessary to conduct its
business as presently conducted and in the manner and on the terms
described in the Registration Statement, the Time of Sale Disclosure
Package, any Issuer Free Writing Prospectus, and the Prospectus, except
where any failures to possess the same, singularly or in the aggregate,
would not have a material adverse
effect.
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4.
|
The
Company’s authorized equity capitalization is as set forth in the
Registration Statement, the Time of Sale Disclosure Package, any Issuer
Free Writing Prospectus, and the Prospectus; and the capital stock of the
Company conforms to the description thereof contained in the Registration
Statement, the Time of Sale Disclosure Package, any Issuer Free Writing
Prospectus, and the Prospectus. All issued and outstanding
securities of the Company have been duly authorized and validly issued and
are fully paid and non-assessable and free and clear of any preemptive or
other similar rights arising under applicable law, the charter or by-laws
of the Company or any agreement or instrument that is material to the
Company; the holders of such securities are not subject to personal
liability by reason of being such holders. The offers and sales
of the outstanding securities were at all relevant times either registered
under the Securities Act or exempt from such registration
requirements.
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5.
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To
the best of such counsel’s knowledge, all the issued shares of capital
stock (or analogous ownership interests, as applicable) of Beijing
CHENGMUJINMING Technology Service Co., LTD. (“Beijing CMJM”) have been
duly and validly authorized and issued, are fully paid and non-assessable
and are wholly-owned by the Company directly and free and clear of any
claim, lien, encumbrance, security interest, restriction upon voting or
transfer or any other claim of any third party; and none of the
outstanding shares of capital stock (or analogous ownership interests, as
applicable) of each of Beijing CMJM and WeiFang JinZheng Poultry Co., Ltd.
was issued in violation of the preemptive or similar rights to subscribe
for shares (or analogous ownership interests, as applicable) of such
entity.
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6.
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The
Shares and the Representatives’ Securities have been duly and validly
authorized for issuance and sale to the Underwriters pursuant to the
Underwriting Agreement and, when issued and delivered by the Company
pursuant to the Underwriting Agreement against payment of the
consideration set forth therein, will be validly issued, fully paid and
non-assessable and free and clear of any preemptive or other similar
rights arising under applicable law, the charter or by-laws of the Company
or any agreement or instrument that is material to the Company; the
holders thereof are not and will not be subject to personal liability by
reason of being such holders. The form of certificate used to
evidence the Shares complies in all material respects with all applicable
statutory requirements, all applicable requirements of the charter and
by-laws of the Company and all applicable requirements of the Nasdaq
Capital Market. When issued, the Representatives’ Warrants will
constitute valid and binding obligations of the Company to issue and sell,
upon exercise thereof and payment therefor, the number and type of
securities of the Company called for thereby, and such Representatives’
Warrants, when issued, in each case, will be enforceable against the
Company in accordance with their terms. The shares of Common Stock
underlying the Representatives’ Warrants will, when issued, upon their
respective exercise and payment of the exercise price thereof, assuming
compliance with all of the other terms and conditions to their exercise,
be duly and validly issued, fully paid and non-assessable. The
Company has reserved for issuance, the shares of Common Stock underlying
the Representatives’ Warrants.
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7.
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There
are no preemptive or other rights to subscribe for or to purchase, nor any
restriction upon the voting or transfer of, any Shares or Representatives’
Securities pursuant to the Company’s charter or by-laws or any agreement
or other instrument known to your
firm.
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8.
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The
Company has the requisite corporate power and authority to execute and
deliver the Underwriting Agreement and the Representatives’ Warrants, and
to perform its obligations thereunder, and all corporate action required
to be taken for the authorization, execution and delivery of the
Underwriting Agreement and the Representatives’ Warrants has been duly and
validly taken.
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9.
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The
Underwriting Agreement and the Representatives’ Warrants have each been
duly and validly authorized, executed and delivered by the
Company.
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10.
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The
execution, delivery and performance of the Underwriting Agreement, the
issuance and sale of the Securities, the consummation of the transactions
contemplated thereby, and compliance by the Company with the terms and
provisions hereof and thereof, do not and will not, with or without the
giving of notice or the lapse of time, or both, (a) conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company is a party
or by which any of the Company Parties is bound or to which any of the
properties or assets of any of the Company Parties is subject, (b) result
in any violation of the provisions of the organizational documents of the
Company, or (c) violate any statute, rule or regulation or any judgment,
order or decree applicable to the Company or any Operating Entity of any
court, domestic or foreign, or of any federal, state or other regulatory
authority or other governmental body having jurisdiction over the Company
or any Operating Entity or any of their properties or
assets.
