Andatee China Marine Fuel Services Corporation Underwriting Agreement
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2009
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& ▇▇▇▇▇▇▇ LLC
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Newbridge
Securities Corporation
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As
Representatives of the several
Underwriters
named in Schedule I hereto
Dear
Sirs:
Andatee
China Marine Fuel Services Corporation, a Delaware corporation (the “Company”),
proposes, subject to the terms and conditions contained herein, to sell to you
and the other underwriters named on Schedule I to this Agreement (the
“Underwriters”) for whom you are acting as Representatives (the
“Representatives”), an aggregate of __________ shares (the “Firm Shares”) of the
Company’s common stock (the “Common Stock”). ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇,
LLC (“▇▇▇▇▇▇”) and Newbridge Securities Corporation (“NSC”) are acting as the
co-managing underwriters of the offering (the “Managers”). The
Underwriters, severally and not jointly, agree to purchase from the Company the
number of Firm Shares set forth opposite their respective names on Schedule I
attached hereto and made a part hereof at a purchase price (net of discounts and
commissions) of $______ per Firm Share.
The
Company has prepared and filed in conformity with the requirements of the
Securities Act of 1933, as amended (the “Securities Act”), and the published
rules and regulations thereunder (the “Rules”) adopted by the Securities and
Exchange Commission (the “Commission”), a Registration Statement (as hereinafter
defined) on Form S-1 (No. 333-161577), including a Preliminary Prospectus (as
hereinafter defined) relating to the Securities (as hereinafter defined), and
such amendments thereof as may have been required to the date of this
Underwriting Agreement (the “Agreement”). The Company has heretofore
delivered copies of the Registration Statement (including all amendments
thereto) and of the related Preliminary Prospectus to you. The term
“Preliminary Prospectus” means any preliminary prospectus included at any time
as a part of the Registration Statement or filed with the Commission by the
Company pursuant to Rule 424(a) of the Rules. The term “Registration
Statement” as used in this Agreement means the initial registration statement
(including all exhibits, all financial schedules and all documents and
information deemed to be a part of the Registration Statement through
incorporation by reference or otherwise), as amended at the time and on the date
it becomes effective (the “Effective Date”), including the information (if any)
contained in the form of final Prospectus (as hereinafter defined) filed with
the Commission pursuant to Rule 424(b) of the Rules and deemed to be part
thereof at the time of effectiveness pursuant to Rule 430A of the
Rules. If the Company has filed an abbreviated registration statement
to register additional
Shares (as hereinafter defined) pursuant to Rule 462(b) under the Rules (the
“462(b) Registration Statement”), then any reference herein to the Registration
Statement shall also be deemed to include such 462(b) Registration
Statement. The term “Prospectus” as used in this Agreement means the
Prospectus in the form included in the Registration Statement at the time of
effectiveness or, if Rule 430A of the Regulations is relied on, the term
Prospectus shall also include the final Prospectus filed with the Commission
pursuant to Rule 424(b) of the Rules.
The
Company understands that the Underwriters propose to make a public offering of
the Shares, as set forth in and pursuant to the Prospectus, as soon after the
Effective Date and the date of this Agreement as the Representatives deem
advisable (the “Offering”). The Company hereby confirms that the
Underwriters and dealers have been authorized to distribute or cause to be
distributed each Preliminary Prospectus and are authorized to distribute the
Prospectus (as from time to time amended or supplemented if the Company
furnishes amendments or supplements thereto to the Underwriters).
1. Sale, Purchase, Delivery,
and Payment for the Shares. On the basis of the
representations, warranties and agreements contained in, and subject to the
terms and conditions of, this Agreement:
(a) The
Company agrees to issue and sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Company, at
a purchase price of $______ per Share (net of discounts and commissions) (the
“Initial Price”), the number of Firm Shares set forth opposite the name of such
Underwriters under the column “Number of Firm Shares to be Purchased” on
Schedule I to this Agreement, subject to adjustment in accordance with Section 6
hereof.
(b) For
the purposes of covering any over-allotments in connection with the distribution
and sale of the Firm Shares, the Company hereby grants to the Underwriters,
severally and not jointly, an option to purchase up to an additional ________
Shares from the Company (“Over-allotment Option”). Such additional
________ Shares are hereinafter referred to as “Option Shares.” The
Firm Shares and the Option Shares are hereinafter referred to as the
“Securities.” The purchase price to be paid for the Option Shares
will be the same price per Option Share as the price per Firm Share set forth in
Section 1(a) hereof.
The
Over-allotment Option granted pursuant to Section 1(b) hereof may be exercised
by the Representatives as to all (at any time) or any part (from time to time)
of the Option Shares within forty-five (45) days after the Effective
Date. The Underwriters will not be under any obligation to purchase
any Option Shares prior to the exercise of the Over-allotment
Option. The Over-allotment Option granted hereby may be exercised by
the giving of oral notice to the Company by the Representatives, which must be
confirmed in writing by overnight mail or facsimile transmission setting forth
the number of Option Shares to be purchased and the date and time for delivery
of and payment for the Option Shares (the “Option Closing Date”), which will not
be later than five (5) full business days nor earlier than two (2) full business
days after the date of the notice or such other time as shall be agreed upon by
the Company and the Representatives, at the offices of the Managers or at such
other place as shall be agreed upon by the Company and the
Representatives. Upon exercise of the Over-allotment Option, the
Company will become obligated to convey to the Underwriters, and, subject to the
terms and conditions
set forth herein, the Underwriters will become obligated to purchase, the number
of Option Shares specified in such notice.
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(c) Payment
of the purchase price for, and delivery of the certificates for, the Firm Shares
shall be made at 10:00 A.M., Eastern time, on ___________, 2009, or such other
date, not later than the fifth (5th) business day thereafter, or at such earlier
time as shall be agreed upon by the Representatives and the Company at the
offices of the Managers or at such other place as shall be agreed upon by the
Representatives and the Company. The hour and date of delivery and
payment for the Firm Shares are called the “Closing Date.” Payment
for the Firm Shares shall be made on the Closing Date at the Representatives’
election by wire transfer in Federal (same day) funds or by certified or bank
cashier’s check(s) in New York Clearing House funds, paid to the order of the
Company upon delivery to you of certificates (in form and substance satisfactory
to the Underwriters) representing the Firm Shares (or through the facilities of
the Depository Trust Company (“DTC”)) for the account of the
Underwriters. The Firm Shares shall be registered in such name or
names and in such authorized denominations as the Representatives may request in
writing at least two (2) full business days prior to the Closing
Date. The Company will permit the Representatives to examine and
package the Firm Shares for delivery at least one (1) full business day prior to
the Closing Date. The Company shall not be obligated to sell or
deliver the Firm Shares except upon tender of payment by the Representatives for
all the Firm Shares.
In
addition, in the event that any or all of the Option Shares are purchased by the
Underwriters, payment of the purchase price for, and delivery of the
certificates representing, the Option Shares shall be made on the Option Closing
Date at the Representatives’ election by wire transfer in Federal (same day)
funds or by certified or bank cashier’s check(s) in New York Clearing House
funds, payable to the Company at the offices of ▇▇▇▇▇▇ or at such other place as
shall be agreed upon by the Representatives and the Company upon delivery to you
of certificates representing such securities (or through the facilities of DTC)
for the account of the Underwriters. The certificates representing
the Option Shares to be delivered will be in such denominations and registered
in such names as the Representatives request not less than two (2) full business
days prior to the Option Closing Date, and will be made available to the
Representatives for inspection, checking and packaging at the aforesaid office
of the Company’s transfer agent or correspondent not less than one (1) full
business day prior to the Option Closing Date.
(d) On
the Closing Date the Company shall sell and issue to the Representatives (and/or
its designees) for a total purchase price of $100.00, options entitling the
Representatives or their assigns to purchase ________ Shares at a price
of $_____ per Share, which is equal to [ ]% of the public offering
price of the Shares (the “Representatives’ Warrants”). The terms of
the Representatives’ Warrants, including exercise period, anti-dilution
provisions, exercise price, exercise provisions, transferability, and
registration rights, shall be in the form filed as an exhibit to the
Registration Statement of the Company.
The
Representatives’ Warrants shall be exercisable, in whole or in part, commencing
six (6) months from the Effective Date and expiring on the five-year anniversary
of the Effective Date. The Representatives’ Warrants may not be may
not be sold, transferred, assigned, pledged or
hypothecated until one hundred eighty (180) days after the Effective Date,
except in accordance with Rule 5110 of the FINRA Conduct Rules.
