FORM OF PLACEMENT AGENCY AGREEMENT October 31, 2007
FORM
OF PLACEMENT AGENCY AGREEMENT
October
31, 2007
▇▇▇▇
Capital Partners, LLC
▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies
and Gentlemen:
Introductory.
Subject
to the terms and conditions herein, China Precision Steel, Inc., a Colorado
corporation (the “Company”),
hereby agrees to sell an aggregate of up to 7,100,000 shares (the “Shares”)
of
common stock, US$0.001 par value per share (the "Common
Stock”),
and
an aggregate of up to 1,420,000 warrants (the “Warrants”
and,
together with the Shares, the “Securities”)
to
purchase shares of Common Stock, of the Company, directly to various investors
(each an “Investor”
and,
collectively, the “Investors”)
through ▇▇▇▇ Capital Partners, LLC, as placement agent (the “Placement
Agent”.)
The
Company hereby confirms its agreement with the Placement Agent as follows:
Section
1. Agreement
to Act as Placement Agent.
(a) On
the
basis of the representations, warranties and agreements of the Company herein
contained, and subject to all the terms and conditions of this Agreement, the
Placement Agent shall be the exclusive Placement Agent in connection with the
offering and sale by the Company of the Securities from the Company's shelf
registration statement on Form S-3 (File No. 333-143454), with the terms of
such
offering (the “Offering”)
to be
subject to market conditions and negotiations between the Company, the Placement
Agent and the prospective Investors. The Placement Agent shall act on a best
efforts basis and does not guarantee that it will be able to sell the Securities
in the prospective Offering. As compensation for services rendered, on the
Closing Date (as defined below), the Company shall pay to the Placement Agent
an
aggregate amount equal to 7.0% of the gross proceeds received by the Company
from the sale of such Securities. The purchase price to the Investors for each
Share is US$6.75 and the exercise price to the Investors of each share of common
stock issuable upon exercise of the Warrants is US$8.45. The Placement Agent
may
retain other brokers or dealers to act as sub-agents on its behalf in connection
with the Offering.
(b)
Concurrently
with the Closing (as defined below) for the Offering, the Company will issue
to
the Placement Agent warrants to purchase Common Stock in an amount and with
such
terms as set forth in Schedule
I
hereto.
(c) The
term
of the Placement Agent's exclusive engagement will be the earlier of (i) the
Closing Date and (ii) six (6) months from the date hereof (the “Exclusive
Term”);
however, a party hereto may terminate the engagement with respect to itself
at
any time upon 10 days written notice to the other parties. Upon termination
or
expiration of this Agreement, the Placement Agent will be entitled to collect
all fees earned, and to be reimbursed for all reimbursable expenses (as set
forth in Section 6 below) incurred, through the date of termination or
expiration, as applicable. Notwithstanding the foregoing, if during the 180
day
period beginning on the date this Agreement is terminated or otherwise expires,
the Company issues and sells any securities of the Company, the Company agrees
to pay to the Placement Agent upon the closing of such transaction or
transactions a cash fee equal to the amount that would otherwise have been
payable to the Placement Agent had such transaction or transactions occurred
during the Exclusive Term. Nothing in this Agreement shall be construed to
limit
the ability of the Placement Agent or its affiliates to pursue, investigate,
analyze, invest in, or engage in investment banking, financial advisory or
any
other business relationship with entities or persons other than the
Company.
1
Section
2. Representations,
Warranties and Covenants
A.
Representations,
Warranties and Covenants of the Company.
The
Company hereby represents, warrants and covenants to the Placement Agent as
of
the date hereof, and as of each Closing Date, as follows:
(a) Securities
Law Filings.
The
Company meets the requirements for use of Form S-3 under the Securities Act
of
1933, as amended (the “Act”),
and
has prepared and filed with the Securities and Exchange Commission (the
“Commission”)
a
registration statement on such Form S-3 (File No. 333-143454), which became
effective on July 16, 2007 at 5:00 P.M., for the registration under the Act
of
the Securities. Such registration statement meets the requirements set forth
in
Rule 415(a)(1)(x) under the Act and complies in all other material respects
with
said Rule and the Act. The Company will file with the Commission pursuant to
Rule 424(b) under the Act a supplement to the form of prospectus included in
such registration statement relating to the offering of the Securities and
the
plan of distribution thereof and the Company has advised the Placement Agent
of
all further information (financial and other) with respect to the Company to
be
set forth therein. Such registration statement, including the exhibits thereto,
as amended at the date of this Agreement, is hereinafter called the
“Registration
Statement”;
the
prospectus, in the form in which it appears in the Registration Statement,
is
hereinafter called the “Base
Prospectus”;
and
each supplemented form of prospectus, in the form in which it will be filed
with
the Commission pursuant to Rule 424(b), is hereinafter called a “Prospectus
Supplement.”
Any
reference herein to the Registration Statement, the Base Prospectus or a
Prospectus Supplement shall be deemed to refer to and include the documents,
if
any, which may be incorporated by reference in the Registration Statement,
the
Base Prospectus and any Prospectus Supplement (the “Incorporated
Documents”)
pursuant to Form S-3 and which were filed under the Securities Exchange Act
of 1934, as amended (the “Exchange
Act”),
on or
before the date of this Agreement, or the issue date of the Base Prospectus
or
any Prospectus Supplement, as the case may be; and any reference herein to
the
terms “amend,”
“amendment”
or
“supplement”
with
respect to the Registration Statement, the Base Prospectus or a Prospectus
Supplement shall be deemed to refer to and include the filing of any document
under the Exchange Act after the date of this Agreement, or the issue date
of
the Base Prospectus or any Prospectus Supplement, as the case may be, deemed
to
be incorporated therein by reference. All references in this Agreement to
financial statements and schedules and other information which is “contained,”
“included”
or
“stated”
in
the
Registration Statement or any Prospectus Supplement (and all other references
of
like import) shall be deemed to mean and include all such financial statements
and schedules and other information which is or is deemed to be incorporated
by
reference in the Registration Statement or such Prospectus Supplement, as the
case may be.
(b) Effectiveness;
No Stop Order.
The
Registration Statement has been declared effective by the Commission under
the
Act and the Company has complied to the Commission’s satisfaction with all
requests of the Commission for additional or supplemental information. No stop
order suspending the effectiveness of the Registration Statement or the use
of
the Base Prospectus or any Prospectus Supplement has been issued, and no
proceeding for any such purpose is pending or has been initiated or, to the
Company’s knowledge, is threatened by the Commission.
2
(c) Compliance
with Applicable Regulations.
The
Registration Statement (and any further documents to be filed with the
Commission) contains all exhibits and schedules as required by the Act. Each
of
the Registration Statement and any post-effective amendment thereto, at the
time
it became effective and at all subsequent times, complied and will comply in
all
material respects with the Act and the applicable rules and regulations of
the
Commission thereunder and did not and, as amended or supplemented, if
applicable, will not, contain any untrue statement of a material fact or omit
to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading. Each of the Base Prospectus and any
Prospectus Supplement, as of its respective date and at all subsequent times,
complied and will comply in all material respects with the Act and the
applicable rules and regulations of the Commission thereunder. Each of the
Base
Prospectus and any Prospectus Supplement, as amended or supplemented, as of
its
date and at all subsequent times, did not and will not contain any untrue
statement of a material fact or omit to state a material fact necessary in
order
to make the statements therein, in light of the circumstances under which they
were made, not misleading. The Incorporated Documents, if any, when they became
effective or were filed with the Commission, as the case may be, conformed
in
all material respects to the requirements of the Act and the Exchange Act,
as
applicable, and the applicable rules and regulations of the Commission
thereunder, and none of such documents contained any untrue statement of a
material fact or omitted to state a material fact necessary to make the
statements therein not misleading; and any further documents so filed and
incorporated by reference in the Base Prospectus or any Prospectus Supplement,
if any, when such documents become effective or are filed with the Commission,
as the case may be, will conform in all material respects to the requirements
of
the Act and the Exchange Act, as applicable, and the applicable rules and
regulations of the Commission thereunder, and will not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make
the statements therein not misleading. No post-effective amendment to the
Registration Statement reflecting any facts or events arising after the
effective date thereof which represent, individually or in the aggregate, a
fundamental change in the information set forth therein is required to be filed
with the Commission. This representation by the Company shall not apply to
statements in or omissions from the Registration Statement based upon and in
conformity with written information furnished to the Company by the Placement
Agent specifically for use therein, it being understood and agreed that the
only
such information furnished by the Placement Agent consists of the information
described as such in Section 7(c) hereof.
