●] ORDINARY SHARES LIZHAN ENVIRONMENTAL CORPORATION UNDERWRITING AGREEMENT
[●]
ORDINARY SHARES
LIZHAN
ENVIRONMENTAL CORPORATION
|
[●],
2010
|
MAXIM
GROUP LLC
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇,
▇▇ ▇▇▇▇▇
As
Representative of the Underwriters
named
on Schedule A
hereto
Ladies
and Gentlemen:
Lizhan
Environmental Corporation, a company organized and existing under the laws of
the Cayman Islands (the “Company”), confirms its
agreement, subject to the terms and conditions set forth herein, with each of
the underwriters listed on Schedule A hereto
(collectively, the “Underwriters”), for whom Maxim
Group LLC is acting as representative (in such capacity, the “Representative”), to sell and
issue to the Underwriters an aggregate of [●] ordinary shares, par value $0.32
per share (the “Firm
Shares”). In addition, the Company proposes to sell to the Underwriters,
upon the terms and conditions set forth herein, the Over-allotment Shares (as
hereinafter defined). The ordinary shares are more fully described in
the Registration Statement and Prospectus referred to below.
The
offering and sale of the ordinary shares contemplated by this underwriting
agreement (this “Agreement”) is referred to
herein as the “Offering.”
1.
Firm Shares;
Over-Allotment Option.
Purchase of Firm
Shares. On the basis of the representations and warranties
herein contained, but subject to the terms and conditions herein set forth, the
Company agrees to issue and sell to the several Underwriters, an aggregate of
[●] Firm Shares at a purchase price (net of discounts and commissions) of $[●]
per Firm Share. The Underwriters, severally and not jointly, agree to
purchase from the Company the number of Firm Shares set forth opposite their
respective names on Schedule A attached
hereto and made a part hereof at a purchase price (net of discounts and
commissions) of $[●] per Firm Share. The Firm Shares are to be offered initially
to the public at the offering price of $[●] per Firm Share.
Payment and
Delivery. Delivery and payment for the Firm Shares shall be
made at 10:00 A.M., New York time, on the third Business Day following the
effective date (the “Effective
Date”) of the Registration Statement (or the fourth Business Day
following the Effective Date, if the Registration Statement is declared
effective after 4:00 p.m.) or at such earlier time as shall be agreed upon by
the Representative and the Company at the offices of the Representative or at
such other place as shall be agreed upon by the Representative and the
Company. “Business Day”
means any day except Saturday, Sunday and any day which is a federal legal
holiday or a day on which banking institutions in the State of New York are
authorized or required by law or other governmental action to close. The hour
and date of delivery and payment for the Firm Shares is referred to herein as the
“Closing Date.” The
closing of the payment of the purchase price for, and delivery of
certificates representing, the Firm Shares is referred to herein as the
“Closing.” Payment for the Firm Shares shall be made on the
Closing Date at the Representative’s election by wire transfer in Federal (same
day) funds or by certified or bank
cashier’s check(s) in New York Clearing House
funds. Any remaining proceeds (less commissions, expense allowance and actual expense
payments or other fees payable pursuant to this Agreement) shall be paid to the
order of the Company upon delivery of certificates (in form and substance
satisfactory to the Underwriters) representing the Firm Shares (or through the full fast transfer
facilities of the Depository Trust Company (the “DTC”)) for the account of the
Underwriters. The Firm Shares shall be registered in such name or
names and in such authorized denominations as the Representative may request
in writing at least two
Business Days prior to the Closing Date. The Company will permit the
Representative to examine and package the Firm Shares for delivery, at least one
full Business Day prior to the Closing Date. The Company shall not be
obligated to sell or deliver the Firm Shares
except upon tender of payment by the Representative for all the Firm
Shares.
Over-allotment
Shares. For the
purposes of covering any over-allotments in connection with the distribution and
sale of the Firm Shares, the Representative on behalf of the
Underwriters is, hereby granted, an option to purchase up to an additional 15%
of the number of Firm Shares, or [●] ordinary shares (the “Over-allotment
Shares”) to be offered by the Company in the
Offering (the “Over-allotment
Option”). The Firm Shares, the
Over-allotment Shares and the Warrant Shares (as defined below) are hereinafter,
collectively, referred to as the “Shares”. The Shares and the
Representative’s Warrants (as hereinafter defined) are
referred to herein as (the “Securities”). The purchase price to be
paid for the Over-allotment Shares (net of discounts and commissions) will be
$[●] per
Over-allotment Share. The
Over-allotment Shares are to be offered initially to the public at the offering
price of $[●] per
Over-allotment Share.
Exercise of
Option. The
Over-allotment Option granted pursuant to Section 1(3) hereof may be exercised
by the Representative as to
all (at any time) or any part (from time to time) of the Over-allotment Shares
within 45 days after the Effective Date. The Underwriters will not be
under any obligation to purchase any Over-allotment Shares prior to the exercise
of the Over-allotment Option. The
Over-allotment Option granted hereby may be exercised by the giving of oral
notice to the Company from the Representative, which must be confirmed in
writing by overnight mail or facsimile transmission setting forth the number of
Over-allotment Shares to be purchased and the
date and time for delivery of and payment for the Over-allotment Shares, which
will not be later than five Business Days after the date of the
notice or such other time as shall be agreed upon by the Company and
the Representative, at the
offices of the Representative or at such other place as shall be agreed upon by
the Company and the Representative. If such delivery and payment for
the Over-allotment Shares does not occur on the Closing Date, the date and time
of the closing for such Over-allotment
Shares will be as set forth in the notice (hereinafter, the “Option Closing
Date”). Upon exercise of the
Over-allotment Option, the Company will become obligated to convey to the
Underwriters, and, subject to the terms and conditions set forth herein, the
Underwriters will become obligated to purchase, the number of Over-allotment
Shares specified in such notice.
Payment and
Delivery of Over-allotment Shares. Payment for the
Over-allotment Shares shall be made on the Option Closing Date at the
Representative’s election by wire transfer in Federal
(same day) funds or by certified or bank cashier’s check(s) in New York Clearing House
funds, by deposit of [●]
per share to the Company upon delivery to the Underwriters of certificates (in form and substance
satisfactory to the Underwriters) representing the Over-allotment Shares (or
through the full fast transfer facilities of DTC) for the account of the
Underwriters. The certificates representing the Over-allotment
Shares to be delivered will be in such
denominations and registered in such names as the Representative requests not
less than two Business Days prior to the Closing Date or the Option Closing
Date, as the case may be, and will be made available to the Representative for inspection, checking and
packaging at the aforesaid office of the Company’s transfer agent or correspondent not
less than one full Business Day prior to such Closing Date or Option Closing
Date.
(6) Representative’s
Warrants. As additional consideration, the Company hereby
agrees to issue and sell to the Representative (and/or its designees) on the
Closing Date non-redeemable ordinary share purchase warrants (the “Representative’s Warrants”) for the purchase of
an aggregate of [●] ordinary shares for an aggregate purchase price of
$100.00. The Representative’s Warrants shall be exercisable, in whole
or in part, commencing on the Effective Date and expiring on the
five-year anniversary of the Effective Date at an initial exercise price per
share of $[●], which is equal to one hundred and thirty percent (130%) of the
initial public offering price per Firm Share. The Representative’s
Warrants and the ordinary shares issuable upon exercise of the Representative’s
Warrants (the “Warrant
Shares”) are hereinafter referred to collectively as the “Representative’s
Securities.” The Representative understands and agrees there
are significant restrictions against transferring the Representative’s
Securities during the first six months after the Effective Date. The
Representative’s Securities may not be transferred, assigned or hypothecated for
a period of six (6) months following the Effective Date, except that they may be
assigned, in whole or in part, to any successor, officer or member of Maxim (or
to officers or partners of any such successor or member), and to members of the
underwriting syndicate or selling group. The Representative’s Warrant
may be exercised as to all or a lesser number of the underlying ordinary shares,
will provide for cashless exercise and will for a period of five years after the
Effective Date, contain provisions for one demand registration of the sale of
the underlying ordinary shares at the Company’s expense, an additional demand
registration at the warrant holders’ expense, and unlimited “piggyback”
registration rights for a period of five years after the Effective Date at the
Company’s expense.
2. Representations
and Warranties of the Company.
2.1 The Company represents, warrants and covenants to, and
agrees with, each of the Underwriters that, as of the date hereof and as of the
Closing Date (for purposes of this Section 2, the terms “Closing Date” and “Closing” shall refer to the Closing Date for the
Firm Shares or Over-allotment Shares, as the case may
be,):
(1)
The Company has filed with
the Securities and Exchange Commission (the “Commission”) a registration statement on Form F-1
(Registration No. [ ]), and amendments thereto, and
related preliminary prospectuses for the registration under the
Securities Act of 1933, as amended (the “Securities
Act”), of the Shares, which registration
statement, as so amended (including post-effective amendments, if any), has been
declared effective by the Commission and copies of which have heretofore been delivered to
the Underwriters. Promptly after execution and delivery of this
Agreement, the Company will prepare and file a prospectus in accordance with the
provisions of Rule 430A (“Rule 430A”) of the rules and regulations
of the Commission (the
“Rules
and Regulations”) and paragraph (b) of Rule 424
(“Rule
424(b)”) of the Rules and
Regulations. The information included in such prospectus that was
omitted from such registration statement at the time it became effective but
that is deemed to be part
of such registration statement at the time it became effective pursuant to
paragraph (b) of Rule 430A is referred to as “Rule 430A
Information.” The registration statement, as amended
at the time it became effective, including the prospectus, financial statements,
schedules, exhibits and other information (if any) deemed to be part of the
registration statement at the time of effectiveness pursuant to Rule 430A under
the Securities Act, is hereinafter referred to as the “Registration
Statement.” If the Company has filed or
is required pursuant to the terms hereof to file a registration statement
pursuant to Rule 462(b) under the Securities Act registering additional ordinary
shares (a “Rule 462(b)
Registration Statement”), then, unless otherwise specified, any reference
herein to the term “Registration Statement” shall be deemed to include such Rule
462(b) Registration Statement. Other than a Rule 462(b) Registration
Statement, which, if filed, becomes effective upon filing, no other document with respect to the
Registration Statement has heretofore been filed with the
Commission. All of the Shares have been registered under the
Securities Act pursuant to the Registration Statement or, if any Rule 462(b)
Registration Statement is filed, will be duly registered under the
Securities Act with the filing of such Rule 462(b) Registration
Statement. The Company has responded to all requests of the
Commission for additional or supplemental information. Based on
communications from the Commission, no stop order suspending the
effectiveness of either the Registration Statement or the Rule 462(b)
Registration Statement, if any, has been issued and no proceeding for that
purpose has been initiated or threatened by the Commission. The
Company, if required by the Securities Act and
Rules and Regulations, proposes to file the Prospectus with the Commission
pursuant to Rule 424(b). The prospectus, in the form in which it is
to be filed with the Commission pursuant to Rule 424(b), or, if the
prospectus is not to be filed with the
Commission pursuant to Rule 424(b), the prospectus in the form included as part
of the Registration Statement at the time the Registration Statement became
effective, is hereinafter referred to as the “Prospectus,” except that if any revised prospectus or
prospectus supplement shall be provided to the Underwriters by the Company for
use in connection with the Offering which differs from the Prospectus (whether
or not such revised prospectus or prospectus supplement is required to be filed by the Company pursuant to
Rule 424(b)), the term “Prospectus” shall also refer to such revised
prospectus or prospectus supplement, as the case may be, from and after the time
it is first provided to the Underwriters for such use. Any
preliminary prospectus or prospectus subject
to completion included in the Registration Statement or filed with the
Commission pursuant to Rule 424 under the Securities Act, including the
preliminary prospectus dated [ ] which was included in
the Registration Statement at the Time of Sale, is
hereafter called a “Preliminary
Prospectus.” Any reference herein to the
Registration Statement, any Preliminary Prospectus or the Prospectus shall be
deemed to refer to and include the exhibits incorporated by reference therein pursuant to the Rules and
Regulations on or before the Effective Date, the date of such Preliminary
Prospectus or the date of the Prospectus, as the case may be. All references in
this Agreement to the Registration Statement, the Rule 462(b) Registration Statement, a Preliminary
Prospectus and the Prospectus, or any amendments or supplements to any of the
foregoing shall be deemed to include any copy thereof filed with the Commission
pursuant to its Electronic Data Gathering, Analysis and Retrieval System (“▇▇▇▇▇”).
(2) The Company has filed with the
Commission a Form 8-A (File Number 001-[●]) providing for the registration under
the Securities Exchange Act of 1934, as amended (the “Exchange
Act”) of its ordinary shares. The
registration of the Company’s ordinary shares under the Exchange Act has been declared
effective by the Commission on the date hereof.
(3) At the time of the effectiveness of the
Registration Statement or any Rule 462(b) Registration Statement or the
effectiveness of any post-effective amendment to the Registration Statement, when the
Prospectus is first filed with the Commission pursuant to Rule 424(b), and when
any supplement to or amendment of the Prospectus is filed with the Commission,
the Registration Statement and the Prospectus and any amendments thereof and supplements or exhibits
thereto complied or will comply in all material respects with the applicable
provisions of the Securities Act, the Exchange Act and the Rules and
Regulations, and did not and will not contain an untrue statement of a
material fact and did not and will not
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein: (i) in the case of the Registration
Statement, not misleading, and (ii) in the case of the Prospectus or any related Preliminary Prospectus in
light of the circumstances under which they were made, not
misleading. When any Preliminary Prospectus was first filed with the
Commission (whether filed as part of the registration statement for the
registration of the Securities or any amendment thereto
or pursuant to Rule 424(a) under the Securities Act) and when any amendment
thereof or supplement thereto was first filed with the Commission, such
Preliminary Prospectus and any amendments thereof and supplements thereto complied in all material respects
with the applicable provisions of the Securities Act, the Exchange Act and the
Rules and Regulations and did not contain an untrue statement of a material fact
and did not omit to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading. No representation and warranty is made in
this subsection (c), however, with respect to any information contained in or omitted from the
Registration Statement or the Prospectus or any related Preliminary Prospectus
or any amendment thereof or supplement thereto in reliance upon and in
conformity with information furnished in writing to the Company by or on
behalf of any Underwriter through the
Representative specifically for use therein. The parties acknowledge
and agree that such information provided by or on behalf of any Underwriter
consists solely of the subsections of the “Underwriting” section of the Prospectus captioned “Stabilization,” “Pricing of Securities,” the last sentence of “Other Matters” and the penultimate paragraph on the
cover page of the Preliminary Prospectus and the Prospectus (the “Underwriters’
Information”).
(4) The section entitled “Management’s Discussion and Analysis of Financial
Condition and Results of Operations — Critical Accounting Policies Critical
Accounting Policies and Estimates” in the Prospectus truly, accurately and
completely in all material respects describes: (A) accounting policies which the Company believes
are the most important in the portrayal of the Company’s financial condition and results of
operations and which require management’s most difficult, subjective or complex
judgments (“Critical Accounting
Policies”); (B) judgments and uncertainties affecting
the application of Critical Accounting Policies; and (C) the likelihood that
materially different amounts would be reported under different conditions or
using different assumptions; and the Company’s Board of Directors and management have reviewed and
agreed with the selection, application and disclosure of Critical Accounting
Policies and have consulted with its legal counsel and independent public
accountants with regard to such disclosure.
(5) The section entitled “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” in the Prospectus accurately and fully
describes: (A) all material trends, demands, commitments, events, uncertainties
and risks, and the potential effects thereof, that the Company believes would materially
affect liquidity and are reasonably likely to occur; and (B) all off-balance
sheet transactions, arrangements, and obligations, including, without
limitation, relationships with unconsolidated entities that are
contractually limited to narrow activities
that facilitate the transfer of or access to assets by the Company or any of its
subsidiaries, such as structured finance entities and special purpose entities
(collectively, “Off-Balance
Sheet Arrangements”) that
are reasonably likely to have a material
effect on the liquidity of the Company or any of its subsidiaries or the
availability thereof or the requirements of the Company or any of its
subsidiaries for capital resources.
(6) Neither: (i) any Issuer-Represented
General Free Writing
Prospectus(es) (as defined below) issued at or prior to the Time of Sale (as
defined below) and the Statutory Prospectus (as defined below), all considered
together (collectively, the “General Disclosure
Package”), nor (ii) any individual Issuer-Represented Limited-Use Free
Writing Prospectus(es) (as defined below), when considered together with the
General Disclosure Package, includes or included as of the Time of Sale, any
untrue statement of a material fact or omits or omitted as of the Time of Sale to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The preceding sentence
does not apply to statements in or omissions from any Statutory Prospectus included in the Registration
Statement or any Issuer-Represented Free Writing Prospectus (as defined below)
based upon and in conformity with written information furnished to the Company
by the Representative specifically for use therein.
