2,000,000 Shares CHINA ADVANCED CONSTRUCTION MATERIALS GROUP, INC. Common Stock UNDERWRITING AGREEMENT
EXHIBIT
1.1
2,000,000
Shares
Common
Stock
February
24, 2010
▇▇▇▇
Capital Partners, LLC
▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies
and Gentlemen:
China Advanced Construction Materials
Group, Inc., a Delaware corporation (the “Company”), proposes,
subject to the terms and conditions stated herein, to issue and sell to ▇▇▇▇
Capital Partners, LLC (the “Underwriter”) an
aggregate of 2,000,000 authorized but unissued shares (the “Underwritten Shares”)
of Common Stock, par value $0.001 per share (the “Common Stock”), of
the Company. The
Company has granted the Underwriter the option to purchase an aggregate of up to
300,000 additional shares of Common Stock (the “Additional Shares”)
as may be necessary to cover over-allotments made in connection with the
offering. The Underwritten Shares and the Additional Shares are
collectively referred to as the “Shares.”
The
Company and the Underwriter hereby confirm their agreement as
follows:
1. Registration
Statement and Prospectus. The Company has prepared and filed
with the Securities and Exchange Commission (the “Commission”) a
registration statement on Form S-3 (File No. 333-164048) under the Securities
Act of 1933, as amended (the “Securities Act”) and
the rules and regulations (the “Rules and
Regulations”) of the Commission thereunder, such amendments to such
registration statement (including post effective amendments) as may have been
required to the date of this Agreement and a preliminary prospectus supplement
or “red ▇▇▇▇▇▇▇” pursuant to Rule 424(b) under the Securities
Act. Such registration statement, as amended (including any post
effective amendments) has been declared effective by the
Commission. Such registration statement, including amendments thereto
(including post effective amendments thereto) at such time, the exhibits and any
schedules thereto at such time, the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 under the Securities Act at such time and the
documents and information otherwise deemed to be a part thereof or included
therein by Rule 430B under the Securities Act or otherwise pursuant to the Rules
and Regulations at such time, is herein called the “Registration
Statement.” If the Company has filed or files an abbreviated
registration statement pursuant to Rule 462(b) under the Securities Act (the
“Rule 462 Registration
Statement”), then any reference herein to the term Registration Statement
shall include such Rule 462 Registration Statement.
The
Company is filing with the Commission pursuant to Rule 424 under the Securities
Act a final prospectus supplement relating to the Shares to a form of prospectus
included in the Registration Statement. Such prospectus in the form
in which it appears in the Registration Statement is hereinafter called the
“Base
Prospectus,” and such final prospectus supplement as filed, along with
the Base Prospectus, is hereinafter called the “Final
Prospectus.” Such Final Prospectus and any preliminary
prospectus supplement or “red ▇▇▇▇▇▇▇,” in the form in which they shall be filed
with the Commission pursuant to Rule 424(b) under the Securities Act (including
the Base Prospectus as so supplemented) is hereinafter called a “Prospectus.” Any
reference herein to the Base Prospectus, the Final Prospectus or a Prospectus
shall be deemed to include the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 under the Securities Act as of the date of such
Prospectus.
For
purposes of this Agreement, all references to the Registration Statement, the
Rule 462 Registration Statement, the Base Prospectus, the Final Prospectus, a
Prospectus or any amendment or supplement to any of the foregoing shall be
deemed to include the copy filed with the Commission pursuant to its Interactive
Data Electronic Applications system and all information incorporated by
reference therein. All references in this Agreement to financial
statements and schedules and other information which is “described,”
“contained,” “included,” or “stated” in the Registration Statement, the Rule 462
Registration Statement, the Base Prospectus, the Final Prospectus or the
Prospectus (or other references of like import) shall be deemed to mean and
include all such financial statements, pro forma financial information and
schedules and other information which is incorporated by reference in or
otherwise deemed by the Rules and Regulations to be a part of or included in the
Registration Statement, the Rule 462 Registration Statement, the Base Prospectus
or a Prospectus, as the case may be; and all references in this Agreement
to amendments or supplements to the Registration Statement, the Rule 462
Registration Statement, the Base Prospectus, the Final Prospectus or the
Prospectus shall be deemed to mean and include the subsequent filing of any
document under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), that is deemed to be incorporated therein by reference
therein or otherwise deemed by the Rules and Regulations to be a part
thereof.
2. Representations
and Warranties of the Company Regarding the Offering.
(a) The
Company represents and warrants to, and agrees with, the Underwriter, as of the
date hereof and as of the Closing Date (as defined in Section 5(c) below),
except as otherwise indicated, as follows:
(i) At
each time of effectiveness, at the date hereof and at the Closing Date, the
Registration Statement and any post-effective amendment thereto complied or will
comply in all material respects with the requirements of the Securities Act and
the Rules and Regulations and did not and will not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading. The Base Prospectus, the Prospectus most recently filed
with the Commission, including any preliminary prospectus supplement deemed
to be a part thereof, and the Final Prospectus (the “Time of Sale Disclosure
Package”) as of such time on the date hereof and at the Closing Date, any
roadshow or investor presentations delivered to and approved by the Underwriter
for use in connection with the marketing of the offering of the Shares (the
“Marketing
Materials”) as of the time of their use and at the Closing Date, and the
Final Prospectus, as amended or supplemented, as of its date, at the time of
filing pursuant to Rule 424(b) under the Securities Act and at the Closing Date,
did not and will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. The
representations and warranties set forth in the two immediately preceding
sentences shall not apply to statements in or omissions from the Registration
Statement or any Prospectus in reliance upon, and in conformity with, written
information furnished to the Company by the Underwriter specifically for use in
the preparation thereof, which written information is described in Section 8(f).
The Registration Statement (including each document incorporated by reference
therein) contains all exhibits and schedules required to be filed by the
Securities Act or the Rules and Regulations. No order preventing or
suspending the effectiveness or use of the Registration Statement or any
Prospectus is in effect and no proceedings for such purpose have been instituted
or are pending, or, to the knowledge of the Company, are contemplated or
threatened by the Commission.
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(ii) The
documents incorporated by reference in the Registration Statement, the Time of
Sale Disclosure Package and any Prospectus, when they became effective or were
filed with the Commission, as the case may be, conformed in all material
respects to the requirements of the Securities Act or the Exchange Act, as
applicable, and, to the extent then applicable, the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act,
including in each case, the rules and regulations thereunder, were filed on a
timely basis with the Commission and none of such documents, when they were
filed (or, if amendments to such documents were filed, when such amendments were
filed), contained an untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. Any further documents
so filed and incorporated by reference in the Registration Statement, the Time
of Sale Disclosure Package or the Final Prospectus, when such documents are
filed with the Commission, will conform in all material respects to the
requirements of the Exchange Act, and will not contain an untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(iii) The
Company certifications required by Rules 13a-14 and 15d-14 under the Exchange
Act and Sections 302 and 906 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act that are contained in the
documents incorporated by reference in the Registration Statement, the Time of
Sale Disclosure Package and any Prospectus complied with such laws and the rules
and regulations thereunder.
(iv) The
Company has not distributed any prospectus or other offering material in
connection with the offering and sale of the Shares other than the Time of Sale
Disclosure Package and the Marketing Materials. The Company 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 under the Securities Act, or
that would otherwise constitute a “free writing prospectus,” as defined in Rule
405 under the Securities Act, required to be filed with the
Commission.
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(v) The
financial statements of the Company, together with the related notes, included
or incorporated by reference in the Registration Statement, the Time of Sale
Disclosure Package and the Final Prospectus comply in all material respects with
the applicable requirements of the Securities Act and the Exchange Act,
applicable laws and regulations
in jurisdictions where the Company and its subsidiaries are incorporated,
including the People’s Republic of China (the “PRC”), and fairly
present the financial condition of the Company as of the dates indicated and the
results of operations and changes in cash flows for the periods therein
specified in conformity with generally accepted accounting principles
consistently applied throughout the periods involved; and the supporting
schedules included in the Registration Statement present fairly the information
required to be stated therein. No other financial statements, pro
forma financial information or schedules are required under the Securities Act
to be included or incorporated by reference in the Registration Statement, the
Time of Sale Disclosure Package or the Final Prospectus. To the
Company’s knowledge, (A) ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇,
LLP, which has expressed its opinion with respect to the annual financial
statements and schedules for the fiscal years ended June 30, 2009 and 2008 filed
as a part of the Registration Statement and included in the Registration
Statement, the Time of Sale Disclosure Package and the Final Prospectus, is an
independent public accounting firm with respect to the Company within the
meaning of the Securities Act and the Rules and Regulations and (B) ▇▇▇▇▇▇
▇▇▇▇▇, LLP, the Company’s current auditor, is an independent public accounting
firm with respect to the Company within the meaning of the Securities Act and
the Rules and Regulations.
(vi) The
Company had a reasonable basis for, and made in good faith, each
“forward-looking statement” (within the meaning of Section 27A of the Act or
Section 21E of the Exchange Act) contained or incorporated by reference in the
Registration Statement, the Time of Sale Disclosure Package or the Final
Prospectus, and each “forward-looking statement” contained in the Marketing
Materials.
(vii) All
statistical or market-related data included or incorporated by reference in the
Registration Statement, the Time of Sale Disclosure Package or the Final
Prospectus, or included in the Marketing Materials, are based on or derived from
sources that the Company reasonably believes to be reliable and accurate, and
the Company has obtained the written consent to the use of such data from such
sources, to the extent required.
(viii) The
Common Stock is registered pursuant to Section 12(b) of the Exchange Act and is
included or approved for inclusion on the NASDAQ Global Market. There is no
action pending by the Company or, to the Company’s knowledge, the NASDAQ Global
Market to delist the Common Shares from the NASDAQ Global Market, nor has the
Company received any notification that the NASDAQ Global Market is contemplating
terminating such listing. When issued, the Shares will be listed on
the NASDAQ Global Market.
(ix) The
Company has not taken, directly or indirectly, any action that is designed to or
that has constituted or that would reasonably be expected to cause or result in
the stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares.
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(x) The
Company is not and, after giving effect to the offering and sale of the Shares
and the application of the net proceeds thereof, will not be an “investment
company,” as such term is defined in the Investment Company Act of 1940, as
amended.
(xi) The
Company was at the time of filing the Registration Statement, and at the date
hereof, remains eligible to use Form S-3 under the Securities
Act. The Company shall not issue any of its securities pursuant to
the Registration Statement in a manner that would affect the eligibility of the
Company to use Form S-3 under the Securities Act with respect to the
Shares.
(b) Any
certificate signed by any officer of the Company and delivered to the
Underwriter or to the Underwriter’s counsel shall be deemed a representation and
warranty by the Company to the Underwriter as to the matters covered
thereby.
3. Representations
and Warranties Regarding the Company.
(a) The
Company represents and warrants to and agrees with, the Underwriter as
follows:
(i) Each
of the Company and its subsidiaries has been duly organized and is validly
existing as a corporation in good standing under the laws of its jurisdiction of
incorporation. Each of the Company and its subsidiaries has the corporate power
and authority to own its properties and conduct its business as currently being
carried on and as described in the Registration Statement, the Time of Sale
Disclosure Package and the Prospectus, and is duly qualified to do business as a
foreign corporation in good standing in each jurisdiction in which it owns or
leases real property or in which the conduct of its business makes such
qualification necessary and in which the failure to so qualify would have or is
reasonably likely to result in a material adverse effect upon the business,
prospects, properties, operations, condition (financial or otherwise) or results
of operations of the Company and its subsidiaries, taken as a whole, or in its
ability to perform its obligations under this Agreement (“Material Adverse
Effect”).
(ii) The
Company has the power and authority to enter into this Agreement and to
authorize, issue and sell the Shares as contemplated by this
Agreement. This Agreement has been duly authorized, executed and
delivered by the Company, and constitutes a valid, legal and binding obligation
of the Company, enforceable against the Company in accordance with its terms,
except as rights to indemnity hereunder may be limited by federal or state
securities laws and except as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting the rights of creditors
generally and subject to general principles of equity.