(d) Disclosure
Package.
The
term “Disclosure
Package”
shall
mean (i) the Base Prospectus, (ii) any preliminary Prospectus Supplement
relating to the Offering that is filed with the Commission and delivered to
investors prior to the Sale Time (as defined below), and (iii) any issuer free
writing prospectus as defined in Rule 433 of the Act (each, an “Issuer
Free Writing Prospectus”),
if
any, that the parties hereto shall hereafter expressly agree in writing to
treat
as part of the Disclosure Package. As of 4:00 p.m. (Eastern Time) on the date
of
this Agreement with respect to the Offering hereunder (the “Sale
Time”)
the
Disclosure Package did not contain any untrue statement of material fact or
omit
to state any material fact necessary in order to make the statements therein,
in
light of the circumstances under which they were made, not misleading. The
preceding sentence does not apply to statements in or omissions from the
Disclosure Package based upon and in conformity with written information
furnished to the Company by the Placement Agent specifically for use therein,
it
being understood and agreed that the only such information furnished by or
on
behalf of the Placement Agent consists of the information described as such
in
Section 7(c) hereof.
(e) Reports
and Documents, etc.
There
are no documents required to be filed with the Commission in connection with
the
transactions contemplated hereby that (i) have not been filed as required
pursuant to the Act or (ii) will not be filed within the requisite time
period. There are no contracts or other documents required to be described
in
the Base Prospectus or any Prospectus Supplement, or to be filed as exhibits
or
schedules to the Registration Statement, which have not been or will not be
described or filed as required.
(f) Offering
Materials Furnished to the Placement Agent.
The
Company has delivered, or will as promptly as practicable deliver, to the
Placement Agent complete conformed copies of the Registration Statement and
of
each consent and certificate of experts filed as a part thereof, and conformed
copies of the Registration Statement (without exhibits) and the Base Prospectus
and each Prospectus Supplement, as amended or supplemented, in such quantities
and at such places as the Placement Agent reasonably requests.
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(g) Distribution
of Offering Materials.
The
Company is not an “Ineligible
Issuer,”
as
defined in Rule 405 of the Act. Subject to Section 4A(e) below, the Company
represents and warrants that it has not prepared or had prepared on its behalf
or used or referred to any Issuer Free Writing Prospectus in connection with
the
Offering. Subject to Section 4A(e) below, the Company has not distributed and
the Company will not distribute, prior to the completion of the distribution
of
the Securities, any offering material in connection with the Offering other
than
the Base Prospectus, a Prospectus Supplement or the Registration Statement
and
copies of the documents, if any, incorporated by reference therein.
(h) The
Placement Agency Agreement.
This
Agreement has been duly authorized, executed and delivered by, and is a valid
and binding agreement of, the Company enforceable against the Company in
accordance with its terms, except
as
rights to indemnification and contribution hereunder may be limited by
applicable law and except as the enforcement hereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights and remedies of creditors or by general
equitable principles.
(i) No
Applicable Registration or Other Similar Rights.
There
are no persons with registration, preemptive or other similar rights to have
any
securities (whether equity, debt or any combination thereof) registered or
qualified for sale under the Registration Statement or a Prospectus Supplement
or included in the Offering contemplated by this Agreement, except for such
rights as have been duly waived or satisfied.
(j) No
Material Adverse Change.
Subsequent to the respective dates as of which information is given in the
Base
Prospectus and in any Prospectus Supplement: (i) there has been no material
adverse change or effect, or any development that could reasonably be expected
to result in a material adverse change or effect, in the condition, financial
or
other, or in the earnings, business, operations or prospects, whether or not
arising from transactions in the ordinary course of business, of the Company
and
the Subsidiaries (as defined herein) taken as a whole (any such change or
effect, where the context so requires, is called a “Material
Adverse Change”
or
a
“Material
Adverse Effect”);
(ii)
the Company and the Subsidiaries have not incurred any material liability or
obligation, indirect, direct or contingent, not in the ordinary course of
business nor entered into any material transaction or agreement not in the
ordinary course of business; and (iii) there has been no dividend or
distribution of any kind declared, paid or made by the Company on any class
of
capital stock or repurchase or redemption by the Company of any class of capital
stock.
(k) Independent
Accountants.
To the
best of the Company’s knowledge, Murrell, Hall, ▇▇▇▇▇▇▇▇ & Co., PLLP, who
have expressed their opinion with respect to the financial statements (which
term as used in this Agreement includes the related notes and schedules thereto)
and supporting schedules filed with the Commission as a part of the Registration
Statement and included in or incorporated by reference in the Disclosure Package
or any Prospectus Supplement, is an independent registered public accounting
firm as required by the Act and the Exchange Act.
(l) Preparation
of the Financial Statements.
The
financial statements and selected financial data filed with the Commission
as a
part of the Registration Statement or included or incorporated by reference
in
the Disclosure Package or any Prospectus Supplement present fairly the financial
position of the Company and its consolidated subsidiaries as of and at the
dates
indicated and the results of its operations and cash flows for the periods
specified therein. The supporting exhibits and schedules included in the
Registration Statement, if any, present fairly the information required to
be
stated therein subject to the normal year-end adjustments which are not expected
to be material in amount. Such financial statements and supporting schedules,
if
any, have been prepared in conformity with generally accepted accounting
principles as applied in the United States (“U.S.
GAAP”),
as
applicable, applied on a consistent basis throughout the periods involved,
except as may be expressly stated in the related notes thereto, and comply
in
all material respects with the accounting requirements of the Act, the Exchange
Act and the applicable rules and regulations of the Commission thereunder.
No
other financial statements or supporting schedules or exhibits are required
by
the Act or the rules and regulations of the Commission thereunder to be included
in the Registration Statement, the Base Prospectus or any Prospectus Supplement.
4
(m) Critical
Accounting Policies; Material Trends and Off Balance Sheet
Transactions.
The
section entitled “Management’s Discussion and Analysis of Financial Condition
and Results of Operation—Critical Accounting Policies” in the Registration
Statement or included or incorporated by reference in the Disclosure Package
or
any Prospectus Supplement accurately and fully describes (A) accounting policies
which the Company believes are the most important in the portrayal of the
financial condition and results of operations of the Company and its
consolidated subsidiaries 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) explanation of the likelihood that materially different amounts would be
reported under different conditions or using different assumptions. The
Company’s board of directors, senior management and audit committee have
reviewed and agreed with the selection, application and disclosure of critical
accounting policies. The section entitled “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” in the Registration Statement
or included or incorporated by reference in the Disclosure Package or any
Prospectus Supplement accurately and fully describes (X) all material trends,
demands, commitments, events, uncertainties and risks that the Company believes
would materially affect liquidity and are reasonably likely to occur; and (Y)
all off-balance sheet arrangements that have or are reasonably likely to have
a
current or future effect on the financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources of the Company and its Subsidiaries taken
as a
whole. Except as otherwise disclosed in the Registration Statement, Disclosure
Package or any Prospectus Supplement, there are no outstanding guarantees or
other contingent obligations of the Company or any subsidiary that could
reasonably be expected to have a Material Adverse Effect.
(n) Incorporation
and Good Standing.
Each of
the Company and its subsidiaries set forth in Exhibit
A
attached hereto (the “Subsidiaries”)
has
been duly organized and is validly existing and, as applicable, is a corporation
in good standing under the laws of its jurisdiction of incorporation with full
corporate power and authority to own its properties and other assets and conduct
its business as described in the Disclosure Package and any Prospectus
Supplement, and is duly qualified or licensed to do business as a foreign
corporation and, as applicable, is in good standing under the laws of each
jurisdiction which requires such qualification or license, except where the
failure to be so qualified or in good standing would not have a Material Adverse
Effect.