(7) No forward-looking statement (within the
meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act) contained in the General Disclosure Package, Preliminary Prospectus or the
Prospectus has been made or reaffirmed without a reasonable basis or has been disclosed other than in
good faith.
(8) Nothing has come to the attention of the
Company that has caused the Company to believe that the statistical and
market-related data included in the General Disclosure Package, Preliminary
Prospectus or the
Prospectus is not based on or derived from sources that the Company believes to
be reliable and accurate in all material respects.
(9) Each Issuer-Represented Free Writing
Prospectus, as of its issue date and at all subsequent times through the
completion of the public
offer and sale of the Securities or until any earlier date that the Company
notified or notifies the Representative as described in the next sentence, did
not, does not and will not include any information that conflicted, conflicts or
will conflict with the information contained
in the Registration Statement, General Disclosure Package, Preliminary
Prospectus or the Prospectus. If at any time following issuance of an
Issuer-Represented Free Writing Prospectus there occurred or occurs an
event or development as a result of which
such Issuer-Represented Free Writing Prospectus conflicted or would conflict
with the information contained in the Registration Statement, any Statutory
Prospectus or the Prospectus relating to the Securities or included or would include an untrue statement
of a material fact or omitted or would omit to state a material fact necessary
in order to make the statements therein, in the light of the circumstances
prevailing at that subsequent time, not misleading, the Company has notified or will notify promptly
the Representative so that any use of such Issuer-Represented Free Writing
Prospectus may cease until it is promptly amended or supplemented by the
Company, at its own expense, to eliminate or correct such conflict, untrue statement or
omission. The foregoing two sentences do not apply to statements in
or omissions from any Issuer-Represented Free Writing Prospectus based upon and
in conformity with the Underwriters’ Information (as defined
above).
(10) The Company has not distributed and will not distribute
any prospectus or other offering material in connection with the offering and
sale of the Securities other than the General Disclosure Package, Preliminary
Prospectus or the Prospectus or other materials permitted by the Securities Act to be distributed by
the Company. Unless the Company obtains the prior consent of the
Representative, the Company has not made and will not make any offer relating to
the Securities that would constitute an “issuer free writing prospectus,” as defined in Rule 433 under the
Securities Act, or that would otherwise constitute a “free writing prospectus,” as defined in Rule 405 under the
Securities Act, required to be filed with the Commission. The Company
has complied and will comply with the requirements of Rules 164 and 433
under the Securities Act applicable to any Issuer-Represented Free Writing
Prospectus.
(11) Each Underwriter agrees that, unless it
obtains the prior written consent of the Company, it will not make any offer
relating to the Securities
that would constitute an Issuer-Represented Free Writing Prospectus (as defined
below) or that would otherwise (without taking into account any approval,
authorization, use or reference thereto by the Company) constitute a
“free writing
prospectus” required to be filed by the Company
with the Commission (as defined herein) or retained by the Company under Rule
433 of the Securities Act; provided that the prior written consent of the
Company hereto shall be deemed to have been given in respect of any Issuer-Represented General Free
Writing Prospectuses referenced on Schedule
C attached
hereto.
As used in this Agreement, the terms set
forth below shall have the following meanings:
(i)
“Time of
Sale” means [—] (Eastern time) on the date of
this
Agreement.
(ii)
“Statutory
Prospectus” as of any time means the prospectus
that is included in the Registration Statement immediately prior to that
time. For purposes of this definition, information contained in a
form of prospectus that is deemed retroactively to be a part of the
Registration Statement pursuant to Rule 430A or 430B shall be considered to be
included in the Statutory Prospectus as of the actual time that form of
prospectus is filed with the Commission pursuant to Rule 424(b) under
the Securities Act.
(iii)
“Issuer-Represented
Free Writing Prospectus” means any “issuer free writing
prospectus,” as defined in
Rule 433 under the Securities Act, relating to the Securities that (A) is
required to be filed with the Commission by the Company, or (B) is exempt from filing
pursuant to Rule 433(d)(5)(i) under the Securities Act because it contains a
description of the Securities or of the Offering that does not reflect the final
terms or pursuant to Rule 433(d)(8)(ii) because it is a “bona fide electronic road show,” as defined in Rule 433 of the Rules and
Regulations which is made available without restriction, in each case in the
form filed or required to be filed with the Commission or, if not required to be
filed, in the form retained in the Company’s records pursuant to Rule 433(g) under
the Securities Act.
(iv)
“Issuer-Represented
General Free Writing Prospectus” means any Issuer-Represented Free
Writing Prospectus that is intended for general distribution to prospective
investors, as evidenced by
its being specified in Schedule
C to this
Agreement.
(v)
“Issuer-Represented
Limited-Use Free Writing Prospectus” means any Issuer-Represented Free
Writing Prospectus that is not an Issuer-Represented General Free Writing
Prospectus. The
term Issuer-Represented Limited-Use Free Writing Prospectus also includes any
“bona fide electronic road
show,” as defined in Rule
433 of the Rules and Regulations, that is made available without restriction
pursuant to Rule 433(d)(8)(ii), even though not required to be filed with the
Commission.
(12) At the time of filing the Registration
Statement and any post-effective amendment thereto, at the earliest time
thereafter that the Company or any offering participant made a bona fide offer
(within the meaning of Rule
164(h)(2) under the Securities Act) of the Shares and at the date hereof, the
Company was not and is not an “ineligible issuer,” as defined in Rule 405 under the
Securities Act. The Company has paid the registration fee for this
offering pursuant to Rule 456(b)(1) under the Securities
Act or will pay such fee within the time period required by such rule (without
giving effect to the proviso therein) and in any event prior to the Closing
Date.
(13) The description of the corporate
structure of the Company
and the various contracts between the Company and the Subsidiaries set forth in
the Registration Statement, the General Disclosure Package and the Prospectus in
the section entitled “Corporate Structure and
Organization” is accurate,
complete and fair in all material respects; and each of the
events and transactions set forth therein has been duly authorized and does not
(A) to the knowledge of the
Company, contravene any
provision of applicable law or statute, rule or regulation of any governmental
agency having jurisdiction
over the Company or any Subsidiaries or any of their properties (including but
not limited to the Ministry of Commerce, the State Administration of Industry
and Commerce and the State Administration of Foreign Exchange of the
People’s Republic of China (“PRC”)) to the extent that such contravention
is reasonably likely, individually or in the aggregate, to have a Material
Adverse Effect, (B) contravene the articles of association, business license or
other constitutive documents of the Company or any Subsidiaries, or
(C) conflict with or result in a breach of
violation of any of the terms or provisions of, or constitute a default under,
any license, indenture, mortgage, deed of trust, loan agreement, note, lease or
other agreement or instrument to which the Company or any
Subsidiaries is a party or by which the Company or any Subsidiaries is bound or
to which any of the property or assets of the Company or any Subsidiaries is
subject to the extent that such conflict or breach is reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect.
(14) The execution, delivery and performance
by the Company of this Agreement and the consummation of the transactions herein
contemplated 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, loan agreement or other agreement or instrument to which the
Company or any Subsidiary is a party or by which the Company or any Subsidiary is bound or to which any
of the property or assets of the Company or any Subsidiary is subject to the
extent that such conflict or breach is reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect; (ii) result in any violation of the provisions of
the Certificate of Incorporation, By-laws or other constituent documents of the
Company or any Subsidiary; or (iii) result in any violation of any statute or
any order, rule or regulation of any court or governmental agency or body having jurisdiction over
the Company or any Subsidiary or any of their properties (including but not
limited to the Ministry of Commerce, the State Administration of Industry and
Commerce and the State Administration of Foreign Exchange of the PRC) to the extent that such violation
is reasonably likely, individually or in the aggregate, to have a Material
Adverse Effect. Each consent, approval, authorization, order,
registration or qualification of or with any such court or governmental
agency or body that is required for the
consummation by the Company and its Subsidiaries of the transactions
contemplated herein has been made or obtained unconditionally in writing, and
has not been withdrawn or is subject to any condition precedent which
has not been fulfilled, performed or waive,
unless the failure to obtain any such consent, approval, authorization, order,
registration or qualification is not reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect.
(15) The Shares have been duly and validly authorized
and, when issued, delivered and paid for in accordance with this Agreement and
as described in the Prospectus on the Closing Date, will be duly and validly
issued, fully paid and non-assessable, will have been issued in compliance with all applicable state,
federal and foreign securities laws and will not have been issued in violation
of or subject to any preemptive or similar right that does or will entitle any
Person to acquire any Relevant Security from the Company or any Subsidiary upon issuance or sale
of the Securities in the Offering. As used herein, the term “Relevant
Security” means any ordinary shares or other
security of the Company or any Subsidiary that is convertible into, or
exercisable or exchangeable for ordinary shares or equity securities,
or that holds the right to acquire any ordinary shares or equity securities of
the Company or any Subsidiary or any other such Relevant Security, except for
such rights as may have been fully satisfied or waived prior to the effectiveness of the
Registration Statement. The ordinary shares conform to
the descriptions thereof contained in the Registration Statement, the General
Disclosure Package and the Prospectus. Except as set forth in, or
contemplated by, the Registration Statement, the General
Disclosure Package and the Prospectus, on the Effective Date and on the Closing
Date, neither the Company nor any Subsidiary has outstanding options, warrants,
or other rights to purchase or otherwise acquire any authorized but unissued ordinary shares or any
security convertible into ordinary shares, or any contracts or commitments to
issue or sell ordinary shares or any such options, warrants, rights or
convertible securities. Except as set forth in, or contemplated by,
the Registration Statement, the General
Disclosure Package and the Prospectus, on the Effective Date and on the Closing
Date, no Person has the right to require the Company to register any Relevant
Security of the Company under the Securities Act, whether on a demand basis or in connection with
the registration of securities of the Company for its own account or for the
account of any other Person.
(16) The Warrant Shares will conform to the
description thereof in the Registration Statement, the General
Disclosure Package and the
Prospectus and have been validly reserved for future issuance and will, upon
exercise of the Representative’s Warrants and payment of the exercise
price thereof, be duly and validly issued, fully paid and non-assessable and
will not have been issued in violation of or subject
to preemptive or similar rights to subscribe for or purchase securities of the
Company. The issuance of such securities is not subject to any
statutory preemptive rights under the laws of the Cayman Islands or the
Company’s organization documents as in effect at
the time of issuance, rights of first refusal or other similar rights of any
securityholder of the Company (except for such preemptive or contractual rights
as were waived).
(17) The direct or indirect
subsidiaries of the
Company, listed on Exhibit 21.1 of the Registration Statement (the “Subsidiaries”) are the only subsidiaries of the
Company within the meaning of Rule 405 under the Securities
Act. Except for the Subsidiaries, the Company holds no ownership or
other interest, nominal or
beneficial, direct or indirect, in any other foreign or domestic, corporation,
trust, general or limited partnership, joint venture, limited liability company
or other entity. Except as disclosed in the Registration Statement,
the General Disclosure Package and the
Prospectus, all of the issued and outstanding shares of capital stock 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 permitted or allowed any of their material
properties to be subjected to any lien, charge, mortgage, pledge, security
interest, claim, equity, trust or other encumbrance, preferential
arrangement, defect or restriction of any
kind whatsoever (“Lien”). Except as disclosed in the
Registration Statement, the General Disclosure Package and the Prospectus, no
director, officer or key employee of the Company or any Subsidiary named in the
Prospectus holds any direct
equity, debt or other pecuniary interest in any Subsidiary or any Person with
whom the Company or any Subsidiary does business or is in privity of contract
with, other than, in each case, indirectly through the ownership by such
individuals of ordinary
shares.
(18) Each of the Company and the Subsidiaries
has been duly incorporated, formed or organized, and validly exists as a
corporation, joint venture, partnership or limited liability company in good
standing under the laws of its jurisdiction of incorporation, formation or
organization. Each of the Company and the Subsidiaries has all
requisite power and authority to carry on its business as it is currently being
conducted and as described in the Registration Statement, the General
Disclosure Package and the Prospectus, and
to own, lease and operate its respective properties. Each of the
Company and the Subsidiaries is duly qualified to do business and is in good
standing as a foreign corporation, joint venture, 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, for those failures to be so qualified or in good standing which (individually
and in the aggregate) would not reasonably be expected to have a Material
Adverse Effect on: (i) the business, condition (financial or otherwise), results
of operations, shareholders’ equity, properties or
prospects of the Company and the Subsidiaries,
taken as a whole as such prospects are disclosed or described in the
Registration Statement, the General Disclosure Package and the Prospectus; (ii)
the long-term debt or capital stock of the Company or any Subsidiary; or (iii) the Offering or consummation
of any of the other transactions contemplated by this Agreement, the
Registration Statement, the General Disclosure Package and the Prospectus. 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.
(19) Neither the Company nor any Subsidiary:
(i) is in violation of its certificate or articles of incorporation, memorandum
and articles of association, by-laws, certificate of formation, limited
liability company agreement, joint venture agreement, partnership agreement or
other organizational documents including shareholders’ voting or similar agreements, (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 upon any of its property or assets pursuant to, any 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 property or assets is subject, or (iii)
is in violation in any respect of any 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 clause (ii) above) for any
Lien disclosed in the Registration Statement, the General Disclosure Package and
the Prospectus.
(20) Other than the restrictions disclosed in
the General Disclosure
Package, Preliminary Prospectus or the Prospectus, no Subsidiary is currently
prohibited, directly or indirectly, under any agreement or other instrument to
which it is a party or is subject, from paying any dividends to the
Company (or the Subsidiary that holds the
outstanding equity interests of the relevant Subsidiary).
(21) All dividends and other distributions
declared and payable on the Shares may under the current laws and regulations of
the Cayman Islands be paid to the holders, 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 and are otherwise free and clear of any
other tax, withholding or deduction in the Cayman Islands and without the necessity of obtaining any
consents, approvals, authorizations, orders, registrations, clearances or
qualifications of or with any court or governmental agency having jurisdiction
over the Company or any of its subsidiaries or any of their respective properties in the Cayman
Islands.
(22) All dividends and other distributions
declared and payable on the share capital of Li Zhan Resources Recycling
Technology Development Co., Ltd. may under the current laws and regulations of
Hong Kong be paid to the Company, and all such dividends and other
distributions will not be subject to withholding or other taxes under the laws
and regulations of Hong Kong and are otherwise free and clear of any other tax,
withholding or deduction in Hong Kong and without the necessity of obtaining any governmental
authorization in the Hong Kong.
(23) Except as described in the Registration
Statement, the General Disclosure Package, all dividends and other distributions
declared and payable on the share capital of any of the PRC Subsidiaries and their subsidiaries may under
the current laws and regulations of the PRC be freely transferred out of the PRC
and may be paid in U.S. dollars, and all such dividends and other distributions
will not be subject to withholding or other taxes under the laws and regulations of the PRC
and are otherwise free and clear of any other tax, withholding or deduction in
the PRC, and without the necessity of obtaining any governmental authorization
in the PRC.
(24) Subsequent to the respective dates as of
which information is
presented in the Registration Statement, General Disclosure Package, Preliminary
Prospectus or the Prospectus, and except as disclosed in the Registration
Statement, General Disclosure Package, Preliminary Prospectus or the Prospectus,
(i) the Company has not declared, paid or
made any dividends or other distributions of any kind on or in respect of its
capital stock, and (ii) there has been no material adverse change (or, to the
knowledge of the Company, any development which has a high probability of involving a material adverse
change in the future), whether or not arising from transactions in the ordinary
course of business, in or affecting: (A) the business, condition (financial or
otherwise), results of operations, shareholders’ equity, properties or prospects of the Company
and its Subsidiaries taken as a whole; (B) the long-term debt or capital stock
of the Company or any of its Subsidiaries; or (C) the Offering or consummation
of any of the other transactions contemplated by this Agreement, the Registration Statement,
General Disclosure Package, Preliminary Prospectus or the Prospectus (a
“Material Adverse
Change”).
(25) Any previous restructuring (i.e. equity
transfer) of the Company and the Subsidiaries 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, loan agreement or other agreement or
instrument to which the Company or any Subsidiary is a party or by which the
Company or any Subsidiary is bound or to
which any of the property or assets of the Company or any Subsidiary is subject
to the extent that such conflict or breach is reasonably likely, individually or
in the aggregate, to have a Material Adverse Effect; (ii) result in any violation of the
provisions of the Certificate of Incorporation, By-laws or other constituent
documents of the Company or any Subsidiary; or (iii) result in any violation of
any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction
over the Company or any Subsidiary or any of their properties (including but not
limited to the Ministry of Commerce, the State Administration of Industry and
Commerce and the State Administration of Foreign Exchange of the PRC) to the extent that such
violation is reasonably likely, individually or in the aggregate, to have a
Material Adverse Effect.