(iii) The
execution, delivery and performance of this Agreement and the consummation of
the transactions herein contemplated will not (A) result in a breach or
violation of any of the terms and provisions of, or constitute a default under,
any law, rule or regulation to which the Company or any subsidiary is subject,
or by which any property or asset of the Company or any subsidiary is bound or
affected, (B) conflict with, result in any violation or breach of, or constitute
a default (or an event that with notice or lapse of time or both would become a
default) under, or give to others any right of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both) of,
any agreement, lease, credit facility, debt, note, bond, mortgage, indenture or
other instrument (the “Contracts”) or
obligation or other understanding to which the Company or any subsidiary is a
party of by which any property or asset of the Company
or any subsidiary is bound or affected, except to the extent that such conflict,
default, termination, amendment, acceleration or cancellation right is not
reasonably likely to result in a Material Adverse Effect, or (C) result in a
breach or violation of any of the terms and provisions of, or constitute a
default under, the Company’s charter or by-laws.
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(iv) Neither
the Company nor any of its subsidiaries is in violation, breach or default under
its certificate of incorporation, by-laws or other equivalent organizational or
governing documents.
(v) All
consents, approvals, orders, authorizations and filings required on the part of
the Company and its subsidiaries in connection with the execution, delivery or
performance of this Agreement have been obtained or made, other than such
consents, approvals, orders and authorizations the failure of which to make or
obtain is not reasonably likely to result in a Material Adverse
Effect.
(vi) All
of the issued and outstanding shares of capital stock of the Company are duly
authorized and validly issued, fully paid and nonassessable, and have been
issued in compliance with all applicable securities laws, and conform to the
description thereof in the Registration Statement, the Time of Sale Disclosure
Package and the Prospectus. Except for the issuances of options or
restricted stock in the ordinary course of business, since the respective dates
as of which information is provided in the Registration Statement, the Time of
Sale Disclosure Package or the Prospectus, the Company has not entered into or
granted any convertible or exchangeable securities, options, warrants,
agreements, contracts or other rights in existence to purchase or acquire from
the Company any shares of the capital stock of the Company. The
Shares, when issued, will be duly authorized and validly issued, fully paid
and nonassessable, will be issued in compliance with all applicable securities
laws, and will be free of preemptive, registration or similar
rights.
(vii) The
Company and its subsidiaries have implemented and maintain disclosure controls
and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the
Exchange Act), and such controls and procedures are effective to ensure that
(A) all material information required to be disclosed by the Company in the
reports that it files under the Exchange Act is recorded, processed, summarized
and reported within the time periods specified in the Commission’s rules and
forms, and (B) all such information is accumulated and communicated to the
Company’s management, including its principal executive officer and principal
financial officer, as appropriate, to allow timely decisions regarding required
disclosure.
(viii) The
Company and its subsidiaries have implemented and maintain a system of internal
control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f)
under the Exchange Act) sufficient to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with GAAP, including, without limitation,
that (A) transactions are executed in accordance with management’s general
or specific authorizations, (B) transactions are recorded as necessary to
permit preparation of financial statements in conformity with GAAP and to
maintain asset accountability, (C) access
to assets is permitted only in accordance with management’s general or specific
authorization, and (D) the recorded accountability for assets is compared
with the existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
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(ix) Each
of the Company and its subsidiaries has filed all returns (as hereinafter
defined) required to be filed with taxing authorities prior to the date hereof
or has duly obtained extensions of time for the filing thereof. Each
of the Company and its subsidiaries has paid all taxes (as hereinafter defined)
shown as due on such returns that were filed and has paid all taxes imposed on
or assessed against the Company or such respective subsidiary. The
provisions for taxes payable, if any, shown on the financial statements filed
with or as part of the Registration Statement are sufficient for all accrued and
unpaid taxes, whether or not disputed, and for all periods to and including the
dates of such consolidated financial statements. Except as disclosed
in writing to the Underwriter, (A) no issues have been raised (and are currently
pending) by any taxing authority in connection with any of the returns or taxes
asserted as due from the Company or its subsidiaries, and (B) no waivers of
statutes of limitation with respect to the returns or collection of taxes have
been given by or requested from the Company or its subsidiaries. The
term “taxes”
mean all federal, state, local, foreign, and other net income, gross income,
gross receipts, sales, use, ad valorem, transfer, franchise, profits, license,
lease, service, service use, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, property, windfall profits, customs,
duties or other taxes, fees, assessments, or charges of any kind whatever,
together with any interest and any penalties, additions to tax, or additional
amounts with respect thereto. The term “returns” means all
returns, declarations, reports, statements, and other documents required to be
filed in respect to taxes.
(x) Since
the respective dates as of which information is given in the Registration
Statement, the Time of Sale Disclosure Package or the Prospectus, (A) neither
the Company nor any of its subsidiaries has incurred any material liabilities or
obligations, direct or contingent, or entered into any material transactions
other than in the ordinary course of business, (B) the Company has not declared
or paid any dividends or made any distribution of any kind with respect to its
capital stock; (C) there has not been any change in the capital stock of the
Company or any of its subsidiaries (other than a change in the number of
outstanding shares of Common Stock due to the issuance of shares upon the
exercise of outstanding options or warrants or the issuance of restricted stock
awards or restricted stock units under the Company’s existing stock awards
plan, or any new grants thereof in the ordinary course of business), (D)
there has not been any material change in the Company’s long-term or short-term
debt, and (E) there has not been the occurrence of a Material Adverse
Effect.
(xi) There
is not pending or, to the knowledge of the Company, threatened, any action, suit
or proceeding to which the Company or any of its subsidiaries is a party or of
which any property or assets of the Company or its subsidiaries is the subject
before or by any court or governmental agency, authority or body, or any
arbitrator or mediator, which is reasonably likely to result in a Material
Adverse Effect.
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(xii) The
Company and each of its subsidiaries holds, and is in compliance
with, all franchises, grants, authorizations, licenses, permits, easements,
consents, certificates and orders (“Permits”) of any
governmental or self-regulatory agency, authority or body required for the
conduct of its business, and all such Permits are in full force and effect, in
each case except where the failure to hold, or comply with, any of them is not
reasonably likely to result in a Material Adverse Effect.
(xiii) The
Company and its subsidiaries have good and marketable title to all property
(whether real or personal) described in the Registration Statement, the Time of
Sale Disclosure Package and the Prospectus as being owned by them that are
material to the business of the Company, in each case free and clear of all
liens, claims, security interests, other encumbrances or defects, except those
that are not reasonably likely to result in a Material Adverse
Effect. The property held under lease or pursuant to land use rights
by the Company and its subsidiaries, is held by them under valid, subsisting and
enforceable leases or land use rights, as the case may be, with only such
exceptions with respect to any particular lease as do not interfere in any
material respect with the conduct of the business of the Company and its
subsidiaries.
(xiv) The
Company and each of its subsidiaries owns or possesses or has valid right to use
all patents, patent applications, trademarks, service marks, trade names,
trademark registrations, service ▇▇▇▇ registrations, copyrights, licenses,
inventions, trade secrets and similar rights (“Intellectual
Property”) necessary for the conduct of the business of the Company and
its subsidiaries as currently carried on and as described in the Registration
Statement, the Time of Sale Disclosure Package and the Prospectus. To
the knowledge of the Company, no action or use by the Company or any of its
subsidiaries will involve or give rise to any infringement of, or license or
similar fees for, any Intellectual Property of others, except where such action,
use, license or fee is not reasonably likely to result in a Material Adverse
Effect. Neither the Company nor any of its subsidiaries has received
any notice alleging any such infringement or fee.
(xv) The
Company and each of its subsidiaries has complied with, is not in violation of,
and has not received any notice of violation relating to any law, rule or
regulation relating to the conduct of its business, or the ownership or
operation of its property and assets, including, without limitation, (A) the
Currency and Foreign Transactions Reporting Act of 1970, as amended, or any
money laundering laws, rules or regulations, (B) any laws, rules or regulations
related to health, safety or the environment, including those relating to the
regulation of hazardous substances, (C) the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act and the rules and
regulations of the Commission thereunder, (D) the Foreign Corrupt Practices Act
of 1977 and the rules and regulations thereunder, and (E) the Employment
Retirement Income Security Act of 1974 and the rules and regulations thereunder,
in each case except where the failure to be in compliance is not reasonably
likely to result in a Material Adverse Effect.
(xvi) Neither
the Company nor any of its subsidiaries nor, to the knowledge of the Company,
any director, officer, employee, representative, agent or affiliate of the
Company or any of its subsidiaries is currently subject to any U.S. sanctions
administered by the Office of Foreign Assets Control of the U.S. Treasury
Department (“OFAC”); and the
Company will not directly or indirectly use the proceeds of the offering of the
Shares contemplated hereby, or lend, contribute or otherwise make available
such proceeds to any person or entity, for the purpose of financing the
activities of any person currently subject to any U.S. sanctions administered by
OFAC.
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(xvii) The
Company and each of its subsidiaries carries, or is covered by, insurance in
such amounts and covering such risks as is adequate for the conduct of its
business and the value of its properties and as is customary for companies
engaged in similar businesses in similar industries in the PRC.
(xviii) Each
of the Company and its subsidiaries has complied in all material respects with
all applicable employment and labor laws with respect to its
employees. No labor dispute with the employees of the Company or any
of its subsidiaries and no disputes with any principal supplier, manufacturer,
customer or contractor of the Company or any of their employees, exists or, to
the knowledge of the Company, is imminent that is reasonably likely to result in
a Material Adverse Effect.
(xix) Neither
the Company, its subsidiaries nor, to its knowledge, any other party is in
violation, breach or default of any Contract that is reasonably likely to result
in a Material Adverse Effect.
(xx) No
supplier, customer, distributor or sales agent of the Company or its
subsidiaries, has notified the Company or its subsidiaries, that it
intends to discontinue or decrease the rate of business
done with the Company or its subsidiaries, except where such decrease
is not reasonably likely to result in a Material Adverse Effect.
(xxi) There
are no claims, payments, issuances, arrangements or understandings for services
in the nature of a finder’s, consulting or origination fee with respect to the
introduction of the Company to the Underwriter or the sale of the Shares
hereunder or any other arrangements, agreements, understandings, payments or
issuances with respect to the Company that may affect the Underwriter’s
compensation, as determined by FINRA.
(xxii) The
Company has not made any direct or indirect payments (in cash, securities or
otherwise) to (A) any person, as a finder’s fee, investing fee or otherwise, in
consideration of such person raising capital for the Company or introducing to
the Company persons who provided capital to the Company, (B) any FINRA member,
or (C) any person or entity that has any direct or indirect affiliation or
association with any FINRA member within the 12 month period prior to the date
on which the Registration Statement was filed with the Commission (“Filing Date”) or
thereafter.
(xxiii) None
of the net proceeds of the offering will be paid by the Company to any
participating FINRA member or any affiliate or associate of any participating
FINRA member, except as specifically authorized herein.
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(xxiv) To
the Company’s knowledge, no (A) officer or director of the Company or its
subsidiaries, (B) owner of 5% or more of the Company’s unregistered securities
or that of its subsidiaries or (C) owner of any amount of the Company’s
unregistered securities acquired within the 180 day period prior to the Filing
Date, has any
direct or indirect affiliation or association with any FINRA member. The Company
will advise the Underwriter and its counsel if it becomes aware that any
officer, director or stockholder of the Company or its subsidiaries is or
becomes an affiliate or associated person of a FINRA member participating in the
offering.
(xxv) Other
than the Underwriter, no person has the right to act as an underwriter or as a
financial advisor to the Company in connection with the transactions
contemplated hereby.
4. Representations
and Warranties of the Company Regarding the PRC.
(a) The
Company represents and warrants to, and agrees with, the Underwriter, as of the
date hereof and as of the Closing Date, as follows:
(i) The
Company owns all of the issued and outstanding capital stock of Xin Ao
Construction Materials, Inc., a British Virgin Islands corporation (“BVI-ACM”), which in
turn owns 100% of the outstanding capital stock of Beijing Ao Hang Construction
Materials Technology Co., Ltd., a company incorporated under the laws of the PRC
(“China-ACMH”).
On November 28, 2007, China-ACMH entered into a series of contractual agreements
with Beijing Xin Ao Concrete Co., Ltd., a company incorporated under the laws of
the PRC (“Xin
Ao”), and its two shareholders, in which China-ACMH effectively took over
management of the business activities of Xin Ao and has the right to appoint all
executives and senior management and the members of the board of directors of
Xin Ao. China-ACMH and Xin Ao are collectively referred to
hereinafter as the “PRC
Entities.”
