] Ordinary Shares SGOCO GROUP, LTD. (par value US$0.001 per share) UNDERWRITING AGREEMENT
[ ]
Ordinary Shares
SGOCO
GROUP, LTD.
(par
value US$0.001 per share)
December
__, 2010
I-Bankers
Securities, Inc.
▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
As
Representative of the Several Underwriters
Ladies
and Gentlemen:
SGOCO
Group, Ltd, an exempted company incorporated in the Cayman Islands with limited
liability (the “Company”), proposes, subject to the terms and conditions
contained herein, to issue and sell to you and the other underwriters named on
Schedule I to this Agreement (the “Underwriters”), for whom you are acting as
representative (the “Representative”), [ ]
of the Company’s ordinary shares (the “Firm Shares”), par value US$0.001 per
share (the “Ordinary Shares”). The respective amounts of the Firm
Shares to be purchased by each of the several Underwriters are set forth
opposite their names on Schedule I hereto. In addition, the Company
proposes to grant to the Underwriters an option to purchase up to an additional
[ ]
ordinary shares (the “Option Shares”) of Ordinary Shares for the purpose of
covering over-allotments in connection with the sale of the Firm
Shares. The Firm Shares and the Option Shares are collectively called
the “Offered Shares.”
The
Company has prepared and filed in conformity with the requirements of the
Securities Act of 1933, as amended (the “Securities Act”), and the published
rules and regulations thereunder (the “Rules”) adopted by the Securities and
Exchange Commission (the “Commission”) a Registration Statement (as hereinafter
defined) on Form F-1 (File No. 333-170674), including a Preliminary Prospectus
relating to the Offered Shares, and such amendments thereof as may have been
required to the date of this Agreement. Copies of such Registration
Statement (including all amendments thereof) and of the related Preliminary
Prospectus (as hereinafter defined) have heretofore been delivered by the
Company to you. The term “Preliminary Prospectus” means any
Preliminary Prospectus included at any time as a part of the Registration
Statement or filed with the Commission by the Company pursuant to Rule 424(a) of
the Rules. The term “Registration Statement” as used in this Agreement means the
initial registration statement (including all exhibits and 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 filed with the Commission pursuant to
Rule 424(b) of the Rules and deemed to be part thereof at the time the
Registration Statement was declared effective pursuant to Rule 430A of the
Rules. If the Company has filed an abbreviated registration statement
to register additional Ordinary Shares pursuant to Rule 462(b) under the Rules
(the “462(b) Registration Statement”), then any reference herein to the
Registration Statement shall also be deemed to include such 462(b) Registration
Statement. The term “Prospectus” as used in this Agreement means the
prospectus in the form included in the Registration Statement at the time the
Registration Statement was declared effective or, if Rule 430A of the Rules is
relied on, the term Prospectus shall also include the final prospectus filed
with the Commission pursuant to and within the time limits described in Rule
424(b) of the Rules. Reference made herein to any Preliminary Prospectus, the
Statutory Prospectus (as hereinafter defined) or to the Prospectus shall be
deemed to refer to and include any documents incorporated by reference therein,
including pursuant to Item 5 of Form F-1 under the Securities Act, as of the
date of such Preliminary Prospectus, the Statutory Prospectus, or the
Prospectus, as the case may be, or thereafter, and any reference to any
amendment or supplement to any Preliminary Prospectus or the Prospectus shall be
deemed to refer to and include any document filed under the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), after the date of such Preliminary
Prospectus or the Prospectus, as the case may be, and incorporated by reference
in such Preliminary Prospectus or the Prospectus, as the case may
be. All references in this Agreement to the Registration Statement,
any Preliminary Prospectus or the Prospectus, or any amendments or supplements
to any of the foregoing shall include any copy thereof filed with the Commission
pursuant to its Electronic Data Gathering, Analysis and Retrieval System
(“▇▇▇▇▇”).
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The
Company understands that the Underwriters propose to make a public offering of
the Offered Shares, as set forth in and pursuant to the Statutory Prospectus and
the Prospectus, as soon after the Effective Date and the date of this Agreement
as the Representative deems advisable. The Company hereby confirms
that the Underwriters and dealers have been authorized to distribute or cause to
be distributed each Preliminary Prospectus and 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 Firm 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 allot, 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 (net of discounts, commissions and non-accountable
expense allowance) of US$_____ per Firm Share (the “Initial Price”), the number
of Firm Shares set forth opposite the name of such Underwriter under the column
“Number of Firm Shares to be Purchased” on Schedule I to this Agreement, subject
to adjustment in accordance with Section 8 hereof.
(b) The
Company hereby grants to the several Underwriters an option (the “Over-Allotment
Option”) to purchase, severally and not jointly, all or any part of the Option
Shares at a purchase price (net of discounts and commissions) of US$_____ per
Share. The number of Option Shares to be purchased by each
Underwriter shall be the same percentage (adjusted by the Representative to
eliminate fractions) of the total number of Option Shares to be purchased by the
Underwriters as such Underwriter is purchasing of the Firm
Shares. Such option may be exercised by the Representative on behalf
of the Underwriters only to cover over-allotments in the sales of the Firm
Shares by the Underwriters and may be exercised in whole or in part at any time
on or before 12:00 noon, New York City time, on the business day before the Firm
Shares Closing Date (as defined below), and from time to time thereafter within
30 days after the date of this Agreement, in each case upon written, facsimile
or telegraphic notice, or verbal or telephonic notice confirmed by written,
facsimile or telegraphic notice, by the Representative to the Company at least
two business days before the Option Shares Closing Date (as defined below),
setting forth the number of Option Shares to be purchased and the time and date
(but in no event prior to the Firm Shares Closing Date) of such
purchase.
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(c) Payment
of the purchase price for the Firm Shares shall be made at 10:00 a.m., New York
City time, on the third business day following the date of this Agreement or at
such time on such other date, not later than ten business days after the date of
this Agreement, as shall be agreed upon by the Company and the Representative
(such time and date of delivery and payment are called the “Firm Shares Closing
Date”). In addition, in the event that any or all of the Option
Shares are purchased by the Underwriters, payment of the purchase price for such
Option Shares shall be made at 10:00 a.m., New York City time, on each date of
delivery as specified in the notice from the Representative to the Company (such
time and date of delivery and payment are called the “Option Shares Closing
Date”). The Firm Shares Closing Date and any Option Shares Closing
Date are called, individually, a “Closing Date” and together, the “Closing
Dates.”
(d) Payment
shall be made to the Company by wire transfer of immediately available funds
against delivery of the Firm Shares to the Representative or for the respective
accounts of the Underwriters through the facilities of the Depository Trust
Company (“DTC”).
2. Representations and
Warranties of the Company. The Company represents and warrants
to each Underwriter as of the date hereof, as of the Firm Shares Closing Date
and as of each Option Shares Closing Date (if any), as follows:
(a) On
the Effective Date, the Registration Statement complied, and on the date of the
Prospectus, the date any post-effective amendment to the Registration Statement
becomes effective and the date any supplement to or amendment of the Prospectus
is filed with the Commission, each of the Registration Statement and the
Prospectus, as amended or supplemented, will comply, in all material respects,
with the requirements of the Securities Act and the Rules. The
Registration Statement did not, as of the Effective Date, and will not, as of
the date any post-effective amendment to the Registration Statement becomes
effective, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading; and on the date of the Prospectus, the date
any supplement to or amendment of the Prospectus is filed with the Commission
and each Closing Date, as the case may be, the Prospectus, as amended or
supplemented, will not contain any untrue statement of a material fact or will
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading. When any
Preliminary Prospectus was first filed with the Commission (whether filed as
part of the Registration Statement or any amendment thereto or pursuant to Rule
424(a) of the Rules) and when any amendment thereof or supplement thereto was
first filed with the Commission, such Preliminary Prospectus, as amended or
supplemented, complied, in all material respects, with the applicable provisions
of the Securities Act and the Rules. If applicable, each Preliminary
Prospectus and the Prospectus delivered to the Underwriters for use in
connection with this offering was identical to the electronically transmitted
copies thereof filed with the Commission pursuant to ▇▇▇▇▇, except to the extent
permitted by Regulation S-T. Notwithstanding the foregoing, none of
the representations and warranties in this paragraph 2(a) shall apply to
statements in, or omissions from, the Registration Statement, any Preliminary
Prospectus or the Prospectus made in reliance upon, and in conformity with,
information furnished in writing by the Representative on behalf of the several
Underwriters specifically for use in the Registration Statement, any Preliminary
Prospectus or the Prospectus, as the case may be (the “Underwriter
Information”).
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(b) As
of the Applicable Time (as hereinafter defined), the Statutory Prospectus (as
defined below) and the price to the public and the number of Ordinary Shares
offered and sold, as indicated on the cover page of the Prospectus, the
information included in the Prospectus that is retroactively deemed to be part
of the Registration Statement pursuant to Rule 430A of the Rules and other final
terms of the Ordinary Shares, all considered together (collectively, the
“General Disclosure Package”), when considered together with the General
Disclosure Package, did not include any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however, that this
representation and warranty shall not apply to statements in or omissions from
the General Disclosure Package made in reliance upon and in conformity with the
Underwriter Information.
Any
electronic road show (including without limitation any “bona fide electronic
road show” as defined in Rule 433(h)(5) under the Securities Act, each, a
“Electronic Road Show”) (i) is identified in Schedule II hereto; and (ii)
complied when issued, and complies, in all material respects, with the
requirements of the Securities Act and the Rules. The Company has made at least
one version of the Road Show available without restriction by means of graphic
communication to any person, including any potential investor in the Offered
Shares (and if there is more than one version of a Electronic Road Show for the
Offering that is a written communication, the version available without
restriction was made available no later than the other versions).
As used
in this Section and elsewhere in this Agreement:
“Applicable
Time” means [6]:00 [p].m. (Eastern time) on the date of this Underwriting
Agreement.
“Statutory
Prospectus” means the Preliminary Prospectus relating to the Offered Shares that
is included in the Registration Statement immediately prior to the Applicable
Time.
“Issuer
Free Writing Prospectus” means each “free writing prospectus” (as defined in
Rule 405 of the Rules) prepared by or on behalf of the Company or used or
referred to by the Company in connection with the offering of the Shares,
including, without limitation, each Electronic Road Show.
(c) The
Registration Statement is effective under the Securities Act and no stop order
preventing or suspending the effectiveness of the Registration Statement or
suspending or preventing the use of any Preliminary Prospectus, the Prospectus
has been issued by the Commission and no proceedings for that purpose have been
instituted or are threatened under the Securities Act. Any required filing of
any Preliminary Prospectus and/or the Prospectus and any supplement thereto
pursuant to Rule 424(b) of the Rules has been or will be made in the manner and
within the time period required by such Rule 424(b). Any material
required to be filed by the Company pursuant to Rule 433(d) or Rule 163(b)(2) of
the Rules has been or will be made in the manner and within the time period
required by such Rules.