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Payment
of the purchase price of, and delivery of the certificates for, the
Representatives’ Warrants shall be made on the Closing Date. The
Company shall deliver to the Representatives, upon payment therefor,
certificates for the Representatives’ Warrants in the name or names and in such
authorized denominations as the Representatives may request. The
Representatives’ Warrants and all of the shares of common stock underlying the
Representatives’ Warrants are referred to herein as the “Representatives’
Securities.”
2. Representations and
Warranties of the Company. For your own independent business
reasons, you have required the Company to make the following representations and
warranties as a condition to agreeing to execute this Agreement. You
understand, and anyone reviewing this Agreement should understand, that
disclosure regarding the Company and its business is contained in the Prospectus
or Registration Statement, and that no representation, warranty, covenant or
agreement contained in this Agreement is intended or construed to modify the
disclosure about the Company and its business contained in the Prospectus or the
Registration Statement. The Company represents and warrants to each
Underwriter, as of the date hereof, as of the Closing Date and as of each Option
Closing Date (if any), as follows:
(a) At
the time the Registration Statement became effective and at all times subsequent
thereto up to the Closing Date and the Option Closing Date, if any, the
Registration Statement and the Prospectus will contain all material statements
that are required to be stated therein in accordance with the Securities Act and
the Rules, and will in all material respects conform to the requirements of the
Securities Act and the Rules; neither the Registration Statement nor the
Prospectus, nor any amendment or supplement thereto, on such dates, will contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading. When any Preliminary Prospectus was first filed with the
Commission (whether filed as part of the Registration Statement for the
registration of the Securities or any amendment thereto or pursuant to Rule
424(a) of the Rules) and when any amendment thereof or supplement thereto was
first filed with the Commission, such Preliminary Prospectus and any amendments
thereof and supplements thereto complied or will comply in all material respects
with the applicable provisions of the Securities Act and the Rules and did not
and will not contain an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Notwithstanding the foregoing, none of the
representations and warranties made in this Section 2(a) shall apply to
statements made or statements omitted from the Registration Statement,
Prospectus or any preliminary prospectus (or any amendments or supplements
thereto) in reliance upon and in conformity with written information furnished
to the Company with respect to the Underwriters by the Representatives expressly
for use in the Registration Statement or Prospectus or any amendment thereof or
supplement thereto. The parties acknowledge and agree that such
information provided by or on behalf of any Underwriter consists solely of the
names of the Underwriters appearing in the “Underwriting” section of the
Prospectus and the following additional disclosures contained in the
“Underwriting” section of the Prospectus: [___________________________________________]
(the “Underwriters’ Information”).
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(b) The
Company has filed with the Commission a Form 8-A registration statement
providing for the registration of the Securities under the Exchange Act, which
registration statement complies in all material respects with the Exchange
Act. The registration of the Securities under the Exchange Act has
been declared effective by the Commission on the date hereof. Neither
the Commission nor, to the best of the Company’s knowledge, any state regulatory
authority has issued any order or threatened to issue any order preventing or
suspending the use of any Preliminary Prospectus, the Prospectus or the
Registration Statement or has instituted or, to the best of the Company’s
knowledge, threatened to institute any proceedings with respect to such an
order.
(c) The
agreements and documents described in the Registration Statement and the
Prospectus conform to the descriptions thereof contained therein and there are
no agreements or other documents required to be described in the Registration
Statement or the Prospectus or to be filed with the Commission as exhibits to
the Registration Statement that have not been so described or
filed. Each agreement or other instrument (however characterized or
described) to which the Company is a party or by which its property or business
is or may be bound or affected and (i) that is referred to in the Prospectus, or
(ii) is material to the Company’s business, has been duly and validly executed
by the Company, is in full force and effect and is enforceable against the
Company and, to the Company’s knowledge, the other parties thereto, in
accordance with its terms, except (x) as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting creditors’
rights generally, (y) as enforceability of any indemnification or contribution
provision may be limited under the federal and state securities laws, and (z)
that the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to the equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought; and none of
such agreements or instruments has been assigned by the Company, and neither the
Company nor, to the best of the Company’s knowledge, any other party is in
breach or default thereunder and, to the best of the Company’s knowledge, no
event has occurred that, with the lapse of time or the giving of notice, or
both, would constitute a breach or default thereunder. To the best of
the Company’s knowledge, performance by the Company of the material provisions
of such agreements or instruments will not result in a violation of any existing
applicable law, rule, regulation, judgment, order or decree of any governmental
agency or court, domestic or foreign, having jurisdiction over the Company or
any of its assets or businesses, including, without limitation, those relating
to environmental laws and regulations.
(d) No
securities of the Company have been sold by the Company or by or on behalf of,
or for the benefit of, any person or persons controlling, controlled by, or
under common control with the Company since its inception prior to the date
hereof, except as disclosed in the Registration Statement.
(e) The
disclosures in the Registration Statement summarizing the effects of federal,
state, local and all foreign regulation on the Company’s business as currently
contemplated are correct summaries in all material respects and do not omit to
state a material fact.
(f) The
statistical and related data included in the Registration Statement are based on
or derived from sources that the Company believes to be reliable and
accurate.
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(g) Since
the respective dates as of which information is given in the Registration
Statement and the Prospectus, except as otherwise specifically stated therein,
(i) there has been no material adverse change in the condition, financial or
otherwise, or business prospects of the Company; (ii) there have been no
material transactions entered into by the Company, other than as contemplated
pursuant to this Agreement; and (iii) no member of the Company’s senior
management or director has resigned from any position with the
Company.
(h) Subsequent
to the respective dates as of which information is given in the Registration
Statement and the Prospectus, and except as may otherwise be indicated or
contemplated herein or therein, the Company has not (i) issued any securities or
incurred any liability or obligation, direct or contingent, for borrowed money;
or (ii) declared or paid any dividend or made any other distribution on or in
respect to its equity securities.
(i) ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ (“JSW”), whose report is filed with the Commission as part
of the Registration Statement, are independent accountants as required by the
Securities Act and the Rules, and such accountants, to the best of the Company’s
knowledge, in the performance of their work for the Company, are not in
violation of the auditor independence requirements of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of
2002. JSW has not, during the periods covered by the financial
statements included in the Prospectus, provided to the Company
non-audit-services, such term is used in Section 10A(g) of the Exchange
Act.
(j) The
financial statements, including the notes thereto and supporting schedules
included in the Registration Statement and Prospectus, fairly present in all
material respects the financial position, the results of operations and the cash
flows of the Company at the dates and for the periods to which they apply; such
financial statements have been prepared in conformity with generally accepted
accounting principles, consistently applied throughout the periods involved; and
the supporting schedules included in the Registration Statement present fairly
in all material respects the information required to be stated
therein. The Registration Statement discloses all off-balance sheet
transactions, arrangements, obligations (including contingent obligations) or
any other relationships with unconsolidated entities or other persons, that may
have a material current or a material future effect on the Company’s financial
condition, changes in financial condition, results of operations, liquidity,
capital expenditures, capital resources, or significant components of revenues
or expenses.
(k) The
Company had at the date or dates indicated in the Prospectus the duly
authorized, issued and outstanding capitalization as set forth in the
Registration Statement and the Prospectus. Based on the assumptions
stated in the Registration Statement and the Prospectus, the Company will have
on the Closing Date the adjusted stock capitalization set forth
therein. Except as set forth in, or contemplated by, the Registration
Statement and the Prospectus, on the Effective Date and on the Closing Date,
there will be no options, warrants, or other rights to purchase or otherwise
acquire any authorized but unissued shares of Common Stock of the Company or any
security convertible into shares of Common Stock of the Company, or any
contracts or commitments to issue or sell shares of Common Stock or any such
options, warrants, rights or convertible securities.
(l) All
issued and outstanding securities of the Company have been duly authorized and
validly issued and are fully paid and non-assessable; except as described in or
expressly
contemplated by the Registration Statement. The holders thereof have no rights
of rescission with respect thereto, and are not subject to personal liability by
reason of being such holders and none of such securities were issued violation
of the preemptive rights of any holders of any security the Company or similar
contractual right granted by the Company. The authorized Common Stock conforms
in all material respects to all statements relating thereto contained in the
Registration Statement and the Prospectus. The offers and sales of the
outstanding Common Stock were at all relevant times either registered under the
Securities Act and the applicable state securities or Blue Sky laws or, based in
part on the representations and warranties of the purchasers of such shares of
Common Stock, exempt from such registration requirements.