(ii) The
description of the corporate structure of the Company and the various contracts
between the Company and any of the PRC Entities or shareholders of the PRC
Entities, as the case may be (each a “Corporate Structure
Contract” and collectively, the “Corporate Structure
Contracts”), as described in the Registration Statement, the Time of Sale
Disclosure Package and the Prospectus, 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, its subsidiaries and the PRC Entities which has not been
previously disclosed or made available to the Underwriter and, to the extent
material to the Company, disclosed in the Registration Statement, the Time of
Sale Disclosure Package and the Prospectus. Except for BVI-ACM and
the PRC Entities, the Company does not presently own, control or have, directly
or indirectly, any interest in any other corporation, partnership, trust, joint
venture, association, branch offices or other entity.
(iii) (A)
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; (B)
except as disclosed in the Registration Statement, the Time of Sale Disclosure
Package and the Prospectus, 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;
and (C) 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, its subsidiaries, the PRC Entities or shareholders of the PRC Entities
in any jurisdiction challenging the validity of any of the Corporate Structure
Contracts and, to the knowledge of the Company, no such proceeding, inquiry or
investigation is threatened or contemplated in any jurisdiction.
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(iv) Except
for the Corporate Structure Contracts, there are no outstanding rights, warrants
or options to acquire, or instruments convertible into or exchangeable for, any
equity interest in the PRC Entities, and there is no security interest,
mortgage, pledge, lien, encumbrance, claim or any third party right, the
exercise of which may lead to the change of shareholdings or the amount of the
registered capital of the PRC Entities.
(v) Xin
Ao is engaged in the production of advanced construction materials for large
scale commercial, residential and infrastructure developments. Except as
disclosed in the Registration Statement, the Time of Sale Disclosure Package and
the Prospectus, Xin Ao has obtained all Permits from the competent government
authorities for carrying out its business, and all such Permits are currently
valid and in full force and effect.
(vi) Each
of the PRC Entities has duly entered into a lease contract with respect to the
office premises and the concrete plants that it uses and
occupies Each of the PRC Entities is in compliance with such leases
and holds valid leasehold interests in such properties, free of any liens,
encumbrances, security interests or claims of any party. All
technical service agreements, technical and preferred procurement agreements to
which a PRC Entity is a party has been duly entered into by such PRC Entity and
constitutes a valid and binding obligation of such PRC Entity. The
execution and performance of such technical service agreements and technical and
preferred procurement agreements by a PRC Entity do not violate the business
license, articles of association, Permits and other corporate documents of such
PRC Entity.
(vii) All consents, approvals, authorizations
or licenses requisite under the laws of the PRC for the due and proper
establishment and operation of the PRC Entities have been duly obtained from the
relevant PRC governmental authorities and are in full force and
effect. The Company has no reason to believe that any governmental
body, court, agency or official in the PRC is considering modifying, suspending,
revoking or not renewing any such consents, approvals, authorizations or
licenses. Each of the PRC Entities is in compliance with the
provisions of all such consents, approvals, authorizations or licenses and
conducts its business in accordance with, and is not in violation of, any laws
and regulations of the PRC to which it is subject or by which it is bound, in
all material respects.
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(viii) No
dispute between any of the PRC Entities, BVI-ACM or the Company exists or, to
the knowledge of the Company, is imminent that is reasonably likely to result in
a Material Adverse Effect.
(ix) Except
as disclosed in the Registration Statement, the Time of Sale Disclosure Package
and the Prospectus, all filings and registrations with the PRC governmental
authorities required in respect of each of the PRC Entities and its respective
capital structure and operations, including without limitation, the registration
with local divisions of the Ministry of Commerce, the State Administration of
Foreign Exchange and tax bureau have been duly completed in accordance with the
relevant PRC rules and regulations and neither of the PRC Entities has received
any letter or notice from any relevant PRC government authority notifying it of
revocation of any licenses or qualifications issued to it by any PRC government
authority for non-compliance with the terms thereof or with applicable PRC laws,
or the lack of compliance or remedial actions in respect of the activities
carried out by each of the PRC Entities.
(x) Each
of the PRC Entities has been duly established, is validly existing as a company
in good standing under the laws of the PRC, has the corporate power and
authority to own, lease and operate its property and to conduct its business as
described in the Registration Statement, the Time of Sale Disclosure Package and
the Prospectus, and is duly qualified to transact business and is in good
standing in each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification, except to the
extent that the failure to be so qualified or be in good standing would not,
singly or in the aggregate, have a Material Adverse Effect. Each PRC
Entity has applied for and obtained all requisite business licenses, clearance
and permits required under PRC law as necessary for the conduct of its
businesses, and each PRC Entity has complied in all material respects
with all PRC Laws in connection with foreign exchange, including without
limitation, carrying out all relevant filings, registrations and applications
for relevant permits with the PRC State Administration of Foreign Exchange and
any other relevant authorities, and all such permits are validly
subsisting and as to business licenses, clearances and permits subject to
periodic renewal, the Company has no knowledge of any reasons related to each of
the PRC Entities for which such requisite renewals will not be granted by the
relevant PRC governmental authorities. The registered capital of each
PRC Entity has been fully paid up in accordance with the schedule of payment
stipulated in its respective articles of association, approval document,
certificate of approval and legal person business license (hereinafter referred
to as the “Establishment
Documents”) and in compliance with PRC laws and regulations, and there is
no outstanding capital contribution commitment for any PRC
Entity. With respect to any increase of registered capital, the
relevant PRC Entity has duly filed the application documents with the competent
PRC government authorities for approval. The Establishment Documents
of the PRC Entities have been duly approved in accordance with the laws of the
PRC and are valid and enforceable. The business scope specified in
the Establishment Documents of each PRC Entity complies with the requirements of
all relevant PRC laws and regulations. Except as disclosed in the
Registration Statement, the Time of Sale Disclosure Package and the Prospectus,
none of the PRC Entities is carrying out or has carried out any business
activities that are beyond its business scope or the scope of the
Permits. The outstanding equity interests of each PRC Entity is owned
of record by the respective entities or individuals identified as the registered
holders thereof in the Registration Statement, the Time of Sale Disclosure
Package and the Prospectus and there are no outstanding commitments made by
the Company or its subsidiaries or by Xin Ao to sell any equity interest in any
of the PRC Entities.
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(xi) With
regard to employment and staff or labor, except as disclosed in the Registration
Statement, the Time of Sale Disclosure Package and the Prospectus and except to
the extent that the failure to comply would not have a Material Adverse Effect,
each of the PRC Entities are in compliance with all applicable PRC laws and
regulations, including without limitation, laws and regulations pertaining to
welfare funds, social benefits, medical benefits, insurance, retirement benefits
or pensions.
(xii) To
the best knowledge of the Company, all agreements to which each of the PRC
Entities is a party are valid, enforceable and free of defaults on the part of
all parties thereto.
(xiii) Each
of the PRC Entities is not currently prohibited, directly or indirectly, from
paying any dividends to the Company (or the Company’s subsidiary that holds the
outstanding equity interests of China-ACMH). Each of the PRC Entities
is not prohibited, directly or indirectly, from making any other distribution on
such PRC Entity’s equity capital, from repaying to the Company any loans or
advances to such PRC Entity from the Company or any of the Company’s
subsidiaries.
(xiv) The
choice of the laws of the State of New York as the governing law of this
Agreement is a valid choice of law under the laws of the PRC and will be honored
by the courts in the PRC.
(xv) None
of the PRC Entities nor any of their properties, assets or revenues are entitled
to any right of immunity on the grounds of sovereignty from any legal action,
suit or proceeding, from set-off or counterclaim, from the jurisdiction of any
court, from services of process, from attachment prior to or in aid of execution
of judgment, or from any other legal process or proceeding for the giving of any
relief or for the enforcement of any judgment.
(xvi) It
is not necessary that this Agreement, the Registration Statement, the Time of
Sale Disclosure Package, the Prospectus or any other document be filed or
recorded with any governmental agency, court or other authority in the
PRC.
(xvii) No
transaction, stamp, capital or other issuance, registration, transaction,
transfer or withholding taxes or duties are payable in the PRC by or on behalf
of the Underwriter to any PRC taxing authority in connection with (A) the
issuance, sale and delivery of the Shares by the Company and the delivery of the
Shares to or for the account of the Underwriter, (B) the purchase from the
Company and the initial sale and delivery by the Underwriter of the Shares to
purchasers thereof, or (C) the execution and delivery of this
Agreement.
(xviii) Except
as disclosed in the Registration Statement, the Time of Sale Disclosure Package
and the Prospectus, the Company has taken all necessary steps to comply with,
and to ensure compliance by all of the Company’s direct or indirect shareholders
and option holders who are PRC residents with, any applicable rules and
regulations of the PRC, including the regulations issued by the State
Administration of Foreign Exchange of the PRC (the “SAFE Rules and
Regulations”), including, without limitation, requiring each shareholder
or option holder who is a PRC resident and directly or
indirectly owns or controls the Company to complete any registration and other
procedures required under applicable SAFE Rules and Regulations.
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(xix) The
Company is aware of, and has been advised as to, the content of the Rules on
Mergers and Acquisitions of Domestic Enterprises by Foreign Investors jointly
promulgated on August 8, 2006, as revised on June 22, 2009, by the PRC Ministry
of Commerce, the PRC State Assets Supervision and Administration Commission, the
PRC State Administration of Taxation, the PRC State Administration of Industry
and Commerce, the China Securities Regulatory Commission (“CSRC”) and the PRC
State Administration of Foreign Exchange of the PRC (the “M&A Rules”), in
particular the relevant provisions thereof that purport to require offshore
special purpose vehicles controlled directly or indirectly by PRC-incorporated
companies or PRC residents and established for the purpose of obtaining a stock
exchange listing outside of the PRC to obtain the approval of the CSRC prior to
the listing and trading of their securities on any stock exchange located
outside of the PRC. The Company has received legal advice specifically with
respect to the M&A Rules from its PRC counsel and the Company understands
such legal advice. In addition, the Company has communicated such
legal advice in full to each of its directors that signed the Registration
Statement and each such director has confirmed that he or she understands such
legal advice.
(xx) The
issuance and sale of the Shares, the listing and trading of the Shares on the
NASDAQ Global Market and the consummation of the transactions contemplated by
this Agreement, the Registration Statement, the Time of Sale Disclosure Package
and the Prospectus are not as of the date hereof and will not be on the Closing
Date, affected by the M&A Rules or any official clarifications, guidance,
interpretations or implementation rules in connection with or related to the
M&A Rules, including the guidance and notices issued by the CSRC on
September 8 and September 21, 2006 (together with the M&A Rules, the “M&A Rules and Related
Clarifications”).
(xxi) The
Company has taken all necessary steps to ensure compliance by each of its
shareholders, option holders, directors, officers and employees that is, or is
directly or indirectly owned or controlled by, a PRC resident or citizen with
any applicable rules and regulations of the relevant PRC government agencies
(including but not limited to the PRC Ministry of Commerce, the PRC National
Development and Reform Commission and the PRC State Administration of Foreign
Exchange) relating to overseas investment by PRC residents and citizens (the
“PRC Overseas
Investment and Listing Regulations”), including, requesting each
shareholder, option holder, director, officer, employee and participant that is,
or is directly or indirectly owned or controlled by, a PRC resident or citizen
to complete any registration and other procedures required under applicable PRC
Overseas Investment and Listing Regulations.
(xxii) As
of the date hereof, the M&A Rules and Related Clarifications do not require
the Company to obtain the approval of the CSRC prior to the issuance and sale of
the Shares, the listing and trading of the Shares on the NASDAQ Global Market,
or the consummation of the transactions contemplated by this Agreement, the
Registration Statement, the Time of Sale Disclosure Package or the
Prospectus. No governmental approval of any governmental agency in
the PRC is required for the consummation of the transactions contemplated by
this Agreement, the Registration Statement,
the Time of Sale Disclosure Package or the Prospectus.
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(xxiii) Each
of the PRC Entities is in compliance with all requirements under all applicable
PRC laws and regulations to qualify for its exemptions from enterprise income
tax or other income tax benefits (the “Tax Benefits”) as
described in the Registration Statement, the Time of Sale Disclosure Package and
the Prospectus, and the actual operations and business activities of each such
PRC Entity are sufficient to meet the qualifications for the Tax
Benefits. No submissions made to any PRC government authority in
connection with obtaining the Tax Benefits contained any misstatement or
omission that would, to the knowledge of the Company, have affected the granting
of the Tax Benefits. No PRC Entity has received notice of any
deficiency in its respective applications for the Tax Benefits, and the Company
is not aware of any reason why such PRC Entity might not qualify for, or be in
compliance with the requirements for, the Tax Benefits.