(o) Capitalization
and Other Capital Stock Matters.
The
authorized, issued and outstanding capital stock of the Company, and the
outstanding options and warrants, are as described in the Disclosure Package
and
any Prospectus Supplement (other than for issuances after the dates thereof,
if
any, pursuant to employee benefit plans, or upon exercise of outstanding options
or warrants, described in the Disclosure Package and any Prospectus Supplement),
as the case may be. The Common Stock and warrants, including the Securities,
conforms in all material respects to the description thereof contained in the
Disclosure Package and any Prospectus Supplement. As of the effective date
of
the Registration Statement, there were 38,796,288 shares of Common Stock
outstanding. Since the effective date of the Registration Statement, the Company
has not issued any securities other than Common Stock of the Company pursuant
to
(i) Section 5(a) of the Stock Purchase Agreement, dated as of February 16,
2007
(the "Make Good Shares"), and (ii) the exercise of previously outstanding
options and warrants, in each case as disclosed in the Disclosure Package and
any Prospectus Supplement. All the issued and outstanding shares of the capital
stock of the Company and the Subsidiaries have been duly authorized and validly
issued, are fully paid and nonassessable and have been issued in compliance,
in
all material respects, with all applicable laws. Except as set forth in the
Disclosure Package and any Prospectus Supplement, all of the outstanding shares
of capital stock of the Subsidiaries are owned, directly or indirectly, by
the
Company, and such shares are held free and clear of any security on interest
mortgage, pledge, lien, encumbrance or claim. None of the outstanding shares
of
capital stock of the Company or any Subsidiary were issued in violation of
any
preemptive rights, rights of first refusal or other similar rights to subscribe
for or purchase securities. There are no authorized or outstanding options,
warrants, preemptive rights, rights of first refusal or other rights to
purchase, or equity or debt securities convertible into or exchangeable or
exercisable for, any capital stock of the Company or any Subsidiary other than
those described in the Disclosure Package and any Prospectus Supplement. The
description of the Company’s stock option, stock bonus and other stock plans or
arrangements, and the options, warrants or other rights granted thereunder,
set
forth in the Disclosure Package and any Prospectus Supplement accurately and
fairly presents the information required by the Act to be shown with respect
to
such plans, arrangements, options and rights. Except as set forth in the
Disclosure Package or in any Prospectus Supplement, the Company does not have
any subsidiaries or own directly or indirectly any of the capital stock or
other
equity or long-term debt securities or have any equity interest in any other
person.
5
(p) Stock
Exchange Listing.
The
Common Stock (including the Shares and the shares of common stock issuable
upon
exercise of the Warrants) is registered under the Exchange Act and is listed
on
the NASDAQ Capital Market (“NASDAQ”).
The
Company has taken no action designed to, or likely to have the effect of,
terminating the registration of the Common Stock under the Exchange Act or
delisting or suspending from trading the Common Stock on NASDAQ, nor has the
Company received any information suggesting that the Commission or NASDAQ is
contemplating terminating or suspending such registration or listing.
(q) No
Consents, Approvals or Authorizations Required.
No
consent, approval, authorization, filing with or order of any court or
governmental agency or regulatory body or vote of the Company’s stockholders is
required in connection with the performance by the Company of its obligations
under this Agreement or the Offering contemplated hereby and by the Disclosure
Package and any Prospectus Supplement, except such as have been obtained or
made
by the Company under the Act or the rules and regulations promulgated thereunder
and are in full force and effect, and such as may be required under applicable
state securities or blue sky laws.
(r) Non-Contravention
of Existing Instruments and Agreements.
Neither
the issue and sale of the Securities nor the performance by the Company of
its
obligations under this Agreement nor the fulfillment of the terms hereof will
conflict with, result in a breach or violation of, or the loss of any benefit
under, or give rise to a right of acceleration or any other right, or the
imposition of any lien, charge or encumbrance upon any property or assets of
the
Company or any Subsidiary pursuant to: (i) the charter or by-laws of the Company
or any Subsidiary; (ii) the terms of any indenture, contract, lease, mortgage,
deed of trust, note agreement, loan agreement or other agreement, obligation,
condition, covenant or instrument to which the Company or any Subsidiary is
a
party or is bound or to which any of its property is subject and which conflict,
breach, violation, loss of benefit, acceleration, imposition of lien, charge
or
encumbrance is reasonably likely to have a Material Adverse Effect; or (iii)
any
statute, law, rule, regulation, judgment, order or decree applicable to the
Company or any Subsidiary, as the case may be, of any court, regulatory body,
administrative agency, governmental body, arbitrator or other authority having
jurisdiction over the Company or such Subsidiary, as the case may be, or any
of
its property.
6
(s) No
Defaults or Violations.
None of
the Company or any Subsidiary is in violation or default of: (i) any provision
of its charter or by-laws; (ii) the terms of any indenture, contract, lease,
mortgage, deed of trust, note agreement, loan agreement or other agreement,
obligation, condition, covenant or instrument to which it is a party or by
which
it is bound or to which any of its property is subject; or (iii) any foreign,
federal, state or local statute, law or rule applicable to the Company or any
Subsidiary, as the case may be, or any regulation, judgment, order or decree
of
any court, governmental body, or agency having jurisdiction over the Company
or
such Subsidiary, as the case may be, or any of its property, as applicable,
except in case of clause (ii) any such violation or default which would not,
singly or in the aggregate, reasonably be expected to result in a Material
Adverse Change not specifically disclosed in the Disclosure Package or any
Prospectus Supplement.
(t) No
Actions, Suits or Proceedings.
No
action, suit or proceeding by or before any foreign, federal, state or local
court or governmental agency, authority or body or any arbitrator involving
the
Company or any Subsidiary, as the case may be, or any of its property is pending
or, to the best knowledge of the Company, threatened that if adversely
determined: (i) could reasonably be expected to have a Material Adverse Effect
on the performance of this Agreement or the consummation of any of the
transactions contemplated hereby; or (ii) could reasonably be expected to result
in a Material Adverse Change.
(u) All
Necessary Permits, Etc.
Each of
the Company and its Subsidiaries possesses such valid and current certificates,
authorizations and permits issued by the appropriate foreign, federal, state
or
local regulatory agencies or bodies necessary to conduct its business as
currently conducted, except to the extent that the failure to obtain such
certificates, authorizations or permits would not have a Material Adverse
Effect, and neither the Company nor any Subsidiary has received any notice
of
proceedings relating to the revocation or modification of, or non-compliance
with, any such certificate, authorization or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, could
reasonably be expected to result in a Material Adverse Change.
(v) Title
to Properties.
Each of
the Company and its Subsidiaries has good and marketable title to all real
and
personal property and assets reflected as owned by it in the financial
statements referred to in Section 2(l) above (or elsewhere in the Disclosure
Package and any Prospectus Supplement) and which are material to the business
of
the Company or such Subsidiary, in each case free and clear of any security
interests, mortgages, liens, encumbrances, claims and other defects, except
such
as do not materially and adversely affect the value of such property and do
not
materially interfere with the use made or proposed to be made of such property
and except as otherwise described in the Registration Statement and the
Disclosure Package. The real property, improvements, equipment and personal
property held under lease by each of the Company and its Subsidiaries are held
under valid and enforceable leases, with such exceptions as are not material,
and do not materially interfere with the use made or proposed to be made of
such
real property, improvements, equipment or personal property. The Company and
its
Subsidiaries own or have valid rights to use the intellectual property assets
necessary to conduct the business described in the Disclosure Package and any
Prospectus Supplement, and no material right is expected to expire, terminate
or
be disposed of in the foreseeable future, except as disclosed therein. Neither
the Company nor any Subsidiary has received any notice of, and neither the
Company nor any Subsidiary has knowledge of, any infringement of or conflict
with the asserted intellectual property rights of others, except where the
loss
of any such right would not be reasonably likely to have a Material Adverse
Effect. The Company is not 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 described in the Disclosure Package and any
Prospectus Supplement and are not described in all material respects. None
of the technology employed by the Company has been obtained or is being used
by
the Company in violation of any contractual obligation binding on the Company
or, to the Company’s knowledge, any of its officers, directors or employees or
otherwise in violation of the rights of any persons
7
(w) Tax
Law Compliance.