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11.
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The
Company is not (i) in violation of its charter or by-laws (or analogous
governing instrument, as applicable), (ii) in default and, no event has
occurred, which, with notice or lapse of time or both, would constitute a
default, in the due performance or observance of any term, covenant or
condition contained in any material agreement or instrument to which it is
a party or by which it is bound or to which any of its properties or
assets is subject or (iii) in violation of any law, statute, ordinance,
governmental rule, regulation or court decree to which it or its property
or assets may be subject or has failed to obtain any license, permit,
certificate, franchise or other governmental or non-governmental
authorization or permit necessary for the ownership of its property or to
the conduct of its business as described in the Registration Statement,
Time of Sale Disclosure Package, any Issuer Free Writing Prospectus and
the Prospectus.
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12.
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Other
than as set forth in the Registration Statement, the Time of Sale
Disclosure Package and the Prospectus, to the best of such counsel’s
knowledge, there is no action, suit or other proceeding before or by any
court of governmental agency or body, domestic or foreign, now pending, or
overtly threatened to which the Company or any Operating Entity is a party
or of which any property or asset of the Company or any Operating Entity
is the subject which, singularly or in the aggregate, if determined
adversely to the Company or any Operating Entity, might have a material
adverse effect or would prevent or adversely affect the ability of the
Company to perform its obligations under the Underwriting
Agreement. To your firm’s knowledge, there is no contract or
other document of a character required to be described in the Registration
Statement, the Time of Sale Disclosure Package or the Prospectus, or to be
filed as an exhibit to the Registration Statement, which is not described
or filed as required.
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13.
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The
Registration Statement and any amendments thereto made by the Company
prior to the Closing Date (other than the financial statements and other
financial data contained therein, as to which such counsel need express no
opinion), as of their respective effective dates and as of the date of the
Underwriting Agreement complied as to form in all material respects with
the requirements of the Securities Act and the Regulations; each
prospectus included in the Registration Statement (other than the
financial statements and other financial data contained therein, as to
which such counsel need express no opinion), as of the Time of Sale,
complied as to form in all material respects with the requirements of the
Securities Act; the Prospectus, and any amendments or supplements thereto
made by the Company prior to the Closing Date (other than the financial
statements and other financial data contained therein, as to which such
counsel need express no opinion), as of the respective date thereof,
complied as to form in all material respects with the requirements of the
Securities Act and the Regulations.
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14.
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The
Registration Statement has been declared effective under the Securities
Act as of the date and time specified in such opinion, the Rule 462(b)
Registration Statement, if any, was filed with the Commission on the date
specified therein and became effective immediately upon such filing, the
Prospectus was filed with the Commission pursuant to the subparagraph of
Rule 424(b) and in compliance with Rules 430A and 430B of the Regulations
on the date specified in such opinion and no stop order suspending the
effectiveness of the Registration Statement or any part thereof has been
issued and, to the knowledge of such counsel, no proceeding for that
purpose is pending or threatened by the
Commission.
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15.
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No
consent, approval, authorization, registration or qualification is
required under the Exchange Act and applicable state securities law in
connection with the purchase and distribution of the Public Securities by
the Underwriters. No consent, approval, authorization, order,
registration, filing, qualification, license or permit of or with any
court or any judicial, regulatory or other legal or governmental agency or
body, which has not been obtained or taken and is not in full force and
effect, is required for the execution, delivery and performance by the
Company of the Underwriting Agreement or consummation by the Company of
the transactions contemplated by the Underwriting Agreement, the
Registration Statement, the Time of Sale Disclosure Package, any Issuer
Free Writing Prospectus and the
Prospectus.
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16.
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The
statements under the captions “Description of Securities,” “United States
Taxation Federal Income Tax Consideration,” “Risk
Factors,” “Shares Eligible for Future Sale” and Item 14 of Part
II of the Registration Statement and the Prospectus, as applicable, and
any similar section or information contained in any Issuer Free Writing
Prospectus and the Time of Sale Disclosure Package, insofar as such
statements constitute a summary of the legal matters, documents or
proceedings referred to therein, fairly present the information called for
with respect to such legal matters, documents and
proceedings.