(xxiv) To
the knowledge of the Company, all local and national PRC governmental tax
holidays, exemptions, waivers, financial subsidies, and other local and national
PRC tax relief, concessions and preferential treatment enjoyed by any PRC Entity
as described in the Registration Statement, the Time of Disclosure Package and
the Prospectus are valid, binding and enforceable and do not violate any laws,
regulations, rules, orders, decrees, guidelines, judicial interpretations,
notices or other legislation of the PRC.
(xxv) The
Underwriter shall not be deemed to be resident, domiciled, carrying on business
or subject to taxation in the PRC solely by reason of its execution, delivery,
performance or enforcement of, or the consummation of any transaction
contemplated by, this Agreement, the Registration Statement, the Time of Sale
Disclosure Package or the Prospectus.
(xxvi) To
the knowledge of the Company, all descriptions in the Registration Statement,
the Time of Sale Disclosure Package and the Prospectus of PRC laws or
regulations and contracts, documents and matters governed by or under PRC law
are accurate in all material respects. The statements in the
Registration Statement, the Time of Sale Disclosure Package and the Prospectus
under the headings “Risk Factors,” “Properties,” “Management’s Discussion and
Analysis or Plan of Operation – PRC Taxation,” and “Business” insofar as such
statements constitute summaries of the laws or regulations of the PRC or
documents governed by PRC law as of the date hereof, fairly present the
information called for with respect to such legal matters and documents and
fairly summarize matters referred to therein.
(xxvii) The
application of the net proceeds from the Offering, as contemplated by the
Registration Statement, the Time of Sale Disclosure Package and the Prospectus,
will not (A) contravene any provision of applicable PRC law, rule or regulation
or the articles of association or any other constituent documents of any of the
PRC Entities or (B) contravene the terms or provisions of, or constitute a
default under, (1) any mortgage, loan agreement, lease or other agreement
binding upon any of the PRC Entities, (2) any mortgage, loan agreement, lease or
other agreement governed by PRC law by which the Company or any of the PRC
Entities are bound or to which any of the properties
or assets of any of the PRC Entities are subject or (3) any judgment, order or
decree of any governmental body, agency or court in the PRC.
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(xxviii) The
contribution to the PRC Entities of the proceeds from the sale of the Shares,
subject however to customary and ordinary administrative approvals under the
existing laws and regulations of the PRC, and the compliance by the Company with
all of the provisions of this Agreement and the consummation of the transactions
contemplated thereby does not result in any violation of the provisions of the
articles of association or any other constituent documents of the PRC Entities
or any applicable laws and regulations of the PRC, including without limitation
the New M&A Rules, of any governmental agency having jurisdiction over each
of the PRC Entities or any of its properties.
(xxix) Except
as disclosed in the Registration Statement, the Time of Sale Disclosure Package
and the Prospectus, each of the PRC Entities is not in violation of any
applicable statute, law, or regulation relating to the environment or
occupational health and safety and no material expenditures are or will be
required in order to comply with any such existing statute, law or
regulation.
5. Purchase,
Sale and Delivery of Shares.
(a) On
the basis of the representations, warranties and agreements herein contained,
but subject to the terms and conditions herein set forth, the Company agrees to
issue and sell the Underwritten Shares to the Underwriter, and the Underwriter
agrees to purchase the Underwritten Shares. The purchase price for
each Underwritten Share shall be $4.60 per share (the “Per Share
Price”). The Company will pay the Underwriter, on each Closing
Date, an amount equal to 6% of the gross proceeds received by the Company from
the sale of the Underwritten Shares and the Additional Shares, as applicable, as
an underwriting discount (the “Underwriter’s
Fee”).
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(c) The
Underwritten Shares will be delivered by the Company to the
Underwriter
against payment of the purchase price therefor by wire transfer of same day
funds payable to the order of the Company at the offices of ▇▇▇▇ Capital
Partners, LLC, ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ or such other
location as may be mutually acceptable, at 6:00 a.m. PST, on the third (or if
the Underwritten Shares are priced, as contemplated by Rule 15c6-1(c) under the
Exchange Act, after 4:30 p.m. Eastern time, the fourth) full business day
following the date hereof, or at such other time and date as the Underwriter and
the Company determine pursuant to Rule 15c6-1(a) under the Exchange Act, or, in
the case of the Additional Shares, at such date and time set forth in the Option
Notice. The time and date of delivery of the Underwritten Shares or
the Additional Shares, as applicable, is referred to herein as the “Closing
Date.” Certificates representing the Shares, in definitive
form and in such denominations and registered in such names as the Underwriter
may request upon at least two business days’ prior notice to the Company, will
be made available for checking and packaging not later than 10:30 a.m. PDT on
the business day next preceding the Closing Date at the above addresses, or such
other location as may be mutually acceptable, and shall be delivered to or upon
the prior written instruction of the Underwriter on the business day preceding
the Closing Date to be held in escrow pending release on such Closing
Date.
6. Covenants.
(a) The
Company covenants and agrees with the Underwriter as follows:
(i) During
the period beginning on the date hereof and ending on the later of the Closing
Date or such date as determined by the Underwriter the Prospectus is no longer
required by law to be delivered in connection with sales by an underwriter or
dealer (the “Prospectus Delivery
Period”), prior to amending or supplementing the Registration Statement,
including any Rule 462 Registration Statement, the Time of Sale Disclosure
Package or the Prospectus, the Company shall furnish to the Underwriter for
review and comment a copy of each such proposed amendment or supplement, and the
Company shall not file any such proposed amendment or supplement to which the
Underwriter reasonably objects.
(ii) From
the date of this Agreement until the end of the Prospectus Delivery Period, the
Company shall promptly advise the Underwriter in writing (A) of the receipt of
any comments of, or requests for additional or supplemental information from,
the Commission, (B) of the time and date of any filing of any post-effective
amendment to the Registration Statement or any amendment or supplement to the
Time of Sale Disclosure Package or the Prospectus, (C) of the time and date that
any post-effective amendment to the Registration Statement becomes effective and
(D) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing or
suspending its use or the use of the Time of Sale Disclosure Package, or of any
proceedings to remove, suspend or terminate from listing or quotation the Common
Stock from any securities exchange upon which it is listed for trading or
included or designated for quotation, or of the threatening or initiation of any
proceedings for any of such purposes. If the Commission shall enter
any such stop order at any time during the Prospectus Delivery Period, the
Company will use its reasonable efforts to obtain the lifting of such order at
the earliest possible moment. Additionally, the Company agrees that
it shall comply with the provisions of Rules 424(b), 430A and 430B, as
applicable, under the Securities Act and will use its reasonable
efforts to confirm that any filings made by the Company under Rule 424(b) or
Rule 433 were received in a timely manner by the Commission (without reliance on
Rule 424(b)(8) or 164(b) of the Securities Act).
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(iii) (A)
During the Prospectus Delivery Period, the Company will comply with all
requirements imposed upon it by the Securities Act, as now and hereafter
amended, and by the Rules and Regulations, as from time to time in force, and by
the Exchange Act, as now and hereafter amended, so far as necessary to permit
the continuance of sales of or dealings in the Shares as contemplated by the
provisions hereof, the Time of Sale Disclosure Package, the Registration
Statement and the Prospectus. If during such period any event occurs
the result of which the Prospectus (or if the Prospectus is not yet available to
prospective purchasers, the Time of Sale Disclosure Package ) would include an
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances then existing,
not misleading, or if during such period it is necessary or appropriate in the
opinion of the Company or its counsel or the Underwriter or its counsel to amend
the Registration Statement or supplement the Prospectus (or if the Prospectus is
not yet available to prospective purchasers, the Time of Sale Disclosure Package
) to comply with the Securities Act or to file under the Exchange Act any
document that would be deemed to be incorporated by reference in the Prospectus
in order to comply with the Securities Act or the Exchange Act, the Company will
promptly notify the Underwriter, allow the Underwriter a chance to provide
comments on such amendment, Prospectus supplement or document, and will amend
the Registration Statement or supplement the Prospectus (or if the Prospectus is
not yet available to prospective purchasers, the Time of Sale Disclosure
Package) or file such document (at the expense of the Company) so as to correct
such statement or omission or effect such compliance.
(B) The
Company shall take or cause to be taken all necessary action to qualify the
Shares for sale under the securities laws of such jurisdictions as the
Underwriter reasonably designates and to continue such qualifications in effect
so long as required for the distribution of the Shares, except that the Company
shall not be required in connection therewith to qualify as a foreign
corporation or as a dealer in securities in any jurisdiction in which it is not
so qualified, to execute a general consent to service of process in any state or
to subject itself to taxation in respect of doing business in any jurisdiction
in which it is not otherwise subject.
(iv) The
Company will furnish to the Underwriter and counsel for the Underwriter copies
of the Registration Statement, each Prospectus, and all amendments and
supplements to such documents, in each case as soon as available and in such
quantities as the Underwriter may from time to time reasonably
request.
(v) The
Company will make generally available to its security holders as soon as
practicable, but in any event not later than 15 months after the end of the
Company’s current fiscal quarter, an earnings statement (which need not be
audited) covering a 12-month period that shall satisfy the provisions of Section
11(a) of the Securities Act and Rule 158 of the Rules and
Regulations.
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(vi) The
Company, whether or not the transactions contemplated hereunder
are consummated or this Agreement is terminated, will pay or cause to be
paid (A) all expenses (including transfer taxes allocated to the
respective transferees) incurred in connection with the delivery to the
Underwriter of the Shares, (B) all expenses and fees (including, without
limitation, fees and expenses of the Company’s counsel) in connection with the
preparation, printing, filing, delivery, and shipping of the Registration
Statement (including the financial statements therein and all amendments,
schedules, and exhibits thereto), the Shares, the Time of Sale Disclosure
Package, the Prospectus, and any amendment thereof or supplement thereto, (C)
all filing fees and reasonable fees and disbursements of the Underwriter’s
counsel incurred in connection with the qualification of the Shares for offering
and sale by the Underwriter or by dealers under the securities or blue sky laws
of the states and other jurisdictions that the Underwriter shall designate, (D)
the fees and expenses of any transfer agent or registrar, (E) the filing fees
incident to any required review and approval by FINRA of the terms of the sale
of the Shares, (F) the reasonable fees and disbursements of the Underwriter’s
counsel, (G) listing fees, if any and (H) all other costs and expenses incident
to the performance of its obligations hereunder (including but not limited to
the “road show” expenses incurred by the Company’s management) that are not
otherwise specifically provided for herein. If this Agreement is
terminated by the Underwriter in accordance with the provisions of Section 7 or
Section 10, the Company will reimburse the Underwriter for all out-of-pocket
disbursements (including, but not limited to, reasonable fees and disbursements
of counsel, travel expenses, postage, facsimile and telephone charges) incurred
by the Underwriter in connection with its investigation, preparing to market and
marketing the Shares or in contemplation of performing its obligations
hereunder. Notwithstanding anything contained herein to the contrary, (i) the
Company shall not be responsible for any single expense in excess of $5,000
without its prior written approval and (ii) the maximum amount payable by the
Company for Underwriter’s counsel fees, disbursements and other out-of-pocket
expenses pursuant to this Section 6(a)(vi) shall be $100,000.
(vii) The
Company intends to apply the net proceeds from the sale of the Shares to be sold
by it hereunder for the purposes set forth in the Time of Sale Disclosure
Package and in the Final Prospectus.
(viii) The
Company has not taken and will not take, directly or indirectly, during the
Prospectus Delivery Period, any action designed to or which might reasonably be
expected to cause or result in, or that has constituted, the stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Shares.
(ix) The
Company represents and agrees that 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 under the Securities Act, or that would
otherwise constitute a “free writing prospectus,” as defined in Rule 405 under
the Securities Act.
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(x) The
Company hereby agrees that, without the prior written consent of the
Underwriter, it will not, during the period ending 90 days after the date hereof
(“Lock-Up
Period”), (A) offer, pledge, issue, sell, contract to sell, purchase,
contract to purchase, lend, or otherwise transfer or dispose of, directly or
indirectly, any shares of Common
Stock or any securities convertible into or exercisable or exchangeable for
Common Stock; or (B) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of
the Common Stock, whether any such transaction described in clause (A) or (B)
above is to be settled by delivery of Common Stock or such other securities, in
cash or otherwise; or (C) file any registration statement with the Commission
relating to the offering of any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock. The
restrictions contained in the preceding sentence shall not apply to (1) the
Shares to be sold hereunder, (2) the issuance of Common Stock upon the exercise
of options or warrants disclosed as outstanding in the Registration Statement
(excluding exhibits thereto) or the Prospectus, or (3) the issuance of employee
stock options not exercisable during the Lock-Up Period and the grant of
restricted stock awards or restricted stock units pursuant to equity incentive
plans described in the Registration Statement (excluding exhibits thereto) and
the Prospectus. Notwithstanding the foregoing, if (x) the Company
issues an earnings release or material news, or a material event relating to the
Company occurs, during the last 17 days of the Lock-Up Period, or (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 by this clause shall continue to apply
until the expiration of the 18-day period beginning on the issuance of the
earnings release or the occurrence of the material news or material event,
unless the Underwriter waives such extension in writing.
