6,000,000 Shares WONDER AUTO TECHNOLOGY, INC. Common Stock PURCHASE AGREEMENT
EXECUTION
VERSION
6,000,000
Shares
Common
Stock
November
10, 2009
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▇▇▇▇▇▇▇ & CO.
U.S.
Bancorp Center
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& COMPANY, INC.
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& CO. INC.
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As
Representatives of the several
Underwriters
named in Schedule I hereto
Ladies
and Gentlemen:
Wonder Auto Technology, Inc., a Nevada
corporation (the “Company”),
proposes to sell to the several Underwriters named in Schedule I hereto
(the “Underwriters”)
an aggregate of 6,000,000 shares (the “Firm
Shares”) of Common Stock, $0.0001 par value per share (the “Common
Stock”), of the Company pursuant to the terms and conditions of this
agreement (this “Agreement”). The
Company has also granted to the several Underwriters an option to purchase up to
900,000 additional shares of Common Stock on the terms and for the purposes set
forth in Section 3 hereof (the “Option
Shares”). The Firm Shares and any Option Shares purchased
pursuant to this Agreement are herein collectively called the “Securities.”
The Company hereby confirms its
agreement with respect to the sale of the Securities to the several
Underwriters, for whom you are acting as representatives (the “Representatives”).
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. 333-161358) under the Securities
Act of 1933, as amended (the “Securities Act”
or “Act”) and
the rules and regulations (the “Rules and
Regulations”) of the Commission thereunder, and such amendments to such
registration statement as may have been required to the date of this
Agreement. Such registration statement has been declared effective by
the Commission. Such registration statement, at any given time,
including amendments thereto to 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 (the “Rule 430B
Information”) or otherwise pursuant to the Rules and Regulations at such
time, is herein called the “Registration
Statement.” The Registration Statement at the time it
originally became effective is herein called the “Original
Registration Statement.” Any registration statement filed by
the Company pursuant to Rule 462(b) under the Securities Act is called the
“Rule
462(b) Registration Statement” and, from and after the date and time of
filing of the Rule 462(b) Registration Statement, the term “Registration
Statement” shall include the Rule 462(b) Registration Statement.
The prospectus in the form in which it
appeared in the Original Registration Statement is herein called the “Base
Prospectus.” Each preliminary prospectus supplement to the
Base Prospectus (including the Base Prospectus as so supplemented), that
describes the Securities and the offering thereof, that omitted the Rule 430B
Information and that was used prior to the filing of the final prospectus
supplement referred to in the following sentence is herein called a “Preliminary
Prospectus.” Promptly after execution and delivery of this Agreement, the
Company will prepare and file with the Commission a final prospectus supplement
to the Base Prospectus relating to the Securities and the offering thereof in
accordance with the provisions Rule 430B and Rule 424(b) of the Rules and
Regulations. Such final supplemental form of prospectus (including
the Base Prospectus as so supplemented), in the form filed with the Commission
pursuant to Rule 424(b) is herein called the “Prospectus.” Any
reference herein to the Base Prospectus, any Preliminary Prospectus or the
Prospectus shall be deemed to refer 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(b) Registration
Statement, the Base Prospectus, any Preliminary Prospectus, the 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 Electronic Data Gathering,
Analysis and Retrieval System (“▇▇▇▇▇”). 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 Base Prospectus, any Preliminary Prospectus or the
Prospectus (or other references of like import) shall be deemed to mean and
include all such financial statements 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 Base Prospectus,
any Preliminary Prospectus or the Prospectus, as the case may be; and all
references in this Agreement to amendments or supplements to the Registration
Statement, the Base Prospectus, any Preliminary 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”) and which is deemed to be incorporated therein by reference therein
or otherwise deemed by the Rules and Regulations to be a part
thereof.
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2. Representations
and Warranties of the Company.
(a) The
Company represents and warrants to, and agrees with, the several Underwriters as
follows:
(i) No
order preventing or suspending the use of any Preliminary Prospectus has been
issued by the Commission and each Preliminary Prospectus, at the time of filing
or the time of first use within the meaning of the Rules and Regulations,
complied in all material respects with the requirements of the Securities Act
and the Rules and Regulations and did not contain an 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; except that the foregoing shall not
apply to statements in or omissions from any Preliminary Prospectus in reliance
upon, and in conformity with, written information furnished to the Company by
you, or by any Underwriter through you, specifically for use in the preparation
thereof; it being understood and agreed that the only such information furnished
by any Underwriter consists of the information described as such in Section
6(f).
(ii) The
Registration Statement was initially declared effective by the Commission under
the Securities Act on August 21, 2009. The Company has complied to
the Commission’s satisfaction with all requests of the Commission for additional
or supplemental information. No stop order suspending the
effectiveness of the Registration Statement is in effect and no proceedings for
such purpose have been instituted or are pending or, to the best knowledge of
the Company, are contemplated or threatened by the Commission.
(iii) Each
part of the Registration Statement and any post-effective amendment thereto, at
the time such part became effective (including each deemed effective date with
respect to the Underwriters pursuant to Rule 430B or otherwise under the
Securities Act), at all other subsequent times until the expiration of the
Prospectus Delivery Period (as defined below), and at the First Closing Date and
Second Closing Date (as hereinafter defined), complied and will comply in all
material respects with the applicable requirements and provisions of the
Securities Act, the Rules and Regulations and the Exchange Act 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 Prospectus (or any amendment or
supplement to the Prospectus), at the time of filing, as of its date, or at the
time of first use within the meaning of the Rules and Regulations, at all
subsequent times until the expiration of the Prospectus Delivery Period, and at
the First Closing Date and Second Closing Date, complied and will comply in all
material respects with the applicable requirements and provisions of the
Securities Act, the Rules and Regulations and the Exchange Act and did not and
will not contain any untrue statement of a material fact or omit 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. The
representations and warranties set forth in the two immediately preceding
sentences do not apply to statements in or omissions from the Registration
Statement, any Rule 462(b) Registration Statement, or any post-effective
amendment thereto, or the Prospectus, or any amendments or supplements thereto,
made in reliance upon and in conformity with written information relating to an
Underwriter furnished to the Company by you or by any Underwriter through you,
specifically for use in the preparation thereof; it being understood and agreed
that the only such information furnished by any Underwriter consists of the
information described as such in Section 6(f).
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(iv) Neither
(A) the Issuer General Free Writing Prospectus(es) issued at or prior to the
Time of Sale and set forth on Schedule II, the information set forth on Schedule
III, and the Statutory Prospectus, all considered together (collectively, the
“Time of
Sale Disclosure Package”), nor (B) any individual Issuer Limited-Use Free
Writing Prospectus, when considered together with the Time of Sale Disclosure
Package, includes or included as of the Time of Sale any untrue statement of a
material fact or omits or omitted as of the Time of Sale to state any material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The
preceding sentence does not apply to statements in or omissions from any
Statutory Prospectus or any Issuer Free Writing Prospectus based upon and in
conformity with written information furnished to the Company by you or by any
Underwriter through you specifically for use therein; it being understood and
agreed that the only such information furnished by any Underwriter consists of
the information described as such in Section 6(f). As used in this
paragraph and elsewhere in this Agreement:
(1) “Time of
Sale” means 8:00 pm (Eastern time) on the date of this
Agreement
(2) “Statutory
Prospectus” as of any time means the Preliminary Prospectus that is
included in the Registration Statement immediately prior to that
time. For purposes of this definition, 430B Information contained in
a form of prospectus that is deemed retroactively to be a part of the
Registration Statement shall be considered to be included in the Statutory
Prospectus as of the actual time that form of prospectus is filed with the
Commission pursuant to Rule 424(b) under the Securities Act.
(3) “Issuer Free
Writing Prospectus” means any “issuer free writing prospectus,” as
defined in Rule 433 under the Securities Act, relating to the Securities that
(A) is required to be filed with the Commission by the Company, or (B) is exempt
from filing pursuant to Rule 433(d)(5)(i) under the Securities Act because it
contains a description of the Securities or of the offering that does not
reflect the final terms, or is a “bona fide electronic roadshow,” as defined in
Rule 433 of the Rules and Regulations, in each case in the form filed or
required to be filed with the Commission or, if not required to be filed, in the
form retained in the Company’s records pursuant to Rule 433(g) under the
Securities Act.
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(4) “Issuer General
Free Writing Prospectus” means any Issuer Free Writing Prospectus that is
intended for general distribution to prospective investors, as evidenced by its
being specified in Schedule II to this Agreement.
(5) “Issuer
Limited-Use Free Writing Prospectus” means any Issuer Free Writing
Prospectus that is not an Issuer General Free Writing
Prospectus.
(v) (A)
Each Issuer Free Writing Prospectus, as of its issue date and at all subsequent
times through the Prospectus Delivery Period or until any earlier date that the
Company notified or notifies the Representatives as described in Section
4(c)(B), did not, does not and will not include any information that conflicted,
conflicts or will conflict with the information contained in the Registration
Statement, any Statutory Prospectus or the Prospectus. The foregoing
sentence does not apply to statements in or omissions from any Issuer Free
Writing Prospectus based upon and in conformity with written information
furnished to the Company by you or by any Underwriter through you specifically
for use therein; it being understood and agreed that the only such information
furnished by any Underwriter consists of the information described as such in
Section 6(f).
(B)
(1) At
the earliest time after the filing of the Registration Statement that the
Company or another offering participant made a bona fide offer (within the
meaning of Rule 164(h)(2) under the Securities Act) of the Securities and (2) at
the date hereof, the Company was not and is not an “ineligible issuer,” as
defined in Rule 405 under the Securities Act, including the Company or any
subsidiary in the preceding three years not having been convicted of a felony or
misdemeanor or having been made the subject of a judicial or administrative
decree or order as described in Rule 405 (without taking account of any
determination by the Commission pursuant to Rule 405 that it is not necessary
that the Company be considered an ineligible issuer), nor an “excluded issuer”
as defined in Rule 164 under the Securities Act.
(C)
Each
Issuer Free Writing Prospectus satisfied, as of its issue date and at all
subsequent times through the Prospectus Delivery Period, all other conditions to
use thereof as set forth in Rules 164 and 433 under the Securities
Act.
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(vi) The
consolidated financial statements of the Company, together with the related
notes and schedules, set forth or incorporated by reference in the Registration
Statement, the Time of Sale Disclosure Package and the Prospectus comply in all
material respects with the requirements of the Securities Act and the Exchange
Act and fairly present the financial condition of the Company and its
consolidated subsidiaries 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 in the United States
consistently applied throughout the periods involved; the supporting schedules
included in the Registration Statement present fairly the information required
to be stated therein; all non-GAAP financial information included in the
Registration Statement, the Time of Sale Disclosure Package and the Prospectus
complies with the requirements of Regulation G and Item 10 of Regulation S-K
under the Act, to the extent applicable; and, except as disclosed in the Time of
Sale Disclosure Package and the Prospectus, there are no material off-balance
sheet arrangements (as defined in Regulation S-K under the Act, Item
303(a)(4)(ii)) or any other relationships with unconsolidated entities or other
persons, that may have a material current or, to the Company’s knowledge,
material future effect on the Company’s financial condition, results of
operations, liquidity, capital expenditures, capital resources or significant
components of revenue or expenses. No other financial statements or
schedules are required by the Securities Act, the Rules and Regulations or the
Exchange Act to be included in the Registration Statement, the Time of Sale
Disclosure Package or the Prospectus. All pro forma financial
statements or data (if any) included in the Registration Statement, the Time of
Sale Disclosure Package and the Prospectus comply in all material respects with
the requirements of the Act and the Exchange Act, and the assumptions used in
the preparation of such pro forma financial statements and data are reasonable,
the pro forma adjustments used therein are appropriate to give effect to the
transactions or circumstances described therein and the pro forma adjustments
have been properly applied to the historical amounts in the compilation of those
statements and data. The other financial and statistical data
contained in the Registration Statement, the Time of Sale Disclosure Package and
the Prospectus are accurately and fairly presented and prepared on a basis
consistent with the financial statements and books and records of the
Company. The Company and its subsidiaries do not have any material
liabilities or obligations, direct or contingent (including any off-balance
sheet arrangements as defined by the rules of the Commission), not described in
the Registration Statement (excluding the exhibits thereto), the Time of Sale
Disclosure Package and the Prospectus. To the Company’s knowledge,
PKF, which has expressed its opinion with respect to the financial statements
and schedules filed as a part of the Registration Statement and included in the
Registration Statement, the Time of Sale Disclosure Package and the Prospectus,
is (x) an independent public accounting firm within the meaning of the Act and
the Rules and Regulations, (y) a registered public accounting firm (as defined
in Section 2(a)(12) of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 (the “▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act”)) and (z) not in violation of the auditor independence requirements
of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act.
