8,000,000 Shares China Integrated Energy, Inc. Common Stock UNDERWRITING AGREEMENT
Exhibit
1.1
8,000,000
Shares
Common
Stock
________,
2009
▇▇▇▇▇▇▇▇▇▇▇
& Co. Inc.
As
Representative of the several
Underwriters
named in Schedule I hereto
c/o
Oppenheimer & Co. Inc.
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies
and Gentlemen:
China
Integrated Energy, Inc., a Delaware corporation (the “Company”), proposes,
subject to the terms and conditions contained herein, to sell to you and the
other underwriters named on Schedule I to this Agreement (the “Underwriters”),
for whom you are acting as representative (the “Representative”), an aggregate
of 8,000,000 shares (the “Firm Shares”) of the Company's common stock, $0.0001
par value per share (the “Common Stock”). The respective amounts of
the Firm Shares to be purchased by each of the several Underwriters are set
forth opposite their names on Schedule I hereto. In addition, the
Company proposes to grant to the Underwriters an option to purchase up to an
additional 1,200,000 shares (the “Option Shares”) of Common Stock from the
Company for the purpose of covering over-allotments in connection with the sale
of the Firm Shares. The Firm Shares and the Option Shares are
collectively called the “Shares.”
The
Company has prepared and filed in conformity with the requirements of the
Securities Act of 1933, as amended (the “Securities Act”), and the published
rules and regulations thereunder (the “Rules”) adopted by the Securities and
Exchange Commission (the “Commission”) a Registration Statement (as hereinafter
defined) on Form S-1 (No. 333-161831), including a preliminary prospectus
relating to the Shares, and such amendments thereof as may have been required to
the date of this Agreement. Copies of such Registration Statement
(including all amendments thereof) and of the related Preliminary Prospectus (as
hereinafter defined) have heretofore been delivered by the Company to
you. The term “Preliminary Prospectus” means any preliminary
prospectus included at any time as a part of the Registration Statement or filed
with the Commission by the Company pursuant to Rule 424(a) of the Rules. The
term “Registration Statement” as used in this Agreement means the initial
registration statement (including all exhibits and financial schedules), as
amended at the time and on the date it becomes effective (the “Effective Date”),
including the information (if any) contained in the form of final prospectus
filed with the Commission pursuant to Rule 424(b) of the Rules and deemed to be
part thereof at the time of effectiveness pursuant to Rule 430A of the
Rules. If the Company has filed an abbreviated registration statement
to register additional Shares pursuant to Rule 462(b) under the Rules (the
“462(b) Registration Statement”), then any reference herein to the Registration
Statement shall also be deemed to include such 462(b) Registration
Statement. The term “Prospectus” as used in this Agreement means the
prospectus in the form included in the Registration Statement at the time of
effectiveness or, if Rule 430A of the Rules is relied on, the term Prospectus
shall also include the final prospectus filed with the Commission pursuant to
and within the time limits described in Rule 424(b) of the
Rules. Reference made herein to any Preliminary Prospectus, the
Statutory Prospectus (as hereinafter defined) or to the Prospectus shall be
deemed to refer to and include any documents incorporated by reference therein,
as of the date of such Preliminary Prospectus, the Statutory Prospectus, or the
Prospectus, as the case may be, or thereafter, and any reference to any
amendment or supplement to any Preliminary Prospectus or the Prospectus shall be
deemed to refer to and include any document filed under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), after the date of such Preliminary
Prospectus or the Prospectus, as the case may be, and incorporated by reference
in such Preliminary Prospectus or the Prospectus, as the case may
be.
The
Company understands that the Underwriters propose to make a public offering of
the Shares, as set forth in and pursuant to the Statutory Prospectus (as
hereinafter defined) and the Prospectus, as soon after the Effective Date and
the date of this Agreement as the Representative deems advisable. The
Company hereby confirms that the Underwriters and dealers have been authorized
to distribute or cause to be distributed each Preliminary Prospectus, and each
Issuer Free Writing Prospectus (as hereinafter defined) and are authorized to
distribute the Prospectus (as from time to time amended or supplemented if the
Company furnishes amendments thereof or supplements thereto to the
Underwriters).
1. Sale, Purchase, Delivery and
Payment for the Shares. On the basis of the representations,
warranties and agreements contained in, and subject to the terms and conditions
of, this Agreement:
(a) The Company agrees to issue and sell to
each of the Underwriters, and each of the Underwriters agrees, severally and not
jointly, to purchase from the Company, at a purchase price of $_____ per share
(the “Initial Price”), the number of Firm Shares set forth opposite the name of
such Underwriter under the column “Number of Firm Shares to be Purchased from
the Company” on Schedule I to this Agreement, subject to adjustment in
accordance with Section 8 hereof.
(b) The Company hereby grants to the several
Underwriters an option to purchase, severally and not jointly, all or any part
of the Option Shares at the Initial Price. The number of Option
Shares to be purchased by each Underwriter shall be the same percentage
(adjusted by the Representative to eliminate fractions) of the total number of
Option Shares to be purchased by the Underwriters as such Underwriter is
purchasing the Firm Shares. Such option may be exercised only to
cover over-allotments in the sales of the Firm Shares by the Underwriters and
may be exercised in whole or in part at any time on or before 12:00 noon, New
York City time, on the business day before the Firm Shares Closing Date (as
defined below), and from time to time thereafter within 30 days after the date
of this Agreement, in each case upon written, facsimile or telegraphic notice,
or verbal or telephonic notice confirmed by written, facsimile or telegraphic
notice, by the Representative to the Company no later than 12:00 noon, New York
City time, on the business day before the Firm Shares Closing Date or at least
two business days before the Option Shares Closing Date (as defined below), as
the case may be, setting forth the number of Option Shares to be purchased and
the time and date (if other than the Firm Shares Closing Date) of such
purchase.
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(c) Payment of the purchase price for, and
delivery of certificates for, the Firm Shares shall be made at the offices of
Shearman & Sterling LLP, 12/F, East Tower, Twin Towers, B-12 Jianguomenwai
Dajie, Beijing, People’s Republic of China, at 10:00 a.m., New York City time,
on the third business day following the date of this Agreement or at such time
on such other date, not later than ten (10) business days after the date of this
Agreement, as shall be agreed upon by the Company and the Representative (such
time and date of delivery and payment are called the “Firm Shares Closing
Date”). In addition, in the event that any or all of the Option
Shares are purchased by the Underwriters, payment of the purchase price, and
delivery of the certificates, for such Option Shares shall be made at the
above-mentioned offices, or at such other place as shall be agreed upon by the
Representative and the Company, on each date of delivery as specified in the
notice from the Representative to the Company (such time and date of delivery
and payment are called an “Option Shares Closing Date”). The Firm
Shares Closing Date and any Option Shares Closing Date are called, individually,
a “Closing Date” and, together, the “Closing Dates.”
(d) Payment shall be made to the Company by
wire transfer of immediately available funds or by certified or official bank
check or checks payable in New York Clearing House (same day) funds drawn to the
order of the Company, against delivery of the respective certificates to the
Representative for the respective accounts of the Underwriters of certificates
for the Shares to be purchased by them.
(e) Certificates evidencing the Shares shall
be registered in such names and shall be in such denominations as the
Representative shall request at least two full business days before the Firm
Shares Closing Date or, in the case of Option Shares, on the day of notice of
exercise of the option as described in Section 1(b) and shall be delivered by or
on behalf of the Company to the Representative through the facilities of the
Depository Trust Company (“DTC”) for the account of such
Underwriter. The Company will cause the certificates representing the
Shares to be made available for checking and packaging, at such place as is
designated by the Representative, on the full business day before the Firm
Shares Closing Date (or the Option Shares Closing Date in the case of the Option
Shares).
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2. Representations and
Warranties of the Company. The Company represents and warrants
to each Underwriter as of the date hereof, as of the Firm Shares Closing Date
and as of each Option Shares Closing Date (if any), as
follows:
(a) On the
Effective Date, the Registration Statement complied, and on the date of
the Prospectus, the date any post-effective amendment to the
Registration Statement becomes effective, the date any supplement or amendment
to the Prospectus is filed with the Commission and each Closing Date, the
Registration Statement, the Prospectus (and any amendment thereof or supplement
thereto) will comply, in all material respects, with the requirements of the
Exchange Act and the rules and regulations of the Commission
thereunder. The Registration Statement did not, as of the Effective
Date, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading; and on the Effective Date and the other dates
referred to above neither the Registration Statement nor the Prospectus, nor any
amendment thereof or supplement thereto, will contain any untrue statement of a
material fact or will omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading. When any Preliminary Prospectus was first filed with the
Commission (whether filed as part of the Registration Statement or any amendment
thereto or pursuant to Rule 424(a) of the Rules) and when any amendment thereof
or supplement thereto was first filed with the Commission, such Preliminary
Prospectus as amended or supplemented complied in all material respects with the
applicable provisions of the Securities Act and the Rules and did not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading. If applicable, each Preliminary Prospectus
and the Prospectus delivered to the Underwriters for use in connection with this
offering was identical to the electronically transmitted copies thereof filed
with the Commission pursuant to ▇▇▇▇▇, except to the extent permitted by
Regulation S-T. Notwithstanding the foregoing, none of the
representations and warranties in this paragraph 2(a) shall apply to statements
in, or omissions from, the Registration Statement, any Preliminary Prospectus or
the Prospectus made in reliance upon, and in conformity with, information herein
or otherwise furnished in writing by the Representative on behalf of the several
Underwriters specifically for use in the Registration Statement, any Preliminary
Prospectus or the Prospectus, as the case may be. With respect to the
preceding sentence, the Company acknowledges that the only information furnished
in writing by the Representative on behalf of the several Underwriters for use
in the Registration Statement, any Preliminary Prospectus or the Prospectus is
the statements concerning the concession and reallowance figures contained in
the fourth paragraph and statements concerning possible stabilization measures
contained in the fifth paragraphs under the caption “Underwriting” in
the Prospectus (collectively, the “Underwriter
Information”).
(b) As of the
Applicable Time (as hereinafter defined), neither (i) the price to the public
and the number of shares offered and sold, as indicated on the cover page of the
Prospectus and
the Statutory Prospectus (as hereinafter defined), all considered together
(collectively, the “General Disclosure Package”), nor (ii) any individual
Issuer Free Writing Prospectus when considered together with the General
Disclosure Package, included 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, in the light of the circumstances under which
they were made, not misleading; provided, however, that this representation and
warranty shall not apply to statements in or omissions in the General Disclosure
Package made in reliance upon and in conformity with the Underwriter
Information.