(xi) The
contribution to the PRC Entities of the proceeds from the sale of the Shares,
subject however to customary and ordinary administrative approvals under the
existing laws and regulations of the PRC, and the compliance by the Company with
all of the provisions of the Underwriting Agreement and the consummation of the
transactions contemplated thereby will not result in any violation of the
provisions of the articles of association, business license or any other
constituent documents of the PRC Subsidiary or any applicable laws and
regulations of the PRC, including without limitation the New M&A Rules, of
any governmental agency having jurisdiction over the PRC Subsidiary or any of
its properties.
7. Conditions of the
Underwriter’s Obligations. The obligations of the Underwriter
hereunder to purchase the Shares are subject to the accuracy, as of the date
hereof and at each Closing Date (as if made at each Closing Date), of and
compliance with all representations, warranties and agreements of the
Company contained
herein, the performance by the Company of its obligations
hereunder and the following additional conditions:
(a) If
filing of the Prospectus, or any amendment or supplement thereto is required
under the Securities Act or the Rules and Regulations, the Company shall have
filed the Prospectus (or such amendment or supplement) with the Commission in
the manner and within the time period so required (without reliance on Rule
424(b)(8) under the Securities Act); the Registration Statement shall remain
effective; no stop order suspending the effectiveness of the Registration
Statement or any part thereof, any Rule 462 Registration Statement, or any
amendment thereof, nor suspending or preventing the use of the Time of Sale
Disclosure Package or the Prospectus shall have been issued; no proceedings for
the issuance of such an order shall have been initiated or threatened; any
request of the Commission or the Underwriter for
additional information (to be included in the Registration Statement, the Time
of Sale Disclosure Package, the Prospectus, or otherwise) shall have been
complied with to the Underwriter’s satisfaction.
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(b) FINRA
shall have raised no objection to the fairness and reasonableness of the
underwriting terms and arrangements.
(c) The
Shares shall be qualified for listing on the NASDAQ Global Market.
(d) The
Underwriter shall not have reasonably determined, and advised the Company, that
the Registration Statement, the Time of Sale Disclosure Package or the
Prospectus, or any amendment thereof or supplement thereto, contains an untrue
statement of fact which, in the Underwriter’s reasonable opinion, is material,
or omits to state a fact which, in the Underwriter’s reasonable opinion, is
material and is required to be stated therein or necessary to make the
statements therein not misleading.
(e) On
or after the date hereof (i) no downgrading shall have occurred in the rating
accorded any of the Company’s securities by any “nationally recognized
statistical organization,” as that term is defined by the Commission for
purposes of Rule 436(g)(2) under the Securities Act, and (ii) no such
organization shall have publicly announced that it has under surveillance or
review, with possible negative implications, its rating of any of the Company’s
securities.
(f) On
the Closing Date, there shall have been furnished to the Underwriter the opinion
and the negative assurances of Pillsbury ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ LLP, the
Company’s counsel, dated the Closing Date and addressed to the Underwriter, in
form and substance reasonably satisfactory to the Underwriter, substantially in
the form set forth on Schedule
I.
(g) On
the Closing Date, there shall have been furnished to the Underwriter the opinion
and the negative assurances of the Company’s China counsel, dated the Closing
Date and addressed to the Company and provided to the Underwriter for review, in
form and substance reasonably satisfactory to the Underwriter, substantially in
the form set forth on Schedule
II.
(h) The
Underwriter shall have received a letter from ▇▇▇▇▇▇ ▇▇▇▇▇, LLP, on the date
hereof and on the Closing Date addressed to the Underwriter, confirming it is an
independent public accountant within the meaning of the Securities Act and is in
compliance with the applicable requirements relating to the qualifications of
accountants under Rule 2-01 of Regulation S-X of the Commission, and confirming,
as of the date of each such letter (or, with respect to matters involving
changes or developments since the respective dates as of which specified
financial information is given in the Time of Sale Disclosure Package, as of a
date not prior to the date hereof or more than five days prior to the date of
such letter), the conclusions and findings of said firm with respect to the
financial information and other matters required by the
Underwriter.
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(i) On
the Closing Date, there shall have been furnished to the Underwriter a
certificate, dated the Closing Date and addressed to the Underwriter, signed by
the chief executive
officer and the chief financial officer of the Company, in their capacity as
officers of the Company, to the effect that:
(i) The
representations and warranties of the Company in this Agreement that are
qualified by materiality or by reference to any Material Adverse Effect are true
and correct in all respects, and all other representations and warranties of the
Company in this Agreement are true and correct in all material respects, as if
made at and as of the Closing Date, and the Company has complied with all the
agreements and satisfied all the conditions on its part to be performed or
satisfied at or prior to the Closing Date;
(ii) No
stop order or other order (A) suspending the effectiveness of the Registration
Statement or any part thereof or any amendment thereof, (B) suspending the
qualification of the Shares for offering or sale, or (C) suspending or
preventing the use of the Time of Sale Disclosure Package or the Prospectus, has
been issued, and no proceeding for that purpose has been instituted or, to their
knowledge, is contemplated by the Commission or any state or regulatory body;
and
(iii) There
has been no occurrence or discovery by the Underwriter of any event resulting or
reasonably likely to result in a Material Adverse Effect during the period from
and after the date of this Agreement and prior to the Closing Date.
(j) On
or before the date hereof, the Underwriter shall have received duly executed
“lock-up” agreements, in substantially the form set forth on Schedule III, with those persons set
forth on Schedule IV.
(k) The
Company shall have furnished to the Underwriter and its counsel such additional
documents, certificates and evidence as the Underwriter or its counsel may have
reasonably requested.
If
any condition specified in this Section 7 shall not have been fulfilled when and
as required to be fulfilled, this Agreement may be terminated by the Underwriter
by notice to the Company at any time at or prior to the Closing Date and such
termination shall be without liability of any party to any other party, except
that Section 6(a)(vi), Section 8 and Section 9 shall survive any such
termination and remain in full force and effect.
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8. Indemnification
and Contribution.
(a) The
Company agrees to indemnify, defend and hold harmless the Underwriter, its
respective affiliates, directors and officers and employees, and each person, if
any, who controls the Underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any
losses, claims, damages or liabilities to which the Underwriter or such person
may become subject, under the Securities Act or otherwise (including in
settlement of any litigation if such settlement is effected with the written
consent of the Company), insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon (i) an untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, including the information deemed to be a part of the
Registration Statement at the time of effectiveness and at any subsequent time
pursuant to Rules 430A and
430B of the Rules and Regulations, or any amendment thereto (including any
documents filed under the Exchange Act and deemed to be incorporated by
reference into the Registration Statement), or arise out of or are based upon
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, (ii)
an untrue statement or alleged untrue statement of a material fact contained in
the Time of Sale Disclosure Package, the Prospectus, or any amendment or
supplement thereto (including any documents filed under the Exchange Act and
deemed to be incorporated by reference into the Registration Statement or
Prospectus), or the Marketing Materials, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or in any other
materials used in connection with the offering of the Shares, (iii) in whole or
in part, any inaccuracy in the representations and warranties of the Company
contained herein, or (iv) in whole or in part, any failure of the Company to
perform its obligations hereunder or under law, and will reimburse the
Underwriter for any legal or other expenses reasonably incurred by it in
connection with evaluating, investigating or defending against such loss, claim,
damage, liability or action; provided, however, that the
Company shall not be liable in any such case to the extent that any such loss,
claim, damage, liability or action arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
the Registration Statement, the Time of Sale Disclosure Package, the Prospectus,
or any amendment or supplement thereto, in reliance upon and in conformity with
written information furnished to the Company by the Underwriter specifically for
use in the preparation thereof, which written information is described in
Section 8(f).
(b) The
Underwriter will indemnify, defend and hold harmless the Company, its
affiliates, directors, officers and employees, 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, from and against any losses, claims, damages
or liabilities to which the Company may become subject, under the Securities Act
or otherwise (including in settlement of any litigation, if such settlement is
effected with the written consent of such Underwriter), insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon an untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement, the Time of Sale Disclosure
Package, the Prospectus, or any amendment or supplement thereto, or arise out of
or are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission was
made in the Registration Statement, the Time of Sale Disclosure Package, the
Prospectus, or any amendment or supplement thereto in reliance upon and in
conformity with written information furnished to the Company by such Underwriter
specifically for use in the preparation thereof, which written information is
described in Section 8(f), and will reimburse the Company for any legal or other
expenses reasonably incurred by the Company in connection with investigating or
defending against any such loss, claim, damage, liability or
action.
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(c) Promptly
after receipt by an indemnified party under subsection (a) or (b) above of
notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party under such
subsection, notify the indemnifying party in writing of the commencement
thereof; but the failure to notify the indemnifying
party shall not relieve the indemnifying party from any liability that it may
have to any indemnified party except to the extent such indemnifying party has
been materially prejudiced by such failure. In case any such action
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 the indemnifying
party’s election so to assume the defense thereof, the indemnifying party shall
not be liable to such indemnified party under such subsection for any legal or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof; provided, however, that if (i) the
indemnified party has reasonably concluded (based on advice of counsel) that
there may be legal defenses available to it or other indemnified parties that
are different from or in addition to those available to the indemnifying party,
(ii) a conflict or potential conflict exists (based on advice of counsel to the
indemnified party) between the indemnified party and the indemnifying party (in
which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party), or (iii) the indemnifying
party has not in fact employed counsel reasonably satisfactory to the
indemnified party to assume the defense of such action within a reasonable time
after receiving notice of the commencement of the action, the indemnified party
shall have the right to employ a single counsel (in addition to any local
counsel) to represent it in any claim in respect of which indemnity may be
sought under subsection (a) or (b) of this Section 8, in which event the
reasonable fees and expenses of such separate counsel shall be borne by the
indemnifying party or parties and reimbursed to the indemnified party as
incurred.
The
indemnifying party under this Section 8 shall not be liable for any settlement
of any proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party against any loss, claim, damage,
liability or expense by reason of such settlement or judgment. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement, compromise or consent to the entry of judgment in
any pending or threatened action, suit or proceeding in respect of which any
indemnified party is a party or could be named and indemnity was or would be
sought hereunder by such indemnified party, unless such settlement, compromise
or consent (x) includes an unconditional release of such indemnified party from
all liability for claims that are the subject matter of such action, suit or
proceeding and (y) does not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of any indemnified
party.
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(d) If
the indemnification provided for in this Section 8 is unavailable or
insufficient to hold harmless an indemnified party under subsection (a) or (b)
above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in subsection (a) or (b) above, (i) in such proportion
as is appropriate to reflect the relative benefits received by the Company on
the one hand and the Underwriter on the other hand from the offering and sale of
the Shares or (ii)
if the allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
Company on the one hand and the Underwriter on the other hand in connection with
the statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the
Company on the one hand and the Underwriter on the other hand shall be deemed to
be in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company bear to the total
underwriting discounts and commissions received by the Underwriter, in each case
as set forth in the table on the cover page of the Final
Prospectus. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Underwriter and the parties’ relevant
intent, knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. The Company and the Underwriter
agree that it would not be just and equitable if contributions pursuant to this
subsection (d) were to be determined by pro rata allocation or by any other
method of allocation that does not take account of the equitable considerations
referred to in the first sentence of this subsection (d). The amount
paid by an indemnified party as a result of the losses, claims, damages or
liabilities referred to in the first sentence of this subsection (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending against any
action or claim that is the subject of this subsection
(d). Notwithstanding the provisions of this subsection (d), the
Underwriter shall not be required to contribute any amount in excess of the
amount of the Underwriter’s Fee actually received by the Underwriter
pursuant to this Agreement. 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.
(e) The
obligations of the Company under this Section 8 shall be in addition to any
liability that the Company may otherwise have and
the benefits of such obligations shall extend, upon the same terms and
conditions, to each person, if any, who controls the Underwriter within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act;
and the obligations of the Underwriter under this Section 8 shall be in addition
to any liability that the Underwriter may otherwise have and the benefits of
such obligations shall extend, upon the same terms and conditions, to the
Company, and its officers, directors and each person who controls the
Company within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act.