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(d) Each
Issuer Free Writing Prospectus does not conflict with information contained in
the Registration Statement, the General Disclosure Package or the
Prospectus.
(e) The
financial statements of the Company (including all notes thereto) included in
the Registration Statement, the General Disclosure Package and Prospectus
present fairly the consolidated financial position of the Company and its
consolidated entities at the dates indicated and the statements of operations,
statements of owners’ equity and statements of cash flows of the Company and its
consolidated entities for the periods specified; and such financial statements
and related notes thereto, and the unaudited financial information filed with
the Commission as part of the Registration Statement, have been prepared in
conformity with generally accepted accounting principles, consistently applied
throughout the periods involved other than as described therein. No
other financial statements are required to be included in the Registration
Statement, the General Disclosure Package or the Prospectus. The
summary and selected financial data included in the General Disclosure Package
and the Prospectus present fairly the information shown therein as at the
respective dates and for the respective periods specified and have been
presented on a basis consistent with the consolidated financial statements set
forth in the Prospectus. The pro forma financial statements and the
related notes thereto included in the Registration Statement, the General
Disclosure Package and the Prospectus present fairly the information shown
therein, have been prepared in accordance with the Commission’s rules and
guidelines with respect to pro forma financial statements and have been properly
compiled on the bases described therein, and the assumptions used in the
preparation thereof are reasonable and the adjustments therein are appropriate
to give effect to the transactions and circumstances referred to
therein.
(f) ▇▇▇▇▇▇
▇▇▇▇▇ LLP (the “Auditor”), whose reports are filed with the Commission as a part
of the Registration Statement, is and, during the periods covered by their
reports, was (A) independent public accountant as required by the Securities Act
and the Rules; (B) in compliance with the applicable requirements relating to
the qualification of accountants under Rule 2-01 of Regulation S-X; and (C) a
registered public accounting firm as defined by the Public Company Accounting
Oversight Board (the “PCAOB”) whose registration has not been suspended or
revoked and who has not requested such registration to be
withdrawn.
(g) The
Company does not own or control, directly or indirectly, any corporation,
association or entity other than those listed in Exhibit A hereto.
(h) The
Company and each of the Subsidiaries, including each entity (corporation,
partnership, joint venture, association or other business organization)
controlled directly or indirectly by the Company, (each, a “Subsidiary”), is
duly organized, validly existing and in good standing under the laws of their
respective jurisdictions of incorporation or organization and each such entity
has all requisite power and authority to carry on its business as is currently
being conducted as described in the General Disclosure Package and the
Prospectus, and to own, lease and operate its properties except where the
failure to be in good standing or have such requisite power or authority would
not have a material adverse effect on the properties, condition, financial or
otherwise, or on the results of operations or business affairs of the Company
and the Subsidiaries, taken as a whole (a “Material Adverse
Effect”). All of the issued shares of, or other ownership interests
in, each Subsidiary have been duly and validly authorized and issued and are
fully paid and non-assessable and are owned, directly or indirectly, by the
Company, free and clear of any lien, charge, mortgage, pledge, security
interest, claim, limitation on voting rights, equity, trust or other
encumbrance, preferential arrangement, defect or restriction of any kind
whatsoever. Each of the Company and the Subsidiaries is duly
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction in which the nature of the business conducted by it or
location of the assets or properties owned, leased or licensed by it requires
such qualification, except where the failure to be so qualified or be in good
standing, individually or in the aggregate, would not have a Material Adverse
Effect; and to the Company’s knowledge, no proceeding has been instituted in any
such jurisdiction revoking, limiting or curtailing, or seeking to revoke, limit
or curtail, such power and authority or qualification.
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(i) The
Company and each of the Subsidiaries has all requisite corporate power and
authority, and all necessary authorizations, approvals, consents, orders,
licenses, certificates and permits of and from all governmental or regulatory
bodies or any other person or entity (collectively, the “Permits”), to own,
lease and license its assets and properties and conduct its business, all of
which are valid and in full force and effect, except where the lack of such
Permits, individually or in the aggregate, would not have a Material Adverse
Effect. The Company and each of the Subsidiaries has fulfilled and performed in
all material respects all of its obligations with respect to such
Permits and no event has occurred that allows, or after notice or lapse of time
would allow, revocation or termination thereof or results in any other material
impairment of the rights of the Company thereunder. Except as may be
required under the Securities Act and state and foreign Blue Sky laws, no other
Permits are required to be obtained by the Company or the Subsidiaries to enter
into, deliver and perform this Agreement and to issue and sell the Offered
Shares.
(j) The
Company and each of the Subsidiaries owns or possesses legally enforceable
rights to use all patents, patent rights, inventions, trademarks, trade names,
service marks, copyrights, licenses, know-how and other similar rights and
proprietary knowledge (collectively, “Intangibles”) necessary for the conduct of
its business. Neither the Company nor any of the Subsidiaries has
received any notice of, or is not aware of, any infringement of or conflict with
asserted rights of others with respect to any Intangibles.
(k) Reserved.
(l) The
Company and each of the Subsidiaries has good and marketable title to all land
use rights and other property owned by it and described in the Registration
Statement, the General Disclosure Package and the Prospectus that is material to
the business of the Company and the Subsidiaries, in each case free and clear of
all liens, encumbrances, claims, security interests and defects, except as
described in the Registration Statement, the General Disclosure Package and the
Prospectus or such as do not materially and adversely affect the value of such
property and do not materially interfere with the use made or proposed to be
made of such property by the Company and the Subsidiaries. All
property held under lease by the Company and the Subsidiaries described in the
Registration Statement, the General Disclosure Package and the Prospectus that
is material to the business of the Company and the Subsidiaries, is held by them
under valid, existing and enforceable leases, free and clear of all liens,
encumbrances, claims, security interests and defects, except such as are not
material and do not materially and adversely interfere with the use made or
proposed to be made of such property by the Company and the
Subsidiaries. Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus, except as
described or contemplated in the Registration Statement or Prospectus, (i) there
has not been any event which could have a Material Adverse Effect; (ii) neither
the Company nor any of the Subsidiaries has sustained any loss or interference
with its assets, businesses or properties (whether owned or leased) from fire,
explosion, earthquake, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or any court or legislative or other
governmental action, order or decree which would have a Material Adverse Effect;
and (iii) since the date of the latest balance sheet included in the
Registration Statement or Prospectus, neither the Company nor the Subsidiaries
has (A) issued any securities or incurred any long-term or material liability or
obligation, direct or contingent, for borrowed money, except such liabilities or
obligations incurred in the ordinary course of business, (B) entered into any
transaction not in the ordinary course of business or (C) except for regular
dividends on the Ordinary Shares in amounts per share that are consistent with
past practice, declared or paid any dividend or made any distribution on any
shares of its stock or redeemed, purchased or otherwise acquired or agreed to
redeem, purchase or otherwise acquire any shares of its capital
stock.
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(m) Except
for any of the Subsidiaries incorporated in the PRC or Hong Kong (each, a "PRC
Entity"), the Company has no direct or indirect subsidiaries or any other entity
over which it has direct or indirect effective control incorporated or operating
in the PRC. Each PRC Entity has been duly organized and validly exists as a
corporation, partnership or limited liability company in good standing under the
laws of the PRC. The liability of the Company in respect of equity
interests held in each PRC Entity is limited to its investment therein, and any
unpaid registered capital commitments as described in the Registration
Statement, the General Disclosure Package and the Prospectus. Each PRC Entity’s
business license is in full force and effect. Each of the PRC Entity (i) has all
requisite power and authority to carry on its business as is currently being
conducted and as described in the Registration Statement, the General Disclosure
Package or the Prospectus, and to own, lease and operate its respective
properties, and (ii) is duly qualified to do business as a foreign corporation,
partnership or limited liability company in each jurisdiction in which the
character or location of its properties (owned, leased or licensed) or the
nature or conduct of its business makes such qualification necessary, except, in
each case, as disclosed in the Registration Statement, the General Disclosure
Package and the Prospectus or for those failures to be so qualified which
(individually or in the aggregate) could not reasonably be expected to have a
Material Adverse Effect. The Articles of Association of each PRC Entity comply
with the requirements of applicable PRC law, including the PRC Company Law, and
are in full force and effect.
(n) There
is no document, contract or other agreement required to be described in the
Registration Statement, the General Disclosure Package or the Prospectus or to
be filed as an exhibit to the Registration Statement which is not described or
filed as required by the Securities Act or Rules. Each description of
a contract, document or other agreement in the Registration Statement, the
General Disclosure Package or the Prospectus accurately reflects in all material
respects the terms of the underlying contract, document or other
agreement. Each contract, document or other agreement described in
the Registration Statement, the General Disclosure Package or the Prospectus or
listed in the exhibits to the Registration Statement is, unless otherwise
described therein, in full force and effect and is valid and enforceable by and
against the Company or the Subsidiaries, if a Subsidiary is a party, as the case
may be, in accordance with its terms. Neither the Company nor any of
the Subsidiaries, if a Subsidiary is a party, is in default in the observance or
performance of any term or obligation to be performed by it under any such
agreement, and no event has occurred which with notice or lapse of time or both
would constitute such a default, in any such case which default or event,
individually or in the aggregate, would have a Material Adverse
Effect. No default exists, and no event has occurred which with
notice or lapse of time or both would constitute a default, in the due
performance and observance of any term, covenant or condition, by the Company or
a Subsidiary, if a Subsidiary is a party thereto, of any other agreement or
instrument to which the Company or any of the Subsidiaries is a party or by
which the Company or its properties or business or a Subsidiary or its
properties or business may be bound or affected, which default or event,
individually or in the aggregate, would have a Material Adverse
Effect.
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(o) There
are no business relationships or related-party transactions involving the
Company or any of the Subsidiaries or any other person required under the
Securities Act or Rules to be described in the Registration Statement, the
General Disclosure Package or the Prospectus that have not been described as
required.
(p) The
statistical and market related data included in the Registration Statement, the
General Disclosure Package or the Prospectus are based on or derived from
sources that the Company believes to be reliable and accurate.
(q) Neither
the Company nor any Subsidiary (i) is in violation of its certificate or
memorandum and articles of incorporation, by-laws, certificate of formation,
limited liability company agreement, partnership agreement or other
organizational documents, (ii) is in default under, and no event has occurred
which, with notice or lapse of time, or both, would constitute a default under,
or result in the creation or imposition of any lien, charge, mortgage, pledge,
security interest, claim, limitation on voting rights, equity, trust or other
encumbrance, preferential arrangement, defect or restriction of any kind
whatsoever, upon, any property or assets of the Company or any Subsidiary
pursuant to, any bond, debenture, note, indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which it is a party or by which it
is bound or to which any of its properties or assets is subject or (iii) is in
violation of any statute, law, rule, regulation, ordinance, directive, judgment,
decree or order of any judicial, regulatory or other legal or governmental
agency or body, foreign or domestic, except (in the case of clauses (ii) and
(iii) above) for violations or defaults that could not (individually or in the
aggregate) reasonably be expected to have a Material Adverse
Effect.