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(m) The
Securities and Representatives’ Securities have been duly authorized for
issuance and sale and, when issued and paid for, will be validly issued, fully
paid and non-assessable; the holders thereof are not and will not be subject to
personal liability by reason of being such holders; the Securities are not and
will not be subject to the preemptive rights of any holders of any security of
the Company or similar contractual rights granted by the Company; and all
corporate action required to be taken for the authorization, issuance and sale
of the Securities has been duly and validly taken. The Securities and
the Representatives’ Securities conform in all material respects to all
statements with respect thereto contained in the Registration
Statement. When paid for and issued in accordance with the
Representatives’ Warrant, the underlying Shares will be validly issued, fully
paid and non-assessable; and the holders thereof are not and will not be subject
to personal liability by reason of being such holders; the underlying Shares are
not and will not be subject to the preemptive rights of any holders of any
security of the Company or similar contractual rights granted by the Company;
and all corporate action required to be taken for the authorization, issuance
and sale of the Representatives’ Option Agreement has been duly and validly
taken.
(n) Except
as set forth in the Prospectus, no holders of any securities of the Company or
any rights exercisable for or convertible or exchangeable into securities of the
Company have the right to require the Company to register any such securities of
the Company under the Securities Act or to include any such securities in a
registration statement to be filed by the Company.
(o) Each
of this Agreement and the Representatives’ Warrants has been duly and validly
authorized by the Company and constitutes (or will constitute when issued) the
valid and binding agreement of the Company, enforceable against the Company in
accordance with its terms, except (i) as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting creditors’
rights generally; (ii) as enforceability of any indemnification or contribution
provision may be limited under the federal and state securities laws; and (iii)
that the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to the equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought.
(p) The
execution, delivery, and performance by the Company of this Agreement and the
Representatives’ Warrants, the consummation by the Company of the transactions
herein and therein contemplated and the compliance by the Company with the terms
hereof and thereof do not and will not, with or without the giving of notice or
the lapse of time or both (i)
result in a breach of, or conflict with any of the terms and provisions of, or
constitute a default under, or result in the creation, modification, termination
or imposition of any lien, charge or encumbrance upon any property or assets of
the Company pursuant to the terms of any agreement or instrument to which the
Company is a party; (ii) result in any violation of the provisions of the
Certificate of Incorporation (the “Certificate of Incorporation”) or the Bylaws
of the Company, as may be amended from time to time; or (iii) violate any
existing applicable law, rule, regulation, judgment, order or decree of any
governmental agency or court, domestic or foreign, having jurisdiction over the
Company or any of its properties or business.
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(q) No
material default exists in the due performance and observance of any term,
covenant or condition of any material license, contract, indenture, mortgage,
deed of trust, note, loan or credit agreement, or any other agreement or
instrument evidencing an obligation for borrowed money, or any other material
agreement or instrument to which the Company is a party or by which the Company
may be bound or to which any of the properties or assets of the Company is
subject. The Company is not in violation of any term or provision of
the Certificate of Incorporation or Bylaws or in violation of any material
franchise, license, permit, applicable law, rule, regulation, judgment or decree
of any governmental agency or court, domestic or foreign, having jurisdiction
over the Company or any of its properties or businesses.
(r) Except
as disclosed in the Prospectus, the Company has all requisite corporate power
and authority and has all necessary authorizations, approvals, orders, licenses,
certificates and permits of and from all governmental regulatory officials and
bodies that it needs as of the date hereof to conduct its business as described
in the Prospectus. The disclosures in the Registration Statement
concerning the effects of federal, state, local and foreign regulation on this
Offering and the Company’s business purpose as currently contemplated are
correct in all material respects and do not omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(s) The
Company has all corporate power and authority to enter into this Agreement and
to carry out the provisions and conditions hereof, and all consents,
authorizations, approvals and orders required in connection therewith have been
obtained. No consent, authorization or order of, and no filing with,
any court, government agency or other body is required for the valid issuance,
sale and delivery, of the Securities and the consummation of the transactions
and agreements contemplated by this Agreement, the Representatives’ Warrants,
and as contemplated by the Prospectus, except with respect to applicable federal
and state securities laws.
(t) To
the best of the Company’s knowledge, all information contained in the
questionnaires (“Questionnaires”) completed by each of the Company’s officers,
directors, and 5% or greater stockholders (“Initial Stockholders”) and provided
to the Underwriters is true and correct in all respects, and the Company has not
become aware of any information which would cause the information disclosed in
the Questionnaires completed by each Initial Stockholder to become inaccurate
and incorrect in all material respects.
(u) There
is no action, suit, proceeding, inquiry, arbitration, investigation, litigation
or governmental proceeding pending or, to the best of the Company’s knowledge,
threatened
against, or involving the Company or, to the best of the Company’s knowledge,
any Initial Stockholder which has not been disclosed in the Registration
Statement and the Prospectus or in connection with the Company’s listing of the
Shares and Common Stock on the Nasdaq Capital Market.
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(v) The
Company has been duly organized and is validly existing as a corporation and is
in good standing under the laws of its state of incorporation, and is duly
qualified to do business and is in good standing in each jurisdiction in which
its ownership or lease of property or the conduct of business requires such
qualification, except where the failure to qualify would not have a material
adverse effect on the assets, business or operations of the
Company.
(w) The
Commission has not issued any order preventing or suspending the use of any
Preliminary Prospectus or Prospectus or any part thereof.
(x) Except
as described in the Prospectus, there are no claims, payments, arrangements,
agreements or understandings relating to the payment of a finder’s, consulting
or origination fee by the Company or any Initial Stockholder with respect to the
sale of the Securities hereunder or any other arrangements, agreements or
understandings of the Company or, to the best of the Company’s knowledge, any
Initial Stockholder that may affect the Underwriters’ compensation, as
determined by the Financial Industry Regulatory Authority, Inc.
(“FINRA”).
(y) The
Company has not made any direct or indirect payments (in cash, securities or
otherwise) (i) to any person, as a finder’s fee, consulting fee or otherwise, in
consideration of such person raising capital for the Company or introducing to
the Company persons who raised or provided capital to the Company; (ii) to any
FINRA member; or (iii) to any person or entity that has any direct or indirect
affiliation or association with any FINRA member, within the twelve (12) months
prior to the Effective Date, other than the prior payment of $__________ to NSC,
the Representatives, and payments to the Underwriters as provided hereunder in
connection with the Offering.
(z) The
Company will not pay any of the net proceeds of the Offering to any
participating FINRA member or its affiliates, except as specifically authorized
herein.
(aa) To
the Company knowledge, and except as set forth in the Prospectus, no officer,
director or any beneficial owner of the Company’s unregistered securities has
any direct or indirect affiliation or association with any FINRA
member. The Company will advise the Representatives and their counsel
if it learns that any officer, director, or owner of at least 5% of the
Company’s outstanding Common Stock is or becomes an affiliate or associated
person of an FINRA member participating in the Offering.
(bb) Neither
the Company nor any of the directors, employees, or officers of the Company or
any other person acting on behalf of the Company has, directly or indirectly,
given or agreed to give any money, gift or similar benefit (other than legal
price concessions to customers in the ordinary course of business) to any
customer, supplier, employee or agent of a customer or supplier, or official or
employee of any governmental agency or instrumentality of any
government (domestic or foreign) or any political party or candidate for office
(domestic or foreign) or any political party or candidate for office (domestic
or foreign) or other person who was, is, or may be in a position to help or
hinder the business of the Company (or assist it in connection with any actual
or proposed transaction) that (i) might subject the Company to any damage or
penalty in any civil, criminal or governmental litigation or proceeding; (ii) if
not given in the past, might have had a material adverse effect on the assets,
business or operations of the Company as reflected in any of the financial
statements contained in the Prospectus; or (iii) if not continued in the future,
might adversely affect the assets, business, operations or prospects of the
Company. The Company’s internal accounting controls and procedures are
sufficient to cause the Company to comply with the Foreign Corrupt Practices Act
of 1977, as amended.
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(cc) Any
certificate signed by any duly authorized officer of the Company and delivered
to you or to your counsel shall be deemed a representation and warranty by the
Company to the Underwriters as to the matters covered thereby.
(dd) No
Initial Stockholder, employee, officer, or director of the Company is subject to
any non-competition agreement or non-solicitation agreement with any employer or
prior employer that could materially adversely affect his ability to be an
Initial Stockholder, employee, officer and/or director of the
Company.
(ee) Annex
2 to this Agreement sets for the ownership of all direct and indirect
subsidiaries of the Company (each a “Subsidiary” and together the
“Subsidiaries”). All direct and indirect Subsidiaries of the Company
are duly organized and in good standing under the laws of the place of
organization or incorporation and each such Subsidiary is in good standing in
each jurisdiction in which its ownership or lease of the property or the conduct
of business requires such qualification, except when the failure to qualify
would not have a material adverse effect on the assets, business or operations
of the Company taken as a whole.