(vii) 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 full 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 a
material adverse effect upon the business, prospects, management, properties,
operations, condition (financial or otherwise) or results of operations of the
Company and its subsidiaries, taken as a whole (“Material Adverse
Effect”).
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(viii) Except
as contemplated in the Time of Sale Disclosure Package and in the Prospectus,
subsequent to the respective dates as of which information is given in the Time
of Sale Disclosure Package, neither the Company nor any of its subsidiaries has
incurred any material liabilities or obligations, direct or contingent, or
entered into any material transactions, or declared or paid any dividends or
made any distribution of any kind with respect to its capital stock; and there
has not been any change in the capital stock (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 any material change in the
short-term or long-term debt, or any issuance of options, warrants, convertible
securities or other rights to purchase the capital stock, of the Company or any
of its subsidiaries, or any material adverse change in the general affairs,
condition (financial or otherwise), business, prospects, management, properties,
operations or results of operations of the Company and its subsidiaries, taken
as a whole (“Material Adverse
Change”) or any development which could reasonably be expected to result
in any Material Adverse Change.
(ix) Except
as set forth in the Time of Sale Disclosure Package and in the Prospectus, there
is not pending or, to the knowledge of the Company, threatened or contemplated,
any action, suit or proceeding (a) to which the Company or any of its
subsidiaries is a party or (b) which has as the subject thereof any officer or
director of the Company or any of its subsidiaries, any employee benefit plan
sponsored by the Company or any of its subsidiaries or any property or assets
owned or leased by the Company or any of its subsidiaries before or by any court
or Governmental Authority (as defined below), or any arbitrator, which,
individually or in the aggregate, might result in any Material Adverse Change,
or would materially and adversely affect the ability of the
Company to perform its obligations under this Agreement or which are
otherwise material in the context of the sale of the
Securities. There are no current or, to the knowledge of the Company,
pending, legal, governmental or regulatory actions, suits or proceedings (x) to
which the Company or any of its subsidiaries is subject or (y) which has as the
subject thereof any officer or director of the Company or any of its
subsidiaries, any employee plan sponsored by the Company or any of its
subsidiaries or any property or assets owned or leased by the Company or any of
its subsidiaries, that are required to be described in the Registration
Statement, Time of Sale Disclosure Package and Prospectus by the Act or by the
Rules and Regulations and that have not been so described.
(x) There
are no statutes, regulations, contracts or documents that are required to be
described in the Registration Statement, in the Time of Sale Disclosure Package
and in the Prospectus or required to be filed as exhibits to the Registration
Statement by the Securities Act or by the Rules and Regulations that have not
been so described or filed.
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(xi) This
Agreement has been duly authorized, executed and delivered by the Company, and
constitutes a valid, legal and binding obligation of the Company, enforceable 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. The execution, delivery and performance of this Agreement and
the consummation of the transactions herein contemplated will not (A) conflict
with or result in a breach or violation of any of the terms or provisions of, or
constitute a default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company pursuant to any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries is bound or to which any of the
property or assets of the Company or any of its subsidiaries is subject, (B)
result in any violation of the provisions of the Company’s charter or by-laws or
(C) result in the violation of any law or statute or any judgment, order, rule,
regulation or decree of any court or arbitrator or federal, state, local or
foreign governmental agency or regulatory authority having jurisdiction over the
Company or any of its subsidiaries or any of their properties or assets (each, a
“Governmental
Authority”) other than in the case of clauses (A) and (C) above such
violations, breaches or defaults that do not, and would not, individually or in
the aggregate, result in any Material Adverse Effect. No consent,
approval, authorization or order of, or registration or filing with any
Governmental Authority is required for the execution, delivery and performance
of this Agreement or for the consummation of the transactions contemplated
hereby, including the issuance or sale of the Securities by the Company, except
such as may be required under the Act, the rules of the Financial Industry
Regulatory Authority (“FINRA”),
the NASDAQ Global Market or state securities or blue sky laws; and the Company
has full power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby, including the authorization, issuance and sale
of the Securities as contemplated by this Agreement.
(xii) All
of the issued and outstanding shares of capital stock of the Company, including
the outstanding shares of Common Stock, are duly authorized and validly issued,
fully paid and nonassessable, have been issued in compliance with all federal
and state and foreign securities laws, were not issued in violation of or
subject to any preemptive rights or other rights to subscribe for or purchase
securities that have not been waived in writing (a copy of which has been
delivered to counsel to the Representatives), and the holders thereof are not
subject to personal liability by reason of being such holders; the Securities
which may be sold hereunder by the Company have been duly authorized and, when
issued, delivered and paid for in accordance with the terms of this Agreement,
will have been validly issued and will be fully paid and nonassessable, and the
holders thereof will not be subject to personal liability by reason of being
such holders; and the capital stock of the Company, including the Common Stock,
conforms to the description thereof in the Registration Statement, in the Time
of Sale Disclosure Package and in the Prospectus. Except as otherwise
stated in the Registration Statement, in the Time of Sale Disclosure Package and
in the Prospectus, there are no preemptive rights or other rights to subscribe
for or to purchase, or any restriction upon the voting or transfer of, any
shares of Common Stock pursuant to the Company’s charter, by-laws or any
agreement or other instrument to which the Company or any of its subsidiaries is
a party or by which the Company or any of its subsidiaries is
bound. Except as disclosed in the Registration Statement, in the Time
of Sale Disclosure Package and in the Prospectus, neither the filing of the
Registration Statement nor the offering or sale of the Securities as
contemplated by this Agreement gives rise to any rights for or relating to the
registration of any shares of Common Stock or other securities of the Company
(collectively “Registration
Rights”), and any person to whom the Company has granted Registration
Rights has agreed not to exercise such rights until after expiration of the
Lock-Up Period (as defined below). All of the issued and outstanding
shares of capital stock of each of the Company’s subsidiaries have been duly and
validly authorized and issued and are fully paid and nonassessable, and, except
as otherwise described in the Registration Statement, in the Time of Sale
Disclosure Package and in the Prospectus, the Company owns of record and
beneficially, free and clear of any security interests, claims, liens, proxies,
equities or other encumbrances, all of the issued and outstanding shares of such
stock. Except as described in the Registration Statement, in the Time
of Sale Disclosure Package and in the Prospectus, there are no options,
warrants, agreements, contracts or other rights in existence to purchase or
acquire from the Company or any subsidiary of the Company any shares of the
capital stock of the Company or any subsidiary of the Company. The
Company has an authorized and outstanding capitalization as set forth in the
Registration Statement, in the Time of Sale Disclosure Package and in the
Prospectus under the caption “Capitalization.” The Common Stock
(including the Securities) conforms in all material respects to the description
thereof contained in the Time of Sale Disclosure Package and the
Prospectus. The description of the Company’s stock option, stock
bonus and other stock plans or arrangements, and the options or other rights
granted thereunder, set forth in the Time of Sale Disclosure Package and the
Prospectus accurately and fairly presents the information required to be shown
with respect to such plans, arrangements, options and rights.
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(xiii) The
Company and each of its subsidiaries holds, and is operating in compliance in
all material respects with, all franchises, grants, authorizations, licenses,
permits, easements, consents, certificates and orders of any Governmental
Authority or self-regulatory body required for the conduct of its business and
all such franchises, grants, authorizations, licenses, permits, easements,
consents, certifications and orders are valid and in full force and effect; and
neither the Company nor any of its subsidiaries has received notice of any
revocation or modification of any such franchise, grant, authorization, license,
permit, easement, consent, certification or order or has reason to believe that
any such franchise, grant, authorization, license, permit, easement, consent,
certification or order will not be renewed in the ordinary course; and the
Company and each of its subsidiaries is in compliance in all material respects
with all applicable federal, state, local and foreign laws, regulations, orders
and decrees.
(xiv) The
Company and its subsidiaries have good and marketable title to all property
(whether real or personal) described in the Registration Statement, in the Time
of Sale Disclosure Package and in the Prospectus as being owned by them, in each
case free and clear of all liens, claims, security interests, other encumbrances
or defects except such as are described in the Registration Statement, in the
Time of Sale Disclosure Package and in the Prospectus. The property
held under lease by the Company and its subsidiaries is held by them under
valid, subsisting and enforceable leases 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 or its subsidiaries.
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(xv) Except
as disclosed in the Registration Statement, in the Time of Sale Disclosure
Package and in the Prospectus, the Company and each of its subsidiaries owns,
possesses, or can acquire on reasonable terms, all Intellectual Property
necessary for the conduct of the Company’s and it subsidiaries’ business as now
conducted or as described in the Registration Statement, the Time of Sale
Disclosure Package and the Prospectus to be conducted, except as such failure to
own, possess, or acquire such rights would not result in a Material Adverse
Effect. Furthermore, (A) to the knowledge of the Company, there is no
infringement, misappropriation or violation by third parties of any
such Intellectual Property, except as such infringement, misappropriation or
violation would not result in a Material Adverse Effect; (B) there is no pending
or, to the knowledge of the Company, threatened, action, suit, proceeding or
claim by others challenging the Company’s or any of its subsidiaries’ rights in
or to any such Intellectual Property, and neither the Company nor any of its
subsidiaries is aware of any facts which would form a reasonable basis for any
such claim; (C) the Intellectual Property owned by the Company and its
subsidiaries, and to the knowledge of the Company, the Intellectual Property
licensed to the Company and its subsidiaries, has not been adjudged invalid or
unenforceable, in whole or in part, and there is no pending or threatened
action, suit, proceeding or claim by others challenging the validity or scope of
any such Intellectual Property, and neither the Company nor any of its
subsidiaries is aware of any facts which would form a reasonable basis for any
such claim; (D) there is no pending or threatened action, suit, proceeding or
claim by others that the Company or any of its subsidiaries infringes,
misappropriates or otherwise violates any Intellectual Property or other
proprietary rights of others, neither the Company nor any of its subsidiaries
has received any written notice of such claim and neither the Company nor any of
its subsidiaries is aware of any other fact which would form a reasonable basis
for any such claim; and (E) to the knowledge of the Company, no employee of the
Company or any of its subsidiaries is in or has ever been in violation of any
term of any employment contract, patent disclosure agreement, invention
assignment agreement, non-competition agreement, non-solicitation agreement,
nondisclosure agreement or any restrictive covenant to or with a former employer
where the basis of such violation relates to such employee’s employment with the
Company or any of its subsidiaries or actions undertaken by the employee while
employed with the Company or any of its subsidiaries, except as such violation
would not result in a Material Adverse Effect. Except as stated in
the Registration Statement, the Time of Sale Disclosure Package and the
Prospectus, no name which the Company or any of its subsidiaries uses and no
other aspect of the business of 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 material to the business or prospects of the
Company or any of its subsidiaries and neither the Company nor any of its
subsidiaries has received any notice alleging any such infringement or
fee. “Intellectual
Property” shall mean all patents, patent applications, trade and service
marks, trade and service ▇▇▇▇ registrations, trade names, copyrights,
licenses, inventions, trade secrets, domain names, technology, know-how and
other intellectual property.