Each of
the Company its Subsidiaries has filed all necessary foreign, federal, state
and
local income and franchise Tax returns, except to the extent that the failure
to
file such Tax returns would not have a Material Adverse Effect, and have paid
all Taxes required to be paid by any of them and, if due and payable, any
related or similar assessment, fine or penalty levied against any of them.
The
Company has made adequate charges, accruals and reserves in the applicable
financial statements referred to in Section 2(l) above in respect of all
federal, state and foreign income and franchise taxes for all periods as to
which the Tax liability of the Company or any Subsidiary has not been finally
determined. Neither the Company nor any Subsidiary is aware of any Tax
deficiency that has been or might reasonably be asserted or threatened against
it that could reasonably be expected to result in a Material Adverse Change.
For
purposes of this Agreement, the terms “Tax”
and
“Taxes”
mean
all federal, state, local and foreign taxes, and any other assessments of a
similar nature (whether imposed directly or through withholding), including,
without limitation, any interest, additions to tax, or penalties applicable
thereto. All such Tax returns are true, complete and correct in all material
respects.
(x) No
Transfer Taxes or Other Fees Payable.
There
are no transfer Taxes or other similar fees or charges under United States
law
or the laws of any state or any political subdivision thereof, required to
be
paid by the Company in connection with the execution and delivery of this
Agreement or the sale by the Company of the Securities. 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 Placement Agent to the United
States or the Peoples Republic of China (the "PRC") or any political subdivision
or taxing authority thereof or therein in connection with (A) the issuance
of
the Securities by the Company, and (B) the consummation by the Company of any
other transaction contemplated in this Agreement or the performance by the
Company of its obligations under this Agreement.
(y) Disclosure
Controls and Procedures.
The Company has established and maintains disclosure controls and procedures
(as
such term is defined in Rule 13a-15(e) under the Exchange Act), which (i) are
designed to ensure that material information relating to the Company, including
its consolidated subsidiaries, is made known to the Company’s principal
executive officer and its principal financial officer by others within those
entities, particularly during the periods in which the periodic reports required
under the Exchange Act are being prepared, (ii) will be evaluated for
effectiveness as of the end of each fiscal quarter and fiscal year of the
Company and (iii) are effective in all material respects to perform the
functions for which they were established. The Company is not aware of (A)
any
significant deficiency in the design or operation of internal controls which
could adversely affect the Company’s ability to record, process, summarize and
report financial data or any material weaknesses in internal controls, or (B)
any fraud, whether or not material, that involves management or other employees
who have a significant role in the Company’s internal controls.
(z) Accounting
Controls.
Each of
the Company and its Subsidiaries (i) makes and keeps accurate books and records,
and (ii) maintains a system of 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, the Act and the Exchange Act and the rules and regulations of the
Commission thereunder, and to maintain accountability for assets; (C) access
to
assets is permitted only in accordance with management’s general or specific
authorization; and (D) recorded assets are compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
8
(aa) Conflicts
of Interest.
Except
as disclosed in the Registration Statement and the Disclosure Package, none
of
the directors or officers of the Company is a shareholder, officer or director
in any business similar to or in competition with the business of the Company,
nor are any of the directors or their respective associates interested, directly
or indirectly, in any assets which have since the date two years immediately
preceding the date of the Registration Statement been acquired or disposed
of by
or leased to the Company.
(bb) Company
not an “Investment Company.”
The
Company is not, and after giving effect to the offer and sale of the Securities
and the application of the proceeds thereof as described in the Disclosure
Package or any Prospectus Supplement, will not be, required to register as
an
“investment
company”
or
an
entity “controlled”
by
an
“investment
company”
within
the meaning of the Investment Company Act of 1940, as amended.
(cc) Insurance.
Each of
the Company and its Subsidiaries is insured by recognized, financially sound
and
reputable institutions with policies in such amounts and with such deductibles
and covering such risks as are prudent and customary in the business in which
it
is engaged, including directors and officers liability. Neither the Company
nor
any Subsidiary has any reason to believe that it will not be able: (i) to renew
its existing insurance coverage as and when such policies expire; or (ii) to
obtain comparable coverage from similar institutions as may be necessary or
appropriate to conduct its business as now conducted. Neither the Company nor
any Subsidiary has been denied any insurance coverage which it has sought or
for
which it has applied, such as would have a Material Adverse Effect.
(dd) Labor
Matters.
No
material labor disturbance by the employees of the Company or any Subsidiary
exists or, to the knowledge of the Company or any Subsidiary, is threatened
or
imminent, and neither the Company nor any Subsidiary is aware of any existing,
threatened or imminent labor disturbance by the employees of any of its
principal suppliers, manufacturers, contractors or customers that could
reasonably be expected to result in a Material Adverse Effect.
(ee) No
Price Stabilization or Manipulation.
The
Company has not taken and will not take, directly or indirectly, any action
designed to or that could reasonably be expected to cause or result in
stabilization or manipulation of the price of the Common Stock to facilitate
the
sale or resale of the Securities.
(ff) Prior
Stock Issuances.
All
offers and sales of capital stock of the Company prior to the date hereof were
at all relevant times duly registered or exempt from the registration
requirements of the Act and were duly registered or subject to an available
exemption from the registration requirements of the applicable state securities
or blue sky laws.
(gg) Related
Party Transactions.
There
are no business relationships or related-party transactions involving the
Company or any Subsidiary or any other person required by the Act to be
described in the Base Prospectus or any Prospectus Supplement, which have not
been described, or incorporated by reference, therein as required.
(hh)
Inter-company
Indebtedness.
Except
as otherwise disclosed in the Registration Statement and the Disclosure Package,
(A) no indebtedness (actual or contingent) and no contract or arrangement is
outstanding between the Company and any of its subsidiaries and (B) no
indebtedness (actual or contingent) and no material contract or arrangement
is
outstanding between (i) the Company or any of its subsidiaries (on the one
hand), and (ii) any significant shareholder of the Company, any director or
officer of the Company or related party of the Company or any of their
associates (on the other hand).
9
(ii) Exchange
Act Reports Filed.
The
Company has timely filed all reports required of it to be filed pursuant to
the
Act and the Exchange Act and has filed all such reports in the manner prescribed
thereby.
(jj) Exhibits.
Each
agreement filed as an exhibit to the Registration Statement or described in
the
Disclosure Package and any Prospectus Supplement, including all documents,
if
any, incorporated by reference therein, is in full force and effect and is
valid, binding and enforceable by the Company or a Subsidiary, as the case
may
be, in accordance with its terms, except as the enforceability thereof may
be
limited by applicable bankruptcy, insolvency or similar laws affecting
creditors’ rights generally. Neither the Company nor any Subsidiary, as the case
may be, nor, to the knowledge of the Company or any such Subsidiary, any other
party, is in default in the observance or performance of any term or obligation
to be performed by it under any such agreement, and no event has occurred that
with notice or lapse of time or both would constitute such a default, in any
such case where such default or event would have a Material Adverse Effect.
(kk) Blue
Sky.
The
Securities have been or will be qualified for sale under the securities laws
of
such jurisdictions (United States and foreign) as the Placement Agent
determines, or are or will be exempt from the qualification and broker-dealer
requirements of such jurisdictions.
(ll) No
Unlawful Contributions or Other Payments.
Neither the Company nor any of its Subsidiaries nor any employee or agent of
the
Company or any Subsidiary, has made any contribution or other payment to any
official of, or candidate for, any federal, state or foreign office in violation
of any law or of a character required to be disclosed in the Disclosure Package
or any Prospectus Supplement.
(mm)
Compliance
with OFAC.