(ff) There
are no business relationships or related party transactions involving the
Company or any other person required to be described in the Prospectus that have
not been described as required.
(gg) The
Company has obtained and delivered to the Representatives the agreement (the
“Lock-up Agreements”) of each of its officers, directors and 5% shareholders
that he will not, without the prior written consent of the Representatives,
during the eighteen (18) month period after the effective date of the
Prospectus, offer, sell, contract to sell, make short sales of, loan, grant any
option or contract to purchase, or otherwise dispose of, directly or indirectly,
any shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock, whether these shares or any such securities are
then owned by the person or are thereafter acquired, directly from the Company
without the consent of the Representatives.
(hh) The
Board of Directors of the Company is comprised of the persons set forth under
the heading of the prospectus captioned “Management.” The
qualifications of the persons serving as board members and the overall
composition of the board comply with the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the
rules promulgated thereunder applicable to the Company and the
rules of the Nasdaq Capital Market. At least one member of the Board of
Directors of the Company qualifies as a “financial expert” as such term is
defined under the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the rules promulgated
thereunder and the rules of the Nasdaq Capital Market. In addition, at least a
majority of the persons serving on the Board of Directors qualify as
“independent” as defined under the rules of the Nasdaq Capital
Market.
-10-
(ii) The
Company has developed and currently maintains disclosure controls and procedures
that will comply with Rule 13a-15 or 15d-15 of the Exchange Act, and such
controls and procedures are effective to ensure that all material information
concerning the Company will be made known on a timely basis to the individuals
responsible for the preparation of the Company’s Exchange Act filings and other
public disclosure documents.
(jj) The
Company is, or on the Effective Date will be, in material compliance with the
provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 applicable to it, and has
implemented or will implement such programs and taken reasonable steps to ensure
the Company’s future compliance (not later than the relevant statutory and
regulatory deadlines therefore) with all the material provisions of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002.
3. Covenants of the
Company. The Company covenants and agrees as
follows:
(a) The
Company will cause the Registration Statement, if not effective at the time of
execution of this Agreement, and any amendments thereto, to become effective as
promptly as possible. The Company shall prepare the Prospectus in a
form approved by the Representatives and file such Prospectus pursuant to Rule
424(b) under the Securities Act no later than the Commission’s close of business
on the second (2nd) business day following the execution and delivery of this
Agreement, or, if applicable, such earlier time as may be required by the
Regulations.
(b) The
Company shall promptly advise the Representatives in writing (i) when any
post-effective amendment to the Registration Statement shall have become
effective; (ii) of any request by the Commission for any amendment of the
Registration Statement or the Prospectus or for any additional information;
(iii) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing or
suspending the use of any Preliminary Prospectus or the institution or
threatening of any proceeding for that purchase; (iv) of the receipt by the
Company of any notification with respect to the suspension of the qualification
of the Securities for sale in any jurisdiction or the initiation or threatening
of any proceeding for such purpose; and (v) of the happening of any event during
the period described in Section 3(c) hereof that, in the judgment of the
Company, makes any statement of a material fact made in the Registration
Statement or the Prospectus untrue or that requires the making of any changes in
the Registration Statement or the Prospectus in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The Company shall not file any amendment of the
Registration Statement or supplement to the Prospectus or any document
incorporated by reference in the Registration Statement unless the Company has
furnished the Representatives a copy for review prior to filing and shall not
file any such proposed amendment or supplement to which the Representatives
reasonably object. The Company shall use its best efforts to prevent
the issuance of any such stop order and, if issued, to obtain as soon as
possible the withdrawal thereof.
-11-
(c) During
the time when a Prospectus is required to be delivered under the Securities Act,
the Company will use all reasonable efforts to comply with all requirements
imposed upon it by the Securities Act, the Rules and the Exchange Act and by the
regulations under the Exchange Act, as from time to time in force, so far as
necessary to permit the continuance of sales of or dealings in the Securities in
accordance with the provisions hereof and the Prospectus. If at any
time when a Prospectus relating to the Securities is required to be delivered
under the Securities Act, or the Exchange Act, any event shall have occurred as
a result of which, in the opinion of counsel for the Company or counsel for the
Underwriters, the Prospectus, as then amended or supplemented, includes an
untrue statement of a material fact or omits to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, or if it is
necessary at any time to amend the Prospectus to comply with the Securities Act,
the Company will notify the Representatives promptly and prepare and file with
the Commission, subject to Section 3(b) hereof, an appropriate amendment or
supplement in accordance with Section 10 of the Securities Act.
(d) For
a period of five (5) years from the Effective Date or until such earlier time
upon which the Company is required to be liquidated, the Company will use its
best efforts to maintain the registration of its Common Stock, the shares
underlying the Representatives’ Option Agreement under the provisions of the
Exchange Act. The Company will not deregister its Common Stock under
the Exchange Act without the prior written consent of the
Representatives.
(e) The
Company represents and agrees that 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 of the Securities Act, without prior consent
of the Representatives. Any such free writing prospectus consented to
by the Representatives is hereinafter referred to as a “Permitted Free Writing
Prospectus.” The Company represents 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 applicable requirements of
Rule 433 of the Securities Act, including timely Commission filing where
required, legending and record keeping.
(f) The
Company will endeavor in good faith, in cooperation with the Representatives, at
or prior to the time the Registration Statement becomes effective, to qualify
the Securities and Representatives’ Securities for offering and sale under the
securities laws of such jurisdictions as the Representatives may reasonably
designate within the United States, provided that no such qualification shall be
required in any jurisdiction where, as a result thereof, the Company would be
subject to service of general process or to taxation as a foreign corporation
doing business in such jurisdiction. In each jurisdiction where such
qualification shall be effected, the Company will, unless the Representatives
agree that such action is not at the time necessary or advisable, use all
reasonable efforts to file and make such statements or reports at such times as
are or may be required by the laws of such jurisdiction.
(g) The
Company will deliver to each of the several Underwriters, without charge, from
time to time during the period when the Prospectus is required to be delivered
under the Securities Act or the Exchange Act, such number of copies of each
Preliminary Prospectus
and the Prospectus as such Underwriters may reasonably request and, as soon as
the Registration Statement or any amendment or supplement thereto becomes
effective, deliver to you two original executed Registration Statements,
including exhibits, and all post-effective amendments thereto and copies of all
exhibits filed therewith or incorporated therein by reference and all original
executed consents of certified experts.
-12-
(h) The
Company shall retain a financial public relations firm reasonably acceptable to
the Representatives for a term to be agreed upon by the Company and the
Representatives.
(i) The
Company will use its best efforts to cause the Registration Statement to remain
effective with a current prospectus for at least nine (9) months from the
Applicable Time, and will notify the Representatives immediately and confirm the
notice in writing: (i) of the effectiveness of the Registration
Statement and any amendment thereto; (ii) of the issuance by the Commission of
any stop order or of the initiation, or the threatening, of any
proceeding for that purpose; (iii) of the issuance by any state securities
commission of any proceedings for the suspension of the qualification of the
Securities for offering or sale in any jurisdiction or of the initiation, or the
threatening, of any proceeding for that purpose; (iv) of the mailing and
delivery to the Commission for filing of any amendment or supplement to the
Registration Statement or Prospectus; (v) of the receipt of any comments or
request for any additional information from the Commission; and (vi) of the
happening of any event during the period described in this Section 3(i) hereof
that, in the judgment of the Company, makes any statement of a material fact
made in the Registration Statement or the Prospectus untrue or that requires the
making of any changes in the Registration Statement or the Prospectus in order
to make the statement therein, in light of the circumstances under which they
were made, not misleading. If the Commission or any state securities
commission shall enter a stop order or suspend such qualification at any time,
the Company will make every reasonable effort to obtain promptly the lifting of
such order.
(j) For
a period of three years from the Effective Date, or until such earlier time upon
which the Company is required to be liquidated, the Company will furnish to the
Representatives, upon reasonable request, copies of such financial statements
and other periodic and special reports as the Company from time to time
furnishes generally to holders of any class of its securities and also promptly
furnish to the Representatives: (i) a copy of each periodic report
the Company shall be required to file with the Commission; (ii) a copy of every
press release and every news item and article with respect to the Company or its
affairs which was released by the Company; (iii) a copy of each Form 8-K
prepared and filed by the Company; (iv) five copies of each Registration
Statement; (v) such additional documents and information with respect to the
Company and the affairs of any future subsidiaries of the Company as the
Representatives may from time to time reasonably request; provided the
Representatives shall sign, if requested by the Company, a Regulation FD
compliant confidentiality agreement which is reasonably acceptable to the
Representatives and their counsel in connection with the Representatives’
receipt of such information. Documents filed with the Commission
pursuant to its ▇▇▇▇▇ system shall be deemed to have been delivered to the
Representatives pursuant to this Section.