(r) This
Agreement has been duly authorized, executed and delivered by the
Company.
(s) Neither
the execution, delivery and performance of this Agreement by the Company nor the
consummation of any of the transactions contemplated hereby or thereby
(including, without limitation, the issuance and sale by the Company of the
Offered Shares) will give rise to a right to terminate or accelerate the due
date of any payment due under, or conflict with or result in the breach of any
term or provision of, or constitute a default (or an event which with notice or
lapse of time or both would constitute a default) under, or require any consent
or waiver under, or result in the execution or imposition of any lien, charge or
encumbrance upon any properties or assets of the Company or the
Subsidiaries(each, a "Breach") pursuant to the terms of, any indenture,
mortgage, deed of trust or other agreement or instrument to which the Company or
any of the Subsidiaries is a party or by which either the Company or the
Subsidiaries or any of their properties or businesses is bound, or any
franchise, license, permit, judgment, decree, order, statute, rule or regulation
applicable to the Company or any of the Subsidiaries or violate any provision of
the charter or by-laws of the Company or any of the Subsidiaries, except for
such consents or waivers which have already been obtained and are in full force
and effect, except for Breaches that are not (individually or in the aggregate)
reasonably expected to have a Material Adverse Effect.
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(t) This
Agreement is in proper form to be enforceable against the Company in the Cayman
Islands in accordance with its terms; to ensure the legality, validity,
enforceability or admissibility into evidence in the Cayman Islands of this
Agreement, it is not necessary that this Agreement be filed or recorded with any
court or other authority in the Cayman Islands or that any stamp or similar tax
in the Cayman Islands be paid on or in respect of this Agreement or any other
documents to be furnished hereunder so long as they are executed and remain
outside of the Cayman Islands.
(u) Except
as disclosed in the Registration Statement, the General Disclosure Package and
the Prospectus, neither the execution, delivery and performance of this
Agreement by the Company nor the consummation of any of the transactions
contemplated hereby or thereby (including, without limitation, the issuance and
sale by the Company of the Shares) are or will be, as of the date hereof or at
each Closing Date, adversely affected by the Regulations on Mergers and
Acquisitions of Domestic Enterprises by Foreign Investors (the “M&A Rules”)
or any official clarifications, guidance, interpretations or implementation
rules in connection with or related to the M&A Rules (collectively, the
“M&A Rules and Related Clarifications”).
(v) The
statements set forth in the General Disclosure Package and the Prospectus under
the captions “Risk Factors—Risks Related to the People’s Republic of China” are
fair and accurate summaries of the matters described therein in all material
respects, and nothing has been omitted from such summaries that would make the
same misleading in any material respect.
(w) Each
of the Company and the Subsidiaries that were incorporated outside of the PRC
has taken, or is in the process of taking, all reasonable steps to ensure
compliance by each of its shareholders that, to the best knowledge of the
Company, is, or is directly or indirectly owned or controlled by, a PRC resident
or citizen with any applicable rules and regulations of the relevant PRC
government agencies (including but not limited to the Ministry of Commerce, the
National Development and Reform Commission and the State Administration of
Foreign Exchange) relating to overseas investment by PRC residents and citizens
or overseas listing by offshore special purpose vehicles controlled directly or
indirectly by PRC companies and individuals (the “PRC Overseas Investment and
Listing Regulations”), including, without limitation, requesting such
shareholder to complete any registration and other procedures required under
applicable PRC Overseas Investment and Listing Regulations.
9
(x) (A)
Each party to each of the agreements described under the caption
“[ ]” in the General Disclosure Package and
the Prospectus relating to the Company’s corporate structure to which any of
Guanke (Fujian) Electron Technological Industry Co. Ltd., a company with limited
liability incorporated in China and a wholly owned subsidiary of Honesty Group
(“Guanke”), Guanwei (Fujian) Electron Technological Co. Limited, a company with
limited liability incorporated in China and a wholly owned subsidiary of Honesty
Group (“Guanwei”), Guancheng (Fujian) Electron Technological Co. Limited, a
company with limited liability incorporated in China and a wholly owned
subsidiary of Honesty Group (“Guancheng”), Jinjiang Guanke Electron
Co., Ltd., a company with limited liability incorporated in China and a wholly
owned subsidiary of Guanke ("Jinjiang Guanke"), and the shareholders of Guanke,
Guancheng, Guanwei and Jinjiang Guanke is a party (collectively, the “Relevant
Agreements”) has the legal right, power and authority (corporate and other, as
the case may be) to enter into and perform its respective obligations under the
Relevant Agreements and has taken all necessary corporate action to authorize
the execution, delivery and performance of, and have authorized, executed and
delivered, each of the Relevant Agreements; and except as disclosed in the
Registration Statement, the General Disclosure Package and the Prospectus, each
of the Relevant Agreements constitutes a valid and legally binding obligation of
the parties thereto, enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws of general applicability affecting
creditors’ rights or by equitable principles relating to enforceability and
except as disclosed in the Registration Statement, the General Disclosure
Package and the Prospectus. The execution and delivery by Guanke, Guancheng,
Guanwei and Jinjiang Guanke and shareholders of Guanke, Guancheng, Guanwei and
Jinjiang Guanke of, and the performance by Guanke, Guancheng, Guanwei and
Jinjiang Guanke and shareholders of Guanke, Guancheng, Guanwei and Jinjiang
Guanke of their respective obligations under, each of the Relevant Agreements
and the consummation by Guanke, Guancheng, Guanwei and Jinjiang Guanke and
shareholders of Guanke, Guancheng, Guanwei and Jinjiang Guanke of the
transactions contemplated therein did not, does not and will not: (i) conflict
with or result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, lease, loan
agreement or other agreement or instrument to which the Company, Guanke,
Guancheng, Guanwei and Jinjiang Guanke and, to the Company's best knowledge,
shareholders of Guanke, Guancheng, Guanwei and Jinjiang Guanke, as the case may
be, are a party or by which the Company, Guanke, Guancheng, Guanwei and Jinjiang
Guanke and shareholders of Guanke, Guancheng, Guanwei and Jinjiang Guanke are
bound or to which any of the properties or assets of the Company, Guanke,
Guancheng, Guanwei and Jinjiang Guanke and shareholders of Guanke, Guancheng,
Guanwei and Jinjiang Guanke are subject; (ii) result in any violation of the
provisions of constitutive documents or business license of the Company, Guanke,
Guancheng, Guanwei or Jinjiang Guanke, as the case may be; or (iii) except as
disclosed in the Registration Statement, the General Disclosure Package and the
Prospectus, result in any violation of any PRC statute or any order, rule or
regulation of any PRC governmental agency having jurisdiction over the Company,
Guanke, Guancheng, Guanwei and Jinjiang Guanke, and, to the Company's best
knowledge, shareholders of Guanke, Guancheng, Guanwei and Jinjiang Guanke or any
of their properties, except, in the case of the clauses (i), (ii) and (iii) as
would not reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect.
(B) To
ensure the legality, validity, enforceability and performance of each of the
Relevant Agreements in the PRC, it is not necessary that any such document be
filed or recorded with any court or other authority in the PRC.
10
(y) The
Company has duly authorized the allotment and issuance of the outstanding Shares
as set forth under the caption “Capitalization” in the General Disclosure
Package and the Prospectus. The certificates evidencing the Offered
Shares are in due and proper legal form and have been duly authorized for
issuance by the Company. All of the issued and outstanding Ordinary
Shares have been duly and validly issued and are fully paid. There
are no statutory preemptive or other similar rights to subscribe for or to
purchase or acquire any Ordinary Shares of the Company or any of the
Subsidiaries or any such rights pursuant to such entities Memorandum or Articles
of Association or any agreement or instrument to or by which the Company or any
of the Subsidiaries is a party or bound. The Offered Shares, when
issued and sold pursuant to this Agreement, will be duly and validly issued and
fully paid and none of them will be issued in violation of any preemptive or
other similar right. Except as disclosed in the Registration
Statement, the General Disclosure Package and the Prospectus, there is no
outstanding option, warrant or other right calling for the issuance of, and
there is no commitment, plan or arrangement to issue, any Offered Share or share
of the Company or any of the Subsidiaries or any security convertible into, or
exercisable or exchangeable for, such Offered Share or shares. All
grants of options on the Ordinary Shares were validly issued and properly
approved by the Board of Directors of the Company in material compliance with
all applicable laws and the terms of the plans under which such options were
issued and were recorded in the Company’s financial statements in accordance
with GAAP, and no such grants involved any “back dating”, “forward dating” or
similar practices with respect to the effective date of grant. The
Ordinary Shares, the Offered Shares and the Representative’s Warrants conform in
all material respects to all statements in relation thereto contained in the
Registration Statement, the General Disclosure Package and the
Prospectus. All outstanding shares of capital stock of each of the
Company’s Subsidiaries have been duly authorized and validly issued and, to the
extent owned by the Company or the Subsidiaries as disclosed in the Registration
Statement, the General Disclosure Package and the Prospectus, are fully paid and
are owned directly by the Company or by a wholly-owned Subsidiary of the Company
free and clear of any security interests, liens, encumbrances, equities or
claims, except as described in the General Disclosure Package and the
Prospectus.
(z) The
Ordinary Shares underlying the Option Shares to be purchased by the Underwriters
have been duly authorized and, when issued and delivered in accordance with the
terms of this Agreement against payment in full therefore, will be validly
issued and fully paid, and the issuance of such Ordinary Shares will not be
subject to any preemptive or similar rights.
(aa) When
issued, the Representative's Warrants will constitute valid and binding
obligations of the Company to issue and sell, upon exercise thereof and against
payment of the respective exercise prices therefor, the number and type of
securities of the Company called for thereby in accordance with the terms
thereof and such Representative's Warrants are enforceable against the Company
in accordance with their respective terms, except: (i) as such enforceability
may be limited by bankruptcy, insolvency, reorganization or similar laws
affecting creditors’ rights generally; (ii) as enforceability of any
indemnification or contribution provision may be limited under foreign, 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. The Company will have sufficient authorized share capital for
the issuance of Ordinary Shares upon the exercise of the Representative's
Warrants and payment of the consideration therefor, and when issued in
accordance with the terms thereof, such Ordinary Shares will be duly and validly
authorized, validly issued, fully paid and non-assessable; the holders thereof
are not and will not be subject to personal liability solely by reason of being
such holders. The issuance of such Ordinary Shares is not subject to any
statutory preemptive rights under the law of the Cayman Islands (the “Cayman
Law”) or the memorandum and articles of association as in effect at the time of
issuance or, to the best knowledge of the Company, other similar rights of any
security holder of the Company (except for such preemptive or contractual rights
as were waived).