None of
the Company or any of its Subsidiaries does any business with governments,
entities or persons subject to sanctions administered by the Office of Foreign
Assets Control of the U.S. Department of the Treasury or any enabling
legislation or executive order relating thereto (the “U.S.
Sanctions Laws”),
or
any person or entity in those countries or with those persons, or performs
contracts in support of projects in or for the benefit of those countries or
those persons; neither the entry into this Agreement nor the performance of
any
transactions contemplated herein would cause the Company or any of its
Subsidiaries, the Placement Agent or any of its affiliates (as defined in Rule
501(b) of Regulation D under the U.S. Securities Act, an “Affiliate”), or any of
the Company’s or the Placement Agent's advisors to violate any U.S. Sanctions
Laws applicable to such person; the Company and each of its Subsidiaries will
not use the proceeds of the offering of the Securities, or lend, contribute
or
otherwise make available such proceeds to any subsidiary, joint venture partner
or other person or entity, for the purpose of financing an activity that would
cause the Company or any of its Subsidiaries, the Placement Agent or any of
their Affiliates, or any of the Company’s or the Placement Agent's advisors to
violate any U.S. Sanctions Laws applicable to such person.
(nn) Compliance
with Money Laundering Rules.
The
business and operations of the Company and each of its Subsidiaries are being,
and have been since December 28, 2006, conducted in compliance in all material
respects with, and are not in default in any material respect under any
applicable statutes, laws, rules, regulations, judgments, orders or decrees
of
and commitments to any United States, PRC or other foreign governmental
authority relating to money laundering, bank secrecy, anti-bribery and other
corrupt practices. There is no pending or threatened charge by any United
States, PRC or other foreign governmental authority that the Company or any
of
its Subsidiaries has materially violated any such law, rule, regulation,
judgment, order, decree or commitment, nor is there any pending or threatened
investigation by any Governmental Authority with respect to possible material
violations of any such law, rule, regulation, judgment, order, decree or
commitment, except for such violations which would not, individually or in
the
aggregate, have a Material Adverse Effect.
10
(oo) Compliance
with Environmental Laws. Except
as
would not, individually or in the aggregate, result in a Material Adverse Change
(i) neither the Company nor any of its Subsidiaries is in violation of
any federal, state, local or foreign law or regulation relating to pollution
or
protection of human health or the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata)
or
wildlife, including without limitation, laws and regulations relating to
emissions, discharges, releases or threatened releases of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances, petroleum and
petroleum products (collectively, “Materials
of Environmental Concern”),
or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Materials of Environment Concern
(collectively, “Environmental
Laws”),
which
violation includes, but is not limited to, noncompliance with any permits or
other governmental authorizations required for the operation of the business
of
the Company or its Subsidiaries under applicable Environmental Laws, or
noncompliance with the terms and conditions thereof, nor has the Company or
any
of its Subsidiaries received any written communication, whether from a
governmental authority, citizens group, employee or otherwise, that alleges
that
the Company or any of its Subsidiaries is in violation of any Environmental
Law; (ii) there is no claim, action or cause of action filed with a court
or governmental authority, no investigation with respect to which the Company
has received written notice, and no written notice by any person or entity
alleging potential liability for investigatory costs, cleanup costs,
governmental responses costs, natural resources damages, property damages,
personal injuries, attorneys’ fees or penalties arising out of, based on or
resulting from the presence, or release into the environment, of any Material
of
Environmental Concern at any location owned, leased or operated by the Company
or any of its Subsidiaries, now or in the past (collectively, “Environmental
Claims”),
pending or, to the best of the Company’s knowledge, threatened against the
Company or any of its Subsidiaries or any person or entity whose liability
for any Environmental Claim the Company or any of its Subsidiaries has
retained or assumed either contractually or by operation of law; and
(iii) to the best of the Company’s knowledge, there are no past or present
actions, activities, circumstances, conditions, events or incidents, including,
without limitation, the release, emission, discharge, presence or disposal
of
any Material of Environmental Concern, that reasonably could result in a
violation of any Environmental Law or form the basis of a potential
Environmental Claim against the Company or any of its Subsidiaries or
against any person or entity whose liability for any Environmental Claim the
Company or any of its Subsidiaries has retained or assumed either
contractually or by operation of law.
(pp) ERISA
Compliance. The
Company and its Subsidiaries and any “employee
benefit plan”
(as
defined under the Employee Retirement Income Security Act of 1974, as amended,
and the regulations and published interpretations thereunder (collectively,
“ERISA”))
established or maintained by the Company, its Subsidiaries or their
“ERISA
Affiliates”
(as
defined below) are in compliance in all material respects with ERISA.
“ERISA
Affiliate”
means,
with respect to the Company or a Subsidiary, any member of any group of
organizations described in Sections 414(b), (c), (m) or (o) of the Internal
Revenue Code of 1986, as amended, and the regulations and published
interpretations thereunder (the “Code”)
of
which the Company or such Subsidiary is a member. No “reportable
event”
(as
defined under ERISA) has occurred or is reasonably expected to occur with
respect to any “employee
benefit plan”
established or maintained by the Company, its Subsidiaries or any of their
ERISA Affiliates. No “employee
benefit plan”
established or maintained by the Company, its Subsidiaries or any of their
ERISA Affiliates, if such “employee
benefit plan”
were
terminated, would have any “amount
of unfunded benefit liabilities”
(as
defined under ERISA). Neither the Company, its Subsidiaries nor any
of their ERISA Affiliates has incurred or reasonably expects to incur any
liability under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any “employee benefit plan” or (ii) Sections 412, 4971,
4975 or 4980B of the Code. Each “employee benefit plan” established or
maintained by the Company, its Subsidiaries or any of their ERISA
Affiliates that is intended to be qualified under Section 401(a) of
the Code is so qualified and nothing has occurred, whether by action or failure
to act, which would cause the loss of such qualification.
11
(qq) Compliance
with ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002.
The Company and, to the best of its knowledge, its officers and directors are
in
compliance with all applicable provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002
and
the rules and regulations promulgated in connection therewith (the
“▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act”)
that
are effective and are actively taking steps to ensure that they will be in
compliance with other applicable provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act upon
the
effectiveness of such provisions.
(rr)
No
Contracts Relating to the Sale of Securities.
Except
as disclosed in the Registration Statement and the Disclosure Package, 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 Placement
Agent
for a brokerage commission, finder’s fee or other like payment in connection
with the sale of the Securities.
Any
certificate signed by an officer of the Company and delivered to
the Placement Agent or to counsel for the Placement Agent shall be
deemed to be a representation and warranty by the Company to the Placement
Agent as to the matters set forth therein.
The
Company acknowledges that the Placement Agent will rely upon the accuracy
and truthfulness of the foregoing representations and warranties and hereby
consents to such reliance.
Section
3. Delivery
and Payment.
Subject
to the terms and conditions hereof, payment of the purchase price for, and
delivery of, the Securities shall be made at one or more closings (each a
“Closing”
and
the
date on which each Closing occurs, a “Closing
Date”)
at the
offices of ▇▇▇▇ Capital Partners, LLC, ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇
▇▇▇▇▇ (or at such other place as shall be agreed upon by the Placement Agent
and
the Company), the first such Closing to take place at 10:00 A.M., New York
City
time, on November 6, 2007 (unless another time shall be agreed to by the
Placement Agent and the Company). Subject to the terms and conditions hereof,
at
each Closing payment of the purchase price for the Shares sold on such Closing
Date shall be made by Federal Funds wire transfer, against delivery of such
Securities (through the facilities of The Depository Trust Company), and such
Securities shall be registered in such name or names and shall be in such
denominations, as the Placement Agent may request at least one business day
before the time of purchase (as defined below). For the avoidance of doubt,
each
of the Company and the Placement Agent agree for the benefit of the Investors
that no instructions shall be provided to the Escrow Agent, as defined in the
Escrow Agreement, dated October 29, 2007 (the “Escrow
Agreement”),
for
the release of funds from the Escrow Account (as defined in the Escrow
Agreement) until confirmation has been received from the Company’s registrar and
transfer agent that the Securities have been delivered in accordance with the
Placement Agent’s instructions. Payment of the purchase price for the Shares
shall be made at the time of purchase by the Investors to the Escrow Account
set
forth in the subscription agreement executed by each Investor (the “Subscription
Agreement”),
in
the form attached hereto as Exhibit
B.