-13-
(k) For
a period of three years from the Effective Date, the Company shall retain a
transfer and registrar agent acceptable to the Representatives (the “Transfer
Agent”) and will furnish to the Representatives at the Company’s sole cost and
expense such transfer sheets of the Company’s securities as the Representatives
may reasonably request, including the daily and monthly consolidated transfer
sheets of the Transfer Agent and DTC. Continental Stock Transfer and
Trust Company is acceptable to the Underwriters to act as Transfer Agent for the
Company’s Shares.
(l) During
such time as the Securities are listed on Nasdaq Capital Market the Company
shall provide to the Representatives, at its expense, such reports published by
the Nasdaq Capital Market relating to price trading of the Securities, as the
Representatives shall reasonably request.
(m) The
Company hereby agrees to pay on each of the Closing Date and the Option Closing
Date, if any, to the extent not paid at the Closing Date, all expenses incident
to the performance of the obligations of the Company under this Agreement,
including, without limitation, the following: (i) the preparation,
printing, filing and mailing (including the payment of postage with respect to
such mailing) of the Registration Statement and exhibits thereto, the
Preliminary and Final Prospectuses and the printing and mailing of this
Agreement and related documents, including the cost of all copies thereof and
any amendments thereof or supplements thereto supplied to the Underwriters in
quantities as may be required by the Underwriters; (ii) the printing, engraving,
issuance and delivery of the Securities and the Representatives’ Securities,
including any transfer or other taxes payable thereon; (iii) filing fees, costs
and expenses (excluding fees of the Representatives’ counsel) incurred in
registering the Offering with the FINRA; (iv) costs of placing “tombstone”
advertisements in The Wall Street Journal, The New York Times and a third
publication to be selected by the Representatives not to exceed $10,000 in the
aggregate; (v) fees and disbursements of the Transfer Agent; (vi) all expenses
incurred in connection with any road shows and any “due diligence” meetings
arranged by the Representatives, including a videotape or PowerPoint
presentation; (vii) the preparation, binding and delivery of transaction closing
books, in form and style reasonably satisfactory to the Representatives, and
transaction lucite cubes or similar commemorative items in a style and quantity
as reasonably requested by the Representatives not to exceed $5,000 in the
aggregate; (viii) fees and disbursements of counsel to the Representatives; (ix)
the cost of an investigation search firm that conducted an investigation of the
principals of the Company; and (x) all other costs and expenses incident to the
performance of its obligations hereunder. Upon a written notice given
to the Company at least two (2) days prior to such deduction, the
Representatives may deduct from the net proceeds of the Offering payable to the
Company on the Closing Date, or the Option Closing Date, if any, the expenses
set forth herein to be paid by the Company to the Representatives and
others. If the Offering contemplated by this Agreement is not
consummated for any reason whatsoever for reasons not attributable to the
Underwriters, then the Company shall reimburse the Underwriters in full for
their out of pocket expenses, including, without limitation, its legal fees and
disbursements and “road show” and due diligence expenses. The
Representatives shall retain such part of the non-accountable expense allowance
(described below in Section 3(k) previously paid as shall equal its actual
out-of-pocket expenses and refund the balance. If the amount
previously paid is insufficient to cover such actual out-of-pocket expenses, the
Company shall remain liable for and promptly pay any other actual out-of-pocket
expenses.
-14-
(n) The
Company further agrees that, in addition to the expenses payable pursuant to
Section 3(j), on the Closing Date it will pay to the Representatives a
non-accountable expense allowance equal to three percent (3%) of the gross
proceeds received by the Company from the Offering (less any amounts previously
paid, including $______ previously paid to the Representatives by deduction from
the proceeds of the Offering. In the event the Offering is
terminated, any portion of the non-accountable expense previously paid to the
Representatives will be returned to the Company to the extent not applied to
expenses actually incurred by the Representatives in accordance with NASD
Conduct Rule 5110(f)(2)(D).
(o) The
Company will apply the net proceeds from the Offering received by it in a manner
consistent with the application described under the caption “Use of Proceeds” in
the Prospectus.
(p) The
Company will make generally available to its security holders as soon as
practicable, but not later than forty-five (45) days after the end of the period
covered thereby, an earnings statement (which need not be certified by
independent public or independent certified public accountants unless required
by the Securities Act or the Rules, but which shall satisfy the provisions of
Rule 158(a) under Section 11(a) of the Securities Act) covering a period of at
least 12 consecutive months beginning after the Effective Date.
(q) Neither
the Company nor, to its knowledge, any of its employees, directors or
stockholders (without the consent of the Representatives) has taken or will
take, directly or indirectly, any action designed to or that has constituted or
that might reasonably be expected to cause or result in, under the Exchange Act,
or otherwise, stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities.
(r) The
Company will maintain a system of internal accounting controls sufficient to
provide reasonable assurances that: (i) transactions are executed in
accordance with management’s general or specific authorization; (ii)
transactions are recorded as necessary in order to permit preparation of
financial statements in accordance with generally accepted accounting principles
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.
(s) For
a period of three (3) years from the Effective Date, the Company shall retain
JSW or other independent public accountants reasonably acceptable to the
Representatives.
(t) The
Company shall immediately advise the Representatives if it becomes aware that
any 5% or greater stockholder of the Company becomes an affiliate or associated
person of an FINRA member participating in the distribution of the
Securities.
(u) All
corporate proceedings and other legal matters necessary to carry out the
provisions of this Agreement and the transactions contemplated hereby shall have
been done to the reasonable satisfaction of counsel for the
Underwriters.
-15-
(v) The
Company will reserve and keep available the maximum number of its authorized but
unissued shares of Common Stock that are issuable upon exercise of the
Representatives’ Warrant.
(w) On
the Closing Date, the Company shall enter into a Financial Advisory Agreement
with the NSC (the “Consulting Agreement”) whereby the Company will agree to pay
the NSC a financial consulting fee of $2,500 per month for each of the next
succeeding 24 months. The entire 24-month consulting fee ($60,000) will be due
and payable on the Closing Date.
(x) The
Company shall not take any action or omit to take any action that would cause
the Company to be in breach or violation of its Certificate of Incorporation or
Bylaws.
(y) The
Company acknowledges and agrees that the Underwriters’ responsibility to the
Company is solely contractual in nature and that none of the Underwriters or
their affiliates or any selling agent shall be deemed to be acting in a
fiduciary capacity, or otherwise owes any fiduciary duty to the Company or any
of its affiliates in connection with the Offering and the other transaction
contemplated by this Agreement.
4. Conditions of Underwriters’
Obligations. The obligations of the several Underwriters to
purchase and pay for the Shares, as provided herein, shall be subject to the
continuing accuracy of the representations and warranties of the Company as of
the date hereof and as of each of the Closing Date and the Option Closing Date,
if any, to the accuracy of the statements of officers of the Company made
pursuant to the provisions hereof and to the performance by the Company of its
obligations hereunder and to the following conditions:
(a) The
Registration Statement has been declared effective on the date of this Agreement
or such later date and time as shall be consented to in writing by you, and, at
each of the Closing Date and the Option Closing Date, no stop order suspending
the effectiveness of the Registration Statement shall have been issued and no
proceedings for such purpose shall have been instituted or shall be pending or
contemplated by the Commission and any request on the part of the Commission for
additional information shall have been complied with to the reasonable
satisfaction of counsel to the Underwriters.
(b) By
the Effective Date, the Representatives shall have received clearance from FINRA
as to the amount of compensation allowable or payable to the Underwriters as
described in the Registration Statement.
(c) No
order suspending the sale of the Securities in any jurisdiction designated by
you pursuant to Section 3(e) hereof shall have been issued on or before either
the Closing Date or the Option Closing Date, and no proceedings for that purpose
shall have been instituted or, to the best of the Company’s knowledge, shall be
contemplated.
(d) On
the Closing Date the Company’s Common Stock, including the Securities, shall
have been approved for listing on the Nasdaq Capital Market.
-16-
(e) The
Representatives’ covenants with the Company, the Underwriters will not use,
authorize the use of, referred to, or participate in the planning for the use of
a “Free Writing Prospectus” as defined in Rule 405 of the Securities Act, which
term includes use of any written information furnished by the SEC to the Company
not incorporated by reference into the Registration Statement, without the prior
written consent of the Company. Any such Free Writing Prospectus
consented to by the Company is hereinafter referred to as an “Underwriter Free
Writing Prospectus.”