11
(bb) The
statements set forth in the General Disclosure Package and the Prospectus under
the captions “Description of Share Capital” insofar as they purport to
constitute summaries of the terms of the Ordinary Shares or describe the
provisions of the laws and documents referred to therein, are accurate and fair
summaries or descriptions of such terms and provisions in all material
respects.
(cc) No
holder of any security of the Company has any right, which has not been waived,
to have any security owned by such holder included in the Registration Statement
or to demand registration of any security owned by such holder for a period of
180 days after the date of this Agreement. Each director and
executive officer of the Company and each shareholder of the Company listed on
Schedule III hereto has delivered to the Representative his lock-up agreement in
the form attached to this Agreement as Exhibit B hereto (“Lock-Up
Agreement”).
(dd) There
are no legal or governmental proceedings pending to which the Company or any of
the Subsidiaries is a party or of which any property of the Company or any of
the Subsidiaries is the subject which, if determined adversely to the Company or
any of the Subsidiaries could individually or in the aggregate have a Material
Adverse Effect; and, to the knowledge of the Company, no such proceedings are
threatened or contemplated by governmental authorities or threatened by
others.
(ee) All
necessary corporate action has been duly and validly taken by the Company to
authorize the execution, delivery and performance of this Agreement and the
issuance and sale of the Ordinary Shares by the Company.
(ff) Neither
the Company nor any of the Subsidiaries is involved in any labor dispute, nor,
to the knowledge of the Company, is any such dispute threatened, which dispute
would have a Material Adverse Effect. The Company is not aware of any
threatened or pending litigation between the Company or the Subsidiaries and any
of its executive officers which, if adversely determined, could have a Material
Adverse Effect.
(gg) No
transaction has occurred between or among the Company and any of its officers or
directors, shareholders or any affiliate or affiliates of any such officer or
director or shareholder that is required to be described in and is not described
in the Registration Statement, the General Disclosure Package and the
Prospectus.
(hh) The
Company has not taken, nor will it take, directly or indirectly, any action
designed to or that might be reasonably expected to cause or result in
stabilization or manipulation of the price of the Ordinary Shares or any other
“reference security” (as defined in Rule 100 of Regulation M under the Exchange
Act (“Regulation M”)) whether to facilitate the sale or resale of the Ordinary
Shares, and has taken no action which would directly or indirectly violate
Regulation M.
(ii) The
Company and each of the Subsidiaries has filed all necessary tax returns which
are required to be filed through the date hereof, which returns are true and
correct in all material respects or has received timely extensions thereof, and
has paid all taxes shown on such returns and all assessments received by it to
the extent that the same are material and have become due. There are no tax
audits or investigations pending, which if adversely determined would have a
Material Adverse Effect; nor, to the Company’s best knowledge, are there any
material proposed additional tax assessments against the Company or any of the
Subsidiaries.
12
(jj) The
Ordinary Shares have been duly authorized for listing on the NASDAQ Global
Market, subject to official notice of issuance. A registration statement has
been filed on Form 8-A (File No. [ ])
pursuant to Section 12 of the Exchange Act; such registration statement in the
form heretofore delivered to you and, excluding exhibits, to you for each of the
other Underwriters, has been filed with the Commission in such form; no other
document with respect to such registration statement has heretofore been filed
with the Commission; no stop order suspending the effectiveness of such
registration statement has been issued and no proceeding for that purpose has
been initiated or, to the best of the Company’s knowledge after due inquiry,
threatened by the Commission (the various parts of such registration statement,
including all exhibits thereto, each as amended at the time such part of the
registration statement became effective, being hereinafter called the “Form 8-A
Registration Statement”); and the Form 8-A Registration Statement, when it
became effective, conformed, and any further amendments thereto will conform, in
all material respects to the requirements of the Exchange Act and the rules and
regulations of the Commission thereunder, and did not and will not, as of the
applicable effective date, contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading.
(kk) The
Company has taken no action designed to, or likely to have the effect of,
terminating the registration of the Shares under the Exchange Act or the listing
of the Ordinary Shares on the NASDAQ Global Market, nor has the Company received
any notification that the Commission or the NASDAQ Global Market is
contemplating terminating such registration or listing.
(ll) The
Company and each of the Subsidiaries maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management’s general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles and to
maintain asset accountability, (iii) access to assets is permitted only in
accordance with management’s general or specific authorization, (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences, and (v) the books, records and accounts of the Company and the
Subsidiaries accurately and fairly reflect the transactions in, and dispositions
of, the assets of, and the results of operations of, the Company and the
Subsidiaries.
(mm) The
Company has established and maintains disclosure controls and procedures (as
such term is defined in Rule 13a-15 under the Exchange Act), which: (i) are
reasonably designed to ensure that material information required to be disclosed
by the Company will be made known to the Company’s principal executive officer
and its principal financial officer by others within the Company; (ii) provide
for the periodic evaluation of the effectiveness of such disclosure controls and
procedures at the end of the periods in which the periodic reports are required
to be prepared; and (iii) are effective in all material respects to perform the
functions for which they were established.
13
(nn) Except
as disclosed in the Registration Statement, the General Disclosure Package and
the Prospectus, the Company is not aware of (i) any material weakness or
significant deficiency in the design or operation of internal controls which
could adversely affect the Company’s ability to record, process, summarize and
report financial data; or (ii) any fraud, whether or not material, that involves
management or other employees who have a role in the Company’s internal
controls.
(oo) Except
as described in the Registration Statement, the General Disclosure Package and
the Prospectus, there are no material off-balance sheet arrangements (as defined
in Item 303 of Regulation S-K) that have or are reasonably likely to have a
material current or future effect on the Company’s financial condition, revenues
or expenses, changes in financial condition, results of operations, liquidity,
capital expenditures or capital resources.
(pp) The
Company’s Board of Directors has appointed an audit committee effective upon the
Firm Shares Closing Date whose composition satisfies the requirements of Rule
5605(c)(2)(A) of the NASDAQ Global Market and the Board of Directors and/or the
audit committee has adopted a charter that satisfies the requirements of Rule
5605(c)(1) of the NASDAQ Global Market.
(qq) The
Company is taking steps to ensure that it will be in compliance in all material
respects with all other applicable provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002,
any related rules and regulations promulgated by the Commission and applicable
corporate governance requirements under NASDAQ rules and has no reason to
believe that it will not be able to comply with such provisions in all material
respects.
(rr) The
Company and the Subsidiaries are insured against such losses and risks and in
such amounts as are customary in the businesses in which they are engaged; all
policies of insurance and fidelity or surety bonds insuring the Company or any
of the Subsidiaries that are material to the Company’s business are in full
force and effect; the Company and each of the Subsidiaries are in compliance
with the terms of such policies and instruments in all material
respects.
(ss) Each
approval, consent, order, authorization, designation, declaration or filing of,
by or with any regulatory, administrative or other governmental body necessary
in connection with the execution and delivery by the Company of this Agreement
and the consummation of the transactions herein and therein contemplated
required to be obtained or performed by the Company (except such additional
steps as may be required by the Commission, the Financial Industry Regulatory
Authority (“FINRA”) or may be necessary to qualify the Offered Shares for public
offering by the Underwriters under the state securities or Blue Sky laws) has
been obtained or made and is in full force and effect.
(tt) There
are no affiliations with FINRA among the Company’s officers, directors or, to
the best of the knowledge of the Company, any five percent or greater
shareholder of the Company, except as set forth in the Registration Statement,
the General Disclosure Package and the Prospectus or otherwise disclosed in
writing to the Representative. All of the information provided to the
Underwriters or to counsel for the Underwriters by the Company for furnishing to
FINRA pursuant to FINRA Rules 5110 and 5190 is true, complete and
correct.
14
(uu) Except
as disclosed in the Registration Statement, the General Disclosure Package and
the Prospectus, there are no contracts, agreements or understandings between the
Company and any person (other than the Underwriters) that would give rise to a
valid claim against the Company or any Underwriter for a brokerage commission,
finder’s fee or other like payment in connection with the transactions
contemplated by this Agreement or, to the Company’s knowledge, any arrangements,
agreements, understandings, payments or issuance with or to any person (other
than the Underwriters) with respect to the Company or any of its officers,
directors, shareholders, partners, employees, Subsidiaries or affiliates that
may affect the Underwriters’ compensation as determined by FINRA.
(vv) Each
of the Company and each of the Subsidiaries is in compliance in all material
respects with all environmental rules, laws and regulation which are applicable
to its business, except for violations or defaults that could not (individually
or in the aggregate) reasonably be expected to have a Material Adverse
Effect.
(ww) The
Company is not and, after giving effect to the offering and sale of the Offered
Shares and the application of net proceeds thereof as described in the General
Disclosure Package and the Prospectus, will not be an “investment company”
within the meaning of the Investment Company Act of 1940, as amended (the
“Investment Company Act”).
(xx) The
Company believes that it may qualify as a passive foreign investment company
(“PFIC”) as defined in Section 1297 of the Internal Revenue Code of 1986, as
amended (the “Code”) in 2009, but that the consummation of the transactions
contemplated hereby and the application of the net proceeds as described in the
General Disclosure Package and the Prospectus under the caption “Use of
Proceeds” will not cause it to become a PFIC in 2010.
(yy) The
Company or each of its Subsidiaries, directors or officers of the Company or the
Subsidiaries, or, to the best knowledge of the Company, any other person
associated with or acting on behalf of the Company, including, without
limitation, any agent or employee of the Company or the Subsidiaries, has not,
directly or indirectly, while acting on behalf of the Company or the
Subsidiaries (i) in contravention of the anti-corruption laws in China, Hong
Kong or the Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”), (x)
used any corporate funds for unlawful contributions, gifts, entertainment or
other unlawful expenses relating to political activity; or (y) made any unlawful
payment to foreign or domestic government officials or employees or to foreign
or domestic political parties or campaigns from corporate funds; or (ii)
violated any provision of the anti-corruption laws in China, Hong Kong or the
FCPA.
(zz) The
operations of the Company and the Subsidiaries are and have been conducted at
all times in compliance with applicable financial recordkeeping and reporting
requirements of the applicable money laundering statutes of all jurisdictions
and the rules and regulations thereunder (collectively, the “Money Laundering
Laws”) and no action, suit or proceeding by or before any court or governmental
agency, authority or body or any arbitrator involving the Company or any of it
Subsidiaries with respect to the Money Laundering Laws is pending, or to the
best knowledge of the Company, threatened.