The
time at which such payment and delivery are to be made is hereinafter sometimes
called “the time of purchase.” Physical delivery of the Securities shall be made
at the time of purchase in such names and in such denominations as is set forth
in the applicable Subscription Agreement.
Deliveries
of the documents described in Section 4 hereof with respect to the purchase
of
the Securities shall be made at the offices of DLA Piper US LLP, ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ on each Closing Date.
All
actions taken at a Closing shall be deemed to have occurred
simultaneously.
12
Section
4. Covenants
and Agreements of the Company.
A.
Covenants
and Agreements of the Company.
The
Company further covenants and agrees with the Placement Agent as follows:
(a) Registration
Statement Matters.
The
Company will advise the Placement Agent promptly after it receives notice
thereof of the time when any amendment to the Registration Statement has been
filed or becomes effective or any supplement to any Prospectus Supplement or
any
amended Prospectus Supplement has been filed and will furnish the Placement
Agent with copies thereof. The Company will file promptly all reports and any
definitive proxy or information statements required to be filed by the Company
with the Commission pursuant to Section 13(a), 14 or 15(d) of the Exchange
Act
subsequent to the date of any Prospectus Supplement and for so long as the
delivery of a prospectus is required in connection with the Offering. The
Company will advise the Placement Agent, promptly after it receives notice
thereof (i) of any request by the Commission to amend the Registration Statement
or to amend or supplement any Prospectus Supplement or for additional
information, and (ii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or any post-effective
amendment thereto or any order directed at any Incorporated Document, if any,
or
any amendment or supplement thereto or any order preventing or suspending the
use of the Base Prospectus or any Prospectus Supplement or any amendment or
supplement thereto or any post-effective amendment to the Registration
Statement, of the suspension of the qualification of the Securities for offering
or sale in any jurisdiction, of the institution or threatened institution of
any
proceeding for any such purpose, or of any request by the Commission for the
amending or supplementing of the Registration Statement or a Prospectus
Supplement or for additional information. The Company shall use its best efforts
to prevent the issuance of any such stop order or prevention or suspension
of
such use. If the Commission shall enter any such stop order or order or
notice of prevention or suspension at any time, the Company will use its best
efforts to obtain the lifting of such order at the earliest possible moment,
or
will file a new registration statement and use its best efforts to have such
new
registration statement declared effective as soon as practicable.
Additionally, the Company agrees that it shall comply with the provisions of
Rules 424(b), 430A, 430B and 430C, as applicable, under the Act, including
with respect to the timely filing of documents thereunder, and will use its
reasonable efforts to confirm that any filings made by the Company under such
Rule 424(b) are received in a timely manner by the
Commission.
(b) Blue
Sky Compliance.
The
Company will cooperate with the Placement Agent and the Investors in endeavoring
to qualify the Securities for sale under the securities laws of such
jurisdictions (United States and foreign) as the Placement Agent and the
Investors may reasonably request and will make such applications, file such
documents, and furnish such information as may be reasonably required for that
purpose, provided the Company shall not be required to qualify as a foreign
corporation or to file a general consent to service of process in any
jurisdiction where it is not now so qualified or required to file such a
consent, and provided further that the Company shall not be required to produce
any new disclosure document other than a Prospectus Supplement. The Company
will, from time to time, prepare and file such statements, reports and other
documents as are or may be required to continue such qualifications in effect
for so long a period as the Placement Agent may reasonably request for
distribution of the Securities. The Company will advise the Placement Agent
promptly of the suspension of the qualification or registration of (or any
such
exemption relating to) the Securities for offering, sale or trading in any
jurisdiction or any initiation or threat of any proceeding for any such purpose,
and in the event of the issuance of any order suspending such qualification,
registration or exemption, the Company shall use its best efforts to obtain
the
withdrawal thereof at the earliest possible moment.
13
(c) Amendments
and Supplements to a Prospectus Supplement and Other Matters.
The
Company will comply with the Act and the Exchange Act, and the rules and
regulations of the Commission thereunder, so as to permit the completion of
the
distribution of the Securities as contemplated in this Agreement, the Disclosure
Package and any Prospectus Supplement. If during the period in which a
prospectus is required by law to be delivered in connection with the
distribution of Securities contemplated by the Disclosure Package or any
Prospectus Supplement (the “Prospectus
Delivery Period”),
any
event shall occur as a result of which, in the judgment of the Company or in
the
opinion of the Placement Agent or counsel for the Placement Agent, it becomes
necessary to amend or supplement the Disclosure Package or any Prospectus
Supplement in order to make the statements therein, in the light of the
circumstances under which they were made, as the case may be, not misleading,
or
if it is necessary at any time to amend or supplement the Disclosure Package
or
any Prospectus Supplement or to file under the Exchange Act any Incorporated
Document to comply with any law, the Company will promptly prepare and file
with
the Commission, and furnish at its own expense to the Placement Agent and to
dealers, an appropriate amendment to the Registration Statement or supplement
to
the Registration Statement, the Disclosure Package or any Prospectus Supplement
that is necessary in order to make the statements in the Disclosure Package
and
any Prospectus Supplement as so amended or supplemented, in the light of the
circumstances under which they were made, as the case may be, not misleading,
or
so that the Registration Statement, the Disclosure Package or any Prospectus
Supplement, as so amended or supplemented, will comply with law. Before amending
the Registration Statement or supplementing the Disclosure Package or any
Prospectus Supplement in connection with the Offering, the Company will furnish
the Placement Agent with a copy of such proposed amendment or supplement and
will not file any such amendment or supplement to which the Placement Agent
reasonably objects.
(d) Copies
of any Amendments and Supplements to a Prospectus Supplement.
The
Company will furnish the Placement Agent, without charge, during the period
beginning on the date hereof and ending on the later of the last Closing Date
of
the Offering or the last date of the Prospectus Delivery Period, as many copies
of the Disclosure Package and any Prospectus Supplement and any amendments
and
supplements thereto (including any Incorporated Documents, if any) as the
Placement Agent may reasonably request.
(e) Free
Writing Prospectus.
The
Company covenants that it will not, unless it obtains the prior written consent
of the Placement Agent, make any offer relating to the Securities that would
constitute an Issuer Free Writing Prospectus or that would otherwise constitute
a “free
writing prospectus”
(as
defined in Rule 405 of the Act) required to be filed by the Company with the
Commission or retained by the Company under Rule 433 of the Act. In the event
that the Placement Agent expressly consents in writing to any such free writing
prospectus (a “Permitted
Free Writing Prospectus”),
the
Company covenants that it shall (i) treat each Permitted Free Writing Prospectus
as an Issuer Free Writing Prospectus, and (ii) comply with the requirements
of
Rule 164 and 433 of the Act applicable to such Permitted Free Writing
Prospectus, including in respect of timely filing with the Commission, legending
and record keeping.
(f) Transfer
Agent.
The
Company will maintain, at its expense, a registrar and transfer agent for the
Common Stock.
(g) Earnings
Statement.
As soon
as practicable and in accordance with applicable requirements under the Act,
but
in any event not later than 18 months after the last Closing Date, the Company
will make generally available to its security holders and to the Placement
Agent
an earnings statement, covering a period of at least 12 consecutive months
beginning after the last Closing Date, that satisfies the provisions of Section
11(a) and Rule 158 under the Act.
(h) Periodic
Reporting Obligations.
During
the Prospectus Delivery Period, the Company will duly file, on a timely basis,
with the Commission and NASDAQ all reports and documents required to be filed
under the Exchange Act within the time periods and in the manner required by
the
Exchange Act.
(i) Additional
Documents.
The
Company will enter into any subscription, purchase or other customary agreements
as the Placement Agent or the Investors deem necessary or appropriate to
consummate the Offering, all of which will be in form and substance reasonably
acceptable to the Placement Agent and the Investors. The Company agrees that
the
Placement Agent may rely upon, and each is a third party beneficiary of, the
representations and warranties, and applicable covenants, set forth in any
such
purchase, subscription or other agreement with Investors in the
Offering.