(f) For
purposes of this Agreement, the Underwriter confirms, and the Company acknowledges, that there
is no information concerning the Underwriter furnished in writing to the
Company by the
Underwriter specifically for preparation of or inclusion in the Registration
Statement, the Time of Sale Disclosure Package, or the Prospectus, other than
the statements set forth in the last paragraph on the cover page of the
Prospectus and the statements set forth in the “Underwriting” section of the
Prospectus and Time of Sale Disclosure Package, only insofar as such statements
relate to the amount of selling concession and re-allowance or to over-allotment
and related activities that may be undertaken by the Underwriter.
9. Representations
and Agreements to Survive Delivery. All representations,
warranties, and agreements of the Company herein
or in certificates delivered pursuant hereto, including, but not limited to, the
agreements of the Underwriter and the Company
contained in Section 6(a)(vi) and Section 8 hereof, shall remain operative and
in full force and effect regardless of any investigation made by or on behalf of
the Underwriter or any controlling person thereof, or the Company or any of its officers, directors, or
controlling persons, and shall survive delivery of, and payment for, the Shares
to and by the Underwriter hereunder.
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10. Termination of
this Agreement.
(a) The
Underwriter shall have the right to terminate this Agreement by giving notice to
the Company as
hereinafter specified at any time at or prior to the Closing Date, if in the
discretion of the Underwriter (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 Underwriter, 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 is such
as to make it, in the judgment of the Underwriter, inadvisable or impracticable
to market the Shares or enforce contracts for the sale of the Shares, (ii)
trading in the Common Stock shall have been suspended by the Commission or the
NASDAQ Global Market or trading in securities generally on NASDAQ, New York
Stock Exchange or NYSE Amex shall have been suspended, (iii) minimum or maximum
prices for trading shall have been fixed, or maximum ranges for prices for
securities shall have been required, on NASDAQ, New York Stock Exchange or NYSE
Amex, by such exchange or by order of the Commission or any other governmental
authority having jurisdiction, (iv) a banking moratorium shall have been
declared by federal or state or the PRC authorities, (v) there shall have
occurred any attack on, outbreak or escalation of hostilities or act of
terrorism involving the United States or the PRC, any declaration by the United
States or the PRC of a national emergency or war, any substantial change or
development involving a prospective substantial change in United States or the
PRC or other international political,
financial or economic conditions or any other calamity or crisis, (vi) the
Company suffers any loss by strike, fire, flood, earthquake, accident or other
calamity, whether or not covered by insurance, or (vii) in the judgment of the
Underwriter, 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 subsidiaries considered as a whole, whether or
not arising in the ordinary course of business. Any such termination
shall be without liability of any party to any other party except that the
provisions of Section 6(a)(vi), and Section 8 hereof shall at all times be
effective and shall survive such termination.
(b) If
the Underwriter elects to terminate this Agreement as provided in this Section,
the Company shall
be notified promptly by the Underwriter by telephone, confirmed by
letter.
11. Notices. Except
as otherwise provided herein, all communications hereunder shall be in writing
and, if to the Underwriter, shall be mailed, delivered or telecopied to ▇▇▇▇
Capital Partners, LLC, ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, telecopy
number: (▇▇▇) ▇▇▇-▇▇▇▇, Attention: Managing Director; and if to the Company,
shall be mailed, delivered or telecopied to it at ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
▇▇. ▇ of N. ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇,
▇▇▇▇▇▇, telecopy number: (▇▇) ▇▇-▇▇▇▇-▇▇▇▇, Attention: ▇▇. ▇▇▇▇▇▇ ▇▇▇; or
in each case to such other address as the person to be notified may have
requested in writing. Any party to this Agreement may change such
address for notices by sending to the parties to this Agreement written notice
of a new address for such purpose.
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12. Persons Entitled
to Benefit of Agreement. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and assigns and the
controlling persons, officers and directors referred to in Section
8. Nothing in this Agreement is intended or shall be construed to
give to any other person, firm or corporation any legal or equitable remedy or
claim under or in respect of this Agreement or any provision herein
contained. The term “successors and assigns” as herein used shall not
include any purchaser, as such purchaser, of any of the Shares from the
Underwriter.
13. Absence of
Fiduciary Relationship. The Company acknowledges and agrees
that: (a) the Underwriter has been retained solely to act as underwriter in
connection with the sale of the Shares and that no fiduciary, advisory or agency
relationship between the Company and the Underwriter has
been created in respect of any of the transactions contemplated by this
Agreement, irrespective of whether the Underwriter has advised or is advising
the Company on
other matters; (b) the price and other terms of the Shares set forth in this
Agreement were established by the Company following discussions
and arms-length negotiations with the Underwriter and the Company is capable of evaluating
and understanding and understands and accepts the terms, risks and conditions of
the transactions contemplated by this Agreement; (c) it has been advised that
the Underwriter and its respective affiliates are engaged in a broad range of
transactions that may involve interests that differ from those of the Company
and that the Underwriter does not have any obligation to disclose such interest
and transactions to the Company by virtue of any fiduciary, advisory or agency
relationship; (d) it has been advised that the Underwriter is acting, in respect
of the transactions contemplated by this Agreement, solely for the benefit of
the Underwriter, and not on behalf of the Company.
14. Amendments and
Waivers. No supplement, modification or waiver of this
Agreement shall be binding unless executed in writing by the party to be bound
thereby. The failure of a party to exercise any right or remedy shall
not be deemed to or otherwise constitute a waiver of such right or remedy in the
future. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provision hereof (regardless of
whether similar), nor shall any such waiver be deemed or constitute a continuing
waiver unless otherwise expressly provided.
15. Partial
Unenforceability. The invalidity or unenforceability of any
section, paragraph, clause or provision of this Agreement shall not affect the
validity or enforceability of any other section, paragraph, clause or
provision.
16. Governing
Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
17. Submission to
Jurisdiction. The Company irrevocably (a) submits to the
jurisdiction of any court of the State of New York for the purpose of any suit,
action, or other proceeding arising out of this Agreement, or any of the
agreements or transactions contemplated by this Agreement, the Registration
Statement and the Prospectus (each, a “Proceeding”),
(b) agrees that all claims in respect of any Proceeding may be heard and
determined in any such court, (c) waives, to the fullest extent permitted
by law, any immunity from jurisdiction of any such court or from any legal
process therein, (d) agrees not to commence any Proceeding other than in
such courts, and (e) waives, to the fullest extent permitted by law, any
claim that such Proceeding is brought in an inconvenient forum. Prior
to the Closing Date, the Company shall irrevocably designate an agent reasonably
acceptable to the Underwriter upon whom process against the Company may be
served. EACH OF THE COMPANY (ON BEHALF OF ITSELF AND, TO
THE FULLEST EXTENT PERMITTED BY LAW, ON BEHALF OF ITS RESPECTIVE EQUITY HOLDERS
AND CREDITORS) HEREBY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY CLAIM BASED UPON, ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT AND
THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, THE REGISTRATION STATEMENT, AND
THE PROSPECTUS.
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18. Judgment
Currency. If for
the purposes of obtaining judgment in any court it is necessary to convert a sum
due hereunder into any currency other than United States dollars, the parties
hereto agree, to the fullest extent permitted by law, that the rate of exchange
used shall be the rate at which in accordance with normal banking procedures the
relevant party or parties could purchase United States dollars with such other
currency in The City of New York on the business day preceding that on which
final judgment is given. The obligation of each party hereto with respect to any
sum due from it to any other party hereto or any person controlling any such
other party shall, notwithstanding any judgment in a currency other than United
States dollars, not be discharged until the first business day following receipt
by such other party or controlling person of any sum in such other currency, and
only to the extent that such other party or controlling person 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 other party or controlling person hereunder, the
first-mentioned party agrees as a separate obligation and notwithstanding any
such judgment, to indemnify such other party or controlling person against such
loss. If the United States dollars so purchased are greater than the sum
originally due to such other party or controlling person hereunder, such other
party or controlling person agrees to pay to the first-mentioned party an amount
equal to the excess of the United States dollars so purchased over the sum
originally due to such other party or controlling person hereunder.
19. Counterparts.
This
Agreement may be executed and delivered (including by facsimile transmission and
electronic mail attaching a portable document file (.pdf)) in one or more
counterparts and, if executed and delivered in more than one counterpart, the
executed counterparts shall each be deemed to be an original and all such
counterparts shall together constitute one and the same instrument.
[Remainder
of page intentionally left blank]
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Please
sign and return to the Company the enclosed duplicates of this letter whereupon
this letter will become a binding agreement between the Company and the
Underwriter in accordance with its terms.
Very
truly yours,
By:
/s/ ▇▇▇▇▇▇ ▇▇▇
Name:
▇▇▇▇▇▇
▇▇▇
Title:
Chairman and Chief
Executive Officer
Confirmed
as of the date first above-
mentioned
by the Underwriter.
▇▇▇▇
CAPITAL PARTNERS, LLC
By:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name:
▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇
Title:
Head of Equity Capital
Markets
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SCHEDULE
I
Company
Counsel Opinions
March 1,
2010
▇▇▇▇
Capital Partners, LLC
▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies
and Gentlemen:
We have
acted as counsel for China Advanced Construction Materials Group, Inc., a
Delaware corporation (the “Company”,
in connection with your purchase from the Company pursuant to the Underwriting
Agreement dated February 24, 2010 between you and the Company (the “Agreement”
of 2,000,000 shares
(the “Shares” of
the common stock, par value $0.001 per share, of the Company (the “Common
Stock”. This letter is delivered to you at the request of the
Company pursuant to Section 7(f) of the Agreement. Capitalized terms
used and not otherwise defined in this letter have the meanings given to them in
the Agreement.
We have
reviewed (a) the Agreement, (b) the Registration Statement on Form S-3 (File No.
333-164048) (the “Registration
Statement” filed by the Company to register the Shares with the
Securities and Exchange Commission (the “Commission”
under the Securities Act of 1933 (the “Securities
Act”, including the Prospectus dated January 11, 2010 contained therein
(the “Base
Prospectus”, which incorporates or is deemed to incorporate by reference
the Incorporated Documents referred to below, (c) the Base Prospectus, as
supplemented by the Prospectus Supplement dated February 23, 2010 relating to
the offer and sale of the Shares (as so supplemented, the “Final
Prospectus”) filed by the Company with the Commission pursuant to Rule
424(b) under the Securities Act, which also incorporates or is deemed to
incorporate by reference the Incorporated Documents, and (e) the Company’s
Annual Report on Form 10-K for the fiscal year ended June 30, 2009 (the “Annual
Report”), the Company’s Quarterly Reports on Form 10-Q for the
quarters ended September
30, 2009 and December 31, 2009
(the “Quarterly
Reports”),
and the Company’s Current Reports on Form 8-K filed with the Commission on
August 3, 2009, August 17, 2009, October 9, 2009, January 7, 2010, January 22,
2010, January 29, 2010,
and February 8, 2010
(collectively, the “Current
Reports”), and the description of the Common Stock contained in the
Company’s Registration Statement on Form 8-A filed on October 30, 2009
(collectively, together with the Annual Report, the Quarterly Reports, and the Current
Reports, the “Incorporated
Documents”) in each case filed by the Company with the Commission under
the Securities Exchange Act of 1934 (the “Exchange
Act”). We also have reviewed such other agreements, documents, records,
certificates and materials, and have satisfied ourselves as to such other
matters, as we have considered relevant or necessary for purposes of this
letter.
- 30
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In such
review, we have assumed the accuracy and completeness of all agreements,
documents, records, certificates and other materials submitted to us, the
conformity with the originals of all such materials submitted to us as copies
(whether or not certified and including facsimiles), the authenticity
of the originals of such materials and all materials submitted to us as
originals, the genuineness of all signatures and the legal capacity of all
natural persons. In delivering the opinions contained in this letter,
we have relied, without independent verification, as to factual matters, on
certificates and other written or oral statements of governmental and
other public officials and of officers and other representatives of the Company
and its subsidiaries, on representations made by the Company in the Agreement
and on statements in the Registration Statement, the Final Prospectus, and the Incorporated
Documents. The opinions set forth in paragraph 1 below as to the
Company’s valid existence and good standing are based solely on certificates and
statements of governmental and other public officials and of officers and other
representatives of the Company.
On the
basis of the assumptions and subject to the qualifications and limitations set
forth herein, we are of the opinion that:
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1.