(aaa) Neither
the Company nor any of the Subsidiaries nor, to the knowledge of the Company,
any director, officer, agent, employee or affiliate of the Company or any of the
Subsidiaries is currently subject to any U.S. sanctions administered by the
Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and
the Company will not directly or indirectly use the proceeds of the offering, or
lend, contribute or otherwise make available such proceeds to any Subsidiary,
joint venture partner or other person or entity, for the purpose of financing
the activities of any person currently subject to any U.S. sanctions
administered by OFAC.
15
(bbb) Except
to the extent described in the Registration Statement, the General Disclosure
Package and the Prospectus, all dividends and other distributions declared and
payable on the equity interests of the Company and the Subsidiaries may under
current laws and regulations of the Cayman Islands, Hong Kong and the PRC be
converted into foreign currency that may be freely transferred out of the Cayman
Islands, Hong Kong and the PRC, as the case may be, and all such dividends and
other distributions will not be subject to withholding or other taxes under the
laws and regulations of the Cayman Islands, Hong Kong and the PRC and are
otherwise free and clear of any other tax, withholding or deduction in the
Cayman Islands, Hong Kong and the PRC without the necessity of obtaining
governmental authorization in the Cayman Islands and the PRC.
(ccc) The
statements in the General Disclosure Package and the Prospectus under the
captions “Business,” “Related Party Transactions,” “Management” and “Taxation”,
insofar as such statements constitute a summary of documents referred to therein
or matters of law, are accurate in all material respects and fairly present the
information with respect to such documents and matters. Accurate
copies of all contracts and other documents required to be filed as exhibits to,
or described in, the Registration Statement have been so filed with the
Commission or are fairly described in the Registration Statement, as the case
may be.
(ddd) The
Company is a “foreign private issuer” within the meaning of Rule 405 under the
Securities Act.
(eee) Under
the laws of the Cayman Islands, the choice of the laws of the State of New York
as the governing law of this Agreement is a valid choice of law and would be
recognised and given effect to in any action brought before a court of competent
jurisdiction in the Cayman Islands, except for those laws (i) which such court
considers to be procedural in nature, (ii) which are revenue or penal laws or
(iii) the application of which would be inconsistent with public policy, as such
term is interpreted under the laws of the Cayman Islands. The courts
of the Cayman Islands would recognise as a valid judgment, a final and
conclusive judgment in
personam obtained in any federal or state court in the City of New York
against the Company based upon this Agreement under which a sum of money is
payable (other than a sum of money payable in respect of multiple damages, taxes
or other charges of a like nature or in respect of a fine or other penalty) and
would give a judgment based thereon provided that (a) such courts had proper
jurisdiction over the parties subject to such judgment; (b) such courts did not
contravene the rules of natural justice of the Cayman Islands; (c) such judgment
was not obtained by fraud; (d) the enforcement of the judgment would not be
contrary to the public policy of the Cayman Islands; (e) no new admissible
evidence relevant to the action is submitted prior to the rendering of the
judgment by the courts of the Cayman Islands; and (f) there is due compliance
with the correct procedures under the laws of the Cayman Islands; under the laws
of the PRC, the choice of law provisions set forth herein will be recognized by
the courts of the PRC and any judgment obtained in a New York Court (as defined
below) arising out of or in relation to the obligations of the Company under
this Agreement will be recognized in PRC courts subject to the applicable
provisions of the Civil Procedure Law of the PRC relating to the enforceability
of foreign judgments.
16
(fff) Neither
the Company nor any of its affiliates (within the meaning of Rule 144 under the
Securities Act) has, prior to the date hereof, made any offer or sale of any
securities (other than the Shares and underlying securities) which will be
“integrated” (within the meaning of the Securities Act and the Rules and
Regulations) with the offer and sale of the Shares pursuant to the Registration
Statement. Except as described in the Registration Statement, the
General Disclosure Package and the Prospectus, the Company has not sold or
issued any shares of Ordinary Shares during the six-month period preceding the
date hereof, including any sales pursuant to Rule 144A under, or Regulations D
or S of, the Securities Act, other than shares issued pursuant to employee
benefit plans, qualified stock options plans or other employee compensation
plans or pursuant to outstanding options, rights or warrants.
Any
certificate signed by any officer of the Company and delivered to the
Representative or to counsel for the Underwriters shall be deemed a
representation and warranty by the Company to each Underwriter as to the matters
covered thereby.
The
Company acknowledges that the Underwriters for purposes of the opinions to be
delivered pursuant to Section 3 hereof only, may allow counsel to the Company
and counsel to the Underwriters to rely upon the accuracy and truthfulness of
the foregoing representations.
3. Conditions of the
Underwriters’ Obligations. The obligations of the Underwriters
under this Agreement are several and not joint. The respective
obligations of the Underwriters to purchase the Offered Shares are subject to
each of the following terms and conditions:
(a) Notification
that the Registration Statement have become effective shall have been received
by the Representative and the Prospectus shall have been timely filed with the
Commission in accordance with Section 4(a) of this Agreement and any material
required to be filed by the Company pursuant to Rule 433(d) of the Rules shall
have been timely filed with the Commission in accordance with such
rule.
(b) No
order preventing or suspending the use of any Preliminary Prospectus or
Prospectus, shall have been or shall be in effect and no order suspending the
effectiveness of the Registration Statement shall be in effect and no
proceedings for such purpose shall be pending before or threatened by the
Commission, and any requests for additional information on the part of the
Commission (to be included in the Registration Statement or the Prospectus or
otherwise) shall have been complied with to the satisfaction of the Commission
and the Representative. If the Company has elected to rely upon Rule
430A, Rule 430A information previously omitted from the effective Registration
Statement pursuant to Rule 430A shall have been transmitted to the Commission
for filing pursuant to Rule 424(b) within the prescribed time period and the
Company shall have provided evidence satisfactory to the Underwriters of such
timely filing, or a post-effective amendment providing such information shall
have been promptly filed and declared effective in accordance with the
requirements of Rule 430A.
(c) The
representations and warranties of the Company contained in this Agreement and in
the certificates delivered pursuant to Section 3(d) shall be true and correct
when made and on and as of each Closing Date as if made on such date. The
Company shall have performed all covenants and agreements and satisfied all the
conditions contained in this Agreement required to be performed or satisfied by
it at or before such Closing Date.
17
(d) The
Representative shall have received on each Closing Date a certificate, addressed
to the Representative and dated such Closing Date, of the chief executive
officer and the chief financial officer of the Company to the effect that: (i)
the representations, warranties and agreements of the Company in this Agreement
were true and correct when made and are true and correct as of such Closing
Date; (ii) the Company has performed all covenants and agreements and satisfied
all conditions contained herein; (iii) 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; and (iv) subsequent to the end of the period covered
by the latest audited financial statements included in the Registration
Statement, the General Disclosure Package and the Prospectus, there has been no
material adverse change, nor any development or event involving a prospective
material adverse change, in the condition (financial or otherwise), results of
operations, business, properties or prospects of the Company and the
Subsidiaries taken as a whole, and, to such officer’s knowledge, there has been
no adverse legislative or regulatory developments related to the M&A Rules
and Related Clarifications, except as disclosed in the Registration Statement,
the General Disclosure Package and the Prospectus.
(e) The
Representative shall have received: (i) simultaneously with the execution of
this Agreement a signed letter from the Auditor addressed to the Representative
and dated the date of this Agreement, in form and substance reasonably
satisfactory to the Representative, containing statements and information of the
type ordinarily included in accountants’ “comfort letters” to underwriters with
respect to the financial statements and certain financial information contained
in the Registration Statement and the Disclosure Package, and (ii) on each
Closing Date, a signed letter from the Auditor addressed to the Representative
and dated the date of such Closing Date, in form and substance reasonably
satisfactory to the Representative containing statements and information of the
type ordinarily included in accountants’ “comfort letters” to underwriters with
respect to the financial statements and certain financial information contained
in the Registration Statement and the Prospectus.
(f) On
or prior to the Firm Shares Closing Date, the Firm Shares shall be eligible for
clearance and settlement through the facilities of DTC.
(g)
The Representative shall have received on each Closing Date a written opinion of
Cozen ▇’▇▇▇▇▇▇ LLP, United States counsel for the Company, dated the Closing
Date and addressed to the Underwriters substantially in form set forth in
Exhibit C hereto.
(h)
The Representative shall have received a written opinion of ▇▇▇▇▇▇▇ ▇▇▇▇ &
▇▇▇▇▇▇▇, Cayman Islands counsel for the Company, dated the Closing Date and
addressed to the Underwriters substantially in form set forth in Exhibit C
hereto.
(i) The
Representative shall have received a written opinion of JunZe Jun Law Offices,
PRC counsel for the Company, dated the Closing Date and addressed to the
Underwriters in form and substance satisfactory to the
Representative.
(j) The
Representative shall have received a written opinion of DLA Piper Italy, United
States counsel for the Underwriters, dated the Closing Date and addressed to the
Underwriters in form and substance satisfactory to the
Representative.
18
(k) The
Representative shall have received copies of the Lock-up Agreements executed by
each entity or person listed on Schedule III hereto.
(l) The
Ordinary Shares shall have been approved for listing on the NASDAQ Global
Market, subject only to official notice of issuance.
(m) FINRA
shall have raised no objection to the fairness and reasonableness of the
underwriting terms and arrangements.
(n) The
Representative shall be reasonably satisfied that, except as set forth or
contemplated in the Registration Statement, the General Disclosure Package and
the Prospectus, since the respective dates as of which information is given in
the Registration Statement, the General Disclosure Package and the Prospectus,
(i) there shall not have been any material change in the share capital of the
Company or any material change in the indebtedness (other than in the ordinary
course of business) of the Company, (ii) no material oral or written agreement
or other transaction shall have been entered into by the Company that is not in
the ordinary course of business or that could reasonably be expected to result
in a material reduction in the future earnings of the Company, (iii) no loss or
damage (whether or not insured) to the property of the Company shall have been
sustained that had or could reasonably be expected to have a Material Adverse
Effect, (iv) no legal or governmental action, suit or proceeding affecting the
Company or any of its properties that is material to the Company or that affects
or could reasonably be expected to affect the transactions contemplated by this
Agreement shall have been instituted or, to the Company’s knowledge, threatened
and (v) there shall not have been any material change in the assets, properties,
condition (financial or otherwise), or in the results of operations, business
affairs or business prospects of the Company or the Subsidiaries, considered as
a whole, that makes it impractical or inadvisable in the Representative’s
reasonable judgment to proceed with the purchase or offering of the Offered
Shares as contemplated hereby.
(o) The
Company shall have furnished or caused to be furnished to the Representative
such further certificates or documents as the Representative shall have
reasonably requested.
4. Covenants and other
Agreements of the Company and the Underwriters.