14
(j) No
Manipulation of Price. The
Company will not take, directly or indirectly, any action designed to cause
or
result in, or that has constituted or might reasonably be expected to
constitute, the stabilization or manipulation of the price of any securities
of
the Company.
(k) Acknowledgment.
The
Company acknowledges that any advice given by the Placement Agent to the Company
is solely for the benefit and use of the Board of Directors of the Company
and
may not be used, reproduced, disseminated, quoted or referred to, without the
Placement Agent's prior written consent.
Section
5. Conditions
of the Obligations of the Placement Agent.
The
obligations of the Placement Agent hereunder shall be subject to the accuracy
of
the representations and warranties on the part of the Company set forth in
Section 2 hereof, in each case as of the date hereof and as of each Closing
Date
as though then made, to the timely performance by each of the Company of its
covenants and other obligations hereunder on and as of such dates, and to each
of the following additional conditions:
(a) Accountants’
Comfort Letter.
On the
date hereof, the Placement Agent shall have received, and the Company shall
have
caused to be delivered to the Placement Agent, a letter from Murrell, Hall,
▇▇▇▇▇▇▇▇ & Co., PLLP (the independent registered public accounting firm of
the Company), addressed to the Placement Agent, dated as of the date hereof,
in
form and substance satisfactory to the Placement Agent. The letter shall not
disclose any change in the condition (financial or other), earnings, operations,
business or prospects of the Company from that set forth in the Disclosure
Package or the applicable Prospectus Supplement, which, in the Placement Agent's
sole judgment, is material and adverse and that makes it, in the Placement
Agent's sole judgment, impracticable or inadvisable to proceed with the Offering
of the Securities as contemplated by such Prospectus Supplement.
(b) Compliance
with Registration Requirements; No Stop Order; No Objection from the
NASD.
Each
Prospectus Supplement (in accordance with Rule 424(b)) and “free
writing prospectus”
(as
defined in Rule 405 of the Act), if any, shall have been duly filed with the
Commission, as appropriate; no stop order suspending the effectiveness of the
Registration Statement or any part thereof shall have been issued and no
proceeding for that purpose shall have been initiated or threatened by the
Commission; no order preventing or suspending the use of any Prospectus
Supplement shall have been issued and no proceeding for that purpose shall
have
been initiated or threatened by the Commission; no order having the effect
of
ceasing or suspending the distribution of the Securities or any other securities
of the Company shall have been issued by any securities commission, securities
regulatory authority or stock exchange and no proceedings for that purpose
shall
have been instituted or shall be pending or, to the knowledge of the Company,
contemplated by any securities commission, securities regulatory authority
or
stock exchange; all requests for additional information on the part of the
Commission shall have been complied with; and the NASD shall have raised no
objection to the fairness and reasonableness of the placement terms and
arrangements.
(c) Corporate
Proceedings.
All
corporate proceedings and other legal matters in connection with this Agreement,
the Registration Statement and each Prospectus Supplement, and the registration,
sale and delivery of the Securities, shall have been completed or resolved
in a
manner reasonably satisfactory to the Placement Agent's counsel, and such
counsel shall have been furnished with such papers and information as it may
reasonably have requested to enable such counsel to pass upon the matters
referred to in this Section 5.
15
(d) No
Material Adverse Change.
Subsequent to the execution and delivery of this Agreement and prior to each
Closing Date, in the Placement Agent's sole judgment after consultation with
the
Company, there shall not have occurred any Material Adverse Change or Material
Adverse Effect.
(e) Opinion
of Counsel for the Company.
The
Placement Agent shall have received on each Closing Date the favorable opinion
of legal counsel to the Company, dated as of such Closing Date, addressed to
the
Placement Agent in form and substance satisfactory to the Placement Agent.
(f) Officers’
Certificate.
The
Placement Agent shall have received on each Closing Date a certificate of the
Company, dated as of such Closing Date, signed by the Chief Executive Officer
and Chief Financial Officer of the Company, to the effect that, and the
Placement Agent shall be satisfied that, the signers of such certificate have
reviewed the Registration Statement, the Disclosure Package, any Prospectus
Supplement, and this Agreement and to the further effect that:
(i) The
representations and warranties of the Company in this Agreement are true and
correct, as if made on and as of such Closing Date, and the Company has complied
with all the agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to such Closing Date;
(ii) No
stop
order suspending the effectiveness of the Registration Statement or the use
of
the Base Prospectus or any Prospectus Supplement has been issued and no
proceedings for that purpose have been instituted or are pending or, to the
Company’s knowledge, threatened under the Act; no order having the effect of
ceasing or suspending the distribution of the Securities or any other securities
of the Company has been issued by any securities commission, securities
regulatory authority or stock exchange in the United States and no proceedings
for that purpose have been instituted or are pending or, to the knowledge of
the
Company, contemplated by any securities commission, securities regulatory
authority or stock exchange in the United States;
(iii) When
the
Registration Statement became effective, at the Sale Time, and at all times
subsequent thereto up to the delivery of such certificate, the Registration
Statement, the Disclosure Package and the Incorporated Documents, if any, when
such documents became effective or were filed with the Commission, contained
all
material information required to be included therein by the Act and the Exchange
Act and the applicable rules and regulations of the Commission thereunder,
as
the case may be, and in all material respects conformed to the requirements
of
the Act and the Exchange Act and the applicable rules and regulations of the
Commission thereunder, as the case may be, and the Registration Statement,
the
Disclosure Package and the Incorporated Documents, if any, did not and do not
include any untrue statement of a material fact or omit to state a material
fact
required to be stated therein or necessary to make the statements therein,
in
the light of the circumstances under which they were made, not misleading
(provided, however, that the preceding representations and warranties contained
in this paragraph (iii) shall not apply to any statements or omissions made
in
reliance upon and in conformity with information furnished in writing to the
Company by the Placement Agent expressly for use therein) and, since the
effective date of the Registration Statement, there has occurred no event
required by the Act and the rules and regulations of the Commission thereunder
to be set forth in the Disclosure Package which has not been so set forth;
and
16
(iv) Subsequent
to the respective dates as of which information is given in the Registration
Statement, the Disclosure Package and any Prospectus Supplement, there has
not
been: (a) any Material Adverse Change; (b) any transaction that is material
to
the Company and the Subsidiaries taken as a whole, except transactions entered
into in the ordinary course of business; (c) any obligation, direct or
contingent, that is material to the Company and the Subsidiaries taken as a
whole, incurred by the Company or any Subsidiary, except obligations incurred
in
the ordinary course of business; (d) any material change in the capital stock
(except changes thereto resulting from the exercise of outstanding stock options
or warrants) or outstanding indebtedness of the Company or any Subsidiary;
(e)
any dividend or distribution of any kind declared, paid or made on the capital
stock of the Company; or (f) any loss or damage (whether or not insured) to
the
property of the Company or any Subsidiary which has been sustained or will
have
been sustained which has a Material Adverse Effect.
(g) Bring-down
Comfort Letter. On
each
Closing Date, the Placement Agent shall have received from Murrell, Hall,
▇▇▇▇▇▇▇▇ & Co., PLLP, or such other independent registered public
accounting firm of the Company, a letter dated as of such Closing Date, in
form
and substance satisfactory to the Placement Agent, to the effect that they
reaffirm the statements made in the letter furnished pursuant to
subsection (a) of this Section 5, except that the specified date
referred to therein for the carrying out of procedures shall be no more than
three business days prior to such Closing Date.
(h) Stock
Exchange Listing.
The
Common Stock shall be registered under the Exchange Act and shall be listed
on
NASDAQ, and the Company shall not have taken any action designed to terminate,
or likely to have the effect of terminating, the registration of the Common
Stock under the Exchange Act or delisting or suspending from trading the Common
Stock from NASDAQ, nor shall the Company have received any information
suggesting that the Commission or the NASD is contemplating terminating such
registration or listing.