(26) As of the dates indicated in the
Registration Statement, the General Disclosure Package, the Preliminary
Prospectus and the
Prospectus, the authorized, issued and outstanding shares of capital stock of
the Company were as set forth in the Registration Statement, the General
Disclosure Package, the Preliminary Prospectus and the Prospectus in the column
headed “Actual” under the section thereof captioned
“Capitalization” and, after giving effect to the
Offering and the other transactions (excluding the offer and sale of the
Over-allotment Shares) contemplated by this Agreement, the Registration
Statement, the General Disclosure Package, the Preliminary
Prospectus and the Prospectus, will be as set forth in the column headed
“As Adjusted” in such section. All of the
issued and outstanding shares of capital stock of the Company are fully paid and
non-assessable and have been duly and validly authorized and
issued, in compliance with all applicable state, federal and foreign securities
laws and not in violation of or subject to any preemptive or similar right that
does or will entitle any Person (as defined below), upon the issuance or sale of any security, to
acquire from the Company or any Subsidiary any Relevant Security. As
used herein, the term “Person” means any foreign or domestic
individual, corporation, trust, partnership, joint venture, limited liability
company or other
entity.
(27) The Company, through its wholly owned
subsidiaries, Illigate Development Limited, a corporation organized under the
laws of the British Virgin Islands, and Li Zhan Resources Recycling Technology
Development Co., Ltd., a corporation organized under the laws of Hong Kong, owns
100% of Lizhan Textile (Zhejiang) Co., Ltd. and 87% of Zhejiang Hongzhan New
Material Co. Ltd, each a limited liability company organized under the laws of
PRC (collectively the “PRC
Subsidiaries”). The PRC
Subsidiaries operate in
compliance with all of the laws and regulations of the PRC.
(28) There are no outstanding (i) securities
of the Company or any Subsidiary convertible into or exchangeable for shares of
capital stock or voting securities of any Subsidiary or (ii) options or other rights to acquire
from the Company or any Subsidiary, or other obligation of the Company or any
Subsidiary to issue, any capital stock, voting securities or securities
convertible into or exchangeable for capital stock or voting securities of any Subsidiary (the items in
clauses (i) and (ii) being referred to collectively as the “Subsidiary
Securities”). There are no outstanding
obligations of the Company or any Subsidiary to repurchase, redeem or otherwise
acquire any outstanding Subsidiary Securities.
(29) Each of the Company and its Subsidiaries
is in compliance with all applicable PRC and Cayman Islands laws, rules,
regulations, ordinances, directives, judgments, decrees and orders (including,
without limitation, all securities and tax laws, rules and regulations of PRC and
Cayman Islands), except for such non-compliance as would not have a Material
Adverse Effect. As of the date hereof and as of the Closing Date, and
except as contemplated by this Agreement, neither the Company nor
its Subsidiaries operate within the
jurisdiction of the United States or any state or territory thereof in such a
manner so as to subject the Company and its Subsidiaries or its operations or
businesses to registration as a foreign company doing business in any state within the United States or to
any of the following laws in any material respect: (i) the Bank Secrecy Act, as
amended, (ii) the Uniting and Strengthening of America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism Act of 2001, as amended, (iii) the Foreign
Corrupt Practices Act of 1977, as amended, (iv) the Currency and Foreign
Transactions Reporting Act of 1970, as amended, (v) the Employee Retirement
Income Security Act of 1974, as amended, (vi) the Money Laundering
Control Act of 1986, as amended (vii) the
rules and regulations promulgated under any such law, or any successor law, or
any judgment, decree or order of any applicable administrative or judicial body
relating to such law and (viii) any corresponding law, rule, regulation, ordinance, judgment,
decree or order of any state or territory of the United States or any
administrative or judicial body thereof.
(30) The operations of the Company and its
Subsidiaries are and have been conducted at all times in compliance
with applicable financial
record keeping and reporting requirements and money laundering statutes of the
U.S., PRC and, to the Company’s knowledge, all other jurisdictions to
which the Company and its Subsidiaries are subject, the rules and regulations
thereunder and any related or similar rules,
regulations or guidelines, issued, administered or enforced by any applicable
governmental agency (collectively, the “Money Laundering Laws”) and no action, suit or proceeding by
or before any court or governmental agency, authority or body or any
arbitrator involving the Company and its Subsidiaries with respect to the Money
Laundering Laws is pending or, to the best knowledge of the Company,
threatened.
(31) The Company has full right, power and
authority to execute and
deliver this Agreement, the
Representative’s Warrants and all other agreements, documents,
certificates and instruments required to be delivered pursuant to this Agreement
(collectively, the “Transaction
Documents”) and to perform its obligations
hereunder and thereunder
and to consummate each of the transactions contemplated by each of the
Transaction Documents. The Company has duly and validly authorized
each of the Transaction Documents and each of the transactions contemplated by
the Transaction Documents and no further action is required
by the Company, its board of directors or its shareholders in connection
therewith. Each of the Transaction Documents has been or will be duly
and validly executed and delivered by the Company and constitutes the
legal, valid and binding obligation of the
Company and is enforceable against the Company in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ rights generally and except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at
law).
(32) When issued the
Representative’s Warrants will constitute valid
and binding obligations of
the Company to issue and sell, upon exercise thereof and 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.
(33) The execution, delivery, and performance
of the Transaction Documents and the consummation of the transactions
contemplated thereby do not and will not: (i) conflict with, require consent under
or result in a breach of any of the terms and provisions of, or constitute a
default (or an event which with notice or lapse of time, or both, would
constitute a default) under, or result in the creation or imposition of any Lien upon any property or
assets of the Company or Subsidiaries pursuant to any indenture, mortgage, deed
of trust, loan agreement or other agreement, instrument, franchise, license or
permit to which the Company or its Subsidiaries is a party or by which the Company, its Subsidiaries
or its properties, operations or assets may be bound or (ii) violate or conflict
with any provision of the certificate or articles of incorporation, by-laws,
certificate of formation, limited liability company agreement, partnership agreement or other
organizational documents of the Company or Subsidiaries, or (iii) violate or
conflict with any law, rule, regulation, ordinance, directive, judgment, decree
or order of any judicial, regulatory or other legal or governmental agency or body, domestic or
foreign, except (in the case of clauses (i) and (iii) above) violations or
defaults that could not reasonably be expected to have a Material Adverse
Effect.
(34) The Company is aware of and has been
advised as to, the content of the Rules on Mergers and Acquisitions
of Domestic Enterprises by Foreign Investors jointly promulgated by the Ministry
of Commerce, the State Assets Supervision and Administration Commission, the
State Tax Administration, the State Administration of Industry and Commerce, the China Securities
Regulatory Commission (“CSRC”) and the State Administration of
Foreign Exchange of the PRC on August 8, 2006 (the “M&A Rules”), in particular the relevant provisions
thereof which purport to require offshore special purpose vehicles, or SPVs, formed for
listing purposes and controlled directly or indirectly by PRC companies or
individuals, to obtain the approval of the CSRC prior to the listing and trading
of their securities on an overseas stock exchange; the Company has received legal advice specifically
with respect to the M&A Rules from its PRC counsel and the Company
understands such legal advice. The Company has fully communicated such legal
advice from its PRC counsel to each of its directors that signed the
Registration Statement and each director
has confirmed that he or she understands such legal advice.
(35) The issuance and sale of the Shares, the
listing and trading of the Shares on the NASDAQ Global Market or the consummation of the transactions
contemplated by this
Agreement is not and will not be, as of the date hereof adversely affected by
the M&A Rules or any official clarifications, guidance, interpretations or
implementation rules in connection with or related to the M&A Rules
(collectively, the “M&A
Rules
and Related Clarifications”).
(36) Each of the Company and Subsidiaries
that were incorporated outside of the PRC has taken, or is in the process of
taking, reasonable steps to ensure compliance by each of its shareholders,
option holders, directors, officers, and employees that is, or is
directly or indirectly owned or controlled by, a PRC resident or citizen with
any applicable rules and regulations of the relevant PRC government agencies
(including but not limited to the 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 the repatriation of the proceeds from overseas
offering and listing by offshore special purpose vehicles controlled directly or indirectly by PRC
companies and individuals, such as the Company, (the “PRC Overseas
Investment and Listing Regulations”), including without limitation,
requesting each shareholder, option holder, director, officer, and employees
that is, or is directly or
indirectly owned or controlled by, a PRC resident or citizen to complete any
registration and other procedures required under applicable PRC Overseas
Investment and Listing Regulations.
(37) The Company has taken all reasonable
steps to comply with, and
to ensure compliance by all of the Company’s shareholders who are PRC residents
with any applicable rules and regulations of the PRC State Administration of
Foreign Exchange (the “SAFE Rules and
Regulations”), including without
limitation, taking
reasonable steps to require each of its shareholders and option holders that is,
or is directly or indirectly owned or controlled by, a PRC resident to complete
any registration and other procedures required under applicable SAFE Rules and
Regulations.
(38) Except as disclosed in the Registration
Statement, the General Disclosure Package, the Preliminary Prospectus and the
Prospectus, each of the Company and the Subsidiaries has all material consents,
approvals, authorizations, orders, registrations, qualifications, licenses, filings and
permits of, with and from all judicial, regulatory and other legal or
governmental agencies and bodies and all third parties, foreign and domestic
(collectively, the “Consents”), to own, lease and operate its
properties and conduct its
business as it is now being conducted and as disclosed in the Registration
Statement, the General Disclosure Package, the Preliminary Prospectus and the
Prospectus, and each such Consent is valid and in full force and
effect. Neither the Company nor any Subsidiary has received
notice of any investigation or proceedings which results in or, if decided
adversely to the Company or any Subsidiary, could reasonably be expected to
result in, the revocation of, or imposition of a materially burdensome restriction on, any
Consent. No Consent contains a materially burdensome restriction not
adequately disclosed in the Registration Statement, the General Disclosure
Package, the Preliminary Prospectus and the Prospectus.
(39) Each of the Company and the Subsidiaries is in compliance with all
applicable laws, rules, regulations, ordinances, directives, judgments, decrees
and orders, foreign and domestic relating to transactions with Affiliates (as
such term is defined in Rule 144 under the Securities Act, “Affiliates”). Neither the Company, nor
any of its Affiliates has received any notice or other information from any
regulatory or other legal or governmental agency which could reasonably be
expected to result in any default or potential decertification by the Company, or any of its
Affiliates.
(40) Neither the Company nor any Subsidiary
is required to obtain any consent, waiver, authorization or order of, give any
notice to, or make any filing or registration with, any judicial, regulatory or
other legal or governmental
agency or body or any third party, foreign or domestic or other Person in
connection with the execution, delivery and performance by the Company of any of
the Transaction Documents, including the issuance, sale and delivery of the
Shares to be issued, sold and delivered hereunder,
except the registration under the Securities Act of the Shares and the approval
for listing of the Company’s ordinary shares on the NASDAQ Global Market or such other exchange or quotation
systems as the Company’s securities are listed or quoted on, each of
which has become effective, and such Consents as may be required under state
securities or blue sky laws or the by-laws and rules of the NASDAQ Global Market or such other exchange or quotation
systems as the Company’s securities are listed or quoted on,
where the ordinary shares has been approved for listing, and the Financial
Industry Regulatory Authority, Inc. (“FINRA”) in connection with the purchase and
distribution of the Securities by the Underwriters, each of which has been obtained and is in full
force and effect.
(41) Except as disclosed in the Registration
Statement, the General Disclosure Package, the Preliminary Prospectus and the
Prospectus, there is no judicial, regulatory, arbitral or other legal or
governmental action, suit,
inquiry, notice of violation, proceeding or investigation or other litigation or
arbitration, domestic or foreign, pending or, to the knowledge of the Company,
threatened or contemplated, to which the Company or any Subsidiary is a
party or of which any property, operations
or assets of the Company or any Subsidiary is the subject which, individually or
in the aggregate, if determined adversely to the Company or any Subsidiary,
would reasonably be expected to have a Material Adverse Effect (collectively, an “Action”). To the Company’s knowledge, the defense of all such
proceedings, litigation and arbitration against or involving the Company or any
Subsidiary would not reasonably be expected to have a Material Adverse Effect.
Neither the Company nor any
Subsidiary, nor any director or officer thereof, is or has been the subject of
any Action involving a claim of violation of or liability under federal or state
securities laws or a claim of breach of fiduciary duty. There has not
been and is not pending or contemplated, any
investigation by the Commission involving the Company, its Subsidiaries or any
current or former director or officer of the Company and its
Subsidiaries.
(42) The documents, exhibits or other
materials incorporated or deemed to be incorporated by reference in
the Preliminary Prospectus or the Prospectus, at the time they were or hereafter
are filed with the Commission, complied and will comply in all material respects
with the requirements of the Securities Act, the Exchange Act and the Rules and Regulations,
and, when read together with the other information in the Preliminary Prospectus
or the Prospectus, do not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. There are no contracts or other documents (including,
without limitation, any voting agreement), which are required to be described
in the Registration Statement, the General
Disclosure Package, the Preliminary Prospectus and the Prospectus or filed as
exhibits to the Registration Statement by the Securities Act, the Exchange Act
or the Rules and Regulations and which have not been so described, filed or incorporated by
reference.
(43) UHY Vocation HK CPA Limited
(“UHY”), whose reports relating to the Company
are included in the Registration Statement, is an independent registered public
accounting firm as required by the Securities Act, the Exchange Act, the Rules and Regulations
and the Public Company Accounting Oversight Board (United States) (the
“PCAOB”). UHY is duly registered and
in good standing with the PCAOB. UHY has not, during the periods
covered by the financial statements included in the Registration Statement, the
General Disclosure Package, the Preliminary Prospectus and the Prospectus,
provided to the Company any “non-audit services”, or has not been engaged by the Company
to perform any “prohibited
activities” as such
terms are used in Section 10A(g) of the
Exchange Act. The Company has had no material disagreements with UHY
for the period from its initial engagement by the Company through the Closing
Date and Over-allotment Closing Date that were not satisfied in a manner
mutually satisfactory to both the Company
and UHY. And to the Company’s knowledge, such accountants are not in
violation of the auditor independence requirements of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of
2002 (“Sarb-Ox”).
(44) The financial statements, including the
notes thereto, and the
supporting schedules included in the Registration Statement, the General
Disclosure Package, the Preliminary Prospectus and the Prospectus comply in all
material respects with the requirements of the Securities Act, the Exchange Act
and present fairly the financial position as
of the dates indicated and the cash flows and results of operations for the
periods specified of the Company and its consolidated
Subsidiaries. Except as otherwise stated in the Registration
Statement, the General Disclosure Package, the Preliminary
Prospectus and the Prospectus, said financial statements have been prepared in
conformity with U.S. GAAP applied on a consistent basis throughout the periods
involved, except in the case of unaudited financials which are subject to normal year end adjustments
and do not contain certain footnotes. The supporting schedules
included in the Registration Statement, the General Disclosure Package, the
Preliminary Prospectus and the Prospectus present fairly the information
required to be stated therein. No
other financial statements or supporting schedules are required to be included
or incorporated by reference in the Registration Statement, the General
Disclosure Package, the Preliminary Prospectus or the Prospectus. The
other financial and statistical information
included in the Registration Statement, the General Disclosure Package, the
Preliminary Prospectus and the Prospectus present fairly the information
included therein and have been prepared on a basis consistent with that of the financial statements that
are included in the Registration Statement, the General Disclosure Package, the
Preliminary Prospectus and the Prospectus and the books and records of the
respective entities presented therein.
(45) There are no pro forma or as adjusted financial statements
which are required to be included in the Registration Statement, the General
Disclosure Package, the Preliminary Prospectus and the Prospectus in accordance
with Regulation S-X which have not been included as so required. The pro forma and pro
forma as adjusted financial information included in the Registration Statement,
the General Disclosure Package, the Preliminary Prospectus and the Prospectus
has been properly compiled and prepared in accordance with the
applicable requirements of the Securities Act and
the Rules and Regulations and include all adjustments necessary to present
fairly in accordance with U.S. GAAP the pro forma and as adjusted financial
position of the respective entity or entities presented therein at the respective dates indicated and
their cash flows and the results of operations for the respective periods
specified. The assumptions used in preparing the pro forma and pro
forma as adjusted financial information included in the Registration
Statement, the General Disclosure Package, the
Preliminary Prospectus and the Prospectus provide a reasonable basis for
presenting the significant effects directly attributable to the transactions or
events described therein. The related pro forma and pro
forma as adjusted adjustments give appropriate
effect to those assumptions; and the pro forma and pro forma as adjusted
financial information reflect the proper application of those adjustments to the
corresponding historical financial statement amounts.