(a) The
Company covenants and agrees as follows:
(i) The
Company shall promptly advise the Representative in writing (A) when any
post-effective amendment to the Registration Statement shall have become
effective or any supplement to the Prospectus shall have been filed, (B) of any
request by the Commission for any amendment of the Registration Statement or the
Prospectus or for any additional information, (C) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or of any order preventing or suspending the use of any Preliminary
Prospectus or any “free writing prospectus”, as defined in Rule 405 of the
Rules, or the institution or threatening of any proceeding for that purpose and
(D) of the receipt by the Company of any notification with respect to the
suspension of the qualification of the Ordinary Shares for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose. The Company shall not file any amendment of the Registration
Statement or supplement to the Prospectus or any Issuer Free Writing Prospectus
unless the Company has furnished the Representative a copy prior to filing and
shall not file any such proposed amendment or supplement to which the
Representative reasonably object. The Company shall use its best
efforts to prevent the issuance of any such stop order and, if issued, to obtain
as soon as possible the withdrawal thereof.
19
(ii) If,
at any time when a prospectus relating to the Ordinary Shares (or, in lieu
thereof, a notice referred to in Rule 173(a) of the Rules) is required to be
delivered under the Securities Act and the Rules, any event occurs as a result
of which the Prospectus as then amended or supplemented would include any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein in the light of the circumstances under which they
were made not misleading, or if it shall be necessary to amend or supplement the
Prospectus to comply with the Securities Act or the Rules, the Company shall
promptly prepare and file with the Commission, subject to the second sentence of
paragraph (i) of this Section 4(a), an amendment or supplement which shall
correct such statement or omission or an amendment which shall effect such
compliance.
(iii) The
Company shall make generally available to its shareholders and to the
Representative as soon as practicable, but not later than 60 days after the end
of the 12 month period beginning at the end of the fiscal quarter of the Company
during which the Effective Date occurs (or the earlier of 180 days or the date
the Company’s Form 20-F is due if such 12 month period coincides with the
Company’s fiscal year), an earning statement (which need not be audited) of the
Company, covering a period of at least 12 months beginning after the Effective
Date, which shall satisfy the provisions of Section 11(a) of the Securities Act
or Rule 158 of the Rules.
(iv) The
Company shall furnish to the Representative and counsel for the Underwriters,
without charge, two signed copies of the Registration Statement (including all
exhibits thereto and amendments thereof) and to each other Underwriter a copy of
the Registration Statement (without exhibits thereto) and all amendments
thereof, so long as delivery of a prospectus by an Underwriter or dealer may be
required by the Securities Act or the Rules, as many copies of any Preliminary
Prospectus and the Prospectus and any amendments thereof and supplements thereto
as the Representative may reasonably request. If applicable, the
copies of the Registration Statement, Preliminary Prospectus and Prospectus and
each amendment and supplement thereto furnished to the Underwriters will be
identical to the electronically transmitted copies thereof filed with the
Commission pursuant to ▇▇▇▇▇, except to the extent permitted by Regulation
S-T.
20
(v) The
Company shall cooperate with the Representative and their counsel in endeavoring
to qualify the Offered Shares for offer and sale in connection with the offering
under the laws of such jurisdictions as the Representative may reasonably
designate and shall maintain such qualifications in effect so long as required
for the distribution of the Offered Shares; provided, however, that the Company
shall not be required in connection therewith, as a condition thereof, to
qualify as a foreign corporation or to execute a general consent to service of
process in any jurisdiction or subject itself to taxation as doing business in
any jurisdiction.
(vi) The
Company, during the period when the Prospectus (or in lieu thereof, the notice
referred to in Rule 173(a) of the Rules) is required to be delivered under the
Securities Act and the Rules or the Exchange Act, will file all reports and
other documents required to be filed with the Commission pursuant to Section 13,
14 or 15 of the Exchange Act within the time periods required by the Exchange
Act and the regulations promulgated thereunder.
(vii) Without
the prior written consent of the Representative, for a period of 180 days after
the date of this Agreement, the Company shall not issue, sell or register with
the Commission (other than on Form S-8 or on any successor form), or otherwise
dispose of, directly or indirectly, any equity securities of the Company (or any
securities convertible into, exercisable for or exchangeable for equity
securities of the Company), except for the issuance of the Offered Shares
pursuant to the Registration Statement, the General Disclosure Package and the
Prospectus and the issuance of shares pursuant to the Company's share option
schemes or other arrangements as described in the Registration Statement and the
Prospectus. In the event that during this period, (A) any shares are
issued pursuant to the Company's share option schemes or other arrangements that
are exercisable during such 180 day period or (B) any registration is effected
on Form S-8 or on any successor form relating to shares that are exercisable
during such 180 period, the Company shall obtain the written agreement of such
grantee or purchaser or holder of such registered securities that, for a period
of 180 days after the date of this Agreement, such person will not, except
otherwise disclosed in the Registration Statement, the General Disclosure
Package and the Prospectus, without the prior written consent of the
Representative, offer for sale, sell, distribute, grant any option for the sale
of, or otherwise dispose of, directly or indirectly, or exercise any
registration rights with respect to, any Ordinary Shares (or any securities
convertible into, exercisable for, or exchangeable for any Ordinary Shares)
owned by such person. Notwithstanding the foregoing, if
(x) during the last 17 days of the 180 day period described in this paragraph
the Company issues an earnings release or material news or a material event
relating to the Company occurs; or (y) prior to the expiration of such 180 day
period, the Company announces that it will release earnings results during the
16 day period beginning on the last day of the 180 day period; the restrictions
imposed under this paragraph shall continue to apply until the expiration of the
18-day period beginning on the issuance of the earnings release or the
occurrence of the material news or material event; provided, however, that this
sentence shall not apply if the research published or distributed on the Company
is compliant under Rule 139 of the Securities Act and the Company’s securities
are actively traded as defined in Rule 101(c)(1) of Regulation M of the Exchange
Act.
21
(viii) On
or before completion of this offering, the Company shall make all filings
required under applicable securities laws and by the NASDAQ Global Market
(including any required registration under the Exchange Act).
(ix) Prior
to the Closing Date, the Company will issue no press release or other
communications directly or indirectly and hold no press conference with respect
to the Company, the condition, financial or otherwise, or the earnings, business
affairs or business prospects of any of them, or the offering of the Ordinary
Shares without the prior written consent of the Representative unless in the
judgment of the Company and its counsel, and after notification to the
Representative, such press release or communication is required by
law.
(x) The
Company will apply the net proceeds from the offering of the Ordinary Shares in
the manner set forth under “Use of Proceeds” in the Prospectus.
(xi) The
Company will keep available that maximum number of its authorized but unissued
securities which are issuable upon exercise of the Representative's Warrants
outstanding from time to time.
(b) In
consideration of the services to be provided for hereunder, the Company agrees
to pay to the Underwriters or their respective designees their pro rata portion
(based on the Ordinary Shares purchased), with respect to the Offered Shares
which they are offering, (i) an underwriting discount of seven percent (7%), and
(ii) a non-accountable expense allowance equal to two percent (2%) of the gross
proceeds of the Offering (exclusive of any proceeds from the sale of the Option
Shares). The Company also agrees to issue to the Representative
warrants to purchase an aggregate number of its ordinary shares equal to 5% of
the ordinary shares sold in this offering (____ Ordinary Shares) at an exercise
price of 120% of the offering price of the ordinary shares sold in this offering
(US$_____), which are exercisable commencing 540 days after the effective date
of the registration statement related to this offering, and will expire five
years from the effective date of the registration statement. In this connection,
each of the Underwriters represents to the Company that it is a qualified
institutional buyer within the meaning of Rule 144A under the Securities Act.
The Representative reserves the right to reduce any item of compensation or
adjust the terms thereof as specified herein in the event that a determination
shall be made by FINRA to the effect that the Underwriters’ aggregate
compensation is in excess of FINRA Rules or that the terms thereof require
adjustment.
22
(c) The
Company agrees to pay, or reimburse if paid by the Representative, whether or
not the transactions contemplated hereby are consummated or this Agreement is
terminated, all costs and expenses incident to the public offering of the
Offered Shares and the performance of the obligations of the Company under this
Agreement including those relating to: (i) the preparation, printing,
reproduction filing and distribution of the Registration Statement and the Form
8-A Registration Statement, including all exhibits thereto, each Preliminary
Prospectus, the Prospectus, any Issuer Free Writing Prospectus,
all amendments and supplements thereto; (ii) the preparation and delivery of the
Offered Shares to the Underwriters; (iii) the registration or qualification of
the Offered Shares for offer and sale under the securities or Blue Sky laws of
the various jurisdictions referred to in Section 4(a)(v), including the
reasonable fees and disbursements of counsel for the Underwriters in connection
with such registration and qualification and the preparation, printing,
distribution and shipment of preliminary and supplementary Blue Sky memoranda;
(iv) the furnishing (including costs of shipping and mailing) to the
Representative and to the Underwriters of copies of each Preliminary
Prospectus, the Prospectus and all amendments or supplements to the
Prospectus, and of the several documents required by this Section to be so
furnished, as may be reasonably requested for use in connection with the
offering and sale of the Offered Shares by the Underwriters or by dealers to
whom Offered Shares may be sold; (v) the filing fees of FINRA in
connection with its review of the terms of the public offering; (vi) listing of
the Offered Shares on the NASDAQ Global Market; (vii) all travel expenses of the
Company’s officers and employees and any other expense of the Company incurred
in connection with attending or hosting meetings with prospective purchasers of
the Offered Shares; (viii) all transfer taxes, if any, with respect to the sale
and delivery of the Offered Shares by the Company to the Underwriters; (ix) the
costs and charges of any transfer agent, registrar or depositary. Subject to the
provisions of Section 7, the Underwriters agree to pay, whether or not the
transactions contemplated hereby are consummated or this Agreement is
terminated, all costs and expenses incident to the performance of the
obligations of the Underwriters under this Agreement not payable by the Company
pursuant to the preceding sentence, including, without limitation, the fees and
disbursements of counsel for the Underwriters, stock transfer taxes payable on
resale of any of the Offered Shares by them and any advertising expenses
connected with any offers they may make. For the avoidance of doubt,
the Underwriters’ legal costs and expenses incurred by the Underwriters to
retain Underwriters' legal counsel and the Underwriters’ roadshow expenses
(including the cost of presentation meals) shall be for the account of the
Underwriters. The Underwriters’ roadshow expenses previously reimbursed by the
Company shall be repaid to the Company on the Closing Date of the Firm
Shares. The Representative estimates that the maximum expense
allowance to be paid by the Company for the Underwriters' roadshow and legal
expenses will be $160,000.