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Each
Issuer Free Writing Prospectus (as hereinafter defined), including any
electronic road show (including without limitation any “bona fide electronic
road show” as defined in Rule 433(h)(5) under the Securities Act) (each, a “Road
Show”) (i) is identified in Schedule III hereto and (ii) complied when issued,
and complies, in all material respects, with the requirements of the Securities
Act and the Rules and the Exchange Act and the rules and regulations of the
Commission thereunder.
As used
in this Section and elsewhere in this Agreement:
“Applicable
Time” means [●]:00 [a/p]m (Eastern time) on the date of this
Agreement.
“Statutory
Prospectus” as of any time means the Preliminary Prospectus relating to the
Shares that is included in the Registration Statement immediately prior to the
Applicable Time.
“Issuer
Free Writing Prospectus” means each “free writing prospectus” (as defined in
Rule 405 of the Rules) prepared by or on behalf of the Company or used or
referred to by the Company in connection with the offering of the Shares,
including, without limitation, each Road Show.
(c) The
Registration Statement is effective under the Securities Act and no stop order
preventing or suspending the effectiveness of the Registration Statement or
suspending or preventing the use of any Preliminary Prospectus, the Prospectus
or any “free writing prospectus”, as defined in Rule 405 under the Rules, has
been issued by the Commission and no proceedings for that purpose have been
instituted or are threatened under the Securities Act. Any required filing of
any Preliminary Prospectus and/or the Prospectus and any supplement thereto
pursuant to Rule 424(b) of the Rules has been or will be made in the manner and
within the time period required by such Rule 424(b). Any material
required to be filed by the Company pursuant to Rule 433(d) or Rule 163(b)(2) of
the Rules has been or will be made in the manner and within the time period
required by such Rules.
(d) The
documents incorporated by reference in the Registration Statement, any
Preliminary Prospectus and the Prospectus, at the time they became effective or
were filed with the Commission, as the case may be, complied in all material
respects with the requirements of the Securities Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission thereunder, and none
of such documents contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, and any further documents so filed and incorporated
by reference in the Registration Statement, any Preliminary Prospectus and the
Prospectus, when such documents become effective or are filed with the
Commission, as the case may be, will conform in all material respects to the
requirements of the Securities Act or the Exchange Act, as applicable, and the
rules and regulations of the Commission thereunder and will not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they are made, not misleading.
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(e) Each
Issuer Free Writing Prospectus, as of its issue date and at all subsequent times
through the completion of the public offer and sale of the Shares or until any
earlier date that the Company notified or notifies the Representative as
described in the next sentence, did not, does not and will not include any
information that conflicted, conflicts or will conflict with the information
contained in the Registration Statement, the Statutory Prospectus 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, the Statutory Prospectus or the Prospectus or included
or would include an untrue statement of a material fact or omitted or would omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances prevailing at the
subsequent time, not misleading, the Company has promptly notified or will
promptly notify the Representative and has promptly amended or supplemented or
will promptly amend or supplement, at its own expense, such Issuer Free Writing
Prospectus to eliminate or correct such conflict, untrue statement or
omission.
(f) The
financial statements of the Company (including all notes and schedules thereto)
included in the Registration Statement, the Statutory Prospectus and Prospectus
present fairly the financial position of the Company and its consolidated
subsidiaries at the dates indicated and the statement of income, stockholders'
equity and cash flows of the Company and its consolidated subsidiaries for the
periods specified; and such financial statements and related schedules and notes
thereto, and the unaudited financial statements filed with the Commission as
part of the Registration Statement, have been prepared in conformity with
generally accepted accounting principles of the United States, consistently
applied throughout the periods involved. The summary and selected
financial data and other financial information included in the Statutory
Prospectus and the Prospectus present fairly the information shown therein as at
the respective dates and for the respective periods specified and have been
presented on a basis consistent with the consolidated financial statements set
forth in the Statutory Prospectus and the Prospectus. There are no
pro forma or as adjusted financial statements which are required to be included
in the Registration Statement, the Statutory Prospectus and the Prospectus in
accordance with Regulation S-X which have not been included as so required.
(g) Sherb
& Co., LLP (the “Auditor”) whose reports are filed with the Commission as a
part of the Registration Statement, are and, during the periods covered by their
reports, were independent public accountants as required by the Securities Act
and the Rules.
(h) Each of
the Company and its subsidiaries (the “Subsidiaries”) and Xi’an Baorun
Industrial Development Co., Ltd.(the “Affiliated Entity”) (the Subsidiaries and
the Affiliated Entity are collectively referred to as the “Operating Entities”,
each an “Operating Entity”), is duly organized, validly existing and in good
standing under the laws of their respective jurisdictions of incorporation or
organization and each of the Company and its Operating Entities has all
requisite power and authority to carry on its business as is currently being
conducted as described in the Statutory Prospectus and the Prospectus, and to
own, lease and operate its properties. Except as disclosed in the
Registration Statement, the Statutory Prospectus and the Prospectus, all of the
issued shares of capital stock of, or other ownership interests in, each
Operating Entity have been duly and validly authorized and issued and are fully
paid and non-assessable and are owned, directly or indirectly, by the Company,
free and clear of any lien, charge, mortgage, pledge, security interest, claim,
limitation on voting rights, equity, trust or other encumbrance, preferential
arrangement, defect or restriction of any kind whatsoever. Each of
the Company and its Operating Entities is duly qualified to do business and is
in good standing as a foreign corporation in each jurisdiction in which the
nature of the business conducted by it or location of the assets or properties
owned, leased or licensed by it requires such qualification, except for such
jurisdictions where the failure to so qualify individually or in the aggregate
would not have a material adverse effect on the assets, properties, condition,
financial or otherwise, or in the results of operations, business affairs or
business prospects of the Company and its Operating Entities considered as a
whole (a “Material Adverse Effect”); and to the Company's best knowledge, no
proceeding has been instituted in any such jurisdiction revoking, limiting or
curtailing, or seeking to revoke, limit or curtail, such power and authority or
qualification.
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(i) The
description of the corporate structure of the Company and the various contracts
between the Company and any of the Operating Entities or shareholders of the
Operating Entities, as the case may be (each a “Corporate Structure Contract”
and collectively the “Corporate Structure Contracts”), filed as exhibits to the
Registration Statement and as set forth in the Statutory Prospectus and the
Prospectus under the captions “Our History and Corporate Structure,” is true and
accurate in all material respects and nothing has been omitted from such
description which would make it misleading in any material
respect. There is no other agreement, contract or other document
relating to the corporate structure or the operation of the Company and the
Operating Entities which has not been previously disclosed or made available to
the Underwriters and, to the extent material to the Company, disclosed in the
Registration Statement, the Statutory Prospectus and the
Prospectus.
(j) Each
Corporate Structure Contract has been duly authorized, executed and delivered by
the parties thereto and constitutes a valid and legally binding obligation of
the parties thereto, enforceable in accordance with its terms. 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 Corporate Structure Contract by
the parties thereto. Each Corporate Structure Contract 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 Corporate Structure
Contract. There is no legal or governmental proceeding, inquiry or
investigation pending against the Company, the Operating Entities or
shareholders of the Operating Entities in any jurisdiction challenging the
validity of any of the Corporate Structure Contracts and, to the best knowledge
of the Company, no such proceeding, inquiry or investigation is threatened or
contemplated in any jurisdiction.
(k) Each of
the Company and its Operating Entities has all requisite corporate power and
authority, and all necessary authorizations, approvals, consents, orders,
licenses, certificates and permits of and from all governmental or regulatory
bodies or any other person or entity (collectively, the “Permits”), to own,
lease and license its assets and properties and conduct its business, all of
which are valid and in full force and effect, except where the lack of such
Permits, individually or in the aggregate, would not have a Material Adverse
Effect. Each of the Company and its Operating Entities has fulfilled and
performed in all material respects all of its obligations with respect to such
Permits and no event has occurred that allows, or after notice or lapse of time
would allow, revocation or termination thereof or results in any other material
impairment of the rights of the Company thereunder. Except as may be
required under the Securities Act and state and foreign Blue Sky laws, no other
Permits are required to enter into, deliver and perform this Agreement and to
issue and sell the Shares.
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(l) (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 Rules, including (but not limited to) the Company or any other Operating
Entity in the preceding three years not having been convicted of a felony or
misdemeanor or having been made the subject of a judicial or administrative
decree or order as described in Rule 405 of the Rules.
(m) Each of
the Company and its Operating Entities (i) owns or possesses adequate right
to use all patents, patent applications, trademarks, service marks, domain
names, trade names, trademark registrations, service ▇▇▇▇ registrations,
copyrights, licenses, and know-how and other intellectual property (including
trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures, “Intellectual Property”)
necessary for the conduct of their respective businesses as presently conducted
and as described in the Registration Statement, the Statutory Prospectus and the
Prospectus and (ii) has no reason to believe that the conduct of their
respective businesses does or will conflict with, and has not received any
notice of any claim of conflict with, any such right of others. To the Company’s
best knowledge, all material technical information developed by and belonging to
the Company or any Operating Entity which has not been patented has been kept
confidential. There is no infringement by third parties of any such Intellectual
Property; there is no pending or, to the Company’s best knowledge, threatened
action, suit, proceeding or claim by others challenging the Company’s or any
Operating Entity’ rights in or to any such Intellectual Property, and the
Company is unaware of any facts which would form a reasonable basis for any such
claim; and there is no pending or, to the Company’s best knowledge, threatened
action, suit, proceeding or claim by others that the Company or any Operating
Entity infringes or otherwise violates any patent, trademark, copyright, trade
secret or other proprietary rights of others, and the Company is unaware of any
fact which would form a reasonable basis for any such claim.
(n) Each of
the Company and its Operating Entities has good and marketable title, or valid
land use rights granted by relevant authorities in China, to all real property,
and good and marketable title to all other property owned by it as described in
the Registration Statement, the Statutory Prospectus or the Prospectus, in each
case free and clear of all liens, encumbrances, claims, security interests and
defects, except such as do not materially affect the value of such property and
do not materially interfere with the use made or proposed to be made of such
property by the Company and its Operating Entities. All property held
under lease by the Company and its Operating Entities is held by them under
valid, existing and enforceable leases, free and clear of all liens,
encumbrances, claims, security interests and defects, except such as are not
material and do not materially interfere with the use made or proposed to be
made of such property by the Company and its Operating Entities.
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(o) Subsequent
to the respective dates as of which information is given in the Registration
Statement, the Statutory Prospectus and the Prospectus, (i) there has not been
any event which could have a Material Adverse Effect; (ii) neither the Company
nor any of its Operating Entities has sustained any loss or interference with
its assets, businesses or properties (whether owned or leased) from fire,
explosion, earthquake, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or any court or legislative or other
governmental action, order or decree which would have a Material Adverse Effect;
and (iii) since the date of the latest balance sheet included in the
Registration Statement and the Prospectus, neither the Company nor its Operating
Entities has (A) issued any securities or incurred any liability or obligation,
direct or contingent, for borrowed money, except such liabilities or obligations
incurred in the ordinary course of business, (B) entered into any transaction
not in the ordinary course of business or (C) declared or paid any dividend or
made any distribution on any shares of its stock or redeemed, purchased or
otherwise acquired or agreed to redeem, purchase or otherwise acquire any shares
of its capital stock.