(46) The statistical, industry-related and
market-related data included in the Registration Statement, the General
Disclosure Package, the Preliminary Prospectus and the Prospectus are based on
or derived from sources which the Company reasonably and in good faith
believes are reliable and accurate, and
such data agree with the sources from which they are
derived.
(47) Except as disclosed in the Registration
Statement, the General Disclosure Package, the Preliminary Prospectus and the
Prospectus, the Company and the Subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurances that (A)
transactions are executed in accordance with management’s general or specific authorization; (B)
transactions are recorded as necessary to permit preparation of financial statements in
conformity with U.S. GAAP and to maintain accountability for assets; (C) access
to assets is permitted only in accordance with management’s general or specific authorization; and
(D) the recorded accountability for assets is compared with existing assets
at reasonable intervals and appropriate action is taken with respect to any
differences. The Company maintains disclosure controls and procedures (as such
term is defined in Rule 13a-15 under the Exchange Act) that are effective in ensuring that
information required to be disclosed by the Company in the reports that it files
or submits under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the rules and forms of
the Commission, including, without
limitation, controls and procedures designed to ensure that information required
to be disclosed by the Company in the reports that it files or submits under the
Exchange Act is accumulated and communicated to the Company’s management, including its principal
executive officer or officers and its principal financial officer or officers,
as appropriate, to allow timely decisions regarding required disclosure. Except
as described in the Registration Statement, the General Disclosure Package, the Preliminary
Prospectus or in the Prospectus, since the date of the Company’s formation, there has been no change in
the Company’s internal control over financial
reporting that has materially affected, or is reasonably likely to
materially affect, the Company’s internal control over financial
reporting.
(48) Except as disclosed in the Registration
Statement, the General Disclosure Package, the Preliminary Prospectus and the
Prospectus, the Company’s Board of Directors has validly
appointed an audit
committee, compensation committee, and nominating committee whose composition
satisfies the requirements of the rules and regulations of the NASDAQ Global Market and the Board of Directors and/or each
of the audit committee, compensation committee, and nominating committee has adopted a
charter that satisfies the requirements of the rules and regulations of the
NASDAQ Global
Market. The
audit committee has reviewed the adequacy of its charter within the past twelve
months. Except as disclosed in the Registration Statement, the General
Disclosure Package, the Preliminary Prospectus and the Prospectus, the Board of
Directors nor the audit committee has been informed, nor is any director of the
Company aware, of: (i) any significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the Company’s ability to record, process, summarize
and report financial information; or (ii) any fraud, whether or not material, that involves management or
other employees who have a significant role in the Company’s internal control over financial
reporting.
(49) As of the Effective Date: (i) all
members of the Company’s Board of Directors who are required to
be “independent” (as that term is defined under
applicable laws, rules and regulations), including, without limitation, all
members of the audit committee of the Company’s Board of Directors, meet the
qualifications of independence as set forth under applicable laws, rules and regulations and (ii) the audit
committee of the Company’s Board of Directors has at least one
member who is an “audit
committee financial expert”
(as that term is defined under applicable laws, rules and
regulations).
(50) Neither the Company nor any of its Affiliates has taken, directly
or indirectly, any action which constitutes or is designed to cause or result
in, or which could reasonably be expected to constitute, cause or result in, the
stabilization or manipulation of the price of any security to facilitate the sale or resale of
the Securities.
(51) Neither the Company nor any of its
Affiliates has, prior to the date hereof, made any offer or sale of any
securities which are required to be “integrated” pursuant to the Securities Act or the
Rules and Regulations with
the offer and sale of the Securities pursuant to the Registration
Statement. Except as disclosed in the Registration Statement, the
General Disclosure Package, the Preliminary Prospectus or the Prospectus,
neither Company nor any of its Affiliates has sold or issued any
Relevant Security since the date of the Company’s formation.
(52) All information contained in the
questionnaires completed by each of the Company’s and any Subsidiary’s officers and directors immediately
prior to the Offering and
provided to the Representative as well as the biographies of such individuals in
the Registration Statement is true and correct in all material respects and the
Company has not become aware of any information which would cause the
information disclosed in the questionnaires completed by
the directors and officers to become inaccurate and
incorrect.
(53) No director or officer of the Company or
any Subsidiary is subject to any non-competition agreement or non-solicitation
agreement with any employer or prior employer which could materially
affect his ability to be and act in his respective capacity of the Company or
any Subsidiary.
(54) The conditions for use of Form F-1 to
register the Offering under the Securities Act, as set forth in the General
Instructions to such Form,
have been satisfied.
(55) The Company is not and, at all times up
to and including consummation of the transactions contemplated by this
Agreement, and after giving effect to application of the net proceeds of the
Offering, will not be, subject to registration as an “investment company” under the Investment Company Act of
1940, as amended, and is not and will not be an entity “controlled” by an “investment company” within the meaning of such
act.
(56) No relationship, direct or indirect,
exists between or among any
of the Company or any Affiliate of the Company, on the one hand, and any
director, officer, shareholder, customer or supplier of the Company or any
Affiliate of the Company, on the other hand, which is required by the Securities
Act, the Exchange Act or the Rules and
Regulations to be described in the Registration Statement or the Prospectus
which is not so described as required. There are no outstanding
loans, advances (except normal advances for business expenses in the ordinary
course of business) or guarantees of
indebtedness by the Company to or for the benefit of any of the officers or
directors of the Company or any of their respective family members, except as
described in the Registration Statement, the General Disclosure
Package and the Prospectus. The
Company has not, in violation of the Sarb-Ox directly or indirectly, including
through a Subsidiary (other than as permitted under the Sarb-Ox for depositary
institutions), extending or maintaining credit, arranged for the
extension of credit, or renewing an extension
of credit, in the form of a personal loan to or for any director or executive
officer of the Company or any Subsidiary.
(57) 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 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 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.
(58) The Company and each Subsidiary owns or
leases all such properties as are necessary to the conduct of its business as
presently operated and as proposed to be operated as described in the Registration Statement
and the Prospectus. Except as disclosed in the Registration Statement
and the Prospectus, which describes the rights by which the Company and the
Subsidiaries have rights to the real property under PRC law, the Company and the Subsidiaries have good and
marketable title in fee simple to all real property and good and marketable
title to all personal property owned by them, in each case free and clear of all
Liens except such as are described in the Registration Statement, the General Disclosure Package,
the Preliminary Prospectus and the Prospectus or such as do not (individually or
in the aggregate) materially affect the business or prospects of the Company or
any of the Subsidiaries. Any real property and buildings held under lease or sublease by the
Company and the Subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material to, and do not
interfere with, the use made and proposed to be made of such property and buildings by the Company and the
Subsidiaries. Neither the Company nor any Subsidiary has received any
notice of any claim adverse to its ownership of any real or personal property or
of any claim against the continued possession of any real property, whether owned or held under lease or
sublease by the Company or any Subsidiary.
(59) Except as disclosed in the Registration
Statement, the General Disclosure Package, the Preliminary Prospectus and the
Prospectus, the Company and
each Subsidiary: (i) owns or possesses adequate right to use all
patents, patent
applications, trademarks, service marks, trade names, trademark registrations,
service ▇▇▇▇ registrations, copyrights, licenses, customer lists, and know-how
and other Intellectual
Property necessary for the
conduct of their respective businesses as being conducted and as described in
the Registration Statement, the General Disclosure and Prospectus; and (ii) have
no knowledge that the conduct of their respective businesses do or will conflict
with, and they have not received any notice of
any claim of conflict with, any such right of others. “Intellectual
Property” means the Company’s or a Subsidiary’s patents, patent applications,
trademarks, service marks, trade names, trademark registrations,
service ▇▇▇▇ registrations,
copyrights, licenses and similar rights. To the Company’s knowledge, all material technical
information developed by and belonging to the Company or any Subsidiary which
has not been patented (including, without limitation, the trade secrets referred to in the Prospectus)
has been kept confidential so as, among other things, all such information may
be deemed proprietary to the Company. Except under confidentiality
obligations, there has been no material disclosure of any of the
Company’s or its Subsidiaries’ Confidential Information to any third
party. Except as set forth in the Registration Statement, the General Disclosure
Package, the Preliminary Prospectus or the Prospectus, neither the Company nor
any Subsidiary has granted or assigned to any other Person any right to
sell the current products and services of the Company and its Subsidiaries or
those products and services described in the Registration Statement and
Prospectus..
(60) Except as set forth in the Registration
Statement, the General
Disclosure Package, the Preliminary Prospectus, and the Prospectus: (A) there is
no pending or, to the Company’s knowledge, threatened action, suit,
proceeding, or claim by others challenging the Company’s or any Subsidiary’s rights in or to any Intellectual Property rights, and
the Company is unaware of any facts which would form a reasonable basis for any
such claim; (B) there is no pending or, to the Company’s knowledge, threatened action, suit,
proceeding, or claim by others that the Company or any Subsidiary infringes,
misappropriates, or otherwise violates any Intellectual Property rights of
others, and the Company is unaware of any facts which would form a reasonable
basis for any such claim; (C) there is no pending or, to the Company’s knowledge, threatened action, suit,
proceeding, or claim by others challenging the validity or scope of any such
Intellectual Property rights owned by the Company and any Subsidiary and the
Company is unaware of any facts which would form a reasonable basis for any such claim; (D) the operation
of Company or any Subsidiary’s business as now conducted and in
connection with the development and commercialization of the patents described
in the Registration Statement, the General Disclosure Package and the
Prospectus, as being under development by
the Company or any Subsidiary (either independently or in collaboration with
third parties), does not infringe any claim of any patent or published patent
application; (E) there is no prior art of which the Company is aware that may render any patent owned
or licensed by the Company or any Subsidiary invalid or any patent application
owned or licensed by the Company or any Subsidiary unpatentable which has not
been disclosed to the applicable government patent office; and (F) the patents, trademarks, and
copyrights granted, issued or licensed to the Company and any Subsidiary have
been duly maintained and are in full force and in effect, and none of such
patents, trademarks and copyrights have been adjudged invalid or unenforceable in whole or in
part. Neither the Company nor any Subsidiary is a party to or bound
by any options, licenses or agreements with respect to the Intellectual Property
rights of any other person or entity that are required to be set forth in
the Registration Statement, the General
Disclosure Package and the Prospectus and are not described therein in all
material respects.
(61) The Company and its Subsidiaries have
duly and properly filed or caused to be filed with the State Intellectual
Property Office of the PRC
(the “SIPO”) and applicable foreign and
international patent authorities all patent applications owned by the Company
and its Subsidiaries (the “Company Patent
Applications”). NeitherThe Company and its
Subsidiaries have complied in all material repsects with the SIPO’s duty of candor and disclosure for the
Company Patent Applications and has made no material misrepresentation in the
Company Patent Applications. The Company Patent Applications disclose patentable
subject matters, and neither the Company nor its Subsidiaries have
been notified of any inventorship challenges nor has any interference been
declared or provoked nor is any material fact known by the Company that would
preclude the issuance of patents with respect to the Company Patent Applications or would render such
patents invalid or unenforceable, in each case to the extent that such event is
reasonably likely, individually or in the aggregate, to have a Material Adverse
Effect. No third party possesses rights to the Company’s or a Subsidiary’s Intellectual Property rights that, if
exercised, could enable such party to develop products competitive to those that
the Company or any Subsidiary intends to develop as described in the Preliminary
Prospectus and the Prospectus.
(62) Except as disclosed in the Registration
Statement, the General Disclosure Package, the Preliminary Prospectus, and the
Prospectus, the Company and the Subsidiaries have at all times operated their
respective businesses in material compliance with all Environmental Laws, and no material expenditures
are or will be required in order to comply therewith. Neither the
Company nor any Subsidiary has received any notice or communication that relates
to or alleges any actual or potential violation or failure to comply
with any Environmental Laws that will
result in a Material Adverse Effect. As used herein, the term
“Environmental
Laws” means all applicable
laws and regulations, including any licensing, permits or reporting
requirements, and any action by a federal state or local PRC government entity or any
applicable foreign and international patent authorities, pertaining to the
protection of the environment, protection of public health, protection of worker
health and safety, or the handling of hazardous materials.
(63) Each of the Company and the Subsidiaries
has accurately prepared and timely filed all federal, state, foreign and other
tax returns that are required to be filed by it and has paid or made provision
for the payment of all taxes, assessments, governmental or other similar charges, including
without limitation, all sales and use taxes and all taxes which the Company or
any Subsidiary is obligated to withhold from amounts owing to employees,
creditors and third parties, with respect to the periods covered by such tax returns (whether or not such
amounts are shown as due on any tax return). No deficiency assessment
with respect to a proposed adjustment of the Company’s or any Subsidiary’s federal, state, local or foreign taxes
is presently in effect or is pending or, to the Company’s knowledge, threatened. The
accruals and reserves on the books and records of the Company and the
Subsidiaries in respect of tax liabilities for any taxable period not finally
determined are adequate to meet any assessments and related liabilities for any such period and,
since the date of the Company’s most recent audited financial
statements, the Company and the Subsidiaries have not incurred any liability for
taxes other than in the ordinary course of its business. There is no
tax lien, whether imposed by any federal,
state, foreign or other taxing authority, outstanding against the assets,
properties or business of the Company or any Subsidiary.
(64) The Company has no employees in the U.S.
and is not subject to Retirement Income Security Act of 1974 (“ERISA”).
(65) The application of the net proceeds from
this Offering, as described in the Prospectus,
will not contravene any provision of any current and applicable laws or the
current constituent documents of the Company or any Subsidiary or contravene the terms or provisions
of, or constitute a default under, any indenture, mortgage, deed of trust, loan
agreement, note, lease or other agreement or instrument currently binding upon
the Company or any Subsidiary or any governmental authorization applicable to any of the
Company or any Subsidiary.
(66) The Company and its Subsidiaries
maintain insurance of the types and in the amounts which are customary for
companies engaged in similar businesses in similar industries in the
People’s Republic of China.
(67) Under the laws of their respective
jurisdiction of incorporation, neither the Company nor any Subsidiary, is, nor
are any of their respective properties, assets or revenues, entitled to any
right of immunity on the grounds of sovereignty from any legal action, suit or proceeding,
from set-off or counterclaim, from the jurisdiction of any court, from service
of process, from attachment prior to or in aid of execution of judgment, or from
other legal process or proceeding for the giving of any relief or for the enforcement of any
judgment.
(68) Based on the Company’s current and anticipated operations and
composition of its earnings and assets, including the current and expected
valuation of its assets, the Company does not expect to be a Passive
Foreign Investment Company
(“PFIC”) within the meaning of Section 1297 of
the United States Internal Revenue Code of 1986, as amended, for the year ending
December 31, 2010 and does not expect to become a PFIC in the
future.
(69) Other than as set forth in the
Registration Statement, the
General Disclosure Package and the Prospectus, no stamp or other issuance or
transfer taxes or duties and no capital gains, income, withholding or other
taxes are payable by or on behalf of the Underwriters to the government of
the Cayman Islands or the PRC, or any
political subdivision or taxing.
(70) Neither the Company nor any Subsidiary
is a party to or bound by any collective bargaining agreements or other
agreements with labor organizations.
(71) Except as disclosed in the
Registration Statement, the
General Disclosure Package, the Preliminary Prospectus and the Prospectus, the
Company has no material obligation to provide health, retirement, death or
disability benefits to any of the present or past employees of the Company or
any Subsidiaries, or to any other
person.
(72) As set forth in the Registration
Statement, the General Disclosure Package, the Preliminary Prospectus or the
Prospectus, neither the Company nor any Subsidiary is a party to or subject to
any employment contract or arrangement providing for annual future
compensation, or the opportunity to earn annual future compensation (whether
through fixed salary, bonus, commission, options or otherwise) of more than
$120,000 to any officer, or director.
(73) The execution of this Agreement, the issuance of the Representative’s Warrants or the consummation of the Offering does not
constitute a triggering event under any Employee Plan or any other employment
contract, whether or not legally enforceable, which (either alone or upon
the occurrence of any
additional or subsequent event) will or may result in any payment (of severance
pay or otherwise), acceleration, increase in vesting, or increase in benefits to
any current or former participant, employee or director of the Company or
any Subsidiary other than an event that is
not material to the financial condition or business of the Company or any
Subsidiary, either individually or taken as a whole.