(f) On
the Effective Date, Closing Date and the Option Closing Date, if any, the
Representatives shall have received the favorable opinion of Cozen ▇’▇▇▇▇▇▇,
counsel to the Company, dated such respective date, addressed to the
Representatives and in previously agreed upon form and substance reasonably
satisfactory to counsel to the Underwriters.
(g) On
the Effective Date, the Closing Date and the Option Closing Date, if any, the
Representatives shall receive the favorable opinion of _________________,
counsel to the Company, dated such respective date addressed to the
Representatives and in previously agreed upon form and substance reasonably
satisfactory to counsel to the Underwriters as to PRC and Hong Kong law
matters.
(h) The
Company shall have obtained a five (5) year key man life insurance policy in the
amount of $5 Million insuring the life of the Company’s president and chief
executive officer.
(i) At
the time this Agreement is executed, and at each of the Closing Date and the
Option Closing Date, if any, you shall have received a letter, addressed to the
Representatives and in form and substance satisfactory in all respects
(including the non-material nature of the changes or decreases, if any, referred
to in clause (iii) below) to you and to counsel to the Underwriters from JSW
dated, respectively, as of the date of this Agreement and as of the Closing Date
and the Option Closing Date, if any:
(i) Confirming
that they are independent accountants with respect to the Company within the
meaning of the Securities Act and the applicable Regulations and that they have
not, during the periods covered by the financial statements included in the
Prospectus, provided to the Company any non-audit services, as such term is used
in Section 10A(g) of the Exchange Act;
(ii) Stating
that in their opinion the financial statements of the Company included in the
Registration Statement and Prospectus comply as to form in all material respects
with the applicable accounting requirements of the Securities Act and the
published Regulations thereunder;
(iii) Stating
that, on the basis of a limited review which included a reading of the latest
available unaudited interim financial statements of the Company (with an
indication of the date of the latest available unaudited interim financial
statements), a reading of the latest available minutes of the stockholders and
board of directors and the various committees of the board of directors,
consultations with officers and other employees of the Company responsible for
financial and accounting matters and other specified procedures and
inquiries, nothing
has come to their attention which would lead them to believe that (a) the
unaudited financial statements of the Company included in the Registration
Statement do not comply as to form in all material respects with the applicable
accounting requirements of the Securities Act and the Regulations or are not
fairly presented in conformity with generally accepted accounting principles
applied on a basis substantially consistent with that of the audited financial
statements of the Company included in the Registration Statement; (b) at a date
not later than five days prior to the Effective Date, Closing Date or Option
Closing Date, as the case may be, there was any change in the capital stock or
long-term debt of the Company, or any decrease in the stockholders’ equity of
the Company as compared with amounts shown in the December ___, 2008, balance
sheet included in the Registration Statement, other than as set forth in or
contemplated by the Registration Statement, or, if there was any decrease,
setting forth the amount of such decrease; and (c) during the period from
December __, 2008, to a specified date not later than five days prior to the
Effective Date, Closing Date or Option Closing Date, as the case may be, there
was any decrease in revenues, net earnings or net earnings per share of Common
Stock, in each case as compared with the corresponding period in the immediately
preceding year and as compared with the corresponding period in the immediately
preceding quarter, other than as set forth in or contemplated by the
Registration Statement or, if there was any such decrease, setting forth the
amount of such decrease;
-17-
(iv) Setting
forth, at a date not later than five days prior to the Effective Date, the
amount of liabilities of the Company (including a break-down of commercial
papers and notes payable to banks and related parties);
(v) Stating
that they have compared specific dollar amounts, numbers of shares, percentages
of revenues and earnings, statements and other financial information pertaining
to the Company set forth in the Prospectus in each case to the extent that such
amounts, numbers, percentages, statements and information may be derived from
the general accounting records, including work sheets, of the Company and
excluding any questions requiring an interpretation by legal counsel, with the
results obtained from the application of specified readings, inquiries and other
appropriate procedures (which procedures do not constitute an examination in
accordance with generally accepted auditing standards) set forth in the letter
and found them to be in agreement;
(vi) Stating
that they have not, since the Company’s formation, brought to the attention of
the Company’s management any reportable condition related to internal structure,
design or operation, as defined in the Statement on Auditing Standards No. 60
“Communication of Internal Control Structure Related Matters Noted in an Audit,”
in the Company’s internal controls; and
(vii) Statements
as to such other matters incident to the transaction contemplated hereby as you
may reasonably request.
(j) At
each of the Effective Date, the Closing Date and the Option Closing Date, if
any, the Representatives shall have received a certificate of the Company signed
by the President and the Secretary or Assistant Secretary of the Company, dated
the Effective Date, the Closing Date or the Option Closing Date, as the case may
be, respectively, to the effect that (i) the Company has performed all covenants
and agreements and complied with all conditions required
by this Agreement to be performed or complied with by the Company prior to and
as of the Effective Date, the Closing Date, or the Option Closing Date, as the
case may be; (ii) the conditions set forth in Section 4(h) hereof have been
satisfied as of such date; (iii) as of Effective Date, the Closing Date and the
Option Closing Date, as the case may be, the representations and warranties of
the Company set forth in Section 2 hereof are true and correct; (iv) they have
carefully examined the Registration Statement and the Prospectus and, in their
opinion, (A) as of the Effective Date, the Registration Statement and Prospectus
did not include any untrue statement of a material fact and did not omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, and (B) since the Effective Date no event has occurred which
should have been set forth in a supplement or otherwise required an amendment to
the Registration Statement or the Prospectus; and (iv) no stop order suspending
the effectiveness of the Registration Statement has been issued and, to their
knowledge, no proceedings for that purpose have been instituted or are pending
under the Securities Act. In addition, the Representatives will have received
such other and further certificates of officers of the Company as the
Representatives may reasonably request.
-18-
(k) At
each of the Closing Date and the Option Closing Date, if any, the
Representatives shall have received a certificate of the Company signed by the
Secretary or Assistant Secretary of the Company, dated the Closing Date or the
Option Date, as the case may be, respectively, certifying (i) that the copies of
the Bylaws and Certificate of Incorporation of the Company attached thereto are
true and complete, have not been modified and are in full force and effect; (ii)
that the resolutions relating to the Offering are in full force and effect and
have not been modified; (iii) all correspondence between the Company or its
counsel and the Commission; and (iv) as to the incumbency of the officers of the
Company. The documents referred to in such certificate shall be attached to such
certificate.
(l) Prior
to and on each of the Closing Date and the Option Closing Date, if any, (i)
there shall have been no material adverse change or development involving a
prospective material adverse change in the condition or prospects of the
business activities, financial or otherwise, of the Company from the latest
dates as of which such condition is set forth in the Registration Statement and
Prospectus; (ii) no action suit or proceeding, at law or in equity, shall have
been pending or threatened against the Company or any Initial Stockholder before
or by any court or federal or state commission, board or other administrative
agency wherein an unfavorable decision, ruling or finding may materially
adversely affect the business, operations, prospects or financial condition or
income of the Company, except as set forth in the Registration Statement and
Prospectus; (iii) no stop order shall have been issued under the Securities Act
and no proceedings therefor shall have been initiated or threatened by the
Commission; and (iv) the Registration Statement and the Prospectus and any
amendments or supplements thereto shall contain all material statements which
are required to be stated therein in accordance with the Securities Act and the
Regulations and shall conform in all material respects to the requirements of
the Securities Act and the Regulations, and neither the Registration Statement
nor the Prospectus nor any amendment or supplement thereto shall contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
-19-
(m) On
the Closing Date, the Company shall have delivered to the Representatives
executed copies of the Representatives’ Warrants.
(n) All
proceedings taken in connection with the authorization, issuance or sale of the
Securities as herein contemplated shall be reasonably satisfactory in form and
substance to you and to counsel to the Underwriters.
(o) The
Company has delivered to the Representatives the Lock-up Agreements referred to
in Paragraph 2(gg).
(p) The
Company shall have received notice that the Securities are eligible to be listed
on the Nasdaq Capital Market as of the Effective Date.