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17.
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The
description in the Registration Statement, the Time of Sale Disclosure
Package, any Issuer Free Writing Prospectus and the Prospectus of
statutes, legal or governmental proceedings and contracts and other
documents are fairly summarized in all material respects and, to the best
of such counsel’s knowledge, there are no pending legal or governmental
proceedings or contracts or other documents to which any of the Company
Parties is a party or to which the property of the Company or any
Operating Entity is subject that are required to be described in the
Registration Statement, the Time of Sale Disclosure Package, any Issuer
Free Writing Prospectus or the Prospectus or a document incorporated by
reference therein or to be filed as exhibits to the Registration
Statement.
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18.
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The
Public Securities have been approved for listing on the Nasdaq Capital
Market upon official notice of
issuance.
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19.
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Except
as set forth in the Registration Statement, the Time of Sale Disclosure
Package and the Prospectus, no holders of securities of the Company have
rights to the registration of such securities under the Registration
Statement pursuant to the organizational documents of the Company or
pursuant to any agreement or instrument of any of the Company or any
Operating Entity described in the Registration Statement, the Time of Sale
Disclosure Package or the Prospectus, or filed as an exhibit to the
Registration Statement that has been filed with the Commission
.
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20.
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The
Company is not, and after giving effect to the offering and sale of the
Public Securities and the application of the proceeds thereof as described
in the Prospectus, will not be, an “investment company” within the meaning
of such term as defined in the Investment Company Act and the rules and
regulations of the Commission
thereunder.
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21.
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Any
required filing of each Issuer Free Writing Prospectus pursuant to Rule
433 under the Securities Act has been made within the time period required
by Rule 433(d) under the Securities
Act.
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Such counsel shall also have furnished
to the Representatives a written statement, addressed to the Underwriters and
dated such Closing Date, in form and substance satisfactory to the
Representatives, to the effect that (x) such counsel has acted as counsel to the
Company in connection with the preparation of the Registration Statement, the
Time of Sale Disclosure Package, any Issuer Free Writing Prospectus and the
Prospectus, and each amendment or supplement thereto made by the Company prior
to such Closing Date, (y) based on such counsel’s examination of the
Registration Statement, the Time of Sale Disclosure Package, any Issuer Free
Writing Prospectus and the Prospectus, and each amendment or supplement thereto
made by the Company prior to such Closing Date, and such counsel’s
investigations made in connection with the preparation of the Registration
Statement, the Time of Sale Disclosure Package, any Issuer Free Writing
Prospectus and the Prospectus, and each amendment or supplement thereto made by
the Company prior to such Closing Date, and “conferences with certain officers
and employees of and with auditors for and counsel to the Company” at which
conferences the contents of the Registration Statement, the Time of Sale
Disclosure Package, any Issuer Free Writing Prospectus and the Prospectus were
discussed and, although such counsel is not passing upon and do not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement, the Time of Sale Disclosure Package,
any Issuer Free Writing Prospectus and the Prospectus (except as specified in
the foregoing opinion), on the basis of the foregoing, such counsel
has no reason to believe that (I) the Registration Statement or any amendment
thereto, as of their respective effective dates contained any untrue statement
of a material fact or omitted to state any material fact required to be stated
therein or necessary in order to make the statements therein not misleading,
(II) the Prospectus or any amendment or supplement thereto, at the respective
dates thereof or at such Closing Date, contained or contains any untrue
statement of a material fact or omits to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, or (III) the documents included in the
Time of Sale Disclosure Package, all considered together, and any Issuer Free
Writing Prospectus, as of the Applicable Time and as of the Closing Date
contained or contains any untrue statement of a material fact or omits 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. Such counsel need express no opinion as to the financial
statements or other financial data contained in the Registration Statement, the
Time of Sale Disclosure Package, any Issuer Free Writing Prospectus or the
Prospectus. The foregoing statement may be qualified by a statement
to the effect that such counsel has not independently verified the accuracy,
completeness or fairness of the statements contained in the Registration
Statement, the Time of Sale Disclosure Package, any Issuer Free Writing
Prospectus or the Prospectus and takes no responsibility therefor except to the
extent set forth in the opinion described in clauses 16 and 17
above.
ANNEX
1
Operating
Entities
Beijing
CHENGMUJINMING Technology Service Co., LTD.
WeiFang
JinZheng Poultry Co., Ltd.