(74) Each of the Company and the
Subsidiaries, are in compliance with the requirements of the insurance laws and regulations of
their respective states of incorporation or organization and the insurance laws
and regulations of other jurisdictions including, but not limited to, the PRC,
which are applicable to the Company or such Subsidiaries, and each have filed all notices, reports,
documents or other information required to be filed thereunder, except where the
failure to comply with such requirement could not reasonably be expected to have
a Material Adverse Effect.
(75) Neither the Company, any Subsidiary nor, to the Company’s knowledge, any of their respective
employees or agents has at any time during the last five (5) years: (i) made any
unlawful contribution to any candidate for foreign office, or failed to disclose
fully any contribution in violation of law, or (ii) made any payment
to any federal or state governmental officer or official or other Person charged
with similar public or quasi-public duties, other than payments that are not
prohibited by the laws of the United States of any jurisdiction or its foreign equivalents
including, but not limited to, the PRC, thereof.
(76) The Company has not offered, or caused
the Underwriters to offer, the ordinary shares to any Person or entity with the
intention of unlawfully influencing: (i) a customer or supplier of the Company or any
Subsidiary to alter the customer’s or supplier’s level or type of business with the
Company or any Subsidiary or (ii) a journalist or publication to write or
publish favorable information about the Company, any Subsidiary or its products or
services.
(77) Except as set forth in the Registration
Statement and the Prospectus, there are no outstanding loans or indebtedness of
the Company and the Subsidiaries.
(78) Except as disclosed in the Registration
Statement, the General Disclosure Package, the Preliminary Prospectus
and the Prospectus, no material indebtedness (actual or contingent) and no
Material Contract or arrangement is outstanding between the Company or any of
its Subsidiaries and any director or executive officer of the Company or any of its Subsidiaries or any
person connected with such director or executive officer (including his/her
spouse, infant children
or any company or
enterprise in which he/she holds a controlling
interest); there are no material relationships or transactions between the Company or any
of its Subsidiaries on the one hand and their respective affiliates, officers, directors or shareholders on the other
hand, which are not disclosed in the Registration Statement, the General
Disclosure Package and the
Prospectus.
(79) Neither the Company nor, to the
knowledge of the Company, any director, officer, agent, employee or Affiliate is
currently subject to any U.S. sanctions administered by the Office of Foreign
Assets Control of the U.S. Treasury Department (“OFAC”); and neither the Company nor its
Subsidiaries will directly or indirectly use the proceeds of the Offering, or
lend, contribute or otherwise make available such proceeds to any 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.
(80) Representations and Warranties Relating
to the PRC Subsidiaries.
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(i)
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The constitutional documents of
the PRC Subsidiaries are valid and have been duly approved in accordance with the laws of
the PRC.
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(ii)
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All material consents, approvals,
authorizations, permits and licenses required under PRC law for the due
and proper establishment and operation of each PRC Subsidiary have been
duly obtained; neither the Company nor any Subsidiary is in receipt of
any letter or notice notifying it of revocation or non-renewal of any such
consents, approvals, authorizations, permits and licenses; and the Company
has no knowledge of any grounds on which renewals of such consents,
approvals, authorizations, permits
and licenses will not be granted by the relevant PRC Governmental
Bodies.
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(iii)
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All material filings and
registrations required in respect of each PRC Subsidiary and its
operations including, without limitation, the registrations with the Ministry of Commerce,
with the State Administration of Industry and Commerce, the State
Administration for Foreign Exchange (the “SAFE”), tax bureau and customs
authorities have been duly completed in accordance with the relevant PRC
laws, rules, regulations and
guidelines.
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(iv)
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All material filings and
registrations required in respect of each PRC Subsidiary and its
operations with the State Administration of Industry
and Commerce, the State Administration for Foreign Exchange have been duly
completed in
accordance with the relevant PRC laws, rules, regulations and
guidelines.
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(v)
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The registered capital stock of
each PRC Subsidiary has been fully paid in accordance with relevant PRC
laws and regulations and the payment schedule approved by the relevant
PRC government
body. With respect to any increase of registered capital, each
Subsidiary has duly filed the application documents with the competent PRC
government authorities for approval. There are no outstanding or
commitments made by the Company or any Subsidiary to sell any equity
interest in any PRC Subsidiary to sell any equity interest in such PRC Subsidiary. To
the extent that any direct or indirect shareholder of the Company
(including the Founder) or any of its Subsidiaries is subject to the
jurisdiction of
Circular 75 issued by the PRC State Administration of Foreign Exchange on
October 21, 2005, including any amendment, implementing rules, or official
interpretation thereof or any replacement, successor or alternative
legislation having the same subject matter thereof
(collectively “Circular 75”), each such shareholder has
complied in all respects with Circular 75 and any related requirement of
law, including without limitation, the completion of any applicable
foreign exchange registration, settlement or remittance requirement
therein.
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(vi)
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Each of the Company and the
Subsidiaries has conducted its business activities within the permitted
scope of business or has otherwise operated its business in compliance
with all relevant legal requirements and with all requisite licenses,
permits and approvals granted under PRC
law.
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(vii)
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With regard to employment, staff
and labor matters, each of the PRC Subsidiaries has complied with all
applicable PRC laws and regulations in all material respects, including
without limitation,
laws and regulations pertaining to welfare funds, social benefits, medical
benefits, insurance, retirement benefits or
pensions.
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(81) Except as described in the Registration
Statement and the Prospectus, there are no claims, payments,
arrangements, agreements or
understandings relating to the payment of a finder’s, consulting or origination fee by the
Company or any Affiliate with respect to the sale of the Shares hereunder or any
other arrangements, agreements or understandings of the Company or, to the Company’s knowledge, any of its shareholders
that may affect the Underwriter’s compensation, as determined by FINRA.
Except as described in the Registration Statement and the Prospectus, the
Company has not made any direct or indirect payments (in cash, securities or otherwise) to: (i)
any person, as a finder’s fee, consulting fee or otherwise, in
consideration of such person raising capital for the Company or introducing to
the Company persons who raised or provided capital to the Company; (ii)
any FINRA member; or (iii) any person or
entity that has any direct or indirect affiliation or association with any FINRA
member, within the 180 days prior to the Effective Date, other than the prior
payment of $40,000 to the Underwriter as provided hereunder in connection with the Offering. None
of the net proceeds of the Offering will be paid by the Company to any
participating FINRA member or its affiliates, except as specifically authorized
herein. No Affiliate has any direct or indirect affiliation or association with any FINRA member (as
determined in accordance with the rules and regulations of FINRA); no person to
whom securities of the Company have been privately issued within 180-day period
prior to the initial filing date of the Registration Statement has any relationship or affiliation
or association with any member of FINRA.
(82) Neither the Company nor any of its
Subsidiaries nor any of their respective current or former Affiliates, has,
directly or indirectly, on behalf of the Company or any Subsidiary or in connection with their
respective businesses: (a) used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to foreign or domestic
political activity; (b) made, offered, gave, promised to give, or
authorized the making of any unlawful payments
or any offered, gave, promised to give, or authorized the giving of anything of
value, to any foreign or domestic governmental officials or employees or any
other person acting in an official capacity for any Governmental Body, or to any foreign or domestic
political parties or campaigns from corporate funds or any candidate for
political office (collectively, the “Government Officials”) or to any Person under circumstances
where such Company Affiliate knew or was aware of a high probability that all or a
portion of such money or thing of value would be offered, given or promised,
directly or indirectly, to any Government Official; (c) failed to disclose fully
any contribution made by the Company or any Subsidiary (or made by any person acting on its behalf
of which the Company is aware) which is in violation of law; (d) established or
maintained any unlawful or unrecorded fund of corporate monies or other assets;
(e) made any false or fictitious entries on the books and records of the Company or any
Subsidiary; (f) made any unlawful bribe, rebate, payoff, influence payment,
kickback or other unlawful payment of any nature; or (g) violated any provision
of the Foreign Corrupt Practice Act of 1977, as amended, or any other applicable anti-bribery or
anti-corruption laws of any jurisdiction.
(83) Neither the Company nor any Subsidiary
has: (a) made a general assignment for the benefit of creditors; (b) filed any
voluntary petition in bankruptcy or suffered the filing of any involuntary petition by its creditors; (c)
suffered the appointment of a receiver to take possession of all, or
substantially all, of its assets; (d) suffered the attachment or other judicial
seizure of all, or substantially all, of its assets; (e) admitted in writing its inability to pay its debts
as they come due; or (f) made an offer of settlement, extension or composition
to its creditors generally.
(84) (91) Any certificate signed by or on behalf
of the Company and delivered to the Underwriters or to Ellenoff ▇▇▇▇▇▇▇▇ & Schole LLP
(“Underwriters’ Counsel”) shall be deemed to be a representation
and warranty by the Company to each Underwriter listed on Schedule A hereto as
to the matters covered thereby.
As used in this Agreement, references to
matters being “material” with respect to the Company or its
Subsidiaries shall mean a material event, change, condition, status or effect
related to the condition (financial or otherwise), properties, assets (including
intangible assets), liabilities, business, prospects, operations or results of operations
of the Company or the Subsidiaries, either individually or taken as a whole, as
the context requires. As used in this Agreement, the term “knowledge of the Company” (or similar language) shall mean the
knowledge of the officers and directors of the Company
and the Subsidiaries who are named in the Prospectus, with the assumption that
such officers and directors shall have made reasonable and diligent inquiry of
the matters presented (with reference to what is customary and prudent for the applicable
individuals in connection with the discharge by the applicable individuals of
their duties as officers, directors or managers of the Company or the
Subsidiaries).
3. Offering. Upon authorization of the
release of the Firm Shares
and the Over-allotment Shares, as applicable, by the Representative, the
Underwriters propose to offer the Firm Shares and the Over-allotment Shares, as
applicable, for sale to the public upon the terms and conditions set forth in
the Prospectus.
4. Covenants of
the Company. The
Company acknowledges, covenants and agrees with the Underwriters
that:
(1) The Registration Statement and any
amendments thereto have been declared effective, and if Rule 430A is used or the
filing of the Prospectus is otherwise required under Rule 424(b), the
Company will file the Prospectus (properly completed if Rule 430A has been used)
pursuant to Rule 424(b) within the prescribed time period and will provide
evidence satisfactory to the Representative of such timely filing.
(2) During the period beginning on the date
hereof and ending on the later of the Closing Date or such date, as in the
opinion of Underwriters’ Counsel, the Prospectus is no longer
required by law to be delivered (or in lieu thereof the notice referred
to in Rule 173(a) under the
Securities Act is no longer required to be provided), in connection with sales
by an underwriter or dealer (the “Prospectus Delivery
Period”), prior to amending or supplementing
the Registration Statement, the General Disclosure Package or the Prospectus, the Company
shall furnish to the Representative for review a copy of each such proposed
amendment or supplement at least 48 hours before the Company shall file any such
proposed amendment or supplement.
(3) The Company will notify the Representative immediately (and, if
requested by the Representative, will confirm such notice in writing): (i) when
the Registration Statement and any amendments thereto become effective, (ii) of
any request by the Commission for any amendment of or supplement to the Registration Statement,
the General Disclosure Package, the Preliminary Prospectus or the Prospectus or
for any additional information, (iii) of the Company’s intention to file or prepare any
supplement or amendment to the Registration Statement or the Prospectus, (iv) of the
mailing or the delivery to the Commission for filing of any amendment of or
supplement to the Registration Statement, the General Disclosure Package, the
Preliminary Prospectus or the Prospectus, including but not limited to Rule 462(b) under the Securities
Act, (v) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or any post-effective amendment
thereto or of any order preventing or suspending its use or the use of any Prospectus, the General
Disclosure Package, the Prospectus or any Issuer Represented Free Writing
Prospectus, or of any proceedings to remove, suspend or terminate from listing
the ordinary shares from any securities exchange upon which it is
listed for trading, or of the threatening or
initiation of any proceedings for any of such purposes the initiation, or the
threatening, of any proceedings therefor, it being understood that the Company
shall make every effort to avoid the issuance of any such stop order, (vi) of the receipt of any
comments from the Commission, and (vii) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for that
purpose. If the Commission shall propose or enter a stop order at any
time, the Company will make every reasonable effort to prevent the issuance of
any such stop order and, if issued, to obtain the lifting of such order
as soon as
possible. Additionally, the Company agrees that it shall comply with
provisions of Rules 424(b), 430A and 430B, as applicable, under the Securities
Act and will use its reasonable efforts to confirm that any filings made by the
Company under rule 424(b) or Rule 433 were received in a
timely manner by the Commission (without reliance on Rule 424(b)(8) or Rule
164(b)). The Company will not file any amendment to the Registration Statement
or any amendment of or supplement to the Preliminary Prospectus or the Prospectus (including the
Prospectus required to be filed pursuant to Rule 424(b)) that differs from the
Prospectus on file at the time of the effectiveness of the Registration
Statement or file any document under the Exchange Act if such
document would be deemed to be incorporated by
reference into the Prospectus to which the Representative shall object in
writing after being timely furnished in advance a copy thereof. The
Company will provide the Representative with copies of all such
amendments, filings and other documents a
sufficient time prior to any filing or other publication thereof to permit the
Representative a reasonable opportunity to review and comment
thereon.
(4) The Company shall comply with the
Securities Act, the Exchange Act and all applicable Rules and Regulations to
permit completion of the distribution as contemplated in this Agreement, the
Registration Statement and the Prospectus. If, at any time when a
Prospectus relating to the Securities is required to be delivered
under the Securities Act, the Exchange Act and
all applicable Rules and Regulations in connection with the sales of Securities,
any event shall have occurred as a result of which the Prospectus as then
amended or supplemented would, in the judgment of the Underwriters or the Company, include an untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances existing at the time of delivery to the purchaser, not misleading, or if, to
comply with the Securities Act, the Exchange Act or the Rules and Regulations,
it shall be necessary at any time to amend or supplement the Prospectus or
Registration Statement, or to file any document which is an exhibit to the Registration Statement or the
Prospectus or in any amendment thereof or supplement thereto, the Company will
notify the Representative promptly and prepare and file with the Commission,
subject to Section 4(1) hereof, an appropriate amendment or supplement (in form and substance
reasonably satisfactory to the Representative) which will correct such statement
or omission or which will effect such compliance and will use its best efforts
to have any amendment to the Registration Statement declared effective as soon as
possible.
(5) If at any time following issuance of an
Issuer-Represented Free Writing Prospectus there occurred or occurs an event or
development as a result of which such Issuer-Represented Free Writing Prospectus
conflicted or would conflict with the information contained in
the Registration Statement, the Statutory Prospectus or the Prospectus or
included or would include an untrue statement of a material fact or omitted or
would omit to state a material fact necessary in order to make the statements therein, in the light of
the circumstances prevailing at that subsequent time, not misleading, the
Company has promptly notified or promptly will notify the Underwriter and has
promptly amended or will promptly amend or supplement, at its own expense, such Issuer-Represented Free
Writing Prospectus to eliminate or correct such conflict, untrue statement or
omission.
(6) The Company will promptly deliver to the
Underwriters and Underwriters’ Counsel a signed copy of the
Registration Statement, as initially filed and all amendments
thereto, including all consents and exhibits filed therewith, and will maintain
in the Company’s files manually signed copies of such
documents for at least five (5) years after the date of filing
thereof. The Company will promptly deliver to each of the
Underwriters such number of copies of any Preliminary Prospectus, the
Prospectus, the Registration Statement, and all amendments of and supplements to
such documents, if any, and all documents which are exhibits to the
Registration Statement and Prospectus or
any amendment thereof or supplement thereto, as the Underwriters may reasonably
request. Prior to 10:00 A.M., New York time, on the Business Day next
succeeding the date of this Agreement and from time to time thereafter, the Company will furnish the
Underwriters with copies of the Prospectus in New York City in such quantities
as the Underwriters may reasonably request.
(7) The Company consents to the use and
delivery of the Preliminary Prospectus by the Underwriters in accordance with Rule 430 and Section
5(b) of the Securities Act.
(8) If the Company elects to rely on Rule
462(b) under the Securities Act, the Company shall both file a Rule 462(b)
Registration Statement with the Commission in compliance with Rule 462(b)
and pay the applicable fees
in accordance with Rule 111 of the Securities Act by the earlier of: (i) 10:00
p.m., New York City time, on the date of this Agreement, and (ii) the time that
confirmations are given or sent, as specified by Rule
462(b)(2).