-10-
(xvi) Except
as disclosed in the Registration Statement, in the Time of Sale Disclosure
Package and in the Prospectus, neither the Company nor any of its subsidiaries
is (i) in violation of its respective charter, by-laws, memorandum of
association or articles of association (or similar constitutional or
organization documents), or (ii) in breach of or otherwise in default, and no
event has occurred which, with notice or lapse of time or both, would constitute
such a default in the performance of any material obligation, agreement or
condition contained in any bond, debenture, note, indenture, loan agreement or
any other material contract, lease or other instrument to which it is subject or
by which any of them may be bound, or to which any of the material property or
assets of the Company or any of its subsidiaries is subject, except in the case
of (ii) as individually or in the aggregate would not reasonably be expected to
have a Material Adverse Effect.
(xvii) The
Company and its subsidiaries have timely filed all federal, state, local and
foreign income and franchise tax returns required to be filed and are not in
default in the payment of any taxes which were payable pursuant to said returns
or any assessments with respect thereto (other than any which the Company or any
of its subsidiaries is contesting in good faith and for which adequate reserves
have been provided) except as individually or in the aggregate would not
reasonably be expected to have a Material Adverse Effect. There is no
pending dispute with any taxing authority relating to any of such returns, and
neither the Company nor any of its subsidiaries has knowledge of any proposed
liability for any tax to be imposed upon the properties or assets of the Company
or any of its subsidiaries for which there is not an adequate reserve reflected
in the Company’s consolidated financial statements included in the Registration
Statement, the Time of Sale Disclosure Package and the Prospectus. All local and
national governmental tax relief, concessions, waivers, holidays and
preferential treatments of the People’s Republic of China (“PRC”)
enjoyed by the Company and its subsidiaries are valid, binding, and enforceable
and do not violate any PRC laws.
(xviii) The
Company has not distributed and will not distribute any prospectus or other
offering material in connection with the offering and sale of the Securities
other than any Preliminary Prospectus, the Time of Sale Disclosure Package or
the Prospectus or other materials permitted by the Securities Act to be
distributed by the Company and to which the Representatives have consented in
accordance with this Agreement; provided, however, that,
except as set forth on Schedule II, the Company has not made and will not make
any offer relating to the Securities that would constitute a “free writing
prospectus” as defined in Rule 405 under the Securities Act, except in
accordance with the provisions of Section 4(q) of this Agreement.
(xix) The
Common Stock is registered pursuant to Section 12(b) of the Exchange Act
and is included or approved for listing on the NASDAQ Global Market and the
Company has taken no action designed to, or likely to have the effect of,
terminating the registration of the Common Stock under the Exchange Act or
delisting the Common Stock from the NASDAQ Global Market nor has the Company
received any notification that the Commission or the NASDAQ Global Market is
contemplating terminating such registration or listing. The Company has complied
in all material respects with the applicable requirements of the NASDAQ Global
Market for maintenance of inclusion of the Common Stock thereon. The Company has
filed an application to include the Securities on the NASDAQ Global
Market. Except as previously disclosed to counsel for the
Underwriters or as set forth in the Time of Sale Disclosure Package and the
Prospectus, to the knowledge of the Company, no beneficial owners of the
Company’s capital stock or subordinated debt who, together with their associated
persons and affiliates, hold in the aggregate 10% or more of such capital stock
or subordinated debt, have any direct or indirect association or affiliate with
a FINRA member.
-11-
(xx) Other
than Yearcity Limited, Fuxin Huirui Mechanical Co., Ltd. and the subsidiaries of
the Company listed in Exhibit 21 to the Company’s Annual Report on Form
10-K for the fiscal year ended December 31, 2008, the Company, directly or
indirectly, owns no capital stock or other equity or ownership or proprietary
interest in any corporation, partnership, association, trust or other
entity.
(xxi) The
Company maintains a system of internal accounting controls sufficient to provide
reasonable assurances that (i) transactions are executed in accordance with
management’s general or specific authorization; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles in the United States
and to maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management’s general or specific
authorization; and (iv) the recorded accountability for assets is compared
with existing assets at reasonable intervals and appropriate action is taken
with respect to any differences. Except as disclosed in the
Registration Statement, in the Time of Sale Disclosure Package and in the
Prospectus, the Company’s internal control over financial reporting is effective
and none of the Company, its board of directors and audit committee is aware of
any “significant deficiencies” or “material weaknesses” (each as defined by the
Public Company Accounting Oversight Board) in its internal control over
financial reporting, or any fraud, whether or not material, that involves
management or other employees of the Company who have a significant role in the
Company’s internal controls; and since the end of the latest audited fiscal
year, there has been no change in the Company’s internal control over financial
reporting (whether or not remediated) that has materially affected, or is
reasonably likely to materially affect, the Company’s internal control over
financial reporting. The Company’s board of directors has, subject to
the exceptions, cure periods and the phase in periods specified in the
applicable stock exchange rules (“Exchange
Rules”), validly appointed an audit committee to oversee internal
accounting controls whose composition satisfies the applicable requirements of
the Exchange Rules and the Company’s board of directors and/or the audit
committee has adopted a charter that satisfies the requirements of the Exchange
Rules.
(xxii) Other
than as contemplated by this Agreement, the Company has not incurred any
liability for any finder’s or broker’s fee or agent’s commission in connection
with the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby.
-12-
(xxiii) Each
of the Company and its subsidiaries carries, or is covered by, insurance from
insurers with appropriately rated claims paying abilities in such amounts and
covering such risks as the Company reasonably believes 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; all
policies of insurance and any fidelity or surety bonds insuring the Company or
any of its subsidiaries or its business, assets, employees, officers and
directors are in full force and effect; the Company and its subsidiaries are in
compliance with the terms of such policies and instruments in all material
respects; there are no claims by the Company or any of its subsidiaries under
any such policy or instrument as to which any insurance company is denying
liability or defending under a reservation of rights clause; neither the Company
nor any of its subsidiaries has been refused any insurance coverage sought or
applied for; and neither the Company nor any of its subsidiaries has
reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that
would not have a Material Adverse Effect.
(xxiv) The
Company is not and, after giving effect to the offering and sale of the
Securities, will not be an “investment company,” as such term is defined in the
Investment Company Act of 1940, as amended.
(xxv) The
conditions for use of Form S-3, set forth in the General Instructions
thereto, have been satisfied.
(xxvi) The
documents incorporated by reference in the Time of Sale Disclosure Package and
in the Prospectus, when they became effective or were filed with the Commission,
as the case may be, conformed in all material respects, as to form, to the
requirements of the Securities Act or the Exchange Act, as applicable, and were
filed on a timely basis with the Commission and none of such documents 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 Time of Sale Disclosure Package or in the
Prospectus, when such documents are filed with the Commission, will conform in
all material respects, as to form, 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.
(xxvii) The
Company is in compliance with all applicable provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act and the rules and regulations of the Commission thereunder.
(xxviii) The
Company has established and maintains disclosure controls and procedures (as
defined in Rules 13a-14 and 15d-14 under the Exchange Act) and such controls and
procedures are effective in ensuring that material information relating to the
Company, including its subsidiaries, is made known to the principal executive
officer and the principal financial officer. The Company has utilized
such controls and procedures in preparing and evaluating the disclosures in the
Registration Statement, in the Time of Sale Disclosure Package and in the
Prospectus.
-13-
(xxix) Each
of the Company and its subsidiaries, and to the knowledge of the Company, each
of its affiliates and any of the respective officers, directors, supervisors,
managers, agents or employees of each of the foregoing, has not violated, its
participation in the offering will not violate, and the Company has instituted
and maintains policies and procedures designed to ensure continued compliance
with, each of the following laws: (a) anti-bribery laws, including
but not limited to, any applicable law, rule, or regulation of any locality,
including but not limited to any law, rule, or regulation promulgated to
implement the OECD Convention on Combating Bribery of Foreign Public Officials
in International Business Transactions, signed December 17, 1997, including
the U.S. Foreign Corrupt Practices Act of 1977, as amended, or any other law,
rule or regulation of similar purposes and scope, (b) anti-money laundering
laws, including but not limited to, applicable federal, state, international,
foreign or other laws, regulations or government guidance regarding anti-money
laundering, including, without limitation, U.S. Currency and Foreign
Transactions Reporting Act of 1970, Title 18 US. Code section 1956 and 1957, the
Patriot Act, the Bank Secrecy Act, and international anti-money laundering
principles or procedures by an intergovernmental group or organization, such as
the Financial Action Task Force on Money Laundering, of which the United States
and/or PRC is a member and with which designation representative of the United
States and/or PRC to the group or organization continues to concur, all as
amended, and any executive order, directive, or regulation pursuant to the
authority of any of the foregoing, or any orders or licenses issued thereunder
(collectively, the “Money Laundering
Laws”) or (c) laws and regulations imposing U.S. economic sanctions
measures, including, but not limited to, the International Emergency Economic
Powers Act, the Trading with the Enemy Act, the United Nations Participation Act
and the Syria Accountability and Lebanese Sovereignty Act, all as amended, and
any executive order, directive, or regulation pursuant to the authority of any
of the foregoing, including the regulations of the United States Treasury
Department set forth under 31 CFR, Subtitle B, Chapter V, as amended, or any
orders or licenses issued thereunder. The operations of the Company and its
subsidiaries are and have been conducted at all times in compliance with
applicable financial recordkeeping and reporting requirements of the Money
Laundering Laws and no action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the Company
or any of its subsidiaries with respect to the Money Laundering Laws is pending
or, to the knowledge of the Company, threatened, except, in each case, as would
not reasonably be expected to have a Material Adverse Effect.
(xxx) Neither
the Company nor any of its subsidiaries nor, to the knowledge of the Company,
any director, officer, agent, employee 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. Department of the Treasury (“OFAC”); no
action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company or any of its
subsidiaries with respect to U.S. sanctions administered by OFAC is pending or,
to the knowledge of the Company, threatened; and the Company will not directly
or indirectly use the proceeds of the offering, or lend, contribute or otherwise
make available such proceeds to any subsidiary, joint venture partner or other
person or entity, for the purpose of financing the activities of any person that
would, if undertaken by a U.S. person as defined in U.S. sanctions administered
by OFAC, be prohibited by any U.S. sanctions administered by
OFAC.
-14-
(xxxi) To
the knowledge of the Company, no transaction has occurred between or among the
Company and its subsidiaries, on the one hand, and any of the Company’s
officers, directors or 5% stockholders or any affiliate or affiliates of any
such officer, director or 5% stockholders that is required to be described that
is not so described in the Registration Statement, the Time of Sale Disclosure
Package and the Prospectus. None of the Company and its subsidiaries
has, directly or indirectly, extended or maintained credit, or arranged for the
extension of credit, or renewed an extension of credit, in the form of a
personal loan to or for any of its directors or executive officers in violation
of applicable laws, including Section 402 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act.
(xxxii) Except
as disclosed in the Time of Disclosure Package and the Prospectus, neither the
Company nor any of its subsidiaries is in violation of any statute, any rule,
regulation, decision or order of any Governmental Authority or any court,
domestic or foreign, relating to the use, disposal or release of hazardous or
toxic substances or relating to the protection or restoration of the environment
or human exposure to hazardous or toxic substances (collectively, “Environmental
Laws”), owns or operates any real property contaminated with any
substance that is subject to any environmental laws, is liable for any off-site
disposal or contamination pursuant to any environmental laws, or is subject to
any claim relating to any environmental laws, which violation,
contamination, liability or claim would individually or in the
aggregate, have a Material Adverse Effect; and neither the Company nor any of
its subsidiaries is aware of any pending investigation which might lead to such
a claim.