(p) There is
no document, contract or other agreement required to be described in the
Registration Statement, the Statutory Prospectus or the Prospectus or to be
filed as an exhibit to the Registration Statement which is not described or
filed as required by the Securities Act or Rules. Each description of
a contract, document or other agreement in the Registration Statement, the
Statutory Prospectus or the Prospectus accurately reflects in all respects the
terms of the underlying contract, document or other agreement. Each
contract, document or other agreement described in the Registration Statement,
the Statutory Prospectus or the Prospectus or listed in the exhibits to the
Registration Statement or incorporated by reference is in full force and effect
and is valid and enforceable by and against the Company or its Operating Entity,
as the case may be, in accordance with its terms. Neither the Company
nor any of its Operating Entities, if an Operating Entity is a party, nor to the
Company's best knowledge, any other party is in default in the observance or
performance of any term or obligation to be performed by it under any such
agreement, and no event has occurred which with notice or lapse of time or both
would constitute such a default, in any such case which default or event,
individually or in the aggregate, would have a Material Adverse
Effect. No default exists, and no event has occurred which with
notice or lapse of time or both would constitute a default, in the due
performance and observance of any term, covenant or condition, by the Company or
its Operating Entity, if an Operating Entities is a party thereto, of any other
agreement or instrument to which the Company or any of its Operating Entities is
a party or by which the Company or its properties or business or an Operating
Entity or its properties or business may be bound or affected, which default or
event, individually or in the aggregate, would have a Material Adverse
Effect.
(q) The
statistical, industry-related and market-related data included in the
Registration Statement, the Statutory Prospectus or the Prospectus are based on
or derived from sources that the Company believes to be reliable and
accurate.
(r) Neither
the Company nor any Operating Entity (i) is in violation of its certificate or
articles of incorporation, by-laws, certificate of formation, limited liability
company agreement, partnership agreement or other organizational documents, (ii)
is in default under, and no event has occurred which with notice or lapse of
time or both, would constitute a default under any agreement, covenant or credit
agreement, note, lease or other agreement or instrument, or result in the
creation or imposition of any lien, charge, mortgage, pledge, security interest,
claim, limitation on voting rights, equity, trust or other encumbrance,
preferential arrangement, defect or restriction of any kind whatsoever upon any
property or assets of the Company or any Operating Entity pursuant to any bond,
debenture, note, indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which it is a party or by which it is bound or to
which any of its properties or assets is subject, (iii) is in violation of any
statute, law, rule, regulation, ordinance, directive, judgment, decree or order
of any judicial, regulatory or other legal or governmental agency or body,
foreign or domestic or (iv) is in breach or in default of any of the Permits,
except (in the case of clauses (ii), (iii) and (iv) above) for violations or
defaults that could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
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(s) All
necessary corporate action has been duly and validly taken by the Company to
authorize the issuance and sale of the Shares by the Company.
(t) This
Agreement has been duly authorized, executed and delivered by the
Company.
(u) Neither
the execution, delivery and performance of this Agreement by the Company nor the
consummation of any of the transactions contemplated hereby (including, without
limitation, the issuance and sale by the Company of the Shares) will (i) give
rise to a right to terminate or accelerate the due date of any payment due
under, or conflict with or result in the breach of any term or provision of, or
constitute a default (or an event which with notice or lapse of time or both
would constitute a default) under, or require any consent or waiver under, or
result in the execution or imposition of any lien, charge or encumbrance upon
any properties or assets of the Company or its Operating Entities pursuant to
the terms of, any indenture, mortgage, deed of trust or other agreement or
instrument to which the Company or any of its Operating Entities is a party or
by which either the Company or its Operating Entities or any of their properties
or businesses is bound, (ii) violate or conflict with any franchise, license,
permit, judgment, decree, order, statute, rule or regulation applicable to the
Company or any of its Operating Entities or (iii) violate or conflict with any
provision of certificate or articles of incorporation, by-laws, certificate of
formation, limited liability company agreement, partnership agreement or other
organizational documents of the Company or any of its Operating
Entities.
(v) The
Company has authorized and outstanding capital stock as set forth under the
caption “Capitalization” in the Statutory Prospectus and the
Prospectus. The certificates evidencing the Shares are in due and
proper legal form and have been duly authorized for issuance by the
Company. All of the issued and outstanding shares of Common Stock
have been duly and validly issued and are fully paid and
nonassessable. There are no statutory preemptive or other similar
rights to subscribe for or to purchase or acquire any shares of Common Stock of
the Company or any of its Operating Entities or any such rights pursuant to its
certificate or articles of incorporation or by-laws or any agreement or
instrument to or by which the Company or any of its Operating Entities is a
party or bound. The Shares, when issued and sold pursuant to this
Agreement, will be duly and validly issued, fully paid and nonassessable and
none of them will be issued in violation of any preemptive or other similar
right. Except as disclosed in the Registration Statement, the
Statutory Prospectus and the Prospectus, there is no outstanding option, warrant
or other right calling for the issuance of, and there is no commitment, plan or
arrangement to issue, any share of stock of the Company or any of its Operating
Entities or any security convertible into, or exercisable or exchangeable for,
such stock. The exercise price of each option to acquire Common Stock (each, a
“Company Stock Option”) is no less than the fair market value of a share of
Common Stock as determined on the date of grant of such Company Stock
Option. All grants of Company Stock Options were validly issued and
properly approved by the Board of Directors of the Company in material
compliance with all applicable laws and the terms of the plans under which such
Company Stock Options were issued and were recorded on the Company’s financial
statements, including filings with the Commission, in accordance with generally
accepted accounting principles of the United States, and no such grants involved
any “back dating”, “forward dating,” “spring loading” or similar practices with
respect to the effective date of grant. The
Common Stock and the Shares conform in all material respects to all statements
in relation thereto contained in the Registration Statement, the Statutory
Prospectus and the Prospectus.
10
(w) The
Shares are freely transferable to and for the account of the several
Underwriters; there are no restrictions on subsequent transfers of the Shares
under the laws of the United States, Hong Kong or the PRC, except as described
in the Registration Statement, the Statutory Prospectus and the Prospectus. No
holder of the Shares is or will be subject to personal liability solely by
reason of being such a holder.
(x) No holder
of any security of the Company has any right, which has not been waived, to have
any security owned by such holder included in the Registration Statement or to
demand registration of any security owned by such holder for a period of 180
days after the date of this Agreement. Each director and officer of
the Company and each stockholder of the Company listed on Schedule II hereto has
delivered to the Representative his enforceable written lock-up agreement in the
form attached to this Agreement as Exhibit A hereto (“Lock-Up
Agreement”).
(y) There are
no judicial, regulatory, arbitral or other legal or governmental proceedings
pending to which the Company or any of its Operating Entities is a party or of
which any property of the Company or any of its Operating Entities is the
subject which, if determined adversely to the Company or any of its Operating
Entities could individually or in the aggregate, have a Material Adverse Effect;
and, to the best knowledge of the Company, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others.
(z) Neither
the Company nor any of its Operating Entities is involved in any labor dispute
nor, to the best knowledge of the Company, is any such dispute threatened, which
dispute would have a Material Adverse Effect. The Company is not
aware of any existing or imminent labor disturbance by the employees of any of
its principal suppliers, manufacturers, customers or contractors which would
have a Material Adverse Effect. The Company is not aware of any threatened or
pending litigation between the Company or its Operating Entities and any of its
officers which, if determined adversely to the Company or any of its Operating
Entities, could have a Material Adverse Effect.
(aa) No
transaction has occurred between or among the Company and any of its officers or
directors, shareholders or any affiliate or affiliates of any such officer or
director or shareholder that is required to be described in and is not described
in the Registration Statement, the Statutory Prospectus and the
Prospectus.
11
(bb) Neither
the Company or any of its affiliates (within the meaning of Rule 144 under the
Securities Act) has taken, nor will take, directly or indirectly, any action
designed to or which might reasonably be expected to cause or result in, or
which has constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of the Common Stock or any security
of the Company to facilitate the sale or resale of any of the
Shares.
(cc) Each of
the Company and its Operating Entities has filed all tax returns required to be
filed by it through the date hereof, which tax returns are true and correct in
all material respects. Each of the Company and its Operating Entities
has paid or made provision for the payment of all taxes, assessments,
governmental or other similar charges, with respect to the periods covered by
such tax returns (whether or not such amounts are shown as due on any tax
return). No deficiency assessment with respect to a proposed
adjustment of the Company’s or any Operating Entity’s taxes is pending or, to
the Company’s best knowledge, threatened. The accruals and reserves on the books
and records of the Company and its Operating Entities in respect of tax
liabilities for any taxable period not finally determined are adequate to meet
any assessments and related liabilities for any such period and, since the date
of the most recent audited financial statements, the Company and its Operating
Entities have not incurred any liability for taxes other than in the ordinary
course of their business. There is no tax lien imposed by any taxing authority,
outstanding against the assets, properties or business of the Company or any
Operating Entity. There are no tax audits or investigations pending
which, if determined adversely to the Company or any of its Operating Entities,
would have a Material Adverse Effect.
(dd) The
Shares have been duly authorized for listing on the NASDAQ Capital
Market.
(ee) The
Company has taken no action designed to, or likely to have the effect of,
terminating the registration of the Common Stock under the Exchange Act or the
listing of the Common Stock on the NASDAQ Capital Market, nor has the Company
received any notification that the Commission or the NASDAQ Capital Market is
contemplating terminating such registration or listing.
(ff) The
books, records and accounts of the Company and its Operating Entities accurately
and fairly reflect, the transactions in, and dispositions of, the assets of, and
the results of operations of, the Company and its Operating
Entities. Each of the Company and its Operating Entities maintains a
system of internal accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with management's
general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in accordance with generally
accepted accounting principles of the United States and to maintain asset
accountability, (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 the existing assets at reasonable
intervals and appropriate action is taken with respect to any
differences.
(gg) The
Company has established and maintains disclosure controls and procedures (as
such term is defined in Rule 13a-15 under the Exchange Act), which: (i) are
designed to ensure that material information relating to the Company is made
known to the Company’s principal executive officer and its principal financial
officer by others within the Company, particularly during the periods in which
the periodic reports required under the Exchange Act are required to be
prepared; (ii) provide for the periodic evaluation of the effectiveness of such
disclosure controls and procedures at the end of the periods in which the
periodic reports are required to be prepared; and (iii) are effective in all
material respects to perform the functions for which they were
established.