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The
Company is validly existing as a corporation and
in good standing under the General Corporation Law of the State of
Delaware and has the corporate power to own and lease the properties it
purports to own and lease, to conduct the business in which it is
engaged as
described in the Final Prospectus and the Incorporated Documents and to
execute and deliver, and to perform its obligations under, the Agreement,
including to
issue and deliver the Shares
thereunder.
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2.
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The
Agreement has been duly authorized, executed and delivered by the
Company.
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3.
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The
Shares have been duly authorized and, upon issuance and delivery thereof
and payment therefor pursuant to the Agreement, will be validly issued,
fully paid and nonassessable.
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4.
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The
issuance of the Shares will not be subject to any preemptive or similar
rights of any securityholder of the Company under (i) the General
Corporation Law of the State of Delaware, (ii) the Certificate of
Incorporation or the By-laws of the Company or (iii) to our knowledge,
granted by the Company in any currently effective written agreement to
which the Company is a party.
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5.
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The
statements set forth under the caption “Description of
Capital Stock” in the Final Prospectus, to the extent that
such statements purport to constitute summaries of the terms of the Common
Stock, are accurate in all material
respects.
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6.
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The
Registration Statement has been declared effective under the Securities
Act and, to our knowledge, no stop order with respect thereto has been
issued, and no proceedings therefor are pending or threatened, under
Section 8 of the Securities Act. The Final Prospectus has been
filed by the Company with the Commission pursuant to and in accordance
with Rule 424(b) under the Securities Act within the time period required
by Rule 424(b).
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- 31
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7.
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Neither
the execution and delivery by the Company, nor the performance by the
Company of its obligations under, the Agreement, including the issuance
and delivery of the Shares, will (a) violate or result in a breach of or
constitute a default under [the
Certificate of Incorporation or the By-laws of the Company,] or any of
the other agreements
and instruments filed under Exhibit 10 to the Annual Report, (b) violate
the federal law of the United States of America, the General Corporation
Law of the State of Delaware, or the law of the State of New York that in
our experience is normally applicable to transactions of the type
contemplated by the Agreement, but without our having made any special
investigation with respect to any other law, and other than any federal or
state securities or “blue sky” laws or the antifraud laws of any
jurisdiction, as to which we express no opinion (the “Applicable
Law”) or (c) to our knowledge, violate any authorization, consent,
approval, license of, or any exemption from, or any registration or filing
with, or any report or notice to, any executive, legislative, judicial,
administrative or regulatory body (each, a “Governmental
Approval”), or any order, decision, judgment, injunction or decree
of, any such body, in each case that may be applicable under the
Applicable Law to the Company or any person or entity that directly, or
indirectly through one or more intermediaries, is controlled by the
Company (a “Subsidiary”). We
also express no opinion as to the interpretation of any agreements or
instruments specified in clause (a) above that would arise from the
application or effect of the laws of any jurisdiction other than the
Applicable Law.
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8.
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No
Governmental Approval under the Applicable Law is required to be obtained
or made by the Company for the execution and delivery by the Company, or
the performance by the Company of its obligations under, the Agreement,
including the issuance and delivery of the Shares by the Company
thereunder, other that such as have been obtained under the Securities
Act.
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9.
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The
Company is not, and immediately after giving effect to the offering and
sale of the Shares and the receipt by the Company of payment for the
Shares will not be, required to register as an “investment company” within
the meaning of the Investment Company Act of
1940.
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10.
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Except
as described in the Registration Statement, the Final Prospectus or the
Incorporated Documents, to our knowledge, there are no contracts,
agreements or understandings between the Company and any person granting
such person the right to require the Company to file a registration
statement under the Securities Act with respect to any securities of the
Company owned or to be owned by such person or to require the Company to
include such securities in any securities registered pursuant to the
Registration Statement or pursuant to any other registration statement
filed by the Company under the Securities
Act.
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11.
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The
statements contained in the Registration Statement under Item 15 thereof,
to theextent that such statements purport to constitute summaries of law
or the terms of theagreements or documents referred to therein, are
accurate in all material respects.
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With
respect to paragraphs 1, 2, and 3 above, we have assumed that (a) the
Company is duly incorporated under the General Corporation Law of the State of
Delaware and (b) the issuance and delivery of the Shares by
the Company do not and will not require (i) any Governmental Approval (other than any such
Governmental Approval that is the subject of paragraph 8 above) or (ii) violate
or conflict with, result in a breach of, or constitute a default under, (A) any agreement or
instrument to which the Company or any Subsidiary is a party or by which the
Company
or any Subsidiary or any of its properties may be bound (other than any such
agreement or instrument that is the subject of paragraph 7 above), (B) any
Governmental Approval that may be applicable to the Company or any Subsidiary or
any of its properties (other than any such
Governmental Approval that is the subject of paragraph 7 above), (C) any order,
decision, judgment, injunction or decree of any executive, legislative,
judicial, administrative or regulatory body that may be applicable to the
Company or any Subsidiary or any of its properties (other than any such
order, decision, judgment, injunction or decree that is the subject of paragraph
7 above).
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Whenever
we qualify a statement in this letter with the words “to our knowledge,” it
indicates that in the course of our representation of the Company in connection
with the transaction contemplated by the Agreement, no information that would
give us current actual knowledge of the inaccuracy of such statement has come to
the attention of the lawyers in this firm who have rendered legal services in
connection with the transaction contemplated by the Agreement. We have not made
any independent investigation to determine the accuracy of such statement,
except as expressly described herein.
In the
course of the preparation by the Company of the Registration Statement and the
Final Prospectus, we had conferences with certain officers and other
representatives of the Company, representatives of the Company’s Peoples’
Republic of China (“PRC”) and
British Virgin Islands (“BVI”)
counsel, with ▇▇▇▇▇▇ ▇▇▇▇▇, LLP, the Company’s independent registered public
accounting firm whose predecessor, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇, LLP,
audited certain of the financial statements incorporated by reference in the
Registration Statement and the Final Prospectus and with your representatives
and counsel, during which the contents of the Registration Statement and the
Final Prospectus were discussed. We reviewed drafts of the
Incorporated Documents prior to the time they were filed by the Company with the
Commission pursuant to the Exchange Act. Based on our review of the
Registration Statement, the Final Prospectus and the Incorporated Documents and
our discussions in the conferences as described above:
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(a)
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each
of the Incorporated Documents, at the time such Incorporated Document was
filed with the Commission pursuant to the Exchange Act, appeared on its
face to be appropriately responsive in all material respects, to the
requirements of the Exchange Act and the rules and regulations of the
Commission thereunder;
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(b)
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each
of the Registration Statement at the most recent time it was filed by the
Company with the Commission under the Securities Act, and the Final
Prospectus, at the time each was filed by the Company with the Commission
pursuant to Rule 424(b) under the Securities Act, appeared on its face to
be appropriately responsive, in all material respects, to the requirements
of the Securities Act and the rules and regulations of the Commission
thereunder; and
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(c)
|
although
we have not independently verified the accuracy, completeness or fairness
of the statements contained or incorporated by reference in the
Registration Statement or the Final Prospectus and take no responsibility
therefor (except to the extent that such statements relate to us or as set
forth in paragraph 5 above), no facts
have come to our attention that cause us to believe
that:
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- 33
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(i)
|
the
Registration Statement (including the information deemed to be a part of
the Registration Statement pursuant to Rule 430B(f) under the Securities
Act), at the most recent effective date of the part of the Registration
Statement relating to the Shares determined pursuant to Rule 430B(f)(2)
under the Securities Act and when read together with such of the
Incorporated Documents that were then incorporated by reference therein,
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading;
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(ii)
|
the
Time of Sale Disclosure Package (as defined below), at the Time of Sale
(as defined below) and when read together with such of the Incorporated
Documents that were incorporated by reference therein at the Time of Sale,
contained any untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading;
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(iii)
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the
Final Prospectus, at its issue date or the date hereof and when read
together with the Incorporated Documents, contained or contains any untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
or
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(iv)
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(A)
any legal or governmental actions, suits or proceedings are pending that
are required to be described in the Registration Statement, the Time of
Sale Disclosure Package and the Final Prospectus or the Incorporated
Documents and are not described therein or (B) except as described in the
Registration Statement, the Time of Sale Disclosure Package and the Final
Prospectus or the Incorporated Documents, no such proceedings have been
threatened in writing against the Company or any of its subsidiaries or
with respect to its or their
properties.
|
Notwithstanding
the foregoing, we express no advice or belief in clause (a), (b) or (c) above as
to the financial statements, financial schedules and other financial,
statistical and accounting information contained or incorporated by reference in
or omitted from the Registration Statement or the Prospectus or as to matters
covered by the law of the PRC or the BVI. In addition, in passing on
each of the Incorporated Documents in clause (a) above and the Registration
Statement and the Final Prospectus in clause (b) above, we necessarily assume
the correctness and completeness of the statements made by the Company therein
and in connection with the preparation by the Company thereof. For
purposes of this paragraph, (A) the term “Time of Sale Disclosure Package” means
the Final Prospectus and (B) the term “Time of Sale” means [8:00 p.m.], New York
City time, on the date of the Agreement.
- 34
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The
opinions set forth in this letter are limited to the federal law of the United
States of America, the General Corporation Law of the State of Delaware, and the
law of the State of New York, in each case as in effect on the date
hereof.
This
letter is delivered only to you solely for your benefit in connection with the
transaction contemplated by the Agreement and may not be used or relied on by
you for any other purpose, or furnished or quoted to or used or relied on by any
other person or entity (including by any person or entity that acquires any of
the Shares from you) for any purpose, without our prior written
consent.
Very
truly yours,
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SCHEDULE
II
China
Opinions
Ladies
and Gentlemen,
We are
qualified lawyers of the People’s Republic of China (the "PRC")
and are qualified to issue professional legal opinions on the laws and
regulations of the PRC.
We are
acting as PRC counsel to China Advanced Construction Materials Group, Inc. (the
"Company"), a company
incorporated under the laws of the State of Delaware.
This
opinion is issued and delivered pursuant to Section 7(g) of the Underwriting
Agreement dated February 24, 2010 between the Company and ▇▇▇▇ Capital Partners,
LLC (the “Underwriting
Agreement”).
Capitalized
terms used herein but not otherwise defined herein shall have the same meanings
ascribed to them in the Underwriting Agreement. The term “Knowledge” as used in this
opinion shall mean the actual knowledge of the attorneys who have been directly
involved in representing the Company after due and reasonable
inquiry.
This
opinion is rendered on the basis of the PRC laws effective as at the date
hereof. We do not purport to be experts on, nor do we purport to be
generally familiar with, or qualified to express legal opinions based on, any
laws other than the PRC laws. Accordingly, we express no legal
opinions herein based upon any laws other than the PRC laws.
In so
acting, we have examined the originals or copies certified or otherwise
identified to our satisfaction as true copies of originals, of documents
provided to us by the Company and such other documents, corporate records,
certificates issued by governmental authorities in the PRC and officers of the
Company and other instruments as we have deemed necessary for the purposes of
rendering this opinion.
For the
purpose of providing this opinion, we have assumed:
(a) the
genuineness of all signatures, the authenticity of all documents submitted to us
as originals and the conformity with original documents of those documents
submitted to us as copies;
(b) the
accuracy and completeness of all factual statements in the documents provided to
us. Where important facts were not independently established to us,
we have relied upon certificates issued by governmental agencies and
representatives of the Company with proper authority, and also upon
representations, oral or written, made by the Company and the PRC
Entities.
- 36
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Although
we do not assume any responsibility for the accuracy, completeness or fairness
of the statements contained in the Registration Statement, the Time of Sale
Disclosure Package or the Prospectus,
we have no reason to believe, that (a) when it became of effective, any part of
the Registration Statement (other than the financial statements and related
schedules therein, as to which we express no opinion) describing or summarizing
the PRC laws and regulations or documents, agreements or proceedings governed by
the PRC laws and regulations s contained an untrue statement of a material fact
or omitted to state a material fact necessary to make the statements therein not
misleading; (b) as of the date of the Underwriting Agreement and the date
hereof, any part of the Time of Sale Disclosure Package (other than the
financial statements and related schedules therein, as to which we express no
opinion) describing or summarizing PRC laws and regulations or documents,
agreements or proceedings governed by the PRC laws and regulations contained any
untrue statement of a material fact or omitted to state any material fact
necessary in order to make the statements therein not misleading; or (c) at the
time the Prospectus was filed with the Commission or at the date hereof, any
part of the Prospectus (other than the financial statements and related
schedules therein, as to which we express no opinion) describing or summarizing
PRC laws and regulations or documents, agreements or proceedings governed by the
PRC laws and regulations contained or contains an untrue statement of a material
fact or omitted or omits to state a material fact necessary to make the
statements therein not misleading.