(d) The
Company acknowledges and agrees that each of the Underwriters has acted and is
acting solely in the capacity of a principal in an arm’s length transaction
between the Company and the Underwriters with respect to the offering of Offered
Shares contemplated hereby (including in connection with determining the terms
of the offering) and not as a financial advisor, agent or fiduciary to the
Company. Additionally, the Company acknowledges and agrees that the
Underwriters have not and will not advise the Company as to any legal, tax,
investment, accounting or regulatory matters in any jurisdiction. The
Company has consulted with their own advisors concerning such matters and shall
be responsible for making their own independent investigation and appraisal of
the transactions contemplated hereby, and the Underwriters shall have no
responsibility or liability to the Company with respect thereto, whether arising
prior to or after the date hereof. Any review by the Underwriters of
the Company, the transactions contemplated hereby or other matters relating to
such transactions have been and will be performed solely for the benefit of the
Underwriters and shall not be on behalf of the Company. The Company
agrees that it will not claim that the Underwriters, or any of them, has
rendered advisory services of any nature or respect, or owes a fiduciary duty to
the company in connection with any such transaction or the process leading
thereto.
23
(e) The
Company represents and agrees that, unless it obtains the prior consent of the
Representative, and each Underwriter represents and agrees that, unless it
obtains the prior consent of the Company and the Representative, it has not made
and will not make any offer relating to the Ordinary Shares that would
constitute an “issuer free writing prospectus,” as defined in Rule 433, or that
would otherwise constitute a “free writing prospectus,” as defined in Rule 405,
required to be filed with the Commission. The Company has complied
and will comply with the requirements of Rule 433 under the Act applicable to
any Issuer Free Writing Prospectus, including timely filing with the
Commission where required, legending and record keeping.
(f) The
Company agrees to furnish to the Representative a copy of each proposed free
writing prospectus to be prepared by or on behalf of, used by, or referred to by
the Company and not to use or refer to any proposed free writing prospectus to
which the Representative reasonably objects, and not to take any action that
would result in an Underwriter or the Company being required to file with the
Commission pursuant to Rule 433(d) under the Securities Act a free writing
prospectus prepared by or on behalf of the Underwriter that the Underwriter
otherwise would not have been required to file thereunder.
I-Bankers
Securities, Inc, on behalf of the several Underwriters, may, in its sole
discretion, waive in writing the performance by the Company of any one or more
of the foregoing covenants or extend the time for their
performance.
5. Indemnification.
(a) The
Company agrees to indemnify and hold harmless (to the fullest extent permitted
by applicable law) each Underwriter and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act against any and all losses, claims, damages and liabilities
(including any reasonable investigation, legal and other expenses incurred in
connection with, and any amount paid in settlement of (provided that the Company
consents to such settlement), any action, suit or proceeding or any claim
asserted), to which they, or any of them, may become subject under the
Securities Act, the Exchange Act or other Federal, state or foreign law or
regulation, at common law or otherwise, insofar as such losses, claims, damages
or liabilities arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement, the General Disclosure Package, the Prospectus, any
Issuer Free Writing Prospectus or any “issuer-information” filed or required to
be filed pursuant to Rule 433(d) of the Rules, any amendment thereof or
supplement thereto, or arise out of or are based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however, that
such indemnity shall not inure to the benefit of any Underwriter (or any person
controlling such Underwriter) on account of any losses, claims, damages or
liabilities arising from the sale of the Offered Shares to any person by such
Underwriter if such untrue statement or omission or alleged untrue statement or
omission was made in such Preliminary Prospectus, the Registration Statement,
the Prospectus, the General Disclosure Package, any Issuer Free Writing
Prospectus or such amendment or supplement thereto, in reliance upon and in
conformity with the Underwriter Information. This indemnity agreement
will be in addition to any liability which the Company may otherwise
have.
24
(b) Each
Underwriter agrees to indemnify and hold harmless the Company and each person,
if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, each director of the Company,
and each officer of the Company who signs the Registration Statement, against
any and all losses, claims, damages or liabilities (including any reasonable
investigation, legal and other expenses incurred in connection with, and any
amount paid in settlement of (provided that the Underwriters consent to such
settlement), any action, suit or proceeding or claim asserted) to which they, or
any of them, may become subject under the Securities Act, the Exchange Act or
other Federal, state or foreign law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement, the General Disclosure Package, the Prospectus, any
Issuer Free Writing Prospectus or any amendment thereof or supplement thereto,
or arise out of or are based upon any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in such Preliminary Prospectus, the Registration
Statement, the General Disclosure Package, the Prospectus, any Issuer Free
Writing Prospectus or any amendment thereof or supplement thereto in reliance
upon and in conformity with the Underwriter Information; provided, however, that
the obligation of each Underwriter to indemnify the Company (including any
controlling person, director or officer thereof) shall be limited to the net
proceeds received by the Company from such Underwriter.
(c) Any
party that proposes to assert the right to be indemnified under this Section
will, promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim is to be made against
an indemnifying party or parties under this Section, notify each such
indemnifying party of the commencement of such action, suit or proceeding,
enclosing a copy of all papers served. No indemnification provided
for in Section 5(a) or 5(b) shall be available to any party who shall fail to
give notice as provided in this Section 5(c) if the party to whom notice was not
given was unaware of the proceeding to which such notice would have related and
was prejudiced by the failure to give such notice, but the omission so to notify
such indemnifying party of any such action, suit or proceeding shall not relieve
it from any liability that it may have to any indemnified party for contribution
or otherwise than under this Section. In case any such action, suit
or proceeding shall be brought against any indemnified party and it shall notify
the indemnifying party of the commencement thereof, the indemnifying party shall
be entitled to participate in, and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof and the approval by the indemnified
party of such counsel, the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses, except as provided below and
except for the reasonable costs of investigation subsequently incurred by such
indemnified party in connection with the defense thereof. The
indemnified party shall have the right to employ its counsel in any such action,
but the fees and expenses of such counsel shall be at the expense of such
indemnified party unless (i) the employment of counsel by such indemnified party
has been authorized in writing by the indemnifying parties, (ii) the indemnified
party shall have been advised by counsel that there may be one or more legal
defenses available to it which are different from or in addition to those
available to the indemnifying party (in which case the indemnifying parties
shall not have the right to direct the defense of such action on behalf of the
indemnified party) or (iii) the indemnifying parties shall not have employed
counsel to assume the defense of such action within a reasonable time after
notice of the commencement thereof, in each case the fees and expenses of
counsel shall be at the expense of the indemnifying parties. An
indemnifying party shall not be liable for any settlement of any action, suit,
and proceeding or claim effected without its written consent, which consent
shall not be unreasonably withheld or delayed.
25
6. Contribution. In
order to provide for just and equitable contribution in circumstances in which
the indemnification provided for in Section 5(a) or 5(b) is due in accordance
with its terms but for any reason is unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate losses, liabilities, claims, damages and expenses
(including any investigation, legal and other expenses reasonably incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claims asserted, but after deducting any contribution received
by any person entitled hereunder to contribution from any person who may be
liable for contribution) incurred by such indemnified party, as incurred, in
such proportion as is appropriate to reflect the relative benefits received by
the Company and the Underwriters from the offering of the Offered Shares
pursuant to this Agreement or, if such allocation is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to above but also the relative fault of the Company and the
Underwriters in connection with the statements or omissions, which resulted in
such losses, liabilities, claims, damages or expenses, as well as any other
relevant equitable considerations. The relative benefits received by
the Company and the Underwriters shall be deemed to be in the same respective
proportions as the total net proceeds from the offering received by the Company
and the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover page of the
Prospectus, bear to the aggregate Initial Price of the Offered
Shares. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Underwriters and the parties’
relevant intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The
Company and the Underwriters agree that it would not be just and equitable if
contribution pursuant to this Section 6 were determined by pro rata allocation
(even if the Underwriters were treated as one entity for such purpose) or by any
other method of allocation which does not take account of the equitable
considerations referred to above. The aggregate amount of losses,
liabilities, claims, damages and expenses incurred by an indemnified party and
referred to above shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in investigating, preparing or
defending against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever
based upon any such untrue or alleged untrue statement or omission or alleged
omission. Notwithstanding the provisions of this Section 6, no
Underwriter (except as may be provided in the Agreement Among Underwriters)
shall be required to contribute any amount in excess of the amount by which the
total price at which the Offered Shares underwritten by it and distributed to
the public were offered to the public exceeds the amount of damages which such
underwriter has otherwise been required to pay by reason of any such untrue or
alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. For purposes of this
Section 6, each person, if any, who controls an Underwriter within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have
the same rights to contribution as such Underwriter, and each director of the
Company including any person who, with his or her consent, is named in the
Registration Statement as about to become a director of the Company, each
officer of the Company who signed the Registration Statement, and each person,
if any, who controls the Company within the meaning of the Section 15 of the
Securities Act or Section 20 of the Exchange Act, shall have the same rights to
contribution as the Company. Any party entitled to contribution will,
promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution may
be made against another party or parties under this Section 6, notify such party
or parties from whom contribution may be sought, but the omission so to notify
such party or parties from whom contribution may be sought shall not relieve the
party or parties from whom contribution may be sought from any other obligation
it or they may have hereunder or otherwise than under this Section
6. No party shall be liable for contribution with respect to any
action, suit, proceeding or claim settled without its written
consent. The Underwriter’s obligations to contribute pursuant to this
Section 6 are several in proportion to their respective underwriting commitments
and not joint.
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7. Termination.
(a) This
Agreement may be terminated with respect to the Offered Shares to be purchased
on a Closing Date by the Representative by notifying the Company at any time at
or before a Closing Date in the absolute discretion of the Representative if:
(i) there has occurred any material adverse change in the securities markets or
any event, act or occurrence that has materially disrupted, or in the reasonable
opinion of the Representative, will in the future materially disrupt, the
international securities markets or the securities markets in the United States
the effect of which is such as to make it, in the commercially reasonable
judgment of the Representative, inadvisable or impracticable to market the
Offered Shares or enforce contracts for the sale of the Offered Shares; (ii)
there has occurred any outbreak or material escalation of hostilities or other
calamity or crisis the effect of which on the financial markets of the United
States is such as to make it, in the commercially reasonable judgment of the
Representative, inadvisable or impracticable to market the Offered Shares or
enforce contracts for the sale of the Offered Shares; (iii) trading in the
Offered Shares or any securities of the Company has been suspended or materially
limited by the Commission or trading generally on the New York Stock Exchange,
Inc., the American Stock Exchange, Inc., the NASDAQ Global Market, the London
Stock Exchange or The Stock Exchange of Hong Kong Limited has been suspended or
materially limited, by any of said exchanges or by such system or by order of
the Commission, the Financial Industry Regulatory Authority, or any other
governmental or regulatory authority; or (iv) a banking moratorium in New York,
London, Hong Kong, the PRC or the Cayman Islands has been declared by the
relevant authorities; (v) there has been, since the time of execution of this
Agreement or since the respective dates as of which information is given in the
Prospectus, any change that has a Material Adverse Effect.