(9) The Company will use its best efforts, in
cooperation with the Representative, at or prior to the time of effectiveness of
the Registration Statement, to qualify the Securities for offering and sale
under the securities laws relating to the offering or sale of the Securities of such jurisdictions,
domestic or foreign, as the Representative may designate and to maintain such
qualification in effect for so long as required for the distribution thereof;
except that in no event shall the Company be obligated in connection therewith to qualify as a
foreign corporation or to execute a general consent to service of process under
the laws of any such state where it is not presently qualified or where it would
be subject to taxation as a foreign corporation
(10) The Company will make generally available to its
security holders and to the Underwriters as soon as practicable, but in any
event not later than twelve (12) months after the Effective Date, an audited
earnings statement of the Company and the Subsidiaries complying with Section 11(a) of the Securities Act
and Rule 158 of the Rules and Regulations.
(11) Following the Closing Date, the Company
and any of the individuals listed on Schedule
B hereto (the “Lock-Up
Parties”) shall not sell or otherwise dispose of
any securities of the
Company, whether publicly or in a private placement during the period that their
respective lock-up agreements are in effect, provided, however, that the holders
of options to purchase ordinary shares shall be entitled to exercise their
outstanding options, subject to a written
agreement by the recipient of the lock-up terms contained in this section. The
Company will deliver to the Representative the agreements of Lock-Up Parties to
the foregoing effect prior to the Closing Date, which agreements shall be substantially in the form
attached hereto as Annex
I.
(12) The Company will be subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act and
file reports with the Commission on the ▇▇▇▇▇
system after the Effective Date.
(13) The outstanding ordinary shares and the Shares
will be listed on the NASDAQ Global Market as of the Closing
Date.
(14) For a period of three (3) years from the
Closing Date, the Company agrees to (i) hold all special and annual meetings of
its shareholders within the
United States or (ii) make attendance to such shareholder meetings permissible
from within the United States telephonically or via video
conference.
(15) For a period of two (2) years from the
Closing Date, the Company shall use its best efforts (which shall include, but shall not be limited to,
the solicitation of proxies, if necessary) to elect a designee of Representative
to the Company’s Board of
Directors.
(16) The Company will retain a nationally
recognized firm of independent certified public accountants acceptable to the Representative
for a period of at least
two (2) years after the Closing; provided, however, that the Company
does not need to obtain the consent of the Representative in the event that the
Company retains one of the “Big Four” U.S. accounting firms, BDO, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ or any
affiliate of any of such firm.
(17) If the Company fails to maintain the
listing of its ordinary shares on a nationally recognized exchange, for a period
of two (2) years from the Effective Date, the Company, at its expense, shall obtain and keep current a
listing in the Standard & Poor’s Corporation Records Services or the
▇▇▇▇▇’▇ Industrial Manual; provided that
▇▇▇▇▇’▇ OTC Industrial Manual is not
sufficient for these purposes.
(18) During the period of three (3) years
from Effective Date, the
Company will furnish to the Representative copies of all reports or other
communications (financial or other) furnished to security holders or from time
to time published or publicly disseminated by the Company, and will deliver
to the Underwriters: (i) as soon as they
are available, copies of any reports, financial statements and proxy or
information statements furnished to or filed with the Commission or any national
securities exchange on which any class of securities of the Company is listed; and (ii) such additional
information concerning the business and financial condition of the Company as
the Representative may from time to time reasonably request (such financial
information to be on a consolidated basis to the extent the accounts of the Company and the
Subsidiaries are consolidated in reports furnished to its security holders
generally or to the Commission); provided, that any such item which is available
on the ▇▇▇▇▇ system (or successor thereto) need not be furnished in
physical form.
(19) Each of the Company and its Affiliates
covenant to adhere to all “quiet period” rules and regulations of the Commission
prior to, during and following the filing of the Registration Statement and the
consummation of the Offering. The Company will not issue press releases or engage
in any other publicity, without the Representative’s prior written consent, for a period
ending at 5:00 p.m. Eastern time on the first Business Day following the
fortieth (40th) day following the Closing Date, other than normal and customary releases
issued in the ordinary course of the Company’s business, each of which the
Representative shall have the reasonable right to review in advance of
publication. The Company
further agrees to consult with the Representative as is customary within the securities
industry prior to distribution to third parties of any financial information,
news releases, and/or other publicity regarding the Company, its business, or
any terms of the proposed Offering, it being agreed that the Company shall give the Representative no
less than twelve (12) hours prior notice of any such distribution and a
reasonable opportunity during or prior to such period to review the contents of
the proposed distribution.
(20) Prior to the consummation of the
Offering, the Company will
engage and continue to engage (for no less than one (1) year from the date of the Closing
Date) a financial public relations firm mutually acceptable to the Company and
the Representative, which
firm shall be experienced in assisting issuers in public offerings of
securities and in their relations with their security
holders.
(21) The Company has or will retain a
transfer agent for the Shares and shall continue to retain such transfer agent
(or another transfer agent reasonably acceptable to the Representative) for a period of one
(1) year following the
Closing Date.
(22) The Company will apply the net proceeds
from the sale of the Securities as set forth under the caption “Use of Proceeds” in the Prospectus. Without
the written consent of the
Representative, no proceeds of the Offering will be used to pay outstanding
loans from officers, directors or shareholders or to pay any accrued salaries or
bonuses to any employees or former employees.
(23) The Company, during the period when the
Prospectus is required to
be delivered under the Securities Act or the Exchange Act, will file all
documents required to be filed with the Commission pursuant to the Securities
Act, the Exchange Act and the Rules and Regulations within the time periods
required thereby.
(24) The Company will use its best efforts to
do and perform all things required to be done or performed under this Agreement
by the Company prior to the Closing Date, and to satisfy all conditions
precedent to the delivery of the Firm Shares.
(25) The Company will not take, and will cause
its Affiliates not to take, directly or indirectly, any action which constitutes
or is designed to cause or result in, or which could reasonably be expected to
constitute, cause or result in, the stabilization or manipulation of the price of any security to
facilitate the sale or resale of the Securities.
(26) The Company shall cause to be prepared
and delivered to the Representative, at its expense, within one (1) Business Day
from the effective date of this Agreement, an Electronic Prospectus to be used by the
Underwriters in connection with the Offering. As used herein, the
term “Electronic
Prospectus” means a form of prospectus, and any
amendment or supplement thereto, that meets each of the following conditions:
(i) it shall be encoded in
an electronic format, satisfactory to the Representative, that may be
transmitted electronically by the other Underwriters to offerees and purchasers
of the Securities for at least the period during which a Prospectus relating to
the Securities is required to be delivered
under the Securities Act; (ii) it shall disclose the same information as the
paper prospectus and prospectus filed pursuant to ▇▇▇▇▇, except to the extent
that graphic and image material cannot be disseminated electronically, in which case such graphic and
image material shall be replaced in the electronic prospectus with a fair and
accurate narrative description or tabular representation of such material, as
appropriate; and (iii) it shall be in or convertible into a paper format or an electronic format,
satisfactory to the Representative, that will allow recipients thereof to store
and have continuously ready access to the prospectus at any future time, without
charge to such recipients (other than any fee charged for subscription to the Internet as a whole
and for on-line time). The Company hereby confirms that it has
included or will include in the Prospectus filed pursuant to ▇▇▇▇▇ or otherwise
with the Commission and in the Registration Statement at the time it
was declared effective an undertaking
that, upon receipt of a request by an investor or his or her representative
within the period when a prospectus relating to the Securities is required to be
delivered under the Securities Act, the Company shall transmit or cause to be transmitted promptly,
without charge, a paper copy of the Prospectus.
(27) The Company represents and agrees that,
unless it obtains the prior written consent of the Representative, and the
Representative represents and agrees that, unless it obtains the prior written consent of the
Company, it has not made and will not make any offer relating to the Shares that
would constitute an “issuer
free writing prospectus,”
as defined in Rule 433 under the Securities Act, or that would otherwise
constitute a “free writing prospectus,” as defined in Rule 405 under the
Securities Act, required to be filed with the Commission provided that the prior
written consent of the parties hereto shall be deemed to have been given in
respect of the free writing prospectuses included in Schedule C. Any such free writing
prospectus consented to by the Company and the Representative is hereinafter
referred to as a “Permitted
Free Writing Prospectus.” The Company represents that
it has treated or agrees that it will treat each Permitted Free Writing Prospectus
as an “issuer free writing
prospectus,” as defined in
Rule 433, and has complied and will comply with the requirements of Rule 433
applicable to any Permitted Free Writing Prospectus, including timely Commission
filing where required, legending and record
keeping.
(28) The Company shall not take any action
that would result in the
Underwriters 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
Underwriters that the Underwriters otherwise would not have been required to
file.
(29) For a period equal to five years from
the date hereof, the Company will not take any action or actions which may
prevent or disqualify the
Company’s use of Form F-3 or Form S-3 (or other
appropriate form) for the registration of the Shares under the Securities
Act.
(30) The Company shall have filed with the
Commission all Issuer-Represented Free Writing Prospectuses or other information
required to be filed by the
Company under the Securities Act and the Regulations.
(31) The Company shall maintain, for a period
of no less than three (3) years from the Closing Date, a liability insurance policy affording
coverage for the acts of its officers and directors.
(32) The Company will reserve and 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.
(33) The Company shall comply with any
applicable rules and
regulations of the State Administration of Foreign Exchange (the “SAFE Rules and Regulations”), and shall use its reasonable best
efforts to cause its directors, officers, option holders and shareholders named
in the Company’s share register that are, or that are directly or
indirectly owned or controlled by, PRC residents or PRC citizens, to comply with
the SAFE Rules and Regulations applicable to them in connection with the
Company, including, without limitation, requesting each shareholder
named in the Company’s share register, option holder,
director and officer that is, or is directly or indirectly owned or controlled
by, a PRC resident or PRC citizen to complete any registration and other
procedures required under applicable SAFE Rules and Regulations.
(34) The Company will establish and maintain disclosure
controls and procedures (as defined in Rules 13a-14 and 15d-14 under the
Exchange Act) that are effective in ensuring that material
information relating to the Company, including its Subsidiaries, is made known to the principal
executive officer and the principal financial officer.
5. Consideration;
Payment of Expenses.
(1) In addition to selling the Shares to the
Underwriters at a purchase price (net of a underwriters’ discounts of seven (7) percent) of $[●] per Firm Share and the issuance to the
Representative of the Representative’s Warrants, in consideration of the
services to be provided for hereunder, the Company shall pay to the Underwriters
or their respective designees their pro rata portion (based on the Firm Shares
purchased), at the Closing, a non-accountable expense allowance equal to one
percent (1.0%) of the gross proceeds of the Offering (exclusive of proceeds from
the sale of Over-allotment Shares). The Company has heretofore paid a $40,000 advance to the
Representative, which shall be applied against its anticipated actual expenses
to be incurred (the “Advance”).
(2) The Company acknowledges that
the Representative has paid the expenses in
connection with the background checks of the Company’s officers and directors on behalf of
the Company and the Company will reimburse such expenses at the
Closing.
(3) The Company shall be responsible for
paying or reimbursing the legal fees for Representative’s legal counsel, which amount shall not exceed $125,000.
(4) The Company grants the Representative
the right of participation for a period of twelve (12) months from the Closing
Date to act as co-lead manager and book runner, for any and all transactions
where the Company has elected to employ a banker and any and all public and private
equity offerings of the Company or any successor to or any subsidiary of the
Company (excluding (i) sales to employees under any compensation or stock option
plan approved by the shareholders of the Company, (ii) shares issued in payment of the
consideration for an acquisition and (iii) conventional banking
arrangements and commercial
debt financing). The Company shall provide written notice to
Representative with terms of such offering and if Representative fails to accept
in writing any such proposal for such public or private sale within 20 days
after receipt of a written notice from the Company containing such proposal,
then Representative will have no claim or right with respect to any sale
contained in any such notice.
(5) The Representative reserves the right to
reduce any item of its 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.
(6) Whether or not the transactions
contemplated by this Agreement, the Registration Statement and
the Prospectus are consummated or this Agreement is terminated, the Company
hereby agrees to pay all costs and expenses incident to the performance of its
obligations hereunder, including the following:
(i) all expenses in connection with the preparation,
printing, formatting for ▇▇▇▇▇ and filing of the Registration Statement, any
Preliminary Prospectus and the Prospectus and any and all amendments and
supplements thereto and the mailing and delivering of copies thereof
to the Underwriters and
dealers;
(ii) all fees and expenses in connection with
the filing of Corporate Offerings Business & Regulatory Analysis
(“COBRADesk”) filings with
FINRA;
(iii) all fees and expenses in connection with
filing of the Registration Statement and Prospectus with the
Commission;
(iv) the fees, disbursements and expenses of
the Company’s counsel and accountants in connection
with the registration of the Securities under the Securities Act and the
Offering;
(v) all expenses in connection with the
qualifications of the
Shares for offering and sale under state or foreign
securities;
(vi) all expenses in connection with all
mailing and printing of the prospectus;
(vii) all fees and expenses in connection with
listing the Shares on the NASDAQ Global Market or any other exchange or electronic quotation system
on which the ordinary shares is then listed or quoted;
(viii) 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 Shares (“Road Show
Expenses”);
(ix) any stock transfer taxes incurred in
connection with this Agreement or the Offering;
(x) the cost of preparing stock certificates
representing the Securities;
(xi) the cost and charges of any transfer
agent or registrar for the
Securities;
(xii) any cost and expenses in conducting
satisfactory due diligence investigation and analysis of the Company’s officers, directors, employees, and
affiliates;
(xiii) all other costs and expenses incident to
the performance of the
Company obligations hereunder which are not otherwise specifically provided for
in this Section 5.
(7) In addition to the costs and expenses
set forth in Section 5(4), the Company will be responsible for: (i) the cost of
two (2) “tombstone” advertisements to be placed in appropriate daily or
weekly periodicals of the Representative’s choice (i.e., The Wall Street Journal
and The New York Times); and (ii) the cost of leather bound volumes of the
Offering documents and Offering commemorative lucite (or other reasonable form) memorabilia, both to
be supplied to the Representative, in such quantities as Representative may
reasonably request.
(8) It is understood, however, that except
as provided in this Section 5, and Sections 6, 7 and 11(4) hereof, the
Underwriters will pay all
of their own costs and expenses, including the fees of their
counsel. Notwithstanding anything to the contrary in this Section 5,
in the event that this Agreement is terminated pursuant to Section 5 or 11(2)
hereof, or subsequent to a Material Adverse Change, the
Representative shall return any portion of the Advance previously paid
which was not offset by its accountable
out-of-pocket expenses actually incurred as provided in FINRA Rule 5110.
6. Conditions
of Underwriters’
Obligations. The
obligations of the Underwriters to purchase and pay for the Firm Shares or
Over-allotment Shares, as the case may be, as provided herein shall be subject
to: (i) the accuracy of the representations and warranties of the Company herein
contained, as of the date hereof and as of the Closing
Date; (ii) the absence from any certificates, opinions, written statements or
letters furnished to the Representative or to Underwriters’ Counsel pursuant to this Section 6 of
any misstatement or omission; (iii) the performance by the Company of its
obligations hereunder, and (iv) each of the following additional
conditions. For purposes of this Section 6, the terms “Closing Date” and “Closing” shall refer to the Closing Date for the
Firm Shares or Over-allotment Shares, as the case may be, and each of
the foregoing and following conditions must be satisfied as of each
Closing.
(1) The Registration Statement shall have
become effective and all necessary regulatory or listing approvals shall have
been received not later than 5:30 P.M., New York time, on the
date of this Agreement, or at such later time and date as shall have been
consented to in writing by the Representative. If the Company shall
have elected to rely upon Rule 430A under the Securities Act, the
Prospectus shall have been filed with the
Commission in a timely fashion in accordance with the terms hereof and a form of
the Prospectus containing information relating to the description of the
Securities and the method of distribution and similar matters shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period; and, at or prior to
the Closing Date or the actual time of the Closing, no stop order suspending the
effectiveness of the Registration Statement or any part thereof, or any amendment thereof, nor
suspending or preventing the use of the General Disclosure Package, the
Preliminary Prospectus, the Prospectus or any Issuer Free Writing Prospectus
shall have been issued; no proceedings for the issuance of such an
order shall have been initiated or threatened;
any request of the Commission for additional information (to be included in the
Registration Statement, the General Disclosure Package, the Preliminary
Prospectus, the Prospectus, any Issuer Free Writing Prospectus or otherwise) shall have been complied
with to the Representative’s satisfaction.
(2) The Representative shall not have
reasonably determined, and advised the Company, that the Registration Statement,
the General Disclosure Package or the Prospectus, or any amendment thereof or supplement
thereto, or any Issuer Free Writing Prospectus, contains an untrue statement of
fact which, in the
Representative’s reasonable opinion, is material, or omits to state a fact
which, in the
Representative’s reasonable opinion, is material and is required to be
stated therein or necessary to make the statements therein not
misleading.