12
(hh) Based on
the evaluation of its disclosure controls and procedures, the Company is not
aware of (i) any materials weakness or significant deficiency in the design or
operation of internal controls which could adversely affect the Company’s
ability to record, process, summarize and report financial data or any material
weaknesses in internal controls; (ii) any matter which could result in a
restatement of the Company’s financial statements for any annual or interim
period during the current fiscal year or prior fiscal years; or (iii) any fraud,
whether or not material, that involves management or other employees who have a
role in the Company’s internal controls.
(ii) 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 directors or officers of the Company or any of
their respective family members. The Company has not, in violation of
▇▇▇▇▇▇▇▇-▇▇▇▇▇, directly or indirectly, including through a subsidiary, extended
or maintained credit, arranged for the extension of credit, or renewed an
extension of credit, in the form of a personal loan to or for any director or
officer of the Company and there is and has been no failure on the part of the
Company or any of its directors or officers, in their capacities as such, to
comply with any other provision of ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 (the
“▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act”).
(jj) The
Auditor has not been engaged by the Company to perform any “prohibited
activities” (as defined in Section 10A of the Exchange Act).
(kk) Except as
described in the Statutory Prospectus and the Prospectus, there are no material
off-balance sheet arrangements (as defined in Item 303 of Regulation S-K) that
have or are reasonably likely to have a Material Adverse Effect.
(ll) The
Company’s Board of Directors has validly appointed an audit committee whose
composition satisfies the requirements of Rule 5605 of the NASDAQ Stock Market
and the Board of Directors and/or the audit committee has adopted a charter that
satisfies the requirements of Rule 5605 of the NASDAQ Stock
Market. The audit committee has reviewed the adequacy of its charter
within the past twelve months.
(mm) The
Company is actively taking steps to ensure that it will be in compliance with
all other applicable provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act, any related rules and
regulations promulgated by the Commission and corporate governance requirements
under applicable NASDAQ regulations upon the effectiveness of such provisions
and has no reason to believe that it will not be able to comply with such
provisions at the time of effectiveness. There is and has been no
failure on the part of the Company or any of its directors or officers, in their
capacities as such, to comply with any provision of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act,
including, without limitation, Section 402 related to loans and Sections 302 and
906 related to certifications.
13
(nn) The
Company and its Operating Entities carry, or are covered by,
insurance in such amounts and covering such risks as is adequate for the conduct
of their respective businesses and the value of their respective properties and
as is customary for companies engaged in similar businesses. Neither
the Company nor any of its Operating Entities has any reason to believe that it
will not be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business at a cost that is not materially greater than
the current cost. Neither the Company nor any of its Operating
Entities has been denied any insurance coverage which it has sought or for which
it has applied.
(oo) Each
approval, consent, order, authorization, designation, declaration or filing of,
by or with any regulatory, administrative or other governmental body necessary
in connection with the execution, delivery and performance by the Company of
this Agreement and the consummation of the transactions herein contemplated
required to be obtained or performed by the Company (except such additional
steps as may be required by the Financial Industry Regulatory Authority (the
“FINRA”) or may be necessary to qualify the Shares for public offering by the
Underwriters under the state securities or Blue Sky laws) has been obtained or
made and is in full force and effect.
(pp) The PRC
regulation “Provisions Regarding Mergers and Acquisitions of Domestic
Enterprises by Foreign Investors” does not require an application to be
submitted to the China Security Regulatory Commission for the approval for the transactions contemplated by
this Agreement.
(qq) There are
no affiliations or association between any member of the FINRA and any of the
Company's officers, directors or, to the best knowledge of the Company, five
percent or greater stockholders.
(rr) Each of
the Company and its Operating Entities is in compliance with all rules, laws and
regulation relating to the use, treatment, storage and disposal of toxic
substances and protection of health or the environment (“Environmental Law”)
which are applicable to its business. Neither the Company nor the
Operating Entities has received any notice from any governmental authority or
third party of an asserted claim under Environmental Laws. Each of
the Company and its Operating Entities has received all permits, licenses or
other approvals required of it under applicable Environmental Laws to conduct
its business and is in compliance with all terms and conditions of any such
permit, license or approval. To the Company’s best knowledge, no
facts currently exist that will require the Company or any of the Operating
Entities to make future material capital or other expenditures to comply with
Environmental Laws.
(ss) In the
ordinary course of its business, the Company periodically reviews the effect of
Environmental Laws on the business, operations and properties of the Company and
its Operating Entities, in the course of which the Company identifies and
evaluates associated costs and liabilities (including, without limitation, any
capital or operating expenditures required for clean-up, closure of properties
or compliance with Environmental Laws, or any permit, license or approval, any
related constraints on operating activities and any potential liabilities to
third parties). On the basis of such review, the Company has
reasonably concluded that such associated costs and liabilities would not,
individually or in the aggregate, have a Material Adverse Effect.
14
(tt) The
Company is not and, after giving effect to the offer and sale of the Shares and
the application of proceeds thereof as described in the Statutory Prospectus and
the Prospectus, will not be an “investment company” within the meaning of the
Investment Company Act of 1940, as amended (the “Investment Company
Act”).
(uu) 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, 2009, 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.
(vv) The
Company or any other person associated with or acting on behalf of the Company
including, without limitation, any director, officer, agent, employee or
affiliate of the Company or its Operating Entities, has not, directly or
indirectly, while acting on behalf of the Company or its Operating Entities (i)
used any corporate funds for unlawful contributions, gifts, entertainment or
other unlawful expenses relating to political activity, (ii) made any
unlawful payment to foreign or domestic government officials or employees or to
foreign or domestic political parties or campaigns from corporate funds, (iii)
violated any provision of the Foreign Corrupt Practices Act of 1977, as amended,
or (iv) made any other unlawful payment.
(ww) The
operations of the Company and its Operating Entities are and have been conducted
at all times in compliance with applicable financial recordkeeping and reporting
requirements of the Currency and Foreign Transactions Reporting Act of 1970, as
amended, the money laundering statutes of all jurisdictions, the rules and
regulations thereunder and any related or similar rules, regulations or
guidelines, issued, administered or enforced by any governmental agency
(collectively, the “Money Laundering Laws”) and no action, suit or proceeding by
or before any court or governmental agency, authority or body or any arbitrator
involving the Company or any of it Operating Entities with respect to the Money
Laundering Laws is pending, or to the best knowledge of the Company,
threatened.
(xx) Neither
the Company nor any of its Operating Entities nor, to the best knowledge of the
Company, any director, officer, agent, employee or affiliate of the Company or
any of its Operating Entities 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 from the sale of the Shares, or lend, contribute or otherwise make
available such proceeds to any Operating Entity, 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.
15
(yy) None of
the Company or any of the Operating Entities nor any of their properties, assets
or revenues are entitled to any right of immunity on the grounds of sovereignty
from any legal action, suit or proceeding, from set-off or counterclaim, from
the jurisdiction of any court, from service of process, from attachment prior to
or in aid of execution of judgment or from other legal process or proceeding for
the giving of any relief or for the enforcement of any judgment.
(zz) Except as
disclosed in the Registration Statement, the Statutory Prospectus and the
Prospectus, there are no outstanding guarantees or other contingent obligations
of the Company or any of the Operating Entities that could reasonably be
expected to have a Material Adverse Effect.
(aaa) Except
pursuant to this Agreement, there are no contracts, agreements or understandings
between the Company and any person that would give rise to a valid claim against
the Company or any Underwriter for a brokerage commission, finder’s fee or other
like payment in connection with the transactions contemplated by this Agreement
or, to the Company’s best knowledge, any arrangements, agreements,
understandings, payments or issuance with respect to the Company or any of its
officers, directors, shareholders, partners, employees, or Operating Entities
that may affect the Underwriters’ compensation as determined by the
FINRA.
(bbb) The
Company has taken all reasonable steps to comply with, and to ensure compliance
by all of the Company’s shareholders, directors and officers who are PRC
residents or PRC citizens with any applicable rules and regulations of the State
Administration of Foreign Exchange (the “SAFE Rules and Regulations”), including
without limitation, requiring each shareholder, director and officer that is, or
is directly or indirectly owned or controlled by, a PRC resident or PRC citizen
to complete any registration and other procedures required under applicable SAFE
Rules and Regulations.
(ccc) Except as
disclosed in the Registration Statement, the Statutory Prospectus and
Prospectus, no Operating Entities in the PRC is currently prohibited, directly
or indirectly, from paying any dividends to the Company or Baorun China Group
Limited, from making any other distribution on such Operating Entity’s capital
stock, from repaying to the Company or Baorun China Group Limited any loans or
advances to such Operating Entity from the Company or Baorun China Group Limited
or from transferring any of such Operating Entities’ property or assets to the
Company or Baorun China Group Limited. All dividends declared by an Operating
Entity in the PRC may under the current laws and regulations of the PRC be
freely transferred out of the PRC and may be paid in U.S. dollars, subject to
the successful completion of PRC formalities required for such remittance, and
all such dividends and other distributions will not be subject to withholding or
other taxes under the laws and regulations of the PRC 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.
(ddd) Except as
disclosed in the Registration Statement, the Statutory Prospectus and
Prospectus, dividends declared with respect to after-tax retained earnings on
the equity interests of Redsky Industrial (Xi’an) Co., Ltd., a wholly foreign
owned limited liability company incorporated under the laws of the PRC, Xi’an
Baorun Industrial Development Co., Ltd., a company incorporated under the law of
the PRC which the Company has contractual arrangements with and deemed a
subsidiary of the Company, may under the current laws and regulations of the PRC
be paid to Baorun China Group Limited, a company incorporated under the laws of
Hong Kong, in U.S. dollars, subject to the successful completion of PRC
formalities required for such remittances, and all such dividends and other
distributions will not be subject to withholding or other taxes under the laws
and regulations of the PRC and are otherwise free and clear of any other tax,
withholding or deduction in the PRC, and without the necessity of obtaining any
consents, approvals, authorizations, orders, registrations, clearances, or
qualifications with any governmental agency in the PRC.
16
(eee) The
choice of laws of the State of New York as the governing law of this Agreement
is a valid choice of law under the laws of Delaware and will be honored by
courts in Delaware. The Company has the power to submit, and pursuant
to Section 9 of this Agreement, has legally, validly, effectively and
irrevocably submitted, to the personal jurisdiction of each United States
federal court and New York state court located in the Borough of Manhattan, in
The City of New York, New York, U.S.A. (each, a “New York Court”), and the
Company has the power to designate, appoint and authorize, and pursuant to
Section 9 of this Agreement, has legally, validly, effectively and irrevocably
designated, appointed an authorized agent for service of process in any action
arising out of or relating to this Agreement, or the Shares in any New York
Court, and service of process effected on such authorized agent will be
effective to confer valid personal jurisdiction over the Company as provided in
Section 9 hereof.