(b) If
this Agreement is terminated pursuant to any of its provisions, the Company
shall not be under any liability to any Underwriter, and no Underwriter shall be
under any liability to the Company, except that (y) if this Agreement is
terminated solely due to the fault of the Company, the Company will reimburse
the Underwriters for all out-of-pocket expenses (including the reasonable fees
and disbursements of their counsel) incurred by them in connection with the
offering of the Offered Shares or in contemplation of performing their
obligations hereunder and (z) no Underwriter who shall have failed or refused to
purchase the Ordinary Shares underlying the Offered Shares agreed to be
purchased by it under this Agreement, without some reason sufficient hereunder
to justify cancellation or termination of its obligations under this Agreement,
shall be relieved of liability to the Company or to the other Underwriters for
damages occasioned by its failure or refusal.
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8. Substitution of
Underwriters. If any Underwriter shall default in its
obligation to purchase on any Closing Date the Offered Shares agreed to be
purchased hereunder on such Closing Date, the Representative shall have the
right, within 36 hours thereafter, to make arrangements for one or more of the
non-defaulting Underwriters, or any other underwriters, to purchase such Offered
Shares on the terms contained herein. If, however, the Representative
shall not have completed such arrangements within such 36-hour period, then the
Company shall be entitled to a further period of 36 hours within which to
procure another party or other parties satisfactory to the Underwriters to
purchase such Offered Shares on such terms. If, after giving effect
to any arrangements for the purchase of the Offered Shares of a defaulting
Underwriter or Underwriters by the Representative and the Company as provided
above, the aggregate number of Offered Shares which remains unpurchased on such
Closing Date does not exceed 10% of the aggregate number of all the Offered
Shares that all the Underwriters are obligated to purchase on such date, then
the Company shall have the right to require each non-defaulting Underwriter to
purchase the number of Offered Shares which such Underwriter agreed to purchase
hereunder at such date and, in addition, to require each non-defaulting
Underwriter to purchase its pro rata share (based on the number of Offered
Shares which such Underwriter agreed to purchase hereunder) of the Offered
Shares of such defaulting Underwriter or Underwriters for which such
arrangements have not been made; but nothing herein shall relieve a defaulting
Underwriter from liability for its default. In any such case, either
the Representative or the Company shall have the right to postpone the
applicable Closing Date for a period of not more than seven days in order to
effect any necessary changes and arrangements (including any necessary
amendments or supplements to the Registration Statement or Prospectus or any
other documents), and the Company agrees to file promptly any amendments to the
Registration Statement or the Prospectus which in the opinion of the Company and
the Underwriters and their counsel may thereby be made necessary.
If, after
giving effect to any arrangements for the purchase of the Offered Shares of a
defaulting Underwriter or Underwriters by the Representative and the Company as
provided above, the aggregate number of such Offered Shares which remains
unpurchased exceeds 10% of the aggregate number of all the Offered Shares to be
purchased at such date, then this Agreement, or, with respect to a Closing Date
which occurs after the Firm Shares Closing Date, the obligations of the
Underwriters to purchase and of the Company to sell the Option Shares to be
purchased and sold on such date, shall terminate, without liability on the part
of any non-defaulting Underwriter to the Company, and without liability on the
part of the Company, except as provided in Sections 3(c), 5, 6 and
7. The provisions of this Section 8 shall not in any way affect the
liability of any defaulting Underwriter to the Company or the nondefaulting
Underwriters arising out of such default. The term “Underwriter” as
used in this Agreement shall include any person substituted under this Section 8
with like effect as if such person had originally been a party to this Agreement
with respect to such Shares.
9. Miscellaneous. The
respective agreements, representations, warranties, indemnities and other
statements of the Company and the several Underwriters, as set forth in this
Agreement or made by or on behalf of them pursuant to this Agreement, shall
remain in full force and effect, regardless of any investigation (or any
statement as to the results thereof) made by or on behalf of any Underwriter or
the Company or any of their respective officers, directors or controlling
persons referred to in Sections 5 and 6 hereof, and shall survive delivery of
and payment for the Offered Shares. In addition, the provisions of
Sections 4(c), 6 and 7 shall survive the termination or cancellation of this
Agreement.
28
This
Agreement has been and is made for the benefit of the Underwriters, the Company
and their respective successors and assigns, and, to the extent expressed
herein, for the benefit of persons controlling any of the Underwriters, or the
Company, and directors and officers of the Company, and their respective
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement. The term “successors and
assigns” shall not include any purchaser of Offered Shares from any Underwriter
merely because of such purchase.
All
notices and communications hereunder shall be in writing and mailed or delivered
or by telephone or telegraph if subsequently confirmed in writing, (a) if to the
Representative, I-Bankers Securities, Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, attention: President, with a copy to DLA Piper Italy, ▇▇▇ ▇.
▇▇▇▇▇▇, ▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ and (b) if to the Company,
[
], attention: Chief Financial Officer.
This
Agreement shall be governed by and construed in accordance with the laws of the
State of New York. The Company irrevocably (a) submits to the
jurisdiction of any federal or state court in the City of New York for the
purpose of any suit, action, or other proceeding arising out of this Agreement,
or any of the agreements or transactions contemplated by this Agreement, the
Registration Statement and the Prospectus (each, a “Proceeding”), (b) agrees
that all claims in respect of any Proceeding may be heard and determined in any
such court, (c) waives, to the fullest extent permitted by law, any immunity
from jurisdiction of any such court or from any legal process therein, (d)
agrees not to commence any Proceeding other than in such courts, and (e) waives,
to the fullest extent permitted by law, any claim that such Proceeding is
brought in an inconvenient forum. The Company hereby irrevocably designates
Corporation Service Company, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ as agent upon whom process against the Company
may be served. THE COMPANY (ON BEHALF OF ITSELF AND, TO THE FULLEST EXTENT
PERMITTED BY LAW, ON BEHALF OF ITS RESPECTIVE EQUITY HOLDERS AND CREDITORS)
HEREBY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM
BASED UPON, ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, THE REGISTRATION STATEMENT AND THE
PROSPECTUS.
If for
the purposes of obtaining judgment in any court it is necessary to convert a sum
due hereunder into any currency other than United States dollars, the parties
hereto agree, to the fullest extent permitted by law, that the rate of exchange
used shall be the rate at which in accordance with normal banking procedures the
relevant party or parties could purchase United States dollars with such other
currency in The City of New York on the business day preceding that on which
final judgment is given. The obligation of each party hereto with respect to any
sum due from it to any other party hereto or any person controlling any such
other party shall, notwithstanding any judgment in a currency other than United
States dollars, not be discharged until the first business day following receipt
by such other party or controlling person of any sum in such other currency, and
only to the extent that such other party or controlling person may in accordance
with normal banking procedures purchase United States dollars with such other
currency. If the United States dollars so purchased are less than the sum
originally due to such other party or controlling person hereunder, the
first-mentioned party agrees as a separate obligation and notwithstanding any
such judgment, to indemnify such other party or controlling person against such
loss. If the United States dollars so purchased are greater than the sum
originally due to such other party or controlling person hereunder, such other
party or controlling person agrees to pay to the first-mentioned party an amount
equal to the excess of the United States dollars so purchased over the sum
originally due to such other party or controlling person
hereunder.
29
All
payments made by the Company under this Agreement will be made without
withholding or deduction for or on account of any present or future taxes,
duties, assessments or governmental charges of whatever nature imposed or levied
by or on behalf of the Cayman Islands or the PRC or any political subdivision or
any taxing authority thereof or therein unless the Company is or becomes
required by law to withhold or deduct such taxes, duties, assessments or other
governmental charges. In such event, the Company will pay such additional
amounts as will result, after such withholding or deduction, in the receipt by
each Underwriter and each person controlling any Underwriter, as the case may
be, of the amounts that would otherwise have been receivable in respect thereof,
except to the extent such taxes, duties, assessments or other governmental
charges are imposed or levied by reason of such Underwriter’s or controlling
person’s being connected with the Cayman Islands or the PRC other than by reason
of its being an Underwriter or a person controlling any Underwriter under this
Agreement.
This
Agreement may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were upon
the same instrument.
Please
confirm that the foregoing correctly sets forth the agreement among
us.
30
|
Very
truly yours,
|
||
|
SGOCO
GROUP, LTD.
|
||
|
By
|
||
|
Name:
|
||
|
Title:
|
||
|
Confirmed:
|
||
|
By
I-BANKERS SECURITIES, INC.
|
||
|
By
|
||
|
Name:
|
||
|
Title:
|
||
|
Acting
as representative of the several
|
||
|
Underwriters
named in Schedule I annexed
|
||
|
hereto.
|
||
(SIGNATURE
PAGE TO THE UNDERWRITING AGREEMENT)
31
SCHEDULE
I
|
Name
|
Number of
Firm Shares
to
be Purchased
|
|||
|
I-Bankers
Securities, Inc.
|
||||
|
▇▇▇▇▇▇
Gunnar& Co., LLC
|
||||
|
▇▇▇▇▇▇
Securities, Inc.
|
||||
|
Aegis
Capital Corp.
|
||||
|
Total
|
||||
SCHI - 1
SCHEDULE
II
Issuer
Free Writing Prospectuses
The free
writing prospectuses dated [__] filed by the Company under Rule 433(d) of the
Securities Act of 1933, as amended
SCHII - 1
SCHEDULE
III
Lock-up
Signatories
Directors
and Officers:
[ ]
Shareholders:
[ ]
SCHIII - 1
Exhibit
A
CORPORATION,
ASSOCIATION OR ENTITY CONTROLLED BY THE COMPANY
|
·
|
Honesty
Group Holdings Limited, a Hong Kong limited company and wholly owned
subsidiary of SGOCO (“Honesty
Group”)
|
|
·
|
Guanke
(Fujian) Electron Technological Industry Co. Ltd., a company with limited
liability incorporated in China and a wholly owned subsidiary of Honesty
Group (“Guanke”)
|
|
·
|
Guanwei
(Fujian) Electron Technological Co. Limited, a company with limited
liability incorporated in China and a wholly owned subsidiary of Honesty
Group (“Guanwei”)
|
|
·
|
Guancheng
(Fujian) Electron Technological Co. Limited, a company with limited
liability incorporated in China and a wholly owned subsidiary of Honesty
Group (“Guancheng”).
|
|
·
|
Jinjiang
Guanke Electron Co. Ltd, a company with limited liability incorporated in
China and a wholly owned subsidiary of Guanke (“Jinjiang
Guanke”)
|
EXHIBIT A - 1
Exhibit
B
FORM
OF LOCK-UP AGREEMENT
EXHIBIT B - 1
Exhibit
C
FORM
OF OPINIONS
EXHIBIT C - 1