(xxxiii)
Neither the Company nor any of its subsidiaries is required to perform any of
obligations under the U.S. Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations thereunder. Except as required by
applicable laws and as disclosed in the Registration Statement, the Time of Sale
Disclosure Package and the Prospectus, none of the Company and its subsidiaries
has, or is obligated to provide, any Benefit Plan. For purposes
hereof, “Benefit
Plan” means any plan, contract or other arrangement, formal or informal,
whether oral or written, providing any benefit to any present or former officer,
director or employee, or dependent or beneficiary thereof, including any profit
sharing, deferred compensation, share option, performance share, employee share
purchase, severance, retirement, health, death or disability benefits or
insurance plan. No employee of the Company and its subsidiaries is owed any back
wages or other compensation for services rendered except as set forth on the
Company’s consolidated financial statements. Each of the Company and
its subsidiaries has complied in all material respects with all applicable laws
related to employment, the Benefit Plans and other employee
benefits.
(xxxiv) Except
as disclosed in the Registration Statement, the Time of Sale Disclosure Package
and the Prospectus, none of the Company and any of its subsidiaries has granted
rights to develop, manufacture, produce, assemble, distribute, license, market
or sell its products to any other person and is bound by any agreement (other
than agreements entered into in the ordinary course of business of the Company
or any of its subsidiaries) that adversely affects the exclusive right of the
Company and its subsidiaries to develop, manufacture, produce, assemble,
distribute, license, market or sell their products.
-15-
(xxxv) No
labor problem or dispute with the employees of the Company or any of its
subsidiaries exists or is threatened or imminent, and none of the Company and
any of its subsidiaries is aware of any existing or imminent labor disturbance
by the employees of any of its or its subsidiaries’ principal suppliers,
contractors or customers, that could have a Material Adverse
Effect.
(xxxvi) None
of the subsidiaries of the Company is currently prohibited, directly or
indirectly, from paying any dividends to the Company, from making any other
distribution on such subsidiary’s share capital, from repaying to the Company
any loans or advances to such subsidiary from the Company or from transferring
any of such subsidiary’s property or assets to the Company or any other
subsidiary of the Company, except as described in or contemplated by the Time of
Sale Disclosure Package and the Prospectus; except as described in the Time of
Sale Disclosure Package and the Prospectus, any dividends and other
distributions declared with respect to after-tax retained earnings on the equity
interests of the Company’s PRC subsidiaries may under PRC laws and regulations
be paid to the Company; and all such dividends and distributions will not be
subject to withholding or other taxes under PRC laws and regulations and are
otherwise free and clear of any other tax, withholding or deduction in the PRC,
and without the necessity of obtaining any governmental authorization in the
PRC.
(xxxvii) Except
as described in the Registration Statement, the Time of Sale Disclosure Package
and the Prospectus, each of the Company and its subsidiaries has taken or is in
the process of taking all reasonable steps (to the extent required of the
Company and each such subsidiary under PRC laws and regulations) to comply with,
and to ensure compliance by each of (i) its principal stockholders as disclosed
in the Registration Statement, the Time of Sale Disclosure Package and the
Prospectus, and (ii) any other persons known to the Company that are required to
comply (in connection with their interests in the Company) with applicable rules
and regulations of the relevant PRC governmental agencies (including, without
limitation, the Ministry of Commerce, National Development and Reform Commission
and the State Administration of Foreign Exchange) relating to overseas
investment by PRC residents and citizens or overseas listing by offshore special
purpose vehicles controlled directly or indirectly by PRC companies and
individuals, such as the Company (the “PRC Overseas
Investment and Listing Regulations”), including, without limitation,
requesting such persons to complete any registration and other procedures
required under applicable PRC Overseas Investment and Listing
Regulations.
(xxxviii) There
are no affiliations or associations between (i) any member of the FINRA and (ii)
the Company or, to the knowledge of the Company, any of the Company’s officers,
directors or 5% or greater security holders or any beneficial owner of the
Company’s unregistered equity securities that were acquired at any time on or
after the 180th day immediately preceding the date the Preliminary Prospectus
was initially filed with the Commission, except as disclosed in the Time of Sale
Disclosure Package and in the Prospectus.
-16-
(xxxix) The
Registration Statement, the Time of Sale Disclosure Package and the Prospectus
each fairly and accurately describe all material trends, demands, commitments
and events known to the Company, and uncertainties, and the potential effects
thereof, that the Company believes would materially affect its liquidity and are
reasonably likely to occur. As used herein, the phrase “reasonably
likely” refers to a disclosure threshold lower than “more likely than
not.”
(xl) The
statements set forth in each Preliminary Prospectus and the Prospectus under the
caption “Description of Capital Stock,” insofar as they purport to constitute a
summary of the terms of the shares, and under the caption “Underwriting,”
insofar as they purport to describe the provisions of the laws and documents
referred to therein, are accurate, complete and fair in all material
respects.
(xli) The
Company has no reason to believe that the entering into and performance or
enforcement of this Agreement in accordance with its terms will subject the
Underwriters to a requirement to be licensed or otherwise qualified to do
business in the PRC, or to be deemed to be resident, domiciled, carrying on
business through an establishment or place in the PRC or in breach of any laws
or regulations in the PRC by reason of the entering into, performance or
enforcement of this Agreement.
(xlii) As
of the date hereof, as of the date of the Prospectus, the First Closing Date and
the Second Closing Date, the Rules on Mergers and Acquisitions of Domestic
Enterprises by Foreign Investors jointly promulgated by the Ministry of
Commerce, the State Assets Supervision and Administration Commission,
the State Tax Administration, the State Administration of Industry and Commerce,
the China Securities Regulatory Commission (“CSRC”) and
the State Administration of Foreign Exchange of the PRC on August 8, 2006 (the
“M&A
Rules”) or any official clarifications, guidance, interpretations or
implementation rules in connection with or related to the M&A Rules did not
and do not apply to the issuance and sale of the Securities, the quotation and
trading of the Securities on the NASDAQ Global Market, the reverse takeover of
Wonder Auto Limited by the Company (or its predecessor) as disclosed in the
Company’s current report on Form 8-K dated June 23, 2006 (the “Reverse
Takeover”), or the consummation of the transactions contemplated by this
Agreement. Nor is CSRC or other PRC government approval required in connection
with the above.
(xliii) The
statements set forth in the Prospectus and/or documents incorporated by
reference thereto under the captions “Risk Factors— If the China Securities
Regulatory Commission, or CSRC, or another Chinese regulatory agency, determines
that CSRC approval is required in connection with this offering, this offering
may be delayed or cancelled, or we may become subject to penalties” and “Risk
Factors— Failure to comply with PRC regulations relating to the establishment of
offshore special purpose companies by PRC residents may subject our PRC resident
stockholders to personal liability, limit our ability to acquire PRC companies
or to inject capital into our PRC subsidiaries, limit our PRC subsidiaries’
ability to distribute profits to us or otherwise materially adversely affect us”
are a fair and accurate summary in all material respects of the matters
described therein, and nothing has been omitted from such summary which would
make the same misleading in any material respect.
-17-
(xliv) The
Company has not taken, directly or indirectly, any action designed to or that
would constitute or that might reasonably be expected to cause or result in,
under the Exchange Act or otherwise, stabilization or manipulation of the price
of any security of the Company to facilitate the sale or resale of the
Securities.
(xlv) The
descriptions of the ownership structure of the Company and its subsidiaries and
the restructurings set forth in the Company’s Form 10-K for the fiscal year
ended December 31, 2008 under the captions “Business - overview” and “History
and Corporate Structure” (as updated and supplemented by the Preliminary
Prospectus) are accurate and complete. The ownership structure of the Company
and its subsidiaries, both currently and after giving effect to the offering of
the Securities (the “Corporate
Structure”), are in compliance with existing PRC laws and
regulations. All consent, approval, authorization or order of, or
registration or filing with any Governmental Authority required for the
restructuring transactions resulting into the Corporate Structure (collectively,
the “Restructuring”),
including without limitation the Reverse Takeover, the acquisition of the
Company’s subsidiaries, the privatization of the Company’s PRC subsidiaries
(including without limitation Jinzhou Halla Electrical Equipment Co., Ltd. and
Jinan Worldwide Auto Accessories Limited) and the establishment of the overseas
affiliated companies of the Company’s PRC subsidiaries, including without
limitation Choice Inspire Limited, the Company, Wonder Auto Limited, and
Yearcity Limited, have been duly obtained, and none of such governmental
authorizations has been withdrawn or revoked nor are there circumstances which
may give rise to such governmental authorizations being withdrawn or revoked, or
is subject to any condition precedent which has not been fulfilled or performed.
The Restructuring did not and/or does not (A) contravene or conflict with any
provision of any applicable PRC laws and regulations, (B) contravene or conflict
with the respective articles of association, business license or other
constitutional documents of any of the Company and its subsidiaries, or (C)
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any license, indenture, mortgage,
deed of trust, loan agreement, note, lease or other agreement or instrument to
which any of the Company and its subsidiaries is a party or by which any of the
Company and its subsidiaries is bound or to which any of the property or assets
of any of the Company and its subsidiaries is subject.
-18-
(xlvi) Each
of the Company and its subsidiaries has full power, authority and legal right to
enter into, execute, adopt, assume, deliver and perform its respective
obligations under each of the contracts disclosed, included or incorporated by
reference in the Registration Statement, the Time of Sale Disclosure Package and
the Prospectus (including without limitation those related to the Restructuring,
collectively, the “Material
Contracts”) to which it is a party; Each of the Company and
its subsidiaries has duly authorized, executed and delivered each of the
Material Contracts to which it is a party, and the Material Contracts (either
individually or in any combination) constitute valid, legal and binding
obligations enforceable against the Company and/or its respective subsidiary in
accordance with their respective terms; The execution, delivery and performance
of the Material Contracts by the Company and/or its respective subsidiary, and
the consummation of the transactions contemplated thereunder, do not (A) result
in any violation of the business license, articles of association, other
constitutional documents (if any) or governmental authorizations of the Company
and/or its respective subsidiary; (B) result in any violation of or penalty
under any applicable law; or (C) conflict with or result in a breach or
violation of any of the material terms or provisions of, or constitute a
material default under, any other contract, license, bond, debenture, indenture,
mortgage, deed of trust, loan agreement, note, lease or other agreement or
instrument to which the Company and/or its respective subsidiary is a party or
by which any of them is bound or to which any of their property or assets is
subject, except in the case of clauses (B) and (C) above, such violation,
breach, conflict or default would not result in a Material Adverse Effect; All
consent, approval, authorization or order of, or registration or filing with any
Governmental Authority required for the execution, delivery and performance of
the Material Contracts and the consummation of the transactions contemplated
thereunder have been duly obtained and are in full force and
effect.
(xlvii) Any
third-party statistical and market-related data included in the Registration
Statement, the Time of Sale Disclosure Package and the Prospectus are based on
or derived from sources that the Company believes to be reliable and accurate in
all material respects.
(xlviii) No
approval of the shareholders of the Company under the rules and regulations of
the Nasdaq Global Market or other applicable laws and regulations is required
for the Company to issue and deliver to the several Underwriters the
Securities.
(xlix) To
enable the Underwriters to rely on Rule 5110(b)(7)(C)(i) of FINRA, the
registration of the Securities registered with the Commission could have been
effected on Form S-3 under the Securities Act pursuant to the standards for such
Form S-3 in effect prior to October 21, 1992.