Based on
the foregoing examinations and assumptions and our review of the relevant
documents, we are of the opinion that:
1. China-ACMH
has been duly organized and is validly existing as a wholly foreign owned
enterprise with limited liability under the PRC laws and regulations;
China-ACMH’s business license is in full force and effect; China-ACMH has been
duly qualified as a foreign invested enterprise; 100% of the equity interests of
China-ACMH is owned by BVI-ACM, and to our Knowledge, such equity interests are
free and clear of all liens, encumbrances, equities or claims; and the articles
of association, the business license and other constituent documents of
China-ACMH comply with the requirements of applicable PRC laws and regulations
and are in full force and effect.
2. Xin
Ao has been duly organized and is validly existing as a limited liability
company under the PRC laws and regulations; Xin Ao’s business license is in full
force and effect; 60% of the equity interests of Xin Ao is owned by Han Xianfu
and 40% of the equity interests of Xin Ao is owned by Weili He, and to our
Knowledge, except for the Corporate Structure Contracts, such equity interests
are free and clear of all liens, encumbrances, equities or claims; and the
articles of association, the business license and other constituent documents of
Xin Ao comply with the requirements of applicable PRC laws and regulations and
are in full force and effect.
3. Except
as set forth in the Registration Statement, the Time of Sale Disclosure Package
and the Prospectus, each of the PRC Entities has full corporate right, power and
authority and has all necessary governmental authorizations of and from, and has
made all necessary declarations and filings with, all governmental agencies to
own, lease, license and use its properties, assets and conduct its business, and
such governmental authorizations contain no materially burdensome restrictions
or conditions; to our Knowledge, none of the PRC Entities has any reason to
believe that any regulatory body is considering modifying, suspending, revoking
or not renewing any such governmental authorizations; and each of the PRC
Entities is in compliance in all material respects with the provisions of all
such governmental authorizations and
conducts its business in all material respects in accordance with any PRC laws
and regulations to which it is subject or by which it is bound.
- 37
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4. Except
as set forth in the Registration Statement, the Time of Sale Disclosure Package
and the Prospectus, none of the PRC Entities has taken any action nor have any
steps been taken or legal or administrative proceedings been commenced or
threatened for the winding up, dissolution or liquidation of any of the PRC
Entities or for the suspension, withdrawal, revocation or cancellation of any of
their respective business license.
5. The
ownership structure of the PRC Entities does not violate any prohibitory
provisions of the applicable PRC laws and regulations and the transactions
conducted in the PRC involving the PRC Entities relating to the establishment of
such ownership structure, in each case, did not and do not violate any explicit
provisions of the applicable PRC laws and regulations.
6. Except
as set forth in the Registration Statement, the Time of Sale Disclosure Package
and the Prospectus, each of the PRC Entities owns or otherwise has the legal
right to use, or can acquire on reasonable terms, the intellectual property
(“Intellectual
Property”) as currently used or as currently contemplated to be used by
the PRC Entities.
7. Except
as set forth in the Registration Statement, the Time of Sale Disclosure Package
and the Prospectus, to our Knowledge, none of the PRC Entities is infringing,
misappropriating or violating any intellectual property right of any third party
in the PRC; no Intellectual Property is subject to any outstanding decree,
order, injunction, judgment or ruling restricting the use of such Intellectual
Property in the PRC that would impair the validity or enforceability of such
Intellectual Property; and none of the Company or any of the PRC Entities has
received any notice of any claim of infringement or conflict with any such
rights of others.
8. Except
as set forth in the Registration Statement, the Time of Sale Disclosure Package
and the Prospectus, there are no legal, arbitration or governmental proceedings
in progress or pending or, to our Knowledge, threatened, in the PRC to which the
Company, or any PRC Entity is a party or of which any property of any PRC Entity
is subject.
9. On
August 8, 2006, six PRC regulatory agencies, namely, the PRC Ministry of
Commerce, the State Assets Supervision and Administration Commission, the State
Administration for Taxation, the State Administration for Industry and Commerce,
the China Securities Regulatory Commission (“CSRC”),
and the State Administration of Foreign Exchange, jointly adopted the
Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign
Investors (the “New
M&A Rule”), which became effective on September 8,
2006. The New M&A Rule purports, among other things to require
offshore special purpose vehicles, or SPVs, formed for overseas listing purposes
through acquisitions of PRC domestic companies and controlled directly or
indirectly by PRC companies or individuals, to obtain the approval of the CSRC
prior to publicly listing their securities on an overseas stock exchange. On
September 21, 2006, pursuant to the New M&A Rule and other PRC laws and
regulations, the CSRC, in its official website, promulgated relevant guidance
with respect to the issues of listing and trading of domestic enterprises’
securities on overseas stock exchanges, including a list of application
materials with respect to the listing on overseas stock exchanges by SPVs. Based
on our understanding of current PRC laws and regulations, we believe that CSRC
approval is not required
in respect of this Offering.
- 38
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10. Except
as set forth in the Registration Statement, the Time of Sale Disclosure Package
and the Prospectus, the current beneficial owners of the Company who are PRC
residents, have registered with the applicable local office of the SAFE in
accordance with the SAFE’s Notice on Relevant Issues Concerning Foreign Exchange
Administration for PRC Residents to Engage in Financing and Inbound Investment
via Overseas Special Purpose Vehicles, issued on October 21, 2005.
11. As
a matter of PRC laws and regulations, none of the PRC Entities or their
properties, assets or revenues has any right of immunity, on any grounds, from
any legal action, suit or proceeding, from the giving of any relief in any such
legal action, suit or proceeding, from setoff or counterclaim, from the
jurisdiction of any court, from service of process, attachment upon or prior to
judgment, or attachment in aid of execution of judgment, or from execution of a
judgment, or other legal process or proceeding for the giving of any relief with
respect to their respective obligations, liabilities or any other matter under
or arising out of or in connection with the transactions contemplated by the
Underwriting Agreement.
12. The
sale of the Shares and the compliance by the Company with all of the provisions
of the Underwriting Agreement and the consummation of the transactions
contemplated thereby do not result in any violation of the provisions of the
articles of association, business license or any other constituent documents of
any of the PRC Entities or any applicable statute or any order, rule or
regulation, including without limitation the New M&A Rule, of any
governmental agency having jurisdiction over any of the PRC Entities or any of
its properties. No governmental authorization of any governmental
agency in the PRC is required for the consummation of the transactions
contemplated by the Underwriting Agreement, other than those already
obtained. It is not necessary that this Agreement, the Registration
Statement, the Time of Sale Disclosure Package, the Prospectus or any other
document be filed or recorded with any governmental agency, court or other
authority in the PRC.
13. All
local and national PRC governmental tax holidays, exemptions, waivers, financial
subsidies, and other local and national PRC tax relief, concessions and
preferential treatment enjoyed by any PRC Entity as described in the
Registration Statement, the Time of Disclosure Package and the Prospectus are
valid, binding and enforceable and do not violate any laws, regulations, rules,
orders, decrees, guidelines, judicial interpretations, notices or other
legislation of the PRC.
14. The
entry into, and performance or enforcement of the Underwriting Agreement in
accordance with its terms will not subject the Underwriter to any requirement to
be licensed or otherwise qualified to do business in the PRC, nor will the
Underwriter be deemed to be resident, domiciled, carrying on business or subject
to taxation through an establishment or place in the PRC or in breach of any
laws or regulations in the PRC by reason of entry into, performance or
enforcement of the Underwriting Agreement or any transaction contemplated by the
Registration Statement, the Time of Sale Disclosure Package or the
Prospectus.
15. No
stamp or other issuance or transfer taxes or duties and no capital gains,
income, withholding or other taxes are payable by the Underwriter to the
government of the PRC or to any
political subdivision or taxing authority thereof or therein in connection with
the execution and delivery of the Underwriting Agreement, the sale and delivery
by the Company of the Shares to or for the account of the Underwriter, the sale
and delivery outside the PRC by the Underwriter of the Shares to the purchasers
thereof in the manner contemplated in the Underwriting Agreement, or the
consummation of any other transaction contemplated in the Underwriting
Agreement.
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This
opinion is intended to be used in the context which is specifically referred to
herein and each paragraph should be looked at as a whole and no part should be
extracted and referred to independently.
Yours
faithfully,
Broad
& Bright
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SCHEDULE
III
Lock-Up
Agreement
February
23, 2010
▇▇▇▇
Capital Partners, LLC
▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies
and Gentlemen:
The
undersigned understands that ▇▇▇▇ Capital Partners, LLC (the “Underwriter”)
proposes to enter into an Underwriting Agreement (the “Underwriting
Agreement”) with China Advanced Construction Materials Group, Inc., a
Delaware corporation (the “Company”) providing
for the public offering (the “Public Offering”) by
the Underwriter of shares of the Company’s common stock, $0.001 par value per
share (the “Common
Stock”).
To induce
the Underwriter to continue its efforts in connection with the Public Offering,
the undersigned hereby agrees that, without the prior written consent of the
Underwriter, it will not, during the period commencing on the date hereof and
ending 90 days after the date of the final prospectus supplement relating to the
Public Offering (the “Prospectus”) (the
“Lock-Up
Period”), (1) offer, pledge, 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, lend, or otherwise transfer or dispose of,
directly or indirectly, any shares of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock, or (2) enter into any swap
or other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of the 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. The
foregoing sentence shall not apply to (a) transactions relating to shares of
Common Stock or other securities acquired in open market transactions after the
completion of the Public Offering, provided that no filing
under Section 16(a) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)
shall be required or shall be voluntarily made in connection with subsequent
sales of Common Stock or other securities acquired in such open market
transactions, or (b) transfers of shares of Common Stock or any security
convertible into Common Stock as a bona fide gift, by will or intestacy or to a
family member or trust for the benefit of a family member; provided that in the case of
any transfer or distribution pursuant to clause (b), (i) each donee or
distributee shall sign and deliver a lock-up letter substantially in the form of
this letter and (ii) no filing under Section 16(a) of the Exchange Act,
reporting a reduction in beneficial ownership of shares of Common Stock, shall
be required or shall be voluntarily made during the Lock-up
Period. In addition, the undersigned agrees that, without the prior
written consent of the Underwriter, it will not, during the period commencing on
the date hereof and 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. The undersigned also agrees and consents to the
entry of stop transfer instructions with the Company’s transfer agent and
registrar against the transfer of the undersigned’s shares of Common Stock
except in compliance with the
foregoing restrictions.
- 41
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If (i)
the Company issues an earnings release or material news, or a material event
relating to the Company occurs, during the last 17 days of the Lock-Up Period,
or (ii) prior to the expiration of the Lock-Up Period, the Company announces
that it will release earnings results during the 16-day period beginning on the
last day of the Lock-Up Period, the restrictions imposed by this 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, unless the Underwriter waives such extension.
No
provision in this agreement shall be deemed to restrict or prohibit the exercise
or exchange by the undersigned of any option or warrant to acquire shares of
Common Stock, or securities exchangeable or exercisable for or convertible into
Common Stock, provided
that the undersigned does not transfer the Common Stock acquired on such
exercise or exchange during the Lock-Up Period, unless otherwise permitted
pursuant to the terms of this agreement. In addition, no provision
herein shall be deemed to restrict or prohibit the entry into or modification of
a so-called “10b5-1” plan at any time (other than the entry into or modification
of such a plan in such a manner as to cause the sale of any shares of Common
Stock or any securities convertible into or exercisable or exchangeable for
Common Stock within the Lock-Up Period).
The
undersigned understands that the Company and the Underwriter are relying upon
this agreement in proceeding toward consummation of the Public
Offering. The undersigned further understands that this agreement is
irrevocable and shall be binding upon the undersigned’s heirs, legal
representatives, successors and assigns.
The
undersigned understands that, if the Underwriting Agreement is not executed by
March 1, 2010, or if the Underwriting Agreement (other than the provisions
thereof which survive termination) shall terminate or be terminated prior to
payment for and delivery of the Common Stock to be sold thereunder, the
undersigned shall be released from all obligations under this letter
agreement.
Whether
or not the Public Offering actually occurs depends on a number of factors,
including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Company and the Underwriter.
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(Address)
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SCHEDULE
IV
Parties
to Lock-Up Agreement
All
directors and officers of the Company
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