(fff) Neither
the Company nor any of the Operating Entities, nor any of their respective
properties, assets or revenues has any right of immunity from any legal action,
suit or proceeding, from the giving of any relief in any such legal action, suit
or proceeding, from set-off or counterclaim, from the jurisdiction of any court,
from service of process, attachment upon or prior to judgment, or attachment in
aid of execution of judgment, or from execution of a judgment, or from other
legal process or proceeding for the giving of any relief or for the enforcement
of a judgment, with respect to its obligations, liabilities or any other matter
under or arising out of or in connection with this Agreement. Each of
the Company and Operating Entity waives or will waive such right to the extent
permitted by law and has consented to such relief and enforcement as provided in
Section 9 of this Agreement. The irrevocable and unconditional waiver
and agreement of the Company in this Agreement not to plead or claim any such
immunity in any legal action, suit or proceeding based on this Agreement is
valid and binding under the laws of the PRC, Hong Kong and the United
States.
(ggg) Except as
described in the Statutory Prospectus and the Prospectus, the Company has not
sold or issued any shares of Common Stock during the six-month period preceding
the date of this Agreement, including any sales pursuant to Rule 144A under, or
Regulations D or S of, the Securities Act, other than shares issued pursuant to
employee benefit plans, qualified stock options plans or other employee
compensation plans or pursuant to outstanding options, rights or
warrants.
(hhh) Except as
disclosed in the Registration Statement, the Statutory Prospectus and the
Prospectus, the Company has no obligation to provide retirement, death or
disability benefits to any of the present or past employees of the Company or
any Operating Entity, or to any other person.
17
(iii) The
Company has complied with the requirements of Rule 433 under the Securities Act
with respect to each Issuer Free Writing Prospectus including, without
limitation, all prospectus delivery, filing, record retention and legending
requirements applicable to any such Issuer Free Writing Prospectus. None of the
Company, its directors or its officers has distributed nor will distribute prior
to the later of (i) the Firm Shares Closing Date, or any Option Shares Closing
Date, and (ii) completion of the distribution of the Shares, any offering
material in connection with the offering and sale of the Shares other than any
Preliminary Prospectus, the Prospectus, the Registration Statement and other
materials, if any, permitted by the Securities Act and set forth on Schedule III
hereto.
3. Conditions of the
Underwriters' Obligations. The obligations of the Underwriters
under this Agreement are several and not joint. The respective
obligations of the Underwriters to purchase the Shares are subject to each of
the following terms and conditions:
(a) Notification that the Registration
Statement has become effective shall have been received by the Representative
and the Prospectus shall have been timely filed with the Commission in
accordance with Section 4(a) of this Agreement and any material required to be
filed by the Company pursuant to Rule 433(d) of the Rules shall have been timely
filed with the Commission in accordance with such rule.
(b) No order preventing or suspending
the use of any Preliminary Prospectus, the Prospectus or any “free writing
prospectus” (as defined in Rule 405 of the Rules), shall have been or shall be
in effect and no order suspending the effectiveness of the Registration
Statement shall be in effect and no proceedings for such purpose shall be
pending before or threatened by the Commission, and any requests for additional
information on the part of the Commission (to be included in the Registration
Statement or the Prospectus or otherwise) shall have been complied with to the
satisfaction of the Commission and the Representative. If the Company
has elected to rely upon Rule 430A, Rule 430A information previously omitted
from the effective Registration Statement pursuant to Rule 430A shall have been
transmitted to the Commission for filing pursuant to Rule 424(b) within the
prescribed time period and the Company shall have provided evidence satisfactory
to the Underwriters of such timely filing, or a post-effective amendment
providing such information shall have been promptly filed and declared effective
in accordance with the requirements of Rule 430A.
(c) The representations and warranties of
the Company contained in this Agreement and in the certificates delivered
pursuant to Section 3(d) shall be true and correct when made and on and as of
each Closing Date as if made on such date. The Company shall have performed all
covenants and agreements and satisfied all the conditions contained in this
Agreement required to be performed or satisfied by them at or before such
Closing Date.
(d) The Representative shall have received
on each Closing Date a certificate, addressed to the Representative and dated
such Closing Date, of the chief executive and the chief financial officer of the
Company to the effect that: (i) the representations, warranties and
agreements of the Company in this Agreement were true and correct when made and
are true and correct as of such Closing Date; (ii) the Company has performed all
covenants and agreements and satisfied all conditions contained herein; (iii)
they have carefully examined the Registration Statement, the Prospectus, the
General Disclosure Package, and any Issuer Free Writing Prospectus and, in their
opinion (A) as of the Effective Date the Registration Statement and Prospectus
did not include, and as of the Applicable Time, neither (i) the General
Disclosure Package, nor (ii) any Issuer Free Writing Prospectus, when
considered together with the General Disclosure Package,
included, any untrue statement of a material fact and did not omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading, (B) since the Effective Date, no event has occurred which
should have been set forth in a supplement or otherwise required an amendment to
the Registration Statement, the Statutory Prospectus or the Prospectus; and (C)
no stop order suspending the effectiveness of the Registration Statement has
been issued and, to their best knowledge, no proceedings for that purpose have
been instituted or are pending under the Securities Act.
18
(e) The Representative shall have received:
(i) simultaneously with the execution of this Agreement a signed letter from the
Auditor addressed to the Representative and dated the date of this Agreement, in
form and substance reasonably satisfactory to the Representative, containing
statements and information of the type ordinarily included in accountants’
“comfort letters” to underwriters with respect to the financial statements and
certain financial information contained in the Registration Statement and the
General Disclosure Package, and (ii) on each Closing Date, a signed letter from
the Auditor addressed to the Representative and dated the date of such Closing
Date, in form and substance reasonably satisfactory to the Representative,
containing statements and information of the type ordinarily included in
accountants' “comfort letters” to underwriters with respect to the financial
statements and certain financial information contained in the Registration
Statement and the Prospectus.
(f) The Representative shall have received
on each Closing Date from Loeb & Loeb LLP, United States counsel for the
Company, an opinion, addressed to the Representative and dated such Closing
Date, substantially in the form of Exhibit B hereto.
(g) The Representative shall have received
on each Closing Date from TransAsia Lawyers, PRC counsel for the Company, an
opinion, addressed to the Representative and dated such Closing Date,
substantially in the form of Exhibit C hereto.
(h) The Representative shall have received
on each Closing Date from [•], Hong Kong counsel for the Company, an opinion,
addressed to the Representative and dated such Closing Date, substantially in
the form of Exhibit D hereto.
(i) The Representative shall have received
on each Closing Date from Shearman & Sterling LLP, United States counsel for
the Underwriters, an opinion, addressed to the Representative and dated such
Closing Date, in form and substance satisfactory to the
Representative.
(j) The Representative shall have received
on each Closing Date from Haiwen & Partners, PRC counsel for the
Underwriters, an opinion, addressed to the Representative and dated such Closing
Date, in form and substance satisfactory to the
Representative.
19
(k) All proceedings taken in connection with
the offer and sale of the Firm Shares and the Option Shares as herein
contemplated shall be reasonably satisfactory in form and substance to the
Representative and their counsel.
(l) The Representative shall have received
copies of the Lock-Up Agreements, dated the date of this Agreement, executed by
each entity or person listed on Schedule II hereto.
(m) The Shares shall have been approved for
listing on the NASDAQ Capital Market.
(n) On the Firm Share Closing Date, the
FINRA shall have confirmed that it has not raised any objection with respect to
the fairness and reasonableness of the underwriting terms and arrangements for
the offer and sale of the Shares.
(o) The
Representative shall be reasonably satisfied that since the respective dates as
of which information is given in the Registration Statement, the Statutory
Prospectus, the General Disclosure Package and the Prospectus, (i) there shall
not have been any material change in the capital stock of the Company or any
material change in the indebtedness (other than in the ordinary course of
business) of the Company, (ii) except as set forth or contemplated by the
Registration Statement, the Statutory Prospectus, the General Disclosure Package
or the Prospectus, no material oral or written agreement or other transaction
shall have been entered into
by the Company that is not in the
ordinary course of business or that could reasonably be expected to result in a
material reduction in the future earnings of the Company, (iii) no loss or
damage (whether or not insured) to the property of the Company shall have been
sustained that had or could reasonably be expected to have a
Material Adverse Effect, (iv) no legal or
governmental action, suit
or proceeding affecting the
Company or any of its properties that is material to the Company or that affects
or could reasonably be expected to affect the transactions contemplated by this
Agreement shall have been
instituted or threatened and (v)
there shall not have been any material change in the assets, properties,
condition (financial or otherwise), or in the results of operations, business
affairs or business prospects of the Company or its Operating Entities
considered as a whole that makes it impractical or inadvisable in the
Representative’s judgment to proceed with the purchase or offering of the Shares
as contemplated hereby.
(p) The Company shall have furnished or
caused to be furnished to the Representative such further certificates or
documents as the Representative shall have reasonably
requested.
4. Covenants and other
Agreements of the Company and the Underwriters.
(a) The Company covenants and agrees as
follows:
(i) The Company shall prepare the Prospectus
in a form approved by the Representative and file such Prospectus pursuant to
Rule 424(b) under the Securities Act not later than the Commission's close of
business on the second business day following the execution and delivery of this
Agreement, or, if applicable, such earlier time as may be required by the Rules.
The Company will file with the Commission all Issuer Free Writing Prospectuses
in the time and manner required under Rules 433(d) or 163(b)(2), as the case may
be.
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(ii) The Company shall promptly advise the
Representative in writing (A) when any post-effective amendment to the
Registration Statement shall have become effective or any supplement to the
Prospectus shall have been filed, (B) of any request by the Commission for any
amendment of the Registration Statement or the Prospectus or for any additional
information, (C) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or of any order preventing or
suspending the use of any Preliminary Prospectus or any “free writing
prospectus”, as defined in Rule 405 of the Rules, or the institution or
threatening of any proceeding for that purpose and (D) of the receipt by the
Company of any notification with respect to the suspension of the qualification
of the Shares for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose. The Company shall not file any
amendment of the Registration Statement or supplement to the Prospectus or any
Issuer Free Writing Prospectus unless the Company has furnished the
Representative a copy for its review prior to filing and shall not file any such
proposed amendment or supplement to which the Representative reasonably
object. The Company shall use its best efforts to prevent the
issuance of any such stop order and, if issued, to obtain as soon as possible
the withdrawal thereof.
(iii) If, at any time when a prospectus
relating to the Shares (or, in lieu thereof, the notice referred to in Rule
173(a) of the Rules) is required to be delivered under the Securities Act, any
event occurs as a result of which the Prospectus as then amended or supplemented
would include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or if it shall be necessary to amend or supplement the
Prospectus to comply with the Securities Act or the Rules, the Company shall
promptly prepare and file with the Commission, subject to the second sentence of
paragraph (ii) of this Section 4(a), an amendment or supplement which shall
correct such statement or omission or an amendment which shall effect such
compliance.