(l) None
of the Company, any of its subsidiaries or any of their respective properties or
assets has any immunity from the jurisdiction of any court or from any legal
process (whether through service or notice, attachment prior to judgment,
attachment in aid of execution or otherwise) under the laws of the PRC, Nevada,
New York or United States federal law; and, to the extent that the Company, any
of its subsidiaries or any of their respective properties, assets or revenues
may have or may hereafter become entitled to any such right of immunity in any
such court in which proceedings may at any time be commenced, each of the
Company and its subsidiaries waive and will waive such right to the extent
permitted by law.
-19-
(li) Except
as disclosed in the Time of Sale Disclosure Package and the Prospectus, neither
the Company nor any of its subsidiaries has breached or violated the
obligations, agreements or conditions (including without limitation any and all
financial and operating covenants) contained in any bond, debenture, note,
indenture or loan agreement (collectively, “Loan
Agreements”) to which it is subject or by which any of them may be bound,
or to which any of the material property or assets of the Company or any of its
subsidiaries is subject, except as individually or in the aggregate would not
reasonably be expected to have a Material Adverse Effect and except as would not
be required to be disclosed pursuant to Item 2.04 of Form 8-K; the Company
believes that it and its subsidiaries, taken as a whole, have adequate cash or
access to capital to meet the payment obligations under any and all of the Loan
Agreements on their respective terms set forth therein.
(lii) Neither
the Company nor any of its subsidiaries has breached or violated in any material
respects any of the terms or provision of any Restrictive Agreement; The term
"Restrictive
Agreement" means any agreement which restricts the ability of the Company
or its subsidiaries to sell its products in certain geographic regions, to
certain customers or which use the intellectual property licensed from a
counterparty to such agreement.
(liii) Neither
the Company nor any of its subsidiaries (including Yearcity Limited and Jinan
Worldwide Auto Accessories Co., Ltd.) has received a notice from any local
governmental authorities (including without limitation the Jinan State-Owned
Assets Supervision and Administration Commission) claiming that the Company or
its subsidiaries have breached any obligation arising under the Equity Transfer
Agreement dated May 28, 2005 by and among Beijing Hony VC Investment Center,
Beijing Hony Investment Consulting Co., Ltd. and Jinan State-Owned Assets
Supervision and Administration Commission or the Equity Transfer Agreement dated
May 30, 2005 by and among Beijing Hony VC Investment Center, Beijing Hony
Investment Consulting Co., Ltd. and Yearcity Limited (collectively, the “Jinan Worldwide
Agreements”); if the Company or any of its subsidiaries is required by
the local governmental authorities (including without limitation the Jinan
State-Owned Assets Supervision and Administration Commission) to perform or
carry out the covenants and obligations of Beijing Hony VC Investment Center,
Beijing Hony Investment Consulting Co., Ltd. or Yearcity Limited
under the Jinan Worldwide Agreements, the Company believes that it and its
subsidiaries, taken as a whole, have adequate cash or access to capital and
other resources to perform or carry out such covenants and obligations and the
performance or carrying out of such covenants and obligations would not result
in a Material Adverse Effect.
(b) Any
certificate signed by any officer of the Company and delivered to you or to
counsel for the Underwriters shall be deemed a representation and warranty by
the Company to each Underwriter as to the matters covered
thereby.
-20-
3. Purchase, Sale
and Delivery of Securities.
(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 Firm Shares to the several Underwriters, and each Underwriter
agrees, severally and not jointly, to purchase from the Company the number of
Firm Shares set forth opposite the name of such Underwriter in Schedule I
hereto. The purchase price for each Firm Share shall be $10.2125 per
share. The obligation of each Underwriter to the Company shall be to
purchase from the Company that number of Firm Shares (to be adjusted by the
Representatives to avoid fractional shares) which represents the same proportion
of the number of Firm Shares to be sold by the Company pursuant to this
Agreement as the number of Firm Shares set forth opposite the name of such
Underwriter in Schedule I hereto represents to the total number of Firm
Shares to be purchased by all Underwriters pursuant to this
Agreement. In making this Agreement, each Underwriter is contracting
severally and not jointly; except as provided in paragraph (c) of this
Section 3 and in Section 8 hereof, the agreement of each Underwriter
is to purchase only the respective number of Firm Shares specified in
Schedule I.
The Firm Shares will be delivered by
the Company to you for the accounts of the several Underwriters 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 ▇▇▇▇▇▇▇▇▇ & Company, Inc., ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇., ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, or such other location as may be
mutually acceptable, at 9:00 a.m. Eastern time on the third (or if the
Securities 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 you and the Company determine pursuant
to Rule 15c6-1(a) under the Exchange Act, such time and date of delivery being
herein referred to as the “First Closing
Date.” If the Representatives so elect, delivery of the Firm
Shares may be made by credit through full fast transfer to the accounts at The
Depository Trust Company designated by the
Representatives. Certificates representing the Firm Shares, in
definitive form and in such denominations and registered in such names as you
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., Eastern
time, on the business day next preceding the First Closing Date at the offices
of ▇▇▇▇▇▇▇▇▇ & Company, Inc., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇., ▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇, or such other location as may be mutually acceptable.
(b) On
the basis of the representations, warranties and agreements herein contained,
but subject to the terms and conditions herein set forth, the Company hereby
grants to the several Underwriters an option to purchase all or any portion of
the Option Shares at the same purchase price as the Firm Shares, for use solely
in covering any over-allotments made by the Underwriters in the sale and
distribution of the Firm Shares. The option granted hereunder may be
exercised in whole or in part at any time (but not more than once) within 30
days after the effective date of this Agreement upon notice (confirmed in
writing) by the Representatives to the Company setting forth the aggregate
number of Option Shares as to which the several Underwriters are exercising the
option, the names and denominations in which the certificates for the Option
Shares are to be registered and the date and time, as determined by you, when
the Option Shares are to be delivered, such time and date being herein referred
to as the “Second
Closing” and “Second Closing
Date” (together with the First Closing Date, collectively, the “Closing
Dates”, each, a “Closing
Date”), respectively; provided, however, that the Second Closing Date
shall not be earlier than the First Closing Date nor earlier than the second
business day after the date on which the option shall have been
exercised. The number of Option Shares to be purchased by each
Underwriter shall be the same percentage of the total number of Option Shares to
be purchased by the several Underwriters as the number of Firm Shares to be
purchased by such Underwriter is of the total number of Firm Shares to be
purchased by the several Underwriters, as adjusted by the Representatives in
such manner as the Representatives deem advisable to avoid fractional
shares. No Option Shares shall be sold and delivered unless the Firm
Shares previously have been, or simultaneously are, sold and
delivered.
-21-
The Option Shares will be delivered by
the Company to you for the accounts of the several Underwriters 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 ▇▇▇▇▇▇▇▇▇ & Company, Inc., ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇., ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, or such other location as may be
mutually acceptable at 9:00 a.m., Eastern time, on the Second Closing
Date. If the Representatives so elect, delivery of the Option Shares
may be made by credit through full fast transfer to the accounts at The
Depository Trust Company designated by the
Representatives. Certificates representing the Option Shares in
definitive form and in such denominations and registered in such names as you
have set forth in your notice of option exercise, or evidence of their issuance,
will be made available for checking and packaging not later than 10:30 a.m.,
Eastern time, on the business day next preceding the Second Closing
Date at the office of ▇▇▇▇▇▇▇▇▇ & Company, Inc., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇., ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, or such other location as may be mutually
acceptable.
(c) It
is understood that you, individually and not as Representatives of the several
Underwriters, may (but shall not be obligated to) make payment to the Company,
on behalf of any Underwriter for the Securities to be purchased by such
Underwriter. Any such payment by you shall not relieve any such
Underwriter of any of its obligations hereunder. Nothing herein
contained shall constitute any of the Underwriters an unincorporated association
or partner with the Company.
4. Covenants. The
Company covenants and agrees with the several Underwriters as
follows:
(a) During
the period beginning on the date hereof and ending on the later of the Second
Closing Date or such date, as in the opinion of counsel for the Underwriters,
the Prospectus is no longer required by law to be delivered (assuming the
absence of Rule 172 under the Securities Act), 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(b) Registration Statement), the Time of Sale
Disclosure Package or the Prospectus, the Company shall furnish to the
Representatives for review a copy of each such proposed amendment or supplement,
and the Company shall not file any such proposed amendment or supplement to
which the Representatives or counsel to the Underwriters reasonably
object. Subject to this Section 4(a), immediately following execution
of this Agreement, the Company will prepare the Prospectus containing the Rule
430B Information and other selling terms of the Securities, the plan of
distribution thereof and such other information as may be required by the
Securities Act or the Rules and Regulations or as the Representatives and the
Company may deem appropriate, and if requested by the Representatives, an Issuer
Free Writing Prospectus containing the selling terms of the Securities and such
other information as the Company and the Representatives may deem appropriate,
and will file or transmit for filing with the Commission, in accordance with
Rule 424(b) or Rule 433, as the case may be, copies of the Prospectus and each
Issuer Free Writing Prospectus.
-22-
(b) After
the date of this Agreement, the Company shall promptly advise the
Representatives 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 any Preliminary Prospectus, 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, (D) of
the issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or any post-effective amendment thereto or of any
order preventing or suspending its use or the use of any Preliminary Prospectus,
the Time of Sale Disclosure Package, the Prospectus or any Issuer Free Writing
Prospectus, or (E) 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, the Company will use its best 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), Rule 433 or Rule
462 were received in a timely manner by the Commission (without reliance on Rule
424(b)(8) or Rule 164(b)).
(c) (A) During
the Prospectus Delivery Period, the Company will comply as far as it is able
with all requirements imposed upon it by the Securities Act, as now and
hereafter amended, and by the Rules and Regulations, as from time to time in
force, and by the Exchange Act so far as necessary to permit the continuance of
sales of or dealings in the Securities as contemplated by the provisions hereof,
the Time of Sale Disclosure Package and the Prospectus. If during
such period any event occurs as a result of which the Prospectus (or if the
Prospectus is not yet available to prospective purchasers, the 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
Representatives or counsel to the Underwriters to amend the Registration
Statement or supplement the Prospectus (or, if the Prospectus is not yet
available to prospective purchasers, the Time of Sale Disclosure Package) to
comply with the Securities Act or to file under the Exchange Act any document
which would be deemed to be incorporated by reference in the Prospectus in order
to comply with the Securities Act or the Exchange Act, the Company will promptly
notify you 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) If
at any time following issuance of an Issuer Free Writing Prospectus there
occurred or occurs an event or development as a result of which such Issuer Free
Writing Prospectus conflicted or would conflict with the information contained
in the Registration Statement, the Statutory Prospectus or the Prospectus or
included or would include an untrue statement of a material fact or omitted or
would omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances prevailing at that subsequent time,
not misleading, the Company has promptly notified or promptly will notify the
Representatives and has promptly amended or will promptly amend or supplement,
at its own expense, such Issuer Free Writing Prospectus to eliminate or correct
such conflict, untrue statement or omission.
-23-
(C) If
immediately prior to the third anniversary of the initial effective date of the
Registration Statement, any of the Securities remain unsold by the Underwriters,
the Company will prior to that third anniversary file, if it has not already
done so, a new shelf registration statement relating to the Securities, in a
form satisfactory to the Representatives, will use its best efforts to cause
such registration statement to be declared effective within 180 days after that
third anniversary, and will take all other action necessary or appropriate to
permit the public offering and sale of the Securities to continue as
contemplated in the expired registration statement relating to the
Securities. References herein to the Registration Statement shall
include such new shelf registration statement.