(3) The Representative shall have received a
lock-up agreement from each Lock-Up Party, duly executed by the applicable
Lock-Up Party, in each case substantially in the form attached as
Annex
I.
(4) The Representative shall have received
the favorable written opinion of ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
LLP, the U.S. legal counsel for the Company regarding certain the validity of
the ordinary shares, U.S.
tax matters and certain other legal matters as to the U.S. federal law and New
York law in connection with this Offering, dated as of the Closing Date
addressed to the Representative in the form attached hereto as Annex
II.
(5) The Representative shall have
received the favorable
written opinion of ▇▇▇▇▇▇▇▇▇ Law, the PRC legal counsel for the Company, dated
as of the Closing Date addressed to the Representative in the form attached
hereto as Annex
III.
(6) The Representative shall have received
the favorable written
opinion of ▇▇▇▇▇▇ and ▇▇▇▇▇▇, the Cayman Islands legal counsel for the Company,
dated as of the Closing Date addressed to the Representative in the form
attached hereto as Annex
IV.
(7) The Representative shall have
received the favorable
written opinion of
[ ],
the Hong Kong legal counsel for the Company, dated as of the Closing Date
addressed to the Representative in the form attached hereto as Annex
V.
(8) The Representative shall have
received on and as of the
Closing Date satisfactory evidence of the good standing of the Company and its
subsidiaries in their respective jurisdictions of organization and their good
standing as foreign entities in such other jurisdictions as the
Representative may reasonably request, in each case in
writing or any standard form of telecommunication from the appropriate
governmental authorities of such jurisdictions.
(9) All proceedings taken in connection with
the sale of the Firm Shares and the Over-allotment Shares as herein contemplated shall be
satisfactory in form and substance to the Representative and to
Underwriters’ Counsel.
(10) The Company shall have registered the
Shares under the provisions of Section 12(b) or 12(g), as applicable, of the
Exchange Act on or prior to
the Effective Date.
(11) The Company shall have retained a
financial public relations firm reasonably acceptable to the Representative,
which firm shall be experienced in assisting issuers in public offerings of
securities and in their relations with their security
holders.
(12) The Representative shall have received a
certificate of the Chief Executive Officer and Chief Financial Officer of the
Company, dated as of each Closing Date to the effect that: (i) the condition set
forth in subsection (a) of this Section 6 has been satisfied, (ii) as
of the date hereof and as of the applicable Closing Date, the representations
and warranties of the Company set forth in Sections 1 and 2 hereof are accurate,
(iii) as of the applicable Closing Date, all agreements, conditions and obligations of the
Company to be performed or complied with hereunder on or prior thereto have been
duly performed or complied with, (iv) the Company and the Subsidiaries have not
sustained any material loss or interference with their respective businesses, whether or not covered
by insurance, or from any labor dispute or any legal or governmental proceeding,
(v) no stop order suspending the effectiveness of the Registration Statement or
any post-effective amendment thereof has been issued and no proceedings therefor have been
initiated or threatened by the Commission, (vi) there are no pro forma or as
adjusted financial statements that are required to be included or incorporated
by reference in the Registration Statement and the Prospectus pursuant to the Rules and Regulations
which are not so included or incorporated by reference, and (vii) subsequent to
the respective dates as of which information is given in the Registration
Statement and the Prospectus there has not been any Material Adverse Change or any development involving
a prospective Material Adverse Change, whether or not arising from transactions
in the ordinary course of business.
(13) On the date of this Agreement and on the
Closing Date, the Representative shall have received a “cold comfort” letter from UHY as of the date of the
date of delivery and addressed to the Underwriters and in form and substance
satisfactory to the Representative and Underwriters’ Counsel, confirming that they are
independent certified public accountants with respect to the Company and its
Subsidiaries within the meaning of the Securities Act and the Rules and
Regulations and the PCAOB, and stating, as of the date of delivery (or, with
respect to matters involving changes or developments since the
respective dates as of which specified financial
information is given in the Prospectus, as of a date not more than five (5) days
prior to the date of such letter), the conclusions and findings of such firm
with respect to the financial information and other matters relating to the Registration
Statement covered by such letter.
(14) Subsequent to the execution and delivery
of this Agreement or, if earlier, the dates as of which information is given in
the Registration Statement (exclusive of any amendment thereof) and the Prospectus (exclusive of any
supplement thereto), there shall not have been any change in the capital stock
or long-term debt of the Company or any Subsidiary or any change or development
involving a change, whether or not arising from transactions in the ordinary course of business, in the
business, condition (financial or otherwise), results of operations,
shareholders’ equity, properties or prospects of the
Company and the Subsidiaries, taken as a whole, including but not limited to the
occurrence of any fire, flood, storm, explosion,
accident, act of war or terrorism or other calamity, the effect of which, in any
such case described above, is, in the sole judgment of the Representative, so
material and adverse as to make it impracticable or inadvisable to proceed with the Offering on the
terms and in the manner contemplated in the Prospectus (exclusive of any
supplement).
(15) The Representative shall have received a
duly executed management confirmation letter from the Company’s directors and officers relating to certain information appearing
in the Registration Statement, which letter shall be in the form previously
delivered to the Representative in connection with the filing of the Preliminary
Prospectus.
(16) The ordinary shares shall have been
approved for quotation on
the NASDAQ Global Market. To the Company’s knowledge, no proceedings have been
instituted or threatened which would effect, and no event or circumstance has
occurred which is reasonably likely to effect, the listing of the Shares on the
NASDAQ Global Market.
(17) FINRA shall have confirmed that it has
not raised any objection with respect to the fairness and reasonableness of the
underwriting terms and arrangements.
(18) No action shall have been taken and no
statute, rule, regulation or order shall have been enacted, adopted or issued
by any federal, state or foreign governmental or regulatory authority that
would, as of the Closing Date, prevent the issuance or sale of the Securities;
and no injunction or order of any federal, state or foreign court shall have been issued that would,
as of the Closing Date, prevent the issuance or sale of the
Securities.
(19) The Company shall have furnished the
Underwriters and Underwriters’ Counsel with such other certificates,
opinions or other documents as they may have reasonably
requested.
If any of the conditions specified in
this Section 6 shall not have been fulfilled when and as required by this
Agreement, or if any of the certificates, opinions, written statements or
letters furnished to the Representative or to Underwriters’ Counsel pursuant to this Section 6
shall not be reasonably satisfactory in form and substance to the Representative
and to Underwriters’ Counsel, all obligations of the
Underwriters hereunder may be cancelled by the Representative at, or at any time prior to, the
consummation of the Closing. Notice of such cancellation shall be
given to the Company in writing, or by telephone. Any such telephone
notice shall be confirmed promptly thereafter in
writing.
7. Indemnification.
(1) The Company agrees to indemnify and hold
harmless the Underwriters and each Person, if any, who controls each Underwriter
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, against any and all losses, liabilities, claims, damages and expenses whatsoever as
incurred (including but not limited to attorneys’ fees and any and all expenses
whatsoever incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever, and any and all amounts paid in settlement of
any claim or litigation), joint or several, to which they or any of them may
become subject under the Securities Act, the Exchange Act or otherwise, insofar
as such losses, liabilities, claims, damages or expenses (or actions in respect thereof) arise out
of or are based upon (i)
an untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement, including the information deemed to be a part of the Registration
Statement at the time of
effectiveness and at any subsequent time pursuant to Rules 430A and 430B of the
Rules and Regulations, the General Disclosure Package, the Preliminary
Prospectus, the Prospectus, or any amendment or supplement thereto or any Issuer
Free Writing Prospectus or in any materials or
information provided to investors by, or with the approval of, the Company in
connection with the marketing of the offering of the ordinary shares Offering
(“Marketing
Materials”), including any road show or investor
presentations made to
investors by the Company (whether in person or electronically) or arise out of
or are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and will reimburse such
indemnified party for any legal or other expenses reasonably incurred by it in
connection with investigating or defending against such loss, liability, claim,
damage, liability or action; or (ii) in whole or in part upon any inaccuracy in the representations
and warranties of the Company contained herein; or (iii) in whole or in part
upon any failure of the Company to perform its obligations hereunder or under
law; provided, however, that the Company shall not be liable in any such case to the extent that any
such loss, claim, damage, liability or action arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with the Underwriters’ Information. This indemnity agreement
will be in addition to any liability, which the Company may otherwise have,
including but not limited to other liability under this
Agreement.
(2) Each Underwriter, severally and not
jointly, shall indemnify and hold harmless the Company, each of the
directors of the Company, each of the officers of the Company who shall have
signed the Registration Statement, and each other Person, if any, who controls
the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act, against any losses, liabilities, claims, damages and expenses whatsoever as
incurred (including but not limited to attorneys’ fees and any and all expenses
whatsoever incurred in investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever, and any and all amounts paid in settlement
of any claim or litigation), joint or several, to which they or any of them may
become subject under the Securities Act, the Exchange Act or otherwise, insofar as such losses,
liabilities, claims, damages or expenses (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 the Registration Statement, as originally filed or any amendment
thereof, or any related Preliminary Prospectus or the Prospectus, or in any
amendment thereof or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be stated therein or necessary
to make the statements therein not misleading, in each case to the extent, but
only to the extent, that any such loss, liability, claim, damage or expense
arises out of or is based upon any such untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity with the
Underwriters’ Information; provided,
however, that in no case
shall any Underwriter be liable or responsible for any amount in excess of the
underwriting discount
applicable to the Shares to be purchased by such Underwriter
hereunder. The
parties agree that such information provided by or on behalf of any Underwriter
through the Representative consists solely of the material referred to in the
last sentence of Section
2.1(3) hereof.
(3) Promptly after receipt by an indemnified
party under subsection (1) or (2) above of notice of any claims or the
commencement of any action, such indemnified party shall, if a claim in respect
thereof is to be made against the indemnifying party under such
subsection, notify each party against whom indemnification is to be sought in
writing of the claim or the commencement thereof (but the failure so to notify
an indemnifying party shall not relieve the indemnifying party from any liability which it may have
under this Section 7 to the extent that it is not materially prejudiced as a
result thereof and in any event shall not relieve it from any liability that
such indemnifying party may have otherwise than on account of the indemnity agreement
hereunder). In case any such claim or action is brought against any
indemnified party, and it notifies an indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate, at its own
expense in the defense of such action, and to the
extent it may elect by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such indemnified party, to
assume the defense thereof with counsel satisfactory to such indemnified party; provided however, that
counsel to the indemnifying party shall not (except with the written consent of
the indemnified party) also be counsel to the indemnified
party. Notwithstanding the foregoing, the indemnified party or
parties shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless (i) the employment of
such counsel shall have been authorized in writing by one of the indemnifying parties in
connection with the defense of such action, (ii) the indemnifying parties shall
not have employed counsel to have charge of the defense of such action within a
reasonable time after notice of commencement of the action, (iii) the indemnifying party does not
diligently defend the action after assumption of the defense, or (iv) such
indemnified party or parties shall have reasonably concluded that there may be
defenses available to it or them which are different from or additional to those available to one or all of
the indemnifying parties (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 parties), in any of which events such fees and expenses shall be borne by the indemnifying
parties. No indemnifying party shall, without the prior written
consent of the indemnified parties, effect any settlement or compromise of, or
consent to the entry of judgment with respect to, any pending or
threatened claim, investigation, action or
proceeding in respect of which indemnity or contribution may be or could have
been sought by an indemnified party under this Section 7 or Section 8 hereof
(whether or not the indemnified party is an actual or potential party thereto), unless (x) such
settlement, compromise or judgment (i) includes an unconditional release of the
indemnified party from all liability arising out of such claim, investigation,
action or proceeding and (ii) does not include a statement as to or an admission of fault, culpability or
any failure to act, by or on behalf of the indemnified party, and (y) the
indemnifying party confirms in writing its indemnification obligations hereunder
with respect to such settlement, compromise or judgment.
8. Contribution. In order to provide for
contribution in circumstances in which the indemnification provided for in
Section 8 hereof is for any reason held to be unavailable from any indemnifying
party or is insufficient to hold harmless a party indemnified thereunder, the Company and the
Underwriters shall contribute to the aggregate losses, claims, damages,
liabilities and expenses of the nature contemplated by such indemnification
provision (including any investigation, legal and other expenses incurred
in connection with, and any amount paid
in settlement of, any action, suit or proceeding or any claims asserted, but
after deducting in the case of losses, claims, damages, liabilities and expenses
suffered by the Company, any contribution received by the Company from Persons, other than the
Underwriters, who may also be liable for contribution, including Persons who
control the Company within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, officers of the Company who signed the Registration Statement and
directors of the Company) as incurred to which the Company and one or more of
the Underwriters may be subject, in such proportions as is appropriate to
reflect the relative benefits received by the Company and the
Underwriters from the Offering or, if such
allocation is not permitted by applicable law, in such proportions as are
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, claims, damages, liabilities 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 proportion as (x) the total
proceeds from the Offering (net of underwriting discounts and commissions but
before deducting expenses) received by the Company bears to (y) the underwriting
discount or commissions received by the Underwriters, in each case as set forth in the table on the
cover page of the Prospectus. The relative fault of each of the
Company and of the Underwriters 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’ relative 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 8 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 in this Section
8. The aggregate amount of losses, liabilities, claims, damages and
expenses incurred by an indemnified party and referred to above in this Section 8 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 judicial, regulatory or other
legal or 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 8: (i) no
Underwriter shall be required to contribute any amount in excess of
the total amount by which the discounts and commissions
applicable to the Shares
underwritten by it and distributed to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay in respect of such losses,
liabilities, claims, damages and expenses, by reason of such untrue or alleged
untrue statement or omission or alleged omission and (ii) 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 8, 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
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 officer of the Company who shall have
signed the Registration Statement and each director of the Company shall have
the same rights to contribution as the Company, subject in each case to clauses
(i) and (ii) of the immediately preceding sentence. 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, notify each party or parties from whom contribution may be sought, but
the omission to so notify such party or parties shall not relieve the party or
parties from whom contribution may be sought from any obligation it or they may
have under this Section 8 or otherwise. The obligations of the Underwriters to contribute
pursuant to this Section 8 are several in proportion to the respective number of
Shares to be purchased by each of the Underwriters hereunder and not
joint.
9. Underwriter
Default.
(1) If any Underwriter or Underwriters
shall default in its or
their obligation to purchase Firm Shares hereunder, and if the Firm Shares with
respect to which such default relates (the “Default
Shares”) do not (after giving effect to
arrangements, if any, made by the Representative pursuant to subsection (2) below) exceed in the
aggregate 10% of the number of Firm Shares, each non-defaulting Underwriter,
acting severally and not jointly, agrees to purchase from the Company that
number of Default Shares that bears the same proportion of the total number of Default Shares then being
purchased as the number of Firm Shares set forth opposite the name of such
Underwriter on Schedule
A hereto bears to the
aggregate number of Firm Shares set forth opposite the names of the
non-defaulting Underwriters, subject, however, to such adjustments to
eliminate fractional shares as the Representative in its sole discretion shall
make.
(2) In the event that the aggregate number
of Default Shares exceeds 10% of the number of Firm Shares, the Representative
may in their discretion
arrange for themselves or for another party or parties (including any
non-defaulting Underwriter or Underwriters who so agree) to purchase the Default
Shares on the terms contained herein. In the event that within five
calendar days after such a default the Representative do not
arrange for the purchase of the Default Shares as provided in this Section 9,
this Agreement shall thereupon terminate, without liability on the part of the
Company with respect thereto (except in each case as provided in Sections 4, 6, 7, 9 and 11(d)) or
the Underwriters, but nothing in this Agreement shall relieve a defaulting
Underwriter or Underwriters of its or their liability, if any, to the other
Underwriters and the Company for damages occasioned by its or their default
hereunder.
(3) In the event that any Default Shares are
to be purchased by the non-defaulting Underwriters, or are to be purchased by
another party or parties as aforesaid, the Representative or the Company shall
have the right to postpone the Closing Date for a period, not exceeding five
(5) Business Days, in order to effect whatever changes may thereby be made
necessary in the Registration Statement or the Prospectus or in any other
documents and arrangements, and the Company agrees to file promptly any amendment or supplement to the
Registration Statement or the Prospectus which, in the reasonable opinion of
Underwriters’ Counsel, may thereby be made necessary
or advisable. The term “Underwriter” as used in this Agreement shall include
any party substituted under this Section 9 with
like effect as if it had originally been a party to this Agreement with respect
to such Firm Shares.