(iv) If at any time following issuance of an
Issuer Free Writing Prospectus there occurs an event or development as a result
of which such Issuer Free Writing Prospectus would conflict with the information
contained in the Registration Statement or would include an untrue statement of
a material fact or would omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances prevailing at the subsequent time, not misleading, the Company
shall promptly notify the Representative and shall promptly amend or supplement,
at its own expense, such Issuer Free Writing Prospectus to eliminate or correct
such conflict, untrue statement or omission.
(v) The
Company shall make generally available to its security holders and to the
Representative as soon as practicable, but not later than 45 days after the end
of the 12-month period beginning at the end of the fiscal quarter of the Company
during which the Effective Date occurs (or 90 days if such 12-month period
coincides with the Company's fiscal year), an earning statement of the Company,
covering such 12-month period, which shall satisfy the provisions of Section
11(a) of the Securities Act or Rule 158 of the Rules.
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(vi) The
Company shall furnish to the Representative and counsel for the Underwriters,
without charge, signed copies of the Registration Statement (including all
exhibits thereto and amendments thereof) and to each other Underwriter a copy of
the Registration Statement (without exhibits thereto) and all amendments thereof
and, so long as delivery of a prospectus by an Underwriter or dealer may be
required by the Securities Act or the Rules, as many copies of any Preliminary
Prospectus, any Issuer Free Writing Prospectus and the Prospectus and any
amendments thereof and supplements thereto as the Representative may reasonably
request. If applicable, the copies of the Registration Statement, any
Preliminary Prospectus, any Issuer Free Writing Prospectus and Prospectus and
each amendment thereof and supplement thereto furnished to the Underwriters will
be identical to the electronically transmitted copies thereof filed with the
Commission pursuant to ▇▇▇▇▇, except to the extent permitted by Regulation
S-T.
(vii) The Company shall cooperate with the
Representative and its counsel in endeavoring to qualify the Shares for offer
and sale in connection with the offering under the laws of such jurisdictions as
the Representative may designate and shall maintain such qualifications in
effect so long as required for the distribution of the Shares; provided,
however, that the Company shall not be required in connection therewith, as a
condition thereof, to qualify as a foreign corporation or to execute a general
consent to service of process in any jurisdiction or subject itself to taxation
as doing business in any jurisdiction.
(viii) The Company, during the period when the
Prospectus (or in lieu thereof, the notice referred to in Rule 173(a) of the
Rules) is required to be delivered under the Securities Act and the Rules or the
Exchange Act, will file all reports and other documents required to be filed
with the Commission pursuant to Section 13, 14 or 15 of the Exchange Act within
the time periods required by the Exchange Act and the regulations promulgated
thereunder.
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(ix) Without the prior written consent of the
Representative for a period of 90 days after the date of this Agreement, the
Company and each director, officer and stockholder listed on Schedule II hereto
shall not issue, sell or register with the Commission (other than on Form S-8 or
on any successor form), or otherwise dispose of, directly or indirectly, any
equity securities of the Company (or any securities convertible into,
exercisable for or exchangeable for equity securities of the Company), except
for the issuance of the Shares pursuant to the Registration Statement and the
issuance of shares pursuant to the Company's existing stock option plan or bonus
plan as described in the Registration Statement, the Statutory
Prospectus and the Prospectus. In the event that during
this period, (A) any shares are issued pursuant to the Company's existing stock
option plan or bonus plan that are exercisable during such 90-day period or (B)
any registration is effected on Form S-8 or on any successor form relating to
shares that are exercisable during such 90-day period, the Company shall obtain
the written agreement of such grantee or purchaser or holder of such registered
securities that, for a period of 90 days after the date of this Agreement, such
person will not, without the prior written consent of the Representative offer
for sale, sell, distribute, grant any option for the sale of, or otherwise
dispose of, directly or indirectly, or exercise any registration rights with
respect to, any shares of Common Stock (or any securities convertible into,
exercisable for, or exchangeable for any shares of Common Stock) owned by such
person. Notwithstanding the foregoing, (i) the Company represents and
warrants that each such grantee or purchaser or holder of such registered
securities shall be subject to similar lockup restrictions as set forth on
Exhibit A attached hereto and the Company shall enforce such rights and impose
stop-transfer restrictions on any such sale or other transfer or disposition of
such shares until the end of the 90-day period and (ii) if (x) during the last
17 days of the 90-day period described in this Section 4(a)(ix) the Company
issues an earnings release or material news or a material event relating to the
Company occurs; or (y) prior to the expiration of such 90-day period, the
Company announces that it will release earnings results during the 16-day period
beginning on the last day of the 90-day period; the restrictions imposed during
this Section 4(a)(ix) 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; provided, however, that this sentence shall
not apply if the research published or distributed on the Company is compliant
under Rule 139 of the Securities Act and the Company’s securities are actively
traded as defined in Rule 101(c)(1) of Regulation M of the Exchange
Act.
(x) On or before completion of this
offering, the Company shall make all filings required under applicable
securities laws and by the NASDAQ Capital Market (including any required
registration under the Exchange Act).
(xi) Prior to the completion of the public
offer and sale of the Shares, the Company will issue no press release or other
communications directly or indirectly and hold no press conference without the
prior written consent of the Representative unless in the judgment of the
Company and its counsel, and after notification to the Representative, such
press release or communication is required by law.
(xii) The Company will apply the net proceeds
from the sale of the Shares in the manner set forth under “Use of Proceeds” in
the Prospectus.
23
(xiii) The Company will comply with the SAFE
Rules and Regulations, and will use best efforts to cause its shareholders and
option holders that are, or that are directly or indirectly owned or controlled
by, PRC residents or PRC citizens, to comply with the SAFE Rules and Regulations
applicable to them in connection with the Company, including without limitation,
requesting each shareholder and option holder, that is, or is directly or
indirectly owned or controlled by, a PRC resident or PRC citizen to complete any
registration and other procedures required under applicable SAFE Rules and
Regulations.
(xiv) The Company will at all times maintain
transfer restrictions (including the inclusion of legends in share certificates,
as may be required) with respect to the Company’s Common Stock which are subject
to transfer restrictions pursuant to this Agreement and the Lock-Up Agreements
and shall ensure compliance with such restrictions on transfer of restricted
Common Stock. The Company shall retain all share certificates which are by their
terms subject to transfer restrictions until such time as such transfer
restrictions are no longer applicable to such securities.
(xv) The Company will use its best efforts to
comply with Sarbanes the –Oxley Act, and to use its best efforts to cause the
Company’s directors and officers, in their capacities as such, to comply in with
the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act.
(xvi) The Company will not directly or
indirectly use the proceeds from the sale of Shares hereunder, or lend,
contribute or otherwise make available such proceeds to any Operating Entity,
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.
(b) [The Company agrees to pay, or reimburse
if paid by the Representative, whether or not the transactions contemplated
hereby are consummated or this Agreement is terminated, all costs and expenses
incident to the offer and sale of the Shares and the performance of the
obligations of the Company under this Agreement including those relating to: (i)
the preparation, printing, reproduction filing and distribution of the
Registration Statement including all exhibits thereto, each Preliminary
Prospectus, the Prospectus, any Issuer Free Writing Prospectus, all amendments
thereof and supplements thereto and any document incorporated by reference
therein, and the printing, filing and distribution of this Agreement; (ii) the
preparation and delivery of certificates for the Shares to the Underwriters;
(iii) the registration or qualification of the Shares for offer and sale under
the securities or Blue Sky laws of the various jurisdictions, [including the
reasonable fees and disbursements of counsel for the Underwriters in connection
with such registration and qualification and the preparation, printing,
distribution and shipment of preliminary and supplementary Blue Sky memoranda];
(iv) the furnishing (including costs of shipping and mailing) to the
Representative and to the Underwriters of copies of each Preliminary Prospectus,
the Prospectus and all amendments or supplements to the Prospectus, any Issuer
Free Writing Prospectus, and of the several documents required by this Section
to be so furnished, as may be reasonably requested for use in connection with
the offering and sale of the Shares by the Underwriters or by dealers to whom
Shares may be sold; (v) the filing fees of the FINRA in connection
with its review of the terms of the public offering and reasonable fees and
disbursements of counsel for the Underwriters in connection with such review;
(vi) inclusion of the Shares for listing on the NASDAQ Capital Market; (vii) the
costs and expenses of the Company relating to investor presentations on any road
show undertaken in connection with the marketing of the Shares, including
without limitation, fees and expenses of any consultants engaged in connection
with the road show presentations and travel and lodging expenses of the officers
of the Company and any such consultants, and (viii) all transfer taxes, if any,
with respect to the sale and delivery of the Shares by the Company to the
Underwriters. Subject to the provisions of Section 7, the
Underwriters agree to pay, whether or not the transactions contemplated hereby
are consummated or this Agreement is terminated, all costs and expenses incident
to the performance of the obligations of the Underwriters under this Agreement
not payable by the Company pursuant to the preceding sentence, including,
without limitation, the fees and disbursements of counsel for the
Underwriters.]
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(c) The Company acknowledges and agrees that
each of the Underwriters has acted and is acting solely in the capacity of a
principal in an arm’s length transaction between the Company, on the one hand,
and the Underwriters, on the other hand, with respect to the offering of Shares
contemplated hereby (including in connection with determining the terms of the
offering) and not as a financial advisor, agent or fiduciary to the Company or
any other person. Additionally, the Company acknowledges and agrees
that the Underwriters have not and will not advise the Company or any other
person as to any legal, tax, investment, accounting or regulatory matters in any
jurisdiction. The Company has consulted with its own advisors
concerning such matters and shall be responsible for making its own independent
investigation and appraisal of the transactions contemplated hereby, and the
Underwriters shall have no responsibility or liability to the Company or any
other person with respect thereto, whether arising prior to or after the date
hereof. Any review by the Underwriters of the Company, the
transactions contemplated hereby or other matters relating to such transactions
have been and will be performed solely for the benefit of the Underwriters and
shall not be on behalf of the Company. The Company agrees that it
will not claim that the Underwriters, or any of them, has rendered advisory
services of any nature or respect, or owes a fiduciary duty to the company or
any other person in connection with any such transaction or the process leading
thereto.