5. Indemnification.
(a) Subject
to the conditions set forth below, the Company agrees to indemnify and hold
harmless each of the Underwriters, and each dealer selected by you that
participates in the offer and sale of the Securities (each a “Selected Dealer”)
and each of their respective directors, officers and employees and each person,
if any, who controls any such Underwriter (“controlling person”) within the
meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act, against any and all loss, liability, claim, damage and expense whatsoever
(including, without limitation, any and all legal or other expenses reasonably
incurred in investigating, preparing or defending against any litigation,
commenced or threatened, or any claim whatsoever, whether arising out of any
action between any of the Underwriters and the Company or between any of the
Underwriters and any third party or otherwise) to which they or any of them may
become subject under the Securities Act, the Exchange Act or any other statute
or at common law or otherwise or under the laws of foreign countries, arising
out of or based upon any untrue statement or alleged untrue statement of a
material fact contained in (i) any Preliminary Prospectus, the Registration
Statement or the Prospectus (as from time to time each may be amended and
supplemented); (ii) in any post-effective amendment or amendments or any new
registration statement and prospectus in which is included securities of the
Company issued or issuable upon exercise of the Representatives’ Warrants; (iii)
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 Securities,
including any “road show” or investor presentations made to investors by the
Company (whether in person or electronically); or (iv) any application or other
document or written communication (in this Section 5, collectively called
“application”) executed by the Company or based upon written information
furnished by the Company in any jurisdiction in order to qualify the Securities
under the securities laws thereof or filed with the Commission, any state
securities commission or agency, Nasdaq Capital Market or any securities
exchange; or the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading,
unless such statement or omission was made in reliance upon and in conformity
with written information furnished to the Company with respect to an Underwriter
by or on behalf of such Underwriter expressly for use in any Preliminary
Prospectus, the Registration Statement or Prospectus, or any amendment or
supplement thereof, or in any application, as the case may be. With
respect to any untrue statement or omission or alleged untrue statement or
omission made in the
Preliminary Prospectus, the indemnity agreement contained in this paragraph
shall not inure to the benefit of any Underwriter to the extent that any loss,
liability, claim, damage or expense of such Underwriter results from the fact
that a copy of the Prospectus was not given or sent to the person asserting any
such loss, liability, claim or damage at or prior to the written confirmation of
sale of the Securities to such person as required by the Securities Act and the
Regulations, and if the untrue statement or omission has been corrected in the
Prospectus, unless such failure to deliver the Prospectus was a result of
non-compliance by the Company with its obligations under Section 3(g) hereof.
The Company agrees promptly to notify the Representatives of the commencement of
any litigation or proceedings against the Company or any of its officers,
directors, or controlling persons in connection with the issue and sale of the
Securities or in connection with the Registration Statement or
Prospectus.
-20-
(b) If
any action is brought against an Underwriter, a Selected Dealer or a controlling
person in respect of which indemnity may be sought against the Company pursuant
to Section 5(a), such Underwriter or Selected Dealer shall promptly notify the
Company in writing of the institution of such action, and the Company shall
assume the defense of such action, including the employment and fees of counsel
(subject to the reasonable approval of such Underwriter or Selected Dealer, as
the case may be) and payment of actual expenses. Such Underwriter,
Selected Dealer or controlling person shall have the right to employ its or
their own counsel in any such case, but the fees and expenses of such counsel
shall be at the expense of such Underwriter, Selected Dealer or controlling
person unless (i) the employment of such counsel at the expense of the Company
shall have been authorized in writing by the Company in connection with the
defense of such action; (ii) the Company shall not have employed counsel to have
charge of the defense of such action; or (iii) such indemnified party or parties
shall have reasonably concluded that there will be material defenses available
to it or them which are different from or additional to those available to the
Company (in which case the Company shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties), in any of
which events the reasonable fees and expenses of not more than one additional
firm of attorneys selected by the Underwriter, Selected Dealer and/or
controlling person shall be borne by the Company. Notwithstanding
anything to the contrary contained herein, if the Underwriter, Selected Dealer
or controlling person shall assume the defense of such action as provided above,
the Company shall have the right to approve the terms of any settlement on
behalf of the Company of such action, which approval shall not be unreasonably
withheld.
(c) Each
Underwriter, severally and not jointly, agrees to indemnify and hold harmless
the Company, its directors, officers and employees and agents who control the
Company within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act against any and all loss, liability, claim, damage and expense
described in the foregoing indemnity from the Company to the several
Underwriters, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions made in any Preliminary
Prospectus, the Registration Statement or Prospectus or any amendment or
supplement thereto or in any application, in reliance upon, and in strict
conformity with, written information furnished to the Company with respect to
such Underwriter by or on behalf of the Underwriter expressly for use in such
Preliminary Prospectus, the Registration Statement or Prospectus or any
amendment or supplement thereto or in any such application. In case any action
shall be brought against the Company or any other person so indemnified based on
any Preliminary Prospectus, the Registration Statement or Prospectus or any
amendment or supplement
thereto or any application, and in respect of which indemnity may be sought
against any Underwriter, such Underwriter shall have the rights and duties given
to the Company, and the Company and each other person so indemnified shall have
the rights and duties given to the several Underwriters, by the provisions of
Section 5(b).
-21-
(d) In
order to provide for just and equitable contribution under the Securities Act in
any case in which (i) any person entitled to indemnification under this Section
5 makes claim for indemnification pursuant hereto but it is judicially
determined (by the entry of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to appeal or the denial of the last
right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that this Section 5 provides for indemnification in
such case; or (ii) contribution under the Securities Act, the Exchange Act or
otherwise may be required on the part of any such person in circumstances for
which indemnification is provided under this Section 5, then, and in each such
case, the Company and the Underwriters shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by said
indemnity agreement incurred by the Company and the Underwriters, as incurred,
in such proportions that the Underwriters are responsible for that portion
represented by the percentage that the underwriting discount appearing on the
cover page of the Prospectus bears to the initial offering price appearing
thereon and the Company is responsible for the balance; provided that no person
guilty of a fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. Notwithstanding the
provisions of this Section 5(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 in respect of such losses, liabilities, claims, damages and
expenses. For purposes of this Section 5(d), each director, officer,
and employee of an Underwriter or the Company, as applicable, and each person,
if any, who controls an Underwriter or the Company, as applicable, within the
meaning of Section 15 of the Securities Act shall have the same rights to
contribution as the Underwriters or the Company, as applicable.
(e) Within
fifteen (15) days after receipt by any party to this Agreement (or its
Representatives) of notice of the commencement of any action, suit or
proceeding, such party will, if a claim for contribution in respect thereof is
to be made against another party (“contributing party”), notify the contributing
party of the commencement thereof, but the omission to so notify the
contributing party will not relieve it from any liability which it may have to
any other party other than for contribution hereunder. In case any such action,
suit, or proceeding is brought against any party, and such party notifies a
contributing party or its representatives of the commencement thereof within the
aforesaid fifteen days, the contributing party will be entitled to participate
therein with the notifying party and any other contributing party similarly
notified. Any such contributing party shall not be liable to any
party seeking contribution on account of any settlement of any claim, action or
proceeding effected by such party seeking contribution on account of any
settlement of any claim, action or proceeding effected by such party seeking
contribution without the written consent of such contributing
party. The contribution provisions contained in this Section 5(e) are
intended to supersede, to the extent permitted by law, any right to contribution
under the Securities Act, the Exchange Act or
otherwise available. The Underwriters’ obligations to contribute pursuant to
this Section 5(e) are several and not joint.
-22-
6. Default by an
Underwriter.
(a) If
any Underwriter or Underwriters shall default in its or their obligations to
purchase the Firm Shares or the Option Shares, if the Over-allotment Option is
exercised, hereunder, and if the number of the Firm Shares or Option Shares with
respect to which such default relates does not exceed in the aggregate ten
percent (10%) of the number of Firm Shares or Option Shares that all
Underwriters have agreed to purchase hereunder, then such Firm Shares or Option
Shares to which the default relates shall be purchased by the non-defaulting
Underwriters in proportion to their respective commitments
hereunder.
(b) In
the event that the default addressed in Section 6(a) above relates to more than
ten percent (10%) of the Firm Shares or Option Shares, you may in your
discretion arrange for yourself or for another party or parties to purchase such
Firm Shares or Option Shares to which such default relates on the terms
contained herein. If within one business day after such default
relating to more than 10% of the Firm Shares or Option Shares you do not arrange
for the purchase of such Firm Shares or Option Shares, then the Company shall be
entitled to a further period of one business day within which to procure another
party or parties satisfactory to you to purchase said Firm Shares or Option
Shares on such terms. In the event that neither you nor the Company
arranges for the purchase of the Firm Shares or Option Shares to which a default
relates as provided in this Section 6, this Agreement may be terminated by you
or the Company without liability on the part of the Company (except as provided
in Sections 3(p) and 5 hereof) or the several Underwriters (except as provided
in Section 5 hereof); provided, however, that if such default occurs with
respect to the Option Shares, this Agreement will not terminate as to the Firm
Shares; and provided further that nothing herein shall relieve a defaulting
Underwriter of its liability, if any, to the other several Underwriters and to
the Company for damages occasioned by its default hereunder.