(d) The
Company shall take or cause to be taken all necessary action to qualify the
Securities for sale under the securities laws of such jurisdictions as you
reasonably designate and to continue such qualifications in effect so long as
required for the distribution of the Securities, except that the Company shall
not be required in connection therewith to qualify as a foreign corporation, to
execute a general consent to service of process in any state, or to subject
itself to taxation of any jurisdiction if it is not otherwise so
subject.
(e) The
Company will furnish, at its own expense, to the Underwriters and counsel for
the Underwriters copies of the Registration Statement (which will include three
complete manually signed copies of the Registration Statement and all consents
and exhibits filed therewith), and to the Underwriters and any dealer each
Preliminary Prospectus, the Time of Sale Disclosure Package, the Prospectus, any
Issuer Free Writing Prospectus, and all amendments and supplements to such
documents, in each case as soon as available and in such quantities as you may
from time to time reasonably request.
(f) During
a period of five years commencing with the date hereof, the Company will furnish
to the Representatives, and to each Underwriter who may so request in writing,
copies of all periodic and special reports furnished to the stockholders of the
Company and all information, documents and reports filed with the Commission,
the FINRA or any securities exchange (other than any such information, documents
and reports that are filed with the Commission electronically via ▇▇▇▇▇ or any
successor system).
(g) The
Company will make generally available to its security holders as soon as
practicable, but in no event 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.
-24-
(h) 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 Underwriters of the Securities,
(B) all expenses and fees (including, without limitation, fees and expenses of
the Company’s accountants and counsel but, except as otherwise provided below,
not including fees of the Underwriters’ 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 Securities, each Preliminary Prospectus,
the Time of Sale Disclosure Package, the Prospectus, any Issuer Free Writing
Prospectus and any amendment thereof or supplement thereto, and the printing,
delivery, and shipping of this Agreement and other underwriting documents,
including Blue Sky Memoranda (covering the states and other applicable
jurisdictions), (C) the fees and expenses of any transfer agent or registrar,
(D) listing fees, if any, (E) the cost and expenses of the Company relating to
investor presentations or any “roadshow” undertaken in connection with marketing
of the Securities, and (F) all other costs and expenses of the Company incident
to the performance of its obligations hereunder that are not otherwise
specifically provided for herein. In addition, if the proposed offering
contemplated by this Agreement (the “Proposed
Offering”) is not completed, the Company will reimburse the
Representatives all reasonable costs and out-of-pocket expenses incurred by the
Representatives in connection with planning, preparing and executing the
Proposed Offering, including the fees and disbursements of legal counsels for
the Representatives, provided that the Company’s reimbursement obligation with
respect to the Representatives’ such costs and out-of-pocket expenses shall be
subject to a $150,000 maximum. The Company further agrees that it
will reimburse the Representatives for such expenses within 30 calendar days
following a termination or postponement (regardless of the reasons for the
postponement) of the Proposed Offering.
(i) The
Company will apply the net proceeds from the sale of the Securities to be sold
by it hereunder for the purposes set forth in the Time of Sale Disclosure
Package and in the Prospectus and will file such reports with the Commission
with respect to the sale of the Securities and the application of the proceeds
therefrom as may be required in accordance with Rule 463 of the Rules and
Regulations.
(j) The
Company will not, without the prior written consent of the Representatives, from
the date of execution of this Agreement and continuing to and including the date
90 days after the date of the Prospectus (the “Lock-Up
Period”), (A) offer, pledge, announce the intention to sell, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase 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 agreement that transfers, in whole or in
part, any of the economic consequences of ownership of the Common Stock, whether
any such transaction described in clause (A) or (B) above is to be settled by
delivery of Common Stock or such other securities, in cash or otherwise, except
(i) to the Underwriters pursuant to this Agreement and (ii) to directors,
employees and consultants of the Company under the Company’s equity incentive
plans disclosed in the Time of Sale Disclosure Package and in the Prospectus, so
long as such persons agree to be bound by the terms of the Lock-Up Agreement
described in section 4(k) hereof. The Company agrees not to
accelerate the vesting of any option or warrant or the lapse of any repurchase
right prior to the expiration of the Lock-Up Period. If (1) during
the last 17 days of the Lock-Up Period, (a) the Company issues an earnings
release, (b) the Company publicly announces material news or (c) a material
event relating to the Company occurs; or (2) 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, then
the restrictions in this Agreement, unless otherwise waived by the
Representatives in writing, shall continue to apply until the expiration of the
date that is 18 calendar days after the date on which (a) the Company issues the
earnings release, (b) the Company publicly announces material news or (c) a
material event relating to the Company occurs. The Company will
provide the Representatives, any co-managers and each shareholder subject to the
Lock-Up Agreement (as defined below) with prior notice of any such announcement
that gives rise to the extension of the Lock-Up Period.
-25-
(k) The
Company has caused to be delivered to you prior to the date of this Agreement a
letter, in the form of Exhibit A hereto (the
“Lock-Up
Agreement”), from each of the Company’s directors and officers and Choice
Inspire Limited. The Company will enforce the terms of each Lock-Up
Agreement and issue stop-transfer instructions to the transfer agent for the
Common Stock with respect to any transaction or contemplated transaction that
would constitute a breach of or default under the applicable Lock-Up
Agreement.
(l) The
Company has not taken and will not take, directly or indirectly, any action
designed to or which might reasonably be expected to cause or result in, or
which has constituted, the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Securities, and
has not effected any sales of Common Stock which are required to be disclosed in
response to Item 701 of Regulation S-K under the Securities Act which
have not been so disclosed in the Registration Statement.
(m) The
Company will not incur any liability for any finder’s or broker’s fee or agent’s
commission in connection with the execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby.
(n) During
the Prospectus Delivery Period, the Company will file on a timely basis with the
Commission such periodic and special reports as required by the Rules and
Regulations.
(o) The
Company and its subsidiaries will maintain such controls and other procedures,
including without limitation those required by Sections 302 and 906 of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act and the applicable regulations thereunder, that are designed
to ensure that information required to be disclosed by the Company in the
reports that it files or submits under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the Commission's
rules and forms, including without limitation, controls and procedures designed
to ensure that information required to be disclosed by the Company in the
reports that it files or submits under the Exchange Act is accumulated and
communicated to the Company's management, including its principal executive
officer and its principal financial officer, or persons performing similar
functions, as appropriate to allow timely decisions regarding required
disclosure, to ensure that material information relating to Company, including
its subsidiaries, is made known to them by others within those
entities.
-26-
(p) The
Company and its subsidiaries will comply with all applicable provisions of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act.
(q) The
Company represents and agrees that, unless it obtains the prior written consent
of the Representatives, and each Underwriter severally represents and agrees
that, unless it obtains the prior written consent of the Company and the
Representatives, it has not made and will not make any offer relating to the
Securities that would constitute an “issuer free writing prospectus,” as defined
in Rule 433 under the Securities Act, or that would otherwise constitute a “free
writing prospectus,” as defined in Rule 405 under the Securities Act, required
to be filed with the Commission; provided that the prior written consent of the
parties hereto shall be deemed to have been given in respect of the free writing
prospectuses included in Schedule II. Any such free writing
prospectus consented to by the Company and the Representatives is hereinafter
referred to as a “Permitted Free Writing Prospectus.” The Company
represents that it has treated or agrees that it will treat each Permitted Free
Writing Prospectus as an “issuer free writing prospectus,” as defined in Rule
433, and has complied and will comply with the requirements of Rule 433
applicable to any Permitted Free Writing Prospectus, including timely Commission
filing where required, legending and record keeping.
(r) Prior
to a Closing Date, the Company will not issue any press release or other
communication directly or indirectly or hold any press conference with respect
to the Company and/or its subsidiaries, their condition, financial or otherwise,
or the earnings, business, operations or prospects of any of them, or the
offering of the Securities (except for routine oral marketing communications in
the ordinary course of business and consistent with the past practices of the
Company and of which the Underwriters are notified), without the prior written
consent of the Representatives, unless in the reasonable judgment of the Company
and its counsel, and after notification to the Underwriters, such press release
or communication is required by law or applicable stock exchange, in which case
the Company shall use its reasonable best efforts to allow the Underwriters
reasonable time to comment on such release or other communication in advance of
such issuance.
5. Conditions of
Underwriters’ Obligations. The obligations of the several
Underwriters hereunder are subject to the accuracy, as of the date hereof and at
each of the First Closing Date and the Second Closing Date (as if made at such
Closing Date), of and compliance with all representations, warranties and
agreements of the Company contained herein, to the performance by the Company of
their respective obligations hereunder and to the following additional
conditions:
(a) If
filing of the Prospectus, or any amendment or supplement thereto, or any Issuer
Free Writing Prospectus, is required under the Securities Act or the Rules and
Regulations, the Company shall have filed the Prospectus (or such amendment or
supplement) or such Issuer Free Writing Prospectus with the Commission in the
manner and within the time period so required (without reliance on Rule
424(b)(8) or Rule 164(b)); the Registration Statement shall remain effective; no
stop order suspending the effectiveness of the Registration Statement or any
part thereof, any Rule 462(b) Registration Statement, or any amendment thereof,
nor suspending or preventing the use of the Time of Sale Disclosure Package, the
Prospectus or any Issuer Free Writing Prospectus shall have been issued; no
proceedings for the issuance of such an order shall have been initiated or
threatened; any request of the Commission for additional information (to be
included in the Registration Statement, the Time of Sale Disclosure Package, the
Prospectus, any Issuer Free Writing Prospectus or otherwise) shall have been
complied with to your satisfaction.
-27-
(b) No
Underwriter shall have advised the Company that (i) the Registration Statement
or any amendment thereof or supplement thereto contains an untrue statement of a
material fact which, in your opinion, is material or omits to state a material
fact which, in your opinion, is required to be stated therein or necessary to
make the statements therein not misleading, or (ii) the Time of Sale Disclosure
Package or the Prospectus, or any amendment thereof or supplement thereto, or
any Issuer Free Writing Prospectus contains an untrue statement of fact which,
in your opinion, is material, or omits to state a fact which, in your opinion,
is material and is required to be stated therein, or necessary to make the
statements therein, in light of the circumstances under which they are made, not
misleading.
(c) Except
as contemplated in the Time of Sale Disclosure Package and in the Prospectus,
subsequent to the respective dates as of which information is given in the Time
of Sale Disclosure Package, neither the Company nor any of its subsidiaries
shall have incurred any material liabilities or obligations, direct or
contingent, or entered into any material transactions, or declared or paid any
dividends or made any distribution of any kind with respect to its capital
stock; and there shall not have been any change in the capital stock (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 any material
change in the short-term or long-term debt of the Company, or any issuance of
options, warrants, convertible securities or other rights to purchase the
capital stock of the Company or any of its subsidiaries, or any Material Adverse
Change or any development involving a prospective Material Adverse Change
(whether or not arising in the ordinary course of business), or any loss by
strike, fire, flood, earthquake, accident or other calamity, whether or not
covered by insurance, incurred by the Company or any subsidiary, the effect of
which, in any such case described above, in your judgment, makes it impractical
or inadvisable to offer or deliver the Securities on the terms and in the manner
contemplated in the Time of Sale Disclosure Package and in the
Prospectus.
(d) On
or after the Time of Sale (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 or;
(e) On
each Closing Date, there shall have been furnished to you, as Representatives of
the several Underwriters, the opinion of Pillsbury ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ LLP,
United States counsel for the Company, dated such Closing Date and addressed to
you in substantially the form attached hereto as Exhibit B.
(f) On
each Closing Date, there shall have been furnished to you, as Representatives of
the several Underwriters, the opinion of Holland & ▇▇▇▇ LLP, Nevada counsel
for the Company, dated such Closing Date and addressed to you in substantially
the form attached hereto as Exhibit C.