(d) The Company represents and agrees that,
unless it obtains the prior consent of the Representative, and each Underwriter
represents and agrees that, unless it obtains the prior consent of the Company
and the Representative, it has not made and will not make any offer relating to
the Shares that would constitute an “issuer free writing prospectus,” as defined
in Rule 433, or that would otherwise constitute a “free writing
prospectus,” as defined in Rule 405, required to be filed with the
Commission. The Company has complied and will comply with the
requirements of Rule 433 under the Act applicable to any Issuer Free
Writing Prospectus, including timely filing with the Commission where
required, legending and record keeping. The Company represents that
is has satisfied and agrees that it will satisfy the conditions set forth in
Rule 433 of the Rules to avoid a requirement to file with the Commission any
Road Show
5. Indemnification.
(a) The Company agrees to indemnify and hold
harmless each Underwriter and each person, if any, who controls any Underwriter
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act against any and all losses, claims, damages and liabilities, joint
or several (including any reasonable investigation, legal and other expenses
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claim asserted), to which they, or any of them, may
become subject under the Securities Act, the Exchange Act or other Federal or
state law or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement, the Statutory
Prospectus, the Prospectus, any Issuer Free Writing
Prospectus or any “issuer-information” filed or
required to be filed pursuant to Rule 433(d) of the Rules, any amendment thereof
or supplement thereto, or in any Blue Sky application or other information or
other documents executed by the Company filed in any state or other jurisdiction
to qualify any or all of the Shares under the securities laws thereof (any such
application, document or information being hereinafter referred to as a “Blue
Sky Application”) or arise out of or are based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however, that
such indemnity shall not inure to the benefit of any Underwriter (or any person
controlling such Underwriter) on account of any losses, claims, damages or
liabilities arising from the sale of the Shares to any person by such
Underwriter if such untrue statement or omission or alleged untrue statement or
omission was made in such Preliminary Prospectus, the Registration Statement,
the Statutory Prospectus, the Prospectus, any Issuer Free Writing Prospectus or
such amendment thereof or supplement thereto, or in any Blue Sky Application in
reliance upon and in conformity with the Underwriter Information. This indemnity
agreement will be in addition to any liability which the Company may otherwise
have.
25
(b) Each Underwriter, severally and not
jointly, agrees to indemnify and hold harmless the Company and each person, if
any, who controls the Company within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act, each director of the Company, and each
officer of the Company who signs the Registration Statement, against any losses,
claims, damages or liabilities to which such party may become subject, under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement , the Statutory Prospectus, the Prospectus or any
amendment thereof or supplement thereto, or arise out of or are based upon any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in any
Preliminary Prospectus, the Registration Statement, the Statutory Prospectus or
the Prospectus or any such amendment thereof or supplement in reliance upon and
in conformity with the Underwriter Information; provided, however, that the
obligation of each Underwriter to indemnify the Company (including any
controlling person, director or officer thereof) shall be limited to the amount
of the underwriting discount applicable to the Shares to be purchased by such
Underwriter hereunder.
(c) Any party that proposes to assert the
right to be indemnified under this Section will, promptly after receipt of
notice of commencement of any action, suit or proceeding against such party in
respect of which a claim is to be made against an indemnifying party or parties
under this Section, notify each such indemnifying party of the commencement of
such action, suit or proceeding, enclosing a copy of all papers
served. No indemnification provided for in Section 5(a) or 5(b) shall
be available to any party who shall fail to give notice as provided in this
Section 5(c) if the party to whom notice was not given was unaware of the
proceeding to which such notice would have related and was prejudiced by the
failure to give such notice but the omission so to notify such indemnifying
party of any such action, suit or proceeding shall not relieve it from any
liability that it may have to any indemnified party for contribution or
otherwise than under this Section. In case any such action, suit or
proceeding shall be brought against any indemnified party and it shall notify
the indemnifying party of the commencement thereof, the indemnifying party shall
be entitled to participate in, and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof and the approval by the indemnified
party of such counsel, the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses, except as provided below and
except for the reasonable costs of investigation subsequently incurred by such
indemnified party in connection with the defense thereof. The
indemnified party shall have the right to employ its counsel in any such action,
but the fees and expenses of such counsel shall be at the expense of such
indemnified party unless (i) the employment of counsel by such indemnified party
has been authorized in writing by the indemnifying parties, (ii) the indemnified
party shall have been advised by counsel that there may be one or more legal
defenses available to it which are different from or in addition to those
available to the indemnifying party (in which case the indemnifying parties
shall not have the right to direct the defense of such action on behalf of the
indemnified party) or (iii) the indemnifying parties shall not have employed
counsel to assume the defense of such action within a reasonable time after
notice of the commencement thereof, in each of which cases the fees and expenses
of counsel shall be at the expense of the indemnifying parties. An
indemnifying party shall not be liable for any settlement of any action, suit,
and proceeding or claim effected without its written consent, which consent
shall not be unreasonably withheld or delayed.
26
6. Contribution. In
order to provide for just and equitable contribution in circumstances in which
the indemnification provided for in Section 5(a) or 5(b) is due in accordance
with its terms but for any reason is unavailable to or insufficient to hold
harmless an indemnified party in respect to any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate losses, liabilities, claims, damages and expenses
(including any investigation, legal and other expenses reasonably incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claims asserted, but after deducting any contribution received
by any person entitled hereunder to contribution from any person who may be
liable for contribution) incurred by such indemnified party, as incurred, (A) in
such proportion as is appropriate to reflect the relative benefits received by
the Company on the one hand and the Underwriters on the other hand from the
offering of the Shares pursuant to this Agreement or, (B) if such allocation is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to above but also the relative fault of
the Company on the one hand and the Underwriters on the other hand in connection
with the statements or omissions which resulted in such losses, liabilities,
claims, damages or expenses, as well as any other relevant equitable
considerations. The Company and the Underwriters agree that it would
not be just and equitable if contribution pursuant to this Section 6 were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above. The
aggregate amount of losses, liabilities, claims, damages and expenses incurred
by an indemnified party and referred to above shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission. Notwithstanding the
provisions of this Section 6, no Underwriter (except as may be provided in the
Agreement Among Underwriters) shall be required to contribute any amount in
excess of the amount by which the underwriting discounts and commissions
applicable to the Shares underwritten by it exceed the amount of damages which
such underwriter has otherwise been required to pay by reason of any such untrue
or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For purposes
of this Section 6, each person, if any, who controls an Underwriter within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
shall have the same rights to contribution as such Underwriter, and each
director of the Company, each officer of the Company who signed the Registration
Statement, and each person, if any, who controls the Company within the meaning
of the Section 15 of the Securities Act or Section 20 of the Exchange Act, shall
have the same rights to contribution as the Company. Any party
entitled to contribution will, promptly after receipt of notice of commencement
of any action, suit or proceeding against such party in respect of which a claim
for contribution may be made against another party or parties under this Section
6, notify such party or parties from whom contribution may be sought, but the
omission so to notify such party or parties from whom contribution may be sought
shall not relieve the party or parties from whom contribution may be sought from
any other obligation it or they may have hereunder or otherwise than under this
Section 6. No party shall be liable for contribution with respect to
any action, suit, proceeding or claim settled without its written
consent. The Underwriter's obligations to contribute pursuant to this
Section 6 are several in proportion to their respective underwriting commitments
and not joint.
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7. Termination.
(a) This Agreement may be terminated with
respect to the Shares to be purchased on a Closing Date by the Representative by
notifying the Company at any time at or before a Closing Date in the absolute
discretion of the Representative if: (i) there has occurred any material adverse
change in the securities markets or any event, act or occurrence that has
materially disrupted, or in the opinion of the Representative, will in the
future materially disrupt, the securities markets or there shall be such a
material adverse change in general financial, political or economic conditions
or the effect of international conditions on the financial markets in the United
States or the PRC is such as to make it, in the judgment of the Representative,
inadvisable or impracticable to market the Shares or enforce contracts for the
sale of the Shares; (ii) there has occurred any outbreak or material escalation
of hostilities or acts of terrorism or other calamity or crisis the effect of
which on the financial markets of the United States or the PRC is such as to
make it, in the judgment of the Representative, inadvisable or impracticable to
market the Shares or enforce contracts for the sale of the Shares; (iii) trading
in the Shares or any securities of the Company has been suspended or materially
limited by the Commission or trading generally on the New York Stock Exchange,
Inc., the American Stock Exchange, Inc. or the NASDAQ has been suspended or
materially limited, or minimum or maximum ranges for prices for securities shall
have been fixed, or maximum ranges for prices for securities have been required,
by any of said exchanges or by such system or by order of the Commission, the
FINRA, or any other governmental or regulatory authority; or (iv) a banking
moratorium has been declared by any state or Federal authority; or (v) in the
judgment of the Representative, there has been, since the time of execution of
this Agreement or since the respective dates as of which information is given in
the Prospectus, any material adverse change in the assets, properties,
condition, financial or otherwise, or in the results of operations, business
affairs or business prospects of the Company and its Operating Entities
considered as a whole, whether or not arising in the ordinary course of
business.
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(b) If this Agreement is terminated pursuant
to any of its provisions, the Company shall not be under any liability to any
Underwriter, and no Underwriter shall be under any liability to the Company,
except that (i) if this Agreement is terminated by the Representative or the
Underwriters because of any failure, refusal or inability on the part of the
Company to comply with the terms or to fulfill any of the conditions of this
Agreement, the Company will reimburse the Underwriters for all out-of-pocket
expenses (including the reasonable fees and disbursements of their counsel)
incurred by them in connection with the proposed purchase and sale of the Shares
or in contemplation of performing their obligations hereunder and (ii) no
Underwriter who shall have failed or refused to purchase the Shares agreed to be
purchased by it under this Agreement, without some reason sufficient hereunder
to justify cancellation or termination of its obligations under this Agreement,
shall be relieved of liability to the Company or to the other Underwriters for
damages occasioned by its failure or refusal.
8. Substitution of
Underwriters. If any Underwriter shall default in its
obligation to purchase on any Closing Date the Shares agreed to be purchased
hereunder on such Closing Date, the Representative shall have the right, within
36 hours thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase such Shares on the terms
contained herein. If, however, the Representative shall not have
completed such arrangements within such 36-hour period, then the Company shall
be entitled to a further period of thirty-six hours within which to procure
another party or other parties satisfactory to the Underwriters to purchase such
Shares on such terms. If, after giving effect to any arrangements for
the purchase of the Shares of a defaulting Underwriter or Underwriters by the
Representative and the Company as provided above, the aggregate number of Shares
which remains unpurchased on such Closing Date does not exceed 10% of the
aggregate number of all the Shares that all the Underwriters are obligated to
purchase on such date, then the Company shall have the right to require each
non-defaulting Underwriter to purchase the number of Shares which such
Underwriter agreed to purchase hereunder at such date and, in addition, to
require each non-defaulting Underwriter to purchase its pro rata share (based on
the number of Shares which such Underwriter agreed to purchase hereunder) of the
Shares of such defaulting Underwriter or Underwriters for which such
arrangements have not been made; but nothing herein shall relieve a defaulting
Underwriter from liability for its default. In any such case, either
the Representative or the Company shall have the right to postpone the
applicable Closing Date for a period of not more than seven days in order to
effect any necessary changes and arrangements (including any necessary
amendments or supplements to the Registration Statement or Prospectus or any
other documents), and the Company agrees to file promptly any amendments to the
Registration Statement or the Prospectus which in the opinion of the Company and
the Underwriters and their counsel may thereby be made necessary. If,
after giving effect to any arrangements for the purchase of the Shares of a
defaulting Underwriter or Underwriters by the Representative and the Company as
provided above, the aggregate number of such Shares which remains unpurchased
exceeds 10% of the aggregate number of all the Shares to be purchased on such
date, then this Agreement, or, with respect to a Closing Date which occurs after
the Firm Share Closing Date, the obligations of the Underwriters to purchase and
of the Company to sell the Option Shares to be purchased and sold on such date,
shall terminate, without liability on the part of any non-defaulting Underwriter
to the Company, and without liability on the part of the Company, except as
provided in Sections 4(b), 5, 6 and 7. The provisions of
this Section 8 shall not in any way affect the liability of any defaulting
Underwriter to the Company or the non-defaulting Underwriters arising out of
such default. The term “Underwriter” as used in this Agreement shall
include any person substituted under this Section 8 with like effect as if such
person had originally been a party to this Agreement with respect to such
Shares.