10. Survival of
Representations and Agreements. All representations and
warranties, covenants and agreements of the Company and the Underwriters contained
in this Agreement or in certificates of officers of the Company or any
Subsidiary submitted pursuant hereto, including the agreements contained in
Section 5, the indemnity agreements contained in Section 7 and the
contribution agreements contained in
Section 8 hereof, shall remain operative and in full force and effect regardless
of any investigation made by or on behalf of any Underwriter or any controlling
Person thereof or by or on behalf of the Company, any of its officers and directors or any
controlling Person thereof, and shall survive delivery of and payment for the
Shares to and by the Underwriters. The representations contained in
Section 2 hereof and the covenants and agreements contained in Sections 4, 5,
7, 8, this Section 10 and Sections 14 and
15 hereof shall survive any termination of this Agreement, including termination
pursuant to Section 9 or 11 hereof.
11. Effective
Date of Agreement; Termination.
(1) This Agreement shall become effective
upon the later of: (i)
receipt by the Representative and the Company of notification of the
effectiveness of the Registration Statement or (ii) the execution of this
Agreement. Notwithstanding any termination of this Agreement, the
provisions of this Section 11 and of Sections 1, 4, 6, 7 and 12 through
16, inclusive, shall remain in full force and effect at all times after the
execution hereof.
(2) The Representative shall have the right
to terminate this Agreement at any time prior to the consummation of the Closing
if: (i) any domestic or
international event or act or occurrence has materially disrupted, or in the
opinion of the Representative will in the immediate future materially disrupt,
the market for the Company’s securities or securities in general;
or (ii) trading on the New York Stock Exchange,
NYSE AMEX or NASDAQ shall have been suspended, or minimum or maximum prices for
trading shall have been fixed, or maximum ranges for prices for securities shall
have been fixed, or maximum ranges for prices for securities shall have been required on the New
York Stock Exchange, NYSE AMEX or NASDAQ or by order of the Commission or any
other government authority having jurisdiction; or (iii) if the Company shall have sustained a
material loss by fire, flood, accident, hurricane, earthquake,
theft, sabotage or other calamity or malicious act which, whether or not such
loss shall have been insured, will, in the opinion of the Representative, make
it inadvisable to proceed with the delivery of the Firm Shares, or (iv) if any of the Company’s material representations, warranties
or covenants hereunder are breached, or (vi) a banking moratorium has been declared
by any state or federal authority or if any material disruption in commercial banking or securities
settlement or clearance services shall have occurred; or (v) (A) there shall have occurred any
outbreak or escalation of hostilities or acts of terrorism involving the United
States or there is a declaration of a national emergency or war by the
United States or (B) there shall have been any other calamity or crisis or any
change in political, financial or economic conditions if the effect of any such
event in (A) or (B), in the judgment of the Representative, is so material and adverse
that such event makes it impracticable or inadvisable to proceed with
the offering, sale and delivery of the Firm Shares on the terms and in the
manner contemplated by the Prospectus; or (vi) such adverse material change in general market
conditions, including without limitation as a result of terrorist activities
after the date hereof, as in the Representative’s judgment would make it impracticable
or inadvisable to proceed with the offering, sale and delivery of the Firm Shares on the terms and
in the manner contemplated by the Prospectus.
(3) Any notice of termination pursuant to
this Section 11 shall be in writing.
(4) If this Agreement shall be terminated
pursuant to any of the provisions hereof (other than pursuant to Section 9(2) hereof), or if the
sale of the Shares provided for herein is not consummated because any condition
to the obligations of the Underwriters set forth herein is not satisfied or
because of any refusal, inability or failure on the part of the Company to perform any agreement
herein or comply with any provision hereof, the Company will, subject to demand
by the Representative, reimburse the Underwriters for only those out-of-pocket
expenses actually incurred by the Underwriters in connection herewith, less the Advance and any
other amounts previously paid to the Representative or the Underwriters in
conducting its due diligence, including background checks of the
Company’s officers and directors, or in reimbursement for any of the Underwriter’s expenses, or the Representative shall
return any portion of the Advance not offset by such accountable out-of-pocket
expenses actually incurred.
12. Notices. All communications
hereunder, except as may be otherwise specifically provided herein, shall
be in writing,
and:
if sent to the Representative or any
Underwriter, shall be mailed, delivered, or faxed and confirmed in writing,
to Maxim Group LLC, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Executive
Managing Director of
Investment Banking, with a copy to Underwriters’ Counsel at Ellenoff ▇▇▇▇▇▇▇▇ &
Schole LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, Attention:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.; and if sent to the Company, shall be mailed, delivered, or
faxed and confirmed in
writing to the Company and its counsel at the addresses set forth in the
Registration Statement,
provided,
however, that any notice to
an Underwriter pursuant to Section 7 shall be delivered or sent by mail or
facsimile transmission to such Underwriter at its address set forth in its
acceptance facsimile to the Representative, which address will be supplied to
any other party hereto by the Representative upon request. Any such
notices and other communications shall take effect at the time of receipt
thereof.
13. Parties;
Limitation of Relationship. This Agreement shall inure
solely to the benefit of, and shall be binding upon, the Underwriters, the
Company and the controlling Persons, directors, officers, employees and agents
referred to in Sections 6
and 7 hereof, and their respective successors and assigns, and no other Person
shall have or be construed to have any legal or equitable right, remedy or claim
under or in respect of or by virtue of this Agreement or any provision herein
contained. This Agreement and all conditions and
provisions hereof are intended to be for the sole and exclusive benefit of the
parties hereto and said controlling Persons and their respective successors,
officers, directors, heirs and legal Representative, and it is not for the benefit of any other
Person. The term “successors and assigns” shall not include a purchaser, in its
capacity as such, of Shares from any of the Underwriters.
14. Governing
Law. This
Agreement shall be deemed to have been executed and delivered in New York and both this Agreement and
the transactions contemplated hereby shall be governed as to validity,
interpretation, construction, effect, and in all other respects by the laws of
the State of New York, without regard to the conflicts of laws principals thereof (other than Section
5-1401 of The New York General Obligations Law). Each of the
Underwriters and the Company: (a) agrees that any legal suit, action or
proceeding arising out of or relating to this Agreement and/or the transactions
contemplated hereby shall be instituted
exclusively in the Supreme Court of the State of New York, New York County, or
in the United States District Court for the Southern District of New York, (b)
waives any objection which it may have or hereafter to the venue of any such suit, action or
proceeding, and (c) irrevocably consents to the jurisdiction of Supreme Court of
the State of New York, New York County, or in the United States
District Court for the Southern District of New York in any such suit, action
or proceeding. Each of the
Underwriters and the Company further agrees to accept and acknowledge service of
any and all process which may be served in any such suit, action or proceeding
in the Supreme Court of the State of New York, New York County, or
in the United States District Court for the
Southern District of New York and agrees that service of process upon the
Company mailed by certified mail to the Company’s address or delivered by Federal
Express via overnight delivery shall be deemed in every respect effective service of process upon
the Company, in any such suit, action or proceeding, and service of process upon
the Underwriters mailed by certified mail to the Underwriters’ address or delivered by Federal Express
via overnight delivery shall be deemed in every respect effective service
process upon the Underwriters, in any such suit, action or
proceeding. THE COMPANY (ON BEHALF OF ITSELF, THE SUBSIDIARIES AND,
TO THE FULLEST EXTENT PERMITTED BY LAW, ON BEHALF OF ITS RESPECTIVE EQUITY
HOLDERS AND CREDITORS) HEREBY WAIVE ANY RIGHT THEY
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.
15. Entire
Agreement. This
Agreement, together with the schedule and exhibits attached hereto and as the
same may be amended from time to time in accordance with the terms hereof,
contains the entire agreement among the parties hereto relating to the
subject matter hereof and
there are no other or further agreements outstanding not specifically mentioned
herein.
16. Severability. If any term or provision of
this Agreement or the performance thereof shall be invalid or unenforceable to
any extent, such invalidity
or unenforceability shall not affect or render invalid or unenforceable any
other provision of this Agreement and this Agreement shall be valid and enforced
to the fullest extent permitted by law.
17. Amendment. This Agreement may only be
amended by a written
instrument executed by each of the parties hereto.
18. Waiver, etc. The failure of any of the
parties hereto to at any time enforce any of the provisions of this Agreement
shall not be deemed or construed to be a waiver of any such provision, nor to in any way effect the
validity of this Agreement or any provision hereof or the right of any of the
parties hereto to thereafter enforce each and every provision of this
Agreement. No waiver of any breach, non-compliance or non-fulfillment
of any of the provisions of this Agreement
shall be effective unless set forth in a written instrument executed by the
party or parties against whom or which enforcement of such waiver is sought; and
no waiver of any such breach, non-compliance or non-fulfillment shall be construed or deemed to be
a waiver of any other or subsequent breach, non-compliance or
non-fulfillment.
19. No Fiduciary
Relationship. The Company
hereby acknowledges that the Underwriters are acting solely as underwriters in
connection with the
offering of the Company’s securities. The Company further
acknowledge that the Underwriters are acting pursuant to a contractual
relationship created solely by this Agreement entered into on an arm’s length basis and in no event do the
parties intend that the Underwriters act or be
responsible as a fiduciary to the Company, its management, shareholders,
creditors or any other person in connection with any activity that the
Underwriters may undertake or have undertaken in furtherance of the offering
of the Company’s securities, either before or after the
date hereof. The Underwriters hereby expressly disclaim any fiduciary or similar
obligations to the Company, either in connection with the transactions
contemplated by this Agreement or any matters leading up to such transactions, and the
Company hereby confirms its understanding and agreement to that effect. The
Company hereby further confirms its understanding that no Underwriter has
assumed an advisory or fiduciary responsibility in favor of the Company with respect to the Offering
contemplated hereby or the process leading thereto, including any negotiation
related to the pricing of the ordinary shares; and the Company has consulted its
own legal and financial advisors to the extent it has deemed appropriate in connection with this
Agreement and the Offering. The Company and the Underwriters agree that they are
each responsible for making their own independent judgments with respect to any
such transactions, and that any opinions or views expressed by the Underwriters to the Company
regarding such transactions, including but not limited to any opinions or views
with respect to the price or market for the Company’s securities, do not constitute advice
or recommendations to the Company. The Company hereby waives and releases, to the fullest
extent permitted by law, any claims that the Company may have against the
Underwriters with respect to any breach or alleged breach of any fiduciary or
similar duty to the Company in connection with the transactions contemplated by this Agreement or any
matters leading up to such transactions.
20.
Counterparts. This Agreement may be
executed in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument. Delivery of a signed counterpart of this Agreement by
facsimile transmission shall constitute valid and sufficient delivery
thereof.
21. Headings. The headings herein are
inserted for convenience of reference only and are not intended to be part of, or to
affect the meaning or interpretation of, this Agreement.
[Signature Pages
Follow]
If the foregoing correctly sets forth
your understanding, please so indicate in the space provided below for that
purpose, whereupon this
letter shall constitute a binding agreement among us.
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Very
truly yours,
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LIZHAN
ENVIRONMENTAL CORPORATION
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By:
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Name:
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Title:
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Accepted by the Representative, acting
for itself and as
Representative of the Underwriters named on
Schedule
A attached
hereto,
as of the date first written
above:
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MAXIM
GROUP LLC
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By:
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Name:
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Title:
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SCHEDULE A
Underwriters
|
Underwriter
|
Number of Firm Shares to be
Purchased from the
Company
|
Number of
Over-allotment
Shares to be Purchased
from
the
Company
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Maxim Group
LLC
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||||
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Total
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V-1
SCHEDULED B
Lock-Up Parties
V-2
SCHEDULE C
Issuer-Represented General Free Writing
Prospectus
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ANNEX I
Form of Lock-Up Agreement
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LOCK-UP
AGREEMENT
September
__, 2010
MAXIM
GROUP LLC
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Re: Lizhan Environmental
Corporation Lock-Up Agreement
Ladies
and Gentlemen:
This
letter agreement (this “Agreement”) relates to the
initial public offering (the “Offering”) by Lizhan
Environmental Corporation, a Cayman Islands limited liability company (the
“Company”), of ordinary
shares, par value $ 0.02 per share (the “Ordinary
Shares”). The Offering shall be governed by that certain
Underwriting Agreement to be dated as of the effective date of the Offering (the
“Underwriting
Agreement”), by and between the Company and Maxim Group LLC (the “Representative”), as
representative of the several underwriters named therein.
1. In
order to induce the Representative to underwrite the Offering, the undersigned
hereby agrees that, without the prior written consent of the Representative
during the period commencing from the effective date of the Offering (“Effective Date”) until the
conclusion of the [ ] months
following the Effective Date (the “Lock-Up Period”), the
undersigned: (i) will
not, directly or
indirectly, offer, sell, agree to offer or sell, solicit offers to purchase,
grant any call option or purchase any put option with respect to, assign,
transfer, pledge, borrow or otherwise dispose of, any Ordinary Shares or securities convertible into or
exercisable or exchangeable for Ordinary Shares (including, without limitation,
Ordinary Shares or any such securities which may be
deemed to be beneficially
owned by the undersigned in accordance with the rules and regulations
promulgated under the Securities Act of 1933, as the same may be amended or
supplemented from time to time (such shares or securities, the “Beneficially Owned
Shares ”)); (ii) will not establish or increase
any “put equivalent position” or liquidate or decrease any “call equivalent
position” (in each case within the meaning of Section 16 of the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder) with respect to any Beneficially Owned Shares, or
otherwise enter into any swap, derivative or other transaction or arrangement
that transfers to another, in whole or in part, any economic consequence of
ownership of Beneficially Owned
Shares, Ordinary Shares or securities convertible into or
exercisable or exchangeable for Ordinary Shares, whether or not
such transaction is to be settled by delivery of Beneficially Owned Shares, other
securities, cash or other consideration; or (iii) will not engage in any short selling of any
Beneficially Owned Shares, Ordinary Shares or securities convertible into or
exercisable or exchangeable for Ordinary Shares.
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2. If (i) the Company issues an
earnings release or material news or a material event relating to the Company occurs during the last seventeen
(17) days of the Lock-Up Period, or (ii) prior to the expiration of
the Lock-Up Period, the Company announces that it will release earnings results
during the sixteen (16)-day period beginning on the last day of the Lock-Up Period, the restrictions imposed
by this Agreement shall continue to apply until the expiration of the eighteen
(18)-day period beginning on the issuance of the earnings release or the
occurrence of the material news or material event.
3. The
undersigned hereby authorizes the Company during the Lock-Up Period to cause any
transfer agent for the Beneficial Owned Shares to decline to transfer, and to
note stop transfer restrictions on the stock register and other records relating
to, Beneficial Owned Shares for which the undersigned is the record holder and,
in the case of Beneficial Owned Shares for which the undersigned is the
beneficial but not the record holder, agrees during the Lock-Up Period to cause
the record holder to cause the relevant transfer agent to decline to transfer,
and to note stop transfer restrictions on the stock register and other records
relating to, such Beneficial Owned Shares, if such transfer would
constitute a violation or breach of this Agreement.
4. The
undersigned hereby further agrees that, without the prior written consent of the
Representative, which consent shall not be unreasonably withheld, during the
Lock-Up Period the undersigned will not: (x) file or participate in the filing
with the Securities and Exchange Commission of any registration statement, or
circulate or participate in the circulation of any preliminary or final
prospectus or other disclosure document with respect to any proposed offering or
sale of a Beneficially Owned Shares and (y) exercise any rights the undersigned
may have to require registration with the Securities and Exchange Commission of
any proposed offering or sale of a Beneficially Owned Shares.
4. The
undersigned hereby represents and warrants that the undersigned has full power
and authority to enter into this Agreement and that this Agreement constitutes
the legal, valid and binding obligation of the undersigned, enforceable in
accordance with its terms. Upon request, the undersigned will execute
any additional documents necessary in connection with enforcement
hereof. Any obligations of the undersigned shall be binding upon the
successors and assigns of the undersigned from the date first above
written.
5. This
Agreement shall be governed by and construed in accordance with the laws of the
State of New York, without regard to the conflicts of laws principles
thereof. Delivery of a signed copy of this letter by facsimile or
other electronic transmission shall be effective as delivery of the original
hereof.
[Signatures
on the following page]
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Very
truly yours,
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By:
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Name:
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Title:
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ANNEX II
Form of Legal Opinion by ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
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ANNEX III
Form of Legal Opinion by ▇▇▇▇▇▇▇▇▇
Law
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ANNEX IV
Form of Legal Opinion by ▇▇▇▇▇▇ and
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