-28-
(g) On
each Closing Date, there shall have been furnished to you, as Representatives of
the several Underwriters, the opinion of Beijing Ruidu Law Firm, PRC counsel for
the Company, addressed to you, in substantially the form attached hereto as
Exhibit
D.
(h) On
each Closing Date, there shall have been furnished to you, as Representatives of
the several Underwriters, the opinion of ▇▇▇▇▇▇ and Calder, British Virgin
Islands counsel for the Company and/or its subsidiaries, dated such Closing Date
and addressed to you, in substantially the form attached hereto as Exhibit
E.
(i) On
each Closing Date, there shall have been furnished to you, as Representatives of
the several Underwriters, such opinion or opinions from O’Melveny & ▇▇▇▇▇
LLP, United States counsel for the several Underwriters, dated such Closing Date
and addressed to you, in form and substance satisfactory to the Representatives,
and such counsel shall have been provided with such papers and information as
they request to enable them to pass upon such matters.
(j) On
each Closing Date, there shall have been furnished to you the opinion of Tian
Yuan Law Firm, PRC counsel for the several Underwriters, addressed to you, in
form and substance satisfactory to the Representative, and such counsel shall
have been provided with such papers and information as they request to enable
them to pass upon such matters.
(k) On
the date hereof and on each Closing Date you, as Representatives of the several
Underwriters, shall have received a letter of PKF, dated the date hereof or such
Closing Date and addressed to you, confirming that they are independent public
accountants within the meaning of the Securities Act and are in compliance with
the applicable requirements relating to the qualifications of accountants under
Rule 2-01 of Regulation S-X of the Commission, and stating, as of the date
of 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, customarily included in the accountants’ “comfort
letter,” with respect to the financial information and other matters
covered by its letter delivered to you concurrently with the execution of this
Agreement, and the effect of the letter so to be delivered on such Closing Date
shall be to confirm the conclusions and findings set forth in such prior
letter.
(l) On
the date hereof and on each Closing Date you, as Representatives of the several
Underwriters, shall have received a letter of the chief financial officer of the
Company, dated the date hereof or such Closing Date and addressed to you, in
form and substance satisfactory to the Representatives, which letters shall
cover, without limitation, the various financial and operating disclosures
contained or incorporated by reference in the Registration Statement, the Time
of Sale Disclosure Package, the Prospectus and the Permitted Free Writing
Prospectus, if any.
-29-
(m) On
each Closing Date, there shall have been furnished to you, as Representatives of
the Underwriters, a certificate, dated such Closing Date and addressed to you,
signed by the chief executive officer and by the chief financial officer of the
Company, to the effect that:
(i) The
representations and warranties of the Company in this Agreement are true and
correct, in all material respects, as if made at and as of such 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 such Closing
Date;
(ii) No
stop order or other order suspending the effectiveness of the Registration
Statement or any part thereof or any amendment thereof or the qualification of
the Securities for offering or sale, nor suspending or preventing the
use of the Time of Sale Disclosure Package, the Prospectus or any Issuer Free
Writing Prospectus, has been issued, and no proceeding for that purpose has been
instituted or, to the best of their knowledge, is contemplated by the Commission
or any state or regulatory body; and
(iii) The
signers of said certificate have carefully examined the Registration Statement,
the Time of Sale Disclosure Package and the Prospectus, and any amendments
thereof or supplements thereto (including any documents filed under the Exchange
Act and deemed to be incorporated by reference into the Time of Sale Disclosure
Package and the Prospectus), and
(A) each
part of the Registration Statement and the Prospectus, and any amendments
thereof or supplements thereto (including any documents filed under the Exchange
Act and deemed to be incorporated by reference into the Prospectus) contain, and
contained, when such part of the Registration Statement (or such amendment)
became effective, all statements and information required to be included
therein, each part of the Registration Statement, or any amendment thereof, does
not contain, and did not contain, when such part of the Registration Statement
(or such amendment) became effective, any untrue statement of a material fact or
omit to state, and did not omit to state when such part of the Registration
Statement (or such amendment) became effective, any material fact required to be
stated therein or necessary to make the statements therein not misleading, and
the Prospectus, as amended or supplemented, does not include and did not include
as of its date, or the time of first use within the meaning of the Rules and
Regulations, any untrue statement of a material fact or omit to state and did
not omit to state as of its date, or the time of first use within the meaning of
the Rules and Regulations, a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading,
(B) neither
(1) the Time of Sale Disclosure Package nor (2) any individual Issuer
Limited-Use Free Writing Prospectus, when considered together with the Time of
Sale Disclosure Package, include, nor included as of the Time of Sale any untrue
statement of a material fact or omits, or omitted as of the Time of Sale, to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading,
-30-
(C) since
the Time of Sale, there has occurred no event required to be set forth in an
amended or supplemented prospectus which has not been so set forth, and there
has been no document required to be filed under the Exchange Act that upon such
filing would be deemed to be incorporated by reference into the Time of Sale
Disclosure Package or into the Prospectus that has not been so
filed,
(D)
subsequent
to the respective dates as of which information is given in the Time of Sale
Disclosure Package and in the Prospectus, neither the Company nor any of its
subsidiaries has incurred any material liabilities or obligations, direct or
contingent, or entered into any material transactions, not in the ordinary
course of business, or declared or paid any dividends or made any distribution
of any kind with respect to its capital stock, and except as disclosed in the
Time of Sale Disclosure Package and in the Prospectus, there has not been any
change in the capital stock (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 any material change in the short-term or
long-term debt, or any issuance of options, warrants, convertible securities or
other rights to purchase the capital stock, of the Company, or any of its
subsidiaries, or any Material Adverse Change or any development which could
reasonably be expected to result in any Material Adverse Change (whether or not
arising in the ordinary course of business), or any loss by strike, fire, flood,
earthquake, accident or other calamity, whether or not covered by insurance,
incurred by the Company or any subsidiary, and
(E)
except as stated in the Time of Sale Disclosure Package and in the Prospectus,
there is not pending, or, to the knowledge of the Company, threatened or
contemplated, any action, suit or proceeding to which the Company or any of its
subsidiaries is a party before or by any court or Governmental Authority or
body, or any arbitrator, which could reasonably be expected to result in any
Material Adverse Change.
(n) On
each Closing Date, there shall have been furnished to you, as Representatives of
the Underwriters, a certificate of the Company’s Secretary, dated such Closing
Date and addressed to you, in form and substance satisfactory to the
Representatives.
(o) The
Company shall have furnished to you and counsel for the Underwriters such
additional documents, certificates and evidence as you or they may have
reasonably requested.
(p) The
Securities to be delivered on such Closing Date have been approved for listing
on the NASDAQ Global Market, subject to official notice of
issuance.
All such opinions, certificates,
letters and other documents will be in compliance with the provisions hereof
only if they are satisfactory in form and substance to you and counsel for the
Underwriters. The Company will furnish you with such conformed copies
of such opinions, certificates, letters and other documents as you shall
reasonably request.
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6. Indemnification
and Contribution.
(a) The
Company agrees to indemnify and hold harmless each Underwriter, its affiliates,
directors and officers and each person, if any, who controls such Underwriter
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
from and against any losses, claims, damages or liabilities, joint or several,
to which such indemnified person may become subject, under the 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 an
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement, including the 430B Information and any other information
deemed to be a part of the Registration Statement at the time of effectiveness
and at any subsequent time pursuant to the Rules and Regulations, if applicable,
any Preliminary Prospectus, the Time of Sale Disclosure Package, the Prospectus,
or any amendment or supplement thereto, any Issuer Free Writing Prospectus or in
any materials or information provided to investors by, or with the approval of,
the Company in connection with the marketing of the offering of the Common Stock
(“Marketing
Materials”), including any roadshow or investor presentations made to
investors by the Company (whether in person or electronically), or arise out of
or are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and will reimburse each indemnified person for any legal or
other expenses reasonably incurred by it in connection with investigating or
defending against such loss, claim, damage, liability or action as such expenses
are incurred; provided,
however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage, liability or action arises out of or
is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in the Registration Statement, any Preliminary Prospectus,
the Time of Sale Disclosure Package, the Prospectus, or any such amendment or
supplement, any Issuer Free Writing Prospectus or in any Marketing Materials, in
reliance upon and in conformity with written information furnished to the
Company by you, or by any Underwriter through you, specifically for use in the
preparation thereof; it being understood and agreed that the only information
furnished by an Underwriter consists of the information described as such in
Section 6(f).
(b) Each
Underwriter will, severally and not jointly, indemnify and hold harmless the
Company and its affiliates, directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the Act and Section 20
of the Exchange Act, from and against any losses, claims, damages or liabilities
to which such indemnified person may become subject, under the 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, any Preliminary Prospectus, the Time of
Sale Disclosure Package, the Prospectus, or any amendment or supplement thereto,
or any Issuer Free Writing Prospectus 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, any Preliminary Prospectus, the Time of Sale Disclosure
Package, the Prospectus, or any such amendment or supplement, or any Issuer Free
Writing Prospectus in reliance upon and in conformity with written information
furnished to the Company by you, or by such Underwriter through you,
specifically for use in the preparation thereof (it being understood and agreed
that the only information furnished by an Underwriter consists of the
information described as such in Section 6(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 as such expenses are incurred.
-32-
(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 omission so 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 (through the forfeiture of substantive rights or
defenses). 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 other than reasonable costs of investigation; provided, however, that
if, in the sole judgment of the Representatives, it is advisable for the
Underwriters to be represented as a group by separate counsel, the
Representatives shall have the right to employ a single counsel (in addition to
local counsel) to represent the Representatives and all Underwriters who may be
subject to liability arising from any claim in respect of which indemnity may be
sought by the Underwriters under subsection (a) of this Section 6, 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 Underwriters as
incurred (in accordance with the provisions of the second paragraph in
subsection (a) above). An indemnifying party shall not be obligated
under any settlement agreement relating to any action under this Section 6 to
which it has not agreed in writing. In addition, no indemnifying
party shall, without the prior written consent of the indemnified party (which
consent shall not be unreasonably withheld or delayed), effect any settlement of
any pending or threatened proceeding unless such settlement includes an
unconditional release of such indemnified party for all liability on claims that
are the subject matter of such proceeding and does not include a statement as
to, or an admission of, fault, culpability or a failure to act by or on behalf
of an indemnified party.
-33-
(d) If
the indemnification provided for in this Section 6 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 Underwriters on the other from the offering of
the Securities 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 Underwriters on
the other 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 Underwriters on the other 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 Underwriters, in each case as set forth in the table
on the cover page of the 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
Underwriters and the parties’ relevant intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or
omission. The Company and the Underwriters agree that it would not be
just and equitable if contributions pursuant to this subsection (d) were to
be determined by pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to 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 which is the subject
of this subsection (d). Notwithstanding the provisions of this
subsection (d), no Underwriter shall be required to contribute any amount
in excess of the amount by which the total price at which the Securities
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters’ obligations in this
subsection (d) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(e) The
obligations of the Company under this Section 6 shall be in addition to any
liability which the Company may otherwise have and shall extend, upon the same
terms and conditions, to each person, if any, who controls any Underwriter
within the meaning of the Act; and the obligations of the Underwriters under
this Section 6 shall be in addition to any liability that the respective
Underwriters may otherwise have and shall extend, upon the same terms and
conditions, to each director of the Company (including any person who, with his
consent, is named in the Registration Statement as about to become a director of
the Company), to each officer of the Company who has signed the Registration
Statement and to each person, if any, who controls the Company within the
meaning of the Act.