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9. Governing Law and
Jurisdiction. This Agreement shall be governed by, and construed in
accordance with, the law of the State of New York, including, without
limitation, Section 5-1401 of the New York General Obligations Law.
The Company hereby submits to the
non-exclusive jurisdiction of the Federal and state courts in the Borough of
Manhattan in The City of New York in any suit or proceeding arising out of or
relating to this Agreement or the transactions contemplated
hereby. The Company irrevocably and unconditionally waives any
objection to the laying of venue of any suit or proceeding arising out of or
relating to this Agreement or the transactions contemplated hereby in Federal
and state courts in the Borough of Manhattan in The City of New York and
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any such suit or proceeding in any such court has been brought
in an inconvenient forum. The Company irrevocably appoints [●] as
their respective authorized agent in the Borough of Manhattan in The City of New
York upon which process may be served in any such suit or proceeding, and agrees
that service of process upon such agent, and written notice of said service to
the Company by the person serving the same to the address provided in this
Agreement, shall be deemed in every respect effective service of process upon
the Company in any such suit or proceeding. The Company further
agrees to take any and all action as may be necessary to maintain such
designation and appointment of such agent in full force and effect for a period
of seven years from the date of this Agreement.
10. Judgment Currency.
The obligations of the Company pursuant to this Agreement in respect of any sum
due to any Underwriter shall, notwithstanding any judgment in a currency other
than United States dollars, not be discharged until the first business day,
following receipt by such Underwriter of any sum adjudged to be so due in such
other currency, on which (and only to the extent that) such Underwriter may in
accordance with normal banking procedures purchase United States dollars with
such other currency; if the United States dollars so purchased are less than the
sum originally due to such Underwriter hereunder, the Company agrees, as a
separate obligation and notwithstanding any such judgment, to indemnify such
Underwriter against such loss. If the United States dollars so
purchased are greater than the sum originally due to such Underwriter hereunder,
such Underwriter agrees to pay to the Company an amount equal to the excess of
the dollars so purchased over the sum originally due to such Underwriter
hereunder.
30
11. Miscellaneous. The
respective agreements, representations, warranties, indemnities and other
statements of the Company and the several Underwriters, as set forth in this
Agreement or made by or on behalf of them pursuant to this Agreement, shall
remain in full force and effect, regardless of any investigation (or any
statement as to the results thereof) made by or on behalf of any Underwriter or
the Company or any of their respective officers, directors or controlling
persons referred to in Sections 5 and 6 hereof, and shall survive delivery of
and payment for the Shares. In addition, the provisions of Sections
4(b), 5, 6 and 7 shall survive the termination or cancellation of this
Agreement.
This
Agreement has been and is made for the benefit of the Underwriters, the Company
and their respective successors and assigns, and, to the extent expressed
herein, for the benefit of persons controlling any of the Underwriters, or the
Company, and directors and officers of the Company, and their respective
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement. The term “successors and
assigns” shall not include any purchaser of Shares from any Underwriter merely
because of such purchase.
All
notices and communications hereunder shall be in writing and mailed or delivered
or by telephone or telegraph if subsequently confirmed in writing, (a) if to the
Representative, c/o Oppenheimer & Co. Inc., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Equity Capital Markets,
with a copy to ▇▇▇▇▇▇▇▇▇▇▇ & Co. Inc., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇ Attention: R. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Investment Banking Counsel,
and to Shearman & Sterling LLP, 12/F, East Tower, Twin Towers, B-12
Jianguomenwai Dajie, Beijing, People’s Republic of China, 100022 and (b) if to the
Company, to its agent for service as such agent's address appears on the cover
page of the Registration Statement with a copy to China Integrated Energy,
Inc., Dongxin
Century Square, 7th Floor,
Hi-Tech Development District, Xi’an, Shaanxi Province, People’▇ ▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇.
This
Agreement may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were upon
the same instrument.
Please
confirm that the foregoing correctly sets forth the agreement among
us.
|
Very
truly yours,
|
|||
|
By:
|
|||
| Title: | |||
31
Confirmed:
|
▇▇▇▇▇▇▇▇▇▇▇
& CO. INC.
|
||||
Acting
severally on behalf of itself
and as
representative of the several
Underwriters
named in Schedule I annexed
hereto.
| By |
▇▇▇▇▇▇▇▇▇▇▇
& CO. INC.
|
||||
| By | |||||
|
Title:
|
32
SCHEDULE
I
|
Name
|
Number
of
Firm Shares
to
Be
Purchased
|
|||
|
▇▇▇▇▇▇▇▇▇▇▇
& Co. Inc.
|
||||
| ▇▇▇▇▇ and Company, LLC | ||||
| ▇▇▇▇ Capital Partners, LLC | ||||
| Total | 8,000,000 | |||
Sch I -
1
SCHEDULE
II
Lock-up
Signatories
A -
2
SCHEDULE
III
Issuer
Free Writing Prospectuses
A -
2
|
Exhibit
A
|
FORM
OF LOCK-UP AGREEMENT
|
_________, 2009
|
▇▇▇▇▇▇▇▇▇▇▇
& Co. Inc.
[ADDITIONAL
CO-MANAGERS]
As
Representative of the Several Underwriters
c/o
Oppenheimer & Co. Inc.
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Re: Public
Offering of China Integrated
Energy, Inc.
Ladies
and Gentlemen:
The undersigned, a holder of common
stock, par value $0.0001 (“Common Stock”), or rights to acquire Common Stock, of
China Integrated Energy,
Inc. (the “Company”) understands that you, as Representative of the
several Underwriters, propose to enter into an Underwriting Agreement (the
“Underwriting Agreement”) with the Company, providing
for the public offering (the “Public Offering”) by the several Underwriters
named in Schedule I to the Underwriting Agreement (the “Underwriters”), of
shares of Common Stock of the Company (the “Securities”). Capitalized terms used
herein and not otherwise defined shall have the meanings set forth in the
Underwriting Agreement.
In consideration of the Underwriters'
agreement to enter into the Underwriting Agreement and to proceed with the
Public Offering of the Securities, and for other good and valuable consideration
receipt of which is hereby acknowledged, the undersigned hereby agrees for the
benefit of the Company, you and the other Underwriters that, without the prior
written consent of ▇▇▇▇▇▇▇▇▇▇▇ & Co. Inc. on behalf of the Underwriters, the
undersigned will not, during the period ending 90 days (the “Lock-Up Period”)
after the date of the prospectus relating to the Public Offering (the
“Prospectus”), directly or indirectly (1) offer, pledge, assign, encumber,
announce the intention to sell, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, or otherwise transfer or dispose of, any shares of
Common Stock, $0.0001 per share par value, of
the Company (the “Common Stock”) or any securities convertible into or
exercisable or exchangeable for Common Stock owned either of record or
beneficially (as defined in the Securities Exchange Act of 1934, as amended) by
the undersigned on the date hereof or hereafter acquired or (2) enter into any
swap or other agreement that transfers, in whole or in part, any of the economic
consequences of ownership of the Common Stock, whether any such transaction
described in clause (1) or (2) above is to be settled by delivery of Common
Stock or such other securities, in cash or otherwise, or publicly announce an
intention to do any of the foregoing. In addition, the undersigned agrees that,
without the prior written consent of ▇▇▇▇▇▇▇▇▇▇▇ & Co. Inc. on behalf of the
Underwriters, it will not, during the period ending 90 days after the date of
the Prospectus, make any demand for or exercise any right with respect to, the
registration of any shares of Common Stock or any security convertible into or
exercisable or exchangeable for Common Stock.
A -
1
Notwithstanding the foregoing, if (x)
during the last 17 days of the Lock-Up Period the Company issues an earnings
release or material news or a material event relating to the Company occurs; or
(y) 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 in this Letter Agreement 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; provided, however, that this sentence shall not apply if the
research published or distributed on the Company is compliant under Rule 139 of
the Securities Act and the Company’s securities are actively traded as defined
in Rule 101(c)(1) of Regulation M of the Exchange Act.
In furtherance of the foregoing, the
Company, and any duly appointed transfer agent for the registration or transfer
of the securities described herein, are hereby authorized to decline to make any
transfer of securities if such transfer would constitute a violation or breach
of this Letter Agreement.
The undersigned hereby represents and
warrants that the undersigned has full power and authority to enter into this
Letter Agreement. All authority herein conferred or agreed to be conferred and
any obligations of the undersigned shall be binding upon the successors,
assigns, heirs or personal representatives of the undersigned.
The undersigned understands that, if
the Underwriting Agreement does not become effective, or if the Underwriting
Agreement (other than the provisions thereof which survive termination) shall
terminate or be terminated prior to payment for and delivery of the Common Stock
to be sold thereunder, the undersigned shall be released form all obligations
under this Letter Agreement.
The
undersigned, whether or not participating in the Offering, understands that the
Underwriters are entering into the Underwriting Agreement and proceeding with
the Public Offering in reliance upon this Letter Agreement.
This lock-up agreement shall be
governed by and construed in accordance with the laws of the State of New York,
without regard to the conflict of laws principles thereof.
|
Very
truly yours,
|
|||
|
[STOCKHOLDER]
|
|||
|
By:
|
|||
| Name: | |||
| Title: | |||
Exhibit
B
FORM
OF LEGAL OPINION FOR UNITED STATES COUNSEL TO COMPANY
B-1
Exhibit
C
FORM
OF LEGAL OPINION FOR PRC COUNSEL TO COMPANY
Exhibit
D
FORM
OF LEGAL OPINION FOR HONG KONG COUNSEL TO COMPANY