(c) In
the event that the Firm Shares or Option Shares to which the default relates are
to be purchased by the non-defaulting Underwriters, or are to be purchased by
another party or parties as aforesaid, you or the Company shall have the right
to postpone the Closing Date or Option Closing Date for a reasonable period, but
not in any event exceeding five business days, in order to effect whatever
changes may thereby be made necessary in the Registration Statement or the
Prospectus or in any other documents and arrangements, and the Company agrees to
file promptly any amendment to the Registration Statement or the Prospectus that
in the opinion of counsel for the Underwriters may thereby be made
necessary. The term “Underwriter” as used in this Agreement shall
include any party substituted under this Section 6 with like effect as if it had
originally been a party to this Agreement with respect to such
Securities.
7. Representations and
Agreements to Survive Delivery. Except as the context
otherwise requires, all representations, warranties and agreements contained in
this Agreement shall be deemed to be representations, warranties and agreements
at the Closing Dates, and such representations, warranties and agreements of the
Underwriters and Company, including the indemnity agreements contained in
Section 5 hereof, shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any Underwriter, the
Company or any controlling person, and shall survive the issuance and delivery
of the Securities to the several Underwriters until the earlier of the
expiration of any applicable statute of limitations and the seventh anniversary
of the later of the Closing Date or the Option Closing Date, if any, at which
time the representations, warranties and agreements shall terminate and be of no
further force and effect.
-23-
8. Effective Date of this
Agreement and Termination.
(a) This
Agreement shall become effective when both the Company and the Representatives
have executed the same and delivered counterparts of such signature to the other
party.
(b) You
shall have the right to terminate this Agreement at any time prior to any
Closing Date (i) if any domestic or international event or act or occurrence has
materially disrupted, or in your opinion will in the immediate future materially
disrupt, general securities markets in the United States; (ii) if trading on the
Nasdaq Stock Market, the NYSE Amex LLC (or successor trading market) shall have
been suspended, or minimum or maximum prices for trading shall have been fixed,
or maximum ranges for prices for securities shall have been fixed, or maximum
ranges for prices for securities shall have been required by FINRA or by order
of the Commission or any other government authority having jurisdiction; (iii)
if the United States shall have become materially involved in a new war or an
increase in major hostilities; (iv) if a banking moratorium has been declared by
a New York State or federal authority; (v) if a moratorium on foreign exchange
trading has been declared which materially adversely impacts the United States
securities market; (vi) if the Company shall have sustained a material loss by
fire, flood, accident, hurricane, earthquake, theft, sabotage or other calamity
or malicious act which, whether or not such loss shall have been insured, will,
in your opinion, make it inadvisable to proceed with the delivery of the
Securities; (vii) if the Company is in material breach of any of
representations, warranties or covenants hereunder; or (viii) if the
Representatives shall have become aware after the date hereof of such a material
adverse change in the conditions or prospects of the Company, or such adverse
material change in general market conditions, as in the Representatives’
judgment would make it impracticable to proceed with the offering, sale and/or
delivery of the Securities or to enforce contracts made by the Underwriters for
the sale of the Securities.
(c) In
the event that this Agreement shall not be carried out for any reason
whatsoever, within the time specified herein or any extensions thereof pursuant
to the terms herein, the obligations of the Company to pay the out of pocket
expenses related to the transactions contemplated herein shall be governed by
Section 3(m) hereof.
(d) Notwithstanding
any contrary provision contained in this Agreement, any election hereunder or
any termination of this Agreement, and whether or not this Agreement is
otherwise carried out, the provisions of Section 5 shall not be in any way
effected by such election or termination or failure to carry out the terms of
this Agreement or any part hereof.
9. Miscellaneous.
-24-
(a) All
communications hereunder, except as herein otherwise specifically provided,
shall be in writing and shall be mailed (registered or certified mail, return
receipt requested), personally delivered or faxed and confirmed and shall be
deemed given when so delivered or faxed and confirmed or if mailed, two days
after such mailing.
If to the
Representatives:
▇▇▇▇▇▇
& ▇▇▇▇▇▇▇, LLC
1251
Avenue of the ▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇
▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: _______________________
Newbridge
Securities Corporation
▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
With copy
to (which shall not constitute notice to the Representatives):
▇▇▇▇▇▇▇
& ▇▇▇▇▇▇▇, LPA
▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Las Olas
Centre II, Suite 1150
▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇, Esq.
If to the
Company:
Dalian
Ganjingzi District, Dalian Wan Lijiacun
▇▇▇▇ ▇,
▇▇. ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Dalian
People’s
Republic of China
Attention: __________________
Copy to
(which shall not constitute notice to the Company):
Cozen
▇’▇▇▇▇▇▇
▇▇▇▇ ▇
▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Phone: (▇▇▇)
▇▇▇-▇▇▇▇
Attention:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
F. ▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
F. ▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
(b) The
headings contained herein are for the sole purpose of convenience of reference,
and shall not in any way limit or affect the meaning or interpretation of any of
the terms or provisions of this Agreement.
-25-
(c) This
Agreement may only be amended by a written instrument executed by each of the
parties hereto.
(d) This
Agreement (together with the other agreements and documents being delivered
pursuant to or in connection with this Agreement) constitute the entire
agreement of the parties hereto with respect to the subject matter hereof and
thereof, and supersede all prior agreements and understandings of the parties,
oral and written, with respect to the subject matter hereof.
(e) This
Agreement shall inure solely to the benefit of and shall be binding upon the
Representatives, the Underwriters, the Company and the controlling persons,
directors and officers referred to in Section 5 hereof, and their respective
successors, legal representatives and assigns, and no other person shall have or
be construed to have any legal or equitable right, remedy or claim under or in
respect of or by virtue of this Agreement or any provisions herein
contained.
(f) This
Agreement shall be governed by and construed and enforced in accordance with the
laws of the State of Florida, without giving effect to conflict of
laws. The Company hereby agrees that any action, proceeding or claim
against it arising out of, relating in any way to this Agreement shall be
brought and enforced in the courts in Broward County in the State of Florida of
the United States of America, and irrevocably submits to such jurisdiction,
which jurisdiction shall be exclusive. The Company hereby waives any
objection to such exclusive jurisdiction and that such courts represent an
inconvenient forum. Any such process or summons to be served upon the
Company may be served by transmitting a copy thereof by registered or certified
mail, return receipt requested, postage prepaid, addressed to it at the address
set forth in Section 10(a) hereof. Such mailing shall be deemed
personal service and shall be legal and binding upon the Company in any action,
proceeding, or claim. The Company agrees that the prevailing
party(ies) in any such action shall be entitled to recover from the other
party(ies) all of its reasonable attorneys’ fees and expenses relating to such
action or proceeding and/or incurred in connection with the preparation
therefor.
(g) This
Agreement may be executed in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which shall be deemed to be an
original, but all of which taken together shall constitute one and the same
agreement, and shall become effective when one or more counterparts has been
signed by each of the parties hereto and delivered to each of the other parties
hereto.
(h) The
failure of any of the parties hereto to at any time enforce any of the
provisions of this Agreement shall not be deemed or construed to be a waiver of
any such provision, nor to in any way effect the validity of this Agreement or
any provision hereof or the right of any of the parties hereto to thereafter
enforce each and every provision of this Agreement. No waiver of any
breach, non-compliance or non-fulfillment of any of the provisions of this
Agreement shall be effective unless set forth in a written instrument executed
by the party or parties against whom or which enforcement of such waiver is
sought; and no waiver of any such breach, non-compliance or non-fulfillment
shall be construed or deemed to be a waiver of any other or subsequent breach,
non-compliance or non-fulfillment.
-26-
Signature
Page
If the
foregoing correctly sets forth the understanding between the Underwriters and
the Company, please so indicate in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement between
us.
| Very truly yours, | |||
| ANDATEE CHINA MARINE FUEL SERVICES CORPORATION | |||
|
|
By:
|
||
| President and Chief Executive Officer | |||
Accepted
on the date first above written.
NEWBRIDGE
SECURITIES CORPORATION
Acting
severally on behalf of itself and as
a
Representative of the several Underwriters
named in
Schedule I annexed hereto
|
By:
|
|
|||
|
|
▇▇▇ ▇. ▇▇▇▇▇, President |
|
||
|
|
|
▇▇▇▇▇▇
& ▇▇▇▇▇▇▇, LLC
Acting
severally on behalf of itself and as
a
Representative of the several Underwriters
named in
Schedule I annexed hereto
|
By:
|
|
|||
|
Name:
|
|
|||
|
Title:
|
|
-27-
SCHEDULE
I
__________
Shares
|
Underwriter
|
Number
of Firm Shares to be Purchased
|
|
|
TOTAL:
|
ANNEX
2
Subsidiaries
|
Name
|
Jurisdiction of
Incorporation
|
|