(f) The
Underwriters severally confirm and the Company acknowledges that the statements
with respect to the public offering of the Securities by the Underwriters
regarding the names and corresponding share amounts set forth in the table of
the underwriters under the caption “Underwriting” and the concession and
reallowance figures and the paragraph relating to stabilization by the
Underwriters appearing under the caption “Underwriting” in the Time of Sale
Disclosure Package and in the Prospectus are correct and constitute the only
information concerning such Underwriters furnished in writing to the Company by
or on behalf of the Underwriters specifically for inclusion in the Registration
Statement, any Preliminary Prospectus, the Time of Sale Disclosure Package, the
Prospectus or any Issuer Free Writing Prospectus.
-34-
7. 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 several
Underwriters and the Company contained in Section 6 hereof, shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any Underwriter or any controlling person thereof, or the
Company or any of its officers, directors, or controlling persons, and shall
survive delivery of, and payment for, the Securities to and by the Underwriters
hereunder.
8. Substitution of
Underwriters.
(a) If
any Underwriter or Underwriters shall fail to take up and pay for the amount of
Firm Shares agreed by such Underwriter or Underwriters to be purchased
hereunder, upon tender of such Firm Shares in accordance with the terms hereof,
and the amount of Firm Shares not purchased does not aggregate more than 10% of
the total amount of Firm Shares set forth in Schedule I hereto, the
remaining Underwriters shall be obligated to take up and pay for (in proportion
to their respective underwriting obligations hereunder as set forth in
Schedule I hereto except as may otherwise be determined by you) the Firm
Shares that the withdrawing or defaulting Underwriters agreed but failed to
purchase.
(b) If
any Underwriter or Underwriters shall fail to take up and pay for the amount of
Firm Shares agreed by such Underwriter or Underwriters to be purchased
hereunder, upon tender of such Firm Shares in accordance with the terms hereof,
and the amount of Firm Shares not purchased aggregates more than 10% of the
total amount of Firm Shares set forth in Schedule I hereto, and
arrangements satisfactory to you for the purchase of such Firm Shares by other
persons are not made within 36 hours thereafter, this Agreement shall
terminate. In the event of any such termination, the Company shall
not be under any liability to any Underwriter (except to the extent provided in
Section 4(h) and Section 6 hereof) nor shall any Underwriter (other
than an Underwriter who shall have failed, otherwise than for some reason
permitted under this Agreement, to purchase the amount of Firm Shares agreed by
such Underwriter to be purchased hereunder) be under any liability to the
Company (except to the extent provided in Section 6 hereof).
If Firm Shares to which a default
relates are to be purchased by the non-defaulting Underwriters or by any other
party or parties, the Representatives or the Company shall have the right to
postpone the First Closing Date for not more than seven business days in order
that the necessary changes in the Registration Statement, in the Time of Sale
Disclosure Package, in the Prospectus or in any other documents, as well as any
other arrangements, may be effected. As used herein, the term
“Underwriter” includes any person substituted for an Underwriter under this
Section 8.
-35-
9. Termination of
this Agreement.
(a) You,
as Representatives of the several Underwriters, 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 First Closing Date, and the option
referred to in Section 3(b), if exercised, may be cancelled at any time
prior to the Second Closing Date, if (i) the Company shall have failed,
refused or been unable, at or prior to such Closing Date, to perform any
agreement on its part to be performed hereunder, (ii) any other condition
of the Underwriters’ obligations hereunder is not fulfilled, (iii) trading in
the Company’s Common Stock shall have been suspended by the Commission or The
NASDAQ Global Market or trading in securities generally on the NASDAQ
Global Market, New York Stock Exchange or the American Stock Exchange shall have
been suspended, (iv) minimum or maximum prices for trading shall have been
fixed, or maximum ranges for prices for securities shall have been required, on
the NASDAQ Global Market, New York Stock Exchange or the American Stock
Exchange, by such exchange or by order of the Commission or any other
Governmental Authority having jurisdiction, (v) a banking moratorium shall
have been declared by federal or state authorities, or (vi) there shall
have occurred any attack on, outbreak or escalation of hostilities or act of
terrorism involving the United States and/or the PRC, any declaration by the
United States and/or the PRC of a national emergency or war, any change in
financial markets, any substantial change or development involving a prospective
substantial change in United States and/or the PRC or international political,
financial or economic conditions, or any other calamity or crisis that, in your
judgment, is material and adverse and makes it impractical or inadvisable to
proceed with the completion of the sale of and payment for the
Securities. Any such termination shall be without liability of any
party to any other party except that the provisions of Section 4(h) and
Section 6 hereof shall at all times be effective and shall survive such
termination.
(b) If
you elect to terminate this Agreement as provided in this Section, the Company
shall be notified promptly by you by telephone, confirmed by
letter.
10. Default by the
Company.
If the Company shall fail at the First
Closing Date to sell and deliver the number of Securities which it is obligated
to sell hereunder, then this Agreement shall terminate without any liability on
the part of any Underwriter or, except as provided in Section 4(h) and Section 6
hereof, any non-defaulting party.
No action taken pursuant to this
Section shall relieve the Company from liability, if any, in respect of such
default.
11. Notices. Except
as otherwise provided herein, all communications hereunder shall be in writing
and, if to the Underwriters, shall be mailed or delivered to the Representatives
at (i) ▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co., U.S. Bancorp Center, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: General Counsel, (ii) ▇▇▇▇▇▇▇▇▇ &
Company, Inc., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention:
General Counsel; and (iii) ▇▇▇▇▇▇▇▇▇▇▇ & Co. Inc., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: General Counsel, except that notices given
to an Underwriter pursuant to Section 6 hereof shall be sent to such Underwriter
at the address stated in the Underwriters’ Questionnaire furnished by such
Underwriter in connection with this offering; if to the Company, shall be mailed
or delivered to it at ▇▇. ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ District, Jinzhou City, Liaoning
Province, China, 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.
-36-
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 6. 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 Securities
from any of the several Underwriters.
13. Absence of
Fiduciary Relationship. The Company acknowledges and agrees
that: (a) the Representatives have been retained solely to act as an underwriter
in connection with the sale of the Securities and that no fiduciary, advisory or
agency relationship between the Company and the Representatives have been
created in respect of any of the transactions contemplated by this Agreement,
irrespective of whether the Representatives have advised or are advising the
Company on other matters; (b) the price and other terms of the Securities set
forth in this Agreement were established by the Company following discussions
and arms-length negotiations with the Representatives 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 Representatives and their affiliates are engaged in a broad
range of transactions which may involve interests that differ from those of the
Company and that the Representatives have no 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 Representatives are
acting, in respect of the transactions contemplated by this Agreement, solely
for the benefit of the Representatives and the other Underwriters, and not on
behalf of the Company; (e) it waives to the fullest extent permitted by law, any
claims it may have against the Representatives for breach of fiduciary duty or
alleged breach of fiduciary duty in respect of any of the transactions
contemplated by this Agreement and agrees that the Representatives shall have no
liability (whether direct or indirect) to the Company in respect of such a
fiduciary duty claim on behalf of or in right of the Company, including
stockholders, employees or creditors of the Company.
14. Governing
Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
15. Submission to
Jurisdiction. In connection with any action involving the
Company arising out of or relating to this Agreement, the courts of the State of
New York located in the City and County of New York or in the United States
District Court for the Southern District of New York (each, a “New York
Court”) shall have jurisdiction over the adjudication of such matters,
and the Company consents to the jurisdiction of such courts and
personal service with respect thereto. The Company hereby consents to
personal jurisdiction, service and venue in any court in which any claim
arising out of or in any way relating to this Agreement is brought by any
third party against any Underwriter or any indemnified party. The
Company (on its behalf and, to the extent permitted by applicable law, on behalf
of its stockholders and affiliates) waives all right to trial by jury in any
action, proceeding or counterclaim (whether based upon contract, tort or
otherwise) in any way arising out of or relating to
this Agreement. The Company agrees that a final judgment in any
such action, proceeding or counterclaim brought in any such court shall be
conclusive and binding upon the Company and may be enforced in any other
courts to the jurisdiction of which said Company is or may be subject, by
suit upon such judgment. The Company has irrevocably
appointed Corporation Service Company as its respective authorized agent
upon whom process may be served in any action, proceeding or counterclaim in any
way relating to, arising out of or based on this Agreement or the transactions
contemplated hereby which may be instituted in any New York court.
-37-
16. Research Analyst
Independence. The
Company acknowledges that the Underwriters’ research analysts and research
departments are required to be independent from their investment banking
divisions and are subject to certain regulations and internal policies, and that
the Underwriters’ research analysts may hold views and make statements or
investment recommendations and/or publish research reports with respect to the
Company and/or the offering that differ from the views of their respective
investment banking divisions. The Company hereby waives and releases, to the
fullest extent permitted by law, any claims that the Company may have against
the Underwriters with respect to any conflict of interest that may arise from
the fact that the views expressed by their independent research analysts and
research departments may be different from or inconsistent with the views or
advice communicated to the Company by the Underwriters’ investment banking
divisions. The Company acknowledges that the Underwriters are full service
securities firms and as such from time to time, subject to applicable securities
laws, rules and regulations, may effect transactions for their own accounts or
the accounts of their customers and hold long or short positions in debt or
equity securities of the Company; provided, however, that nothing in this
Section 16 shall relieve any Underwriter of any responsibility or liability it
may otherwise bear in connection with activities in violation of applicable
securities laws, rules and regulations.
17. Counterparts. This
Agreement may be executed in one or more counterparts and, if executed 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.
18. General
Provisions. This Agreement constitutes the entire agreement of
the parties to this Agreement and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations with respect to
the subject matter hereof. This Agreement may not be amended or
modified unless in writing by all of the parties hereto, and no condition herein
(express or implied) may be waived unless waived in writing by each party whom
the condition is meant to benefit. The Section headings herein are
for the convenience of the parties only and shall not affect the construction or
interpretation of this Agreement. 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 hereof.
[Signature
Page Follows]
-38-
Please sign and return to the Company
the enclosed duplicates of this Agreement whereupon it will become a binding
agreement between the Company and the several Underwriters in accordance with
its terms.
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Very
truly yours,
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||
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By
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/s/ ▇▇▇▇▇▇▇ ▇▇▇▇
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▇▇▇▇▇▇▇
▇▇▇▇
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||
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Chief
Executive Officer
|
||
Confirmed
as of the date first above mentioned, on behalf of themselves and the other
several Underwriters named in Schedule I hereto.
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By
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/s/
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Managing
Director
|
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▇▇▇▇▇▇▇▇▇
& COMPANY, INC.
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By
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/s/
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Managing
Director
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▇▇▇▇▇▇▇▇▇▇▇
& CO. INC.
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By
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/s/
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Managing
Director
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SCHEDULE
I
|
Underwriter
|
Number of Firm Shares (1)
|
|||
|
▇▇▇▇▇
▇▇▇▇▇▇▇ & Co.
|
1,950,000 | |||
|
▇▇▇▇▇▇▇▇▇
& Company, Inc.
|
1,950,000 | |||
|
▇▇▇▇▇▇▇▇▇▇▇
& Co. Inc.
|
1,650,000 | |||
|
▇▇▇▇
Capital Partners
|
450,000 | |||
|
Total
|
6,000,000 | |||
|
(1)
|
The
Underwriters may purchase up to an additional 900,000 Option Shares, to
the extent the option described in Section 3(b) of the Agreement is
exercised, in the proportions and in the manner described in the
Agreement.
|
SCHEDULE
II
Issuer
General Free Writing Prospectuses
None
SCHEDULE
III
Pricing
Information
|
|
1.
|
The
initial price to the public: US$10.75 per
share.
|
|
|
2.
|
Number
of shares offered: 6,000,000.
|
|
|
3.
|
Overallotment
option: 900,000.
|
|
|
4.
|
Underwriting
discounts and commissions: 5%.
|
|
|
5.
|
Net
proceeds to the Company (including estimated offering expenses):
$61,275,000 (assuming the underwriters’ overallotment option is not
exercised).
|