(i) Compliance
with Prospectus Delivery Requirements.
The
Company shall have complied with the provisions of Section 4A(c) and Section
4A(d) with respect to the furnishing of the documents referred to therein.
(j) Additional
Documents.
On or
before each Closing Date, the Placement Agent and counsel for the Placement
Agent shall have received such information and documents as they may reasonably
require for the purposes of enabling them to pass upon the issuance and sale
of
the Securities as contemplated herein, or in order to evidence the accuracy
of
any of the representations and warranties, or the satisfaction of any of the
conditions or agreements, herein contained.
If
any
condition specified in this Section 5 is not satisfied when and as required
to
be satisfied, this Agreement may be terminated by the Placement Agent by notice
to the Company at any time on or prior to a Closing Date, which termination
shall be without liability on the part of any party to any other party, except
that Section 6 (Payment of Expenses), Section 7 (Indemnification and
Contribution) and Section 8 (Representations and Indemnities to Survive
Delivery) shall at all times be effective and shall survive such termination.
17
Section
6. Payment
of Expenses.
The
Company agrees to pay all costs, fees and expenses incurred by the Company
in
connection with the performance of its obligations hereunder and in connection
with the transactions contemplated hereby, including, without limitation: (i)
all expenses incident to the issuance, delivery and qualification of the
Securities (including all printing and engraving costs); (ii) all fees and
expenses of the registrar and transfer agent of the Common Stock; (iii) all
necessary issue, transfer and other stamp taxes in connection with the issuance
and sale of the Securities; (iv) all fees and expenses of the Company’s
counsel, independent public or certified public accountants and other advisors;
(v) all costs and expenses incurred in connection with the preparation,
printing, filing, shipping and distribution of the Registration Statement
(including financial statements, exhibits, schedules, consents and certificates
of experts), the Base Prospectus and each Prospectus Supplement, and all
amendments and supplements thereto, and this Agreement; (vi) all filing fees,
reasonable attorneys’ fees and expenses incurred by the Company or the Placement
Agent in connection with qualifying or registering (or obtaining exemptions
from
the qualification or registration of) all or any part of the Securities for
offer and sale under the state securities or blue sky laws or the securities
laws of any other country, and, if requested by the Placement Agent, preparing
and printing a “Blue
Sky Survey,”
an
“International
Blue Sky Survey”
or
other memorandum, and any supplements thereto, advising the Placement Agent
of
such qualifications, registrations and exemptions; (vii) if applicable, the
filing fees incident to, and the reasonable fees and expenses of counsel for
the
Placement Agent in connection with, the review and approval by the NASD of
the
Placement Agent's participation in the offering and distribution of the
Securities; provided, however, that the Company shall not be responsible for
reimbursement of any such fees and expenses set forth in clauses (vi) and (vii)
in excess of $25,000; (viii) the fees and expenses associated with including
the
Securities on NASDAQ; (ix) all costs and expenses incident to the travel and
accommodation of the Company’s and the Placement Agent's employees on the
“roadshow,”
if
any; and (x) all other fees, costs and expenses referred to in Part II of the
Registration Statement.
Section
7. Indemnification
and Contribution.
(a) Indemnification
of the Placement Agent.
The
Company agrees to indemnify and hold harmless the Placement Agent, its officers
and employees, and each person, if any, who controls the Placement Agent within
the meaning of the Act and the Exchange Act against any loss, claim, damage,
liability or expense, as incurred, to which the Placement Agent or such
controlling person may become subject, under the Act, the Exchange Act, or
other
federal or state statutory law or regulation, or at common law or otherwise
(including in settlement of any litigation, if such settlement is effected
with
the written consent of the Company, which consent shall not be unreasonably
withheld), insofar as such loss, claim, damage, liability or expense (or actions
in respect thereof as contemplated below) arises out of or is based: (A) upon
any untrue statement or alleged untrue statement of a material fact contained
in
the Registration Statement, or any amendment thereto, including any information
deemed to be a part thereof pursuant to Rule 430A, Rule 430B and Rule 430C
under
the Act, or the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements therein not
misleading; (B) upon any untrue statement or alleged untrue statement of a
material fact contained in the Base Prospectus, any Issuer Free Writing
Prospectus, any Prospectus Supplement or any Incorporated Document (or any
amendment or supplement thereto), or the omission or alleged omission therefrom
of a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading; (C)
in
whole or in part upon any inaccuracy in the representations and warranties
of
the Company contained herein; (D) in whole or in part upon any failure of the
Company to perform its obligations hereunder or under law; or (E) upon any
act
or failure to act or any alleged act or failure to act by the Placement Agent
in
connection with, or relating in any manner to, the Securities or the Offering
contemplated hereby, and which is included as part of or referred to in any
loss, claim, damage, liability or action arising out of or based upon any matter
covered by clause (A), (B), (C) or (D) above, provided that the Company shall
not be liable under this clause (E) to the extent that a court of competent
jurisdiction shall have determined by a final judgment that such loss, claim,
damage, liability or action resulted directly from any such acts or failures
to
act undertaken or omitted to be taken by the Placement Agent through its gross
negligence, bad faith or willful misconduct; and to reimburse the Placement
Agent and each such controlling person for any and all expenses (including
the
reasonable fees and disbursements of counsel chosen by the Placement Agent)
as
such expenses are incurred by the Placement Agent or such controlling person
in
connection with investigating, defending, settling, compromising or paying
any
such loss, claim, damage, liability, expense or action; provided,
however,
that
the foregoing indemnity agreement shall not apply to any loss, claim, damage,
liability or expense to the extent, but only to the extent, arising out of
or
based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in reliance upon and in conformity with written
information furnished to the Company by the Placement Agent expressly for use
in
the Registration Statement, the Base Prospectus, any Issuer Free Writing
Prospectus or any Prospectus Supplement (or any amendment or supplement
thereto).
18
(b) Indemnification
of the Company, its Directors and Officers.
The
Placement Agent agrees to indemnify and hold harmless the Company, each of
its
directors, each of its officers who signed the Registration Statement, and
each
person, if any, who controls the Company within the meaning of the Act or the
Exchange Act, against any loss, claim, damage, liability or expense, as
incurred, to which the Company, or any such director, officer, or controlling
person may become subject, under the Act, the Exchange Act, or other federal,
state statutory law or regulation, or at common law or otherwise (including
in
settlement of any litigation, if such settlement is effected with the written
consent of the Placement Agent), insofar as such loss, claim, damage, liability
or expense (or actions in respect thereof as contemplated below) arises out
of
or is based upon any untrue or alleged untrue statement of a material fact
contained in any Prospectus Supplement (or any amendment or supplement thereto),
or arises out of or is based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the
statements therein, in light of the circumstances under which they were made,
not misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission
was
made in such Prospectus Supplement (or any amendment or supplement thereto),
in
reliance upon and in conformity with written information furnished to the
Company by the Placement Agent expressly for use therein; and to reimburse
the
Company, or any such director, officer, or controlling person for any legal
and
other expense reasonably incurred by the Company, or any such director, officer
or controlling person, in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or
action. The indemnity agreement set forth in this Section 7(b) shall be in
addition to any liabilities that the Placement Agent may otherwise have.
(c) Information
Provided by the Placement Agent.
The
Company and each person, if any, who controls the Company within the meaning
of
the Act or the Exchange Act, hereby acknowledges that the only information
that
the Placement Agent has furnished to the Company expressly for use in any
Prospectus Supplement (or any amendment or supplement thereto) are the
statements regarding the Placement Agent set forth under the caption
“Plan
of Distribution”
in
such
Prospectus Supplement.
(d) Notifications
and Other Indemnification Procedures.
Promptly after receipt by an indemnified party under this Section 7 of notice
of
the commencement of any action, such indemnified party will, if a claim in
respect thereof is to be made against an indemnifying party under this Section
7, notify the indemnifying party in writing of the commencement thereof, but
the
omission so to notify the indemnifying party will not relieve it from any
liability, which it may have to any indemnified party for contribution to the
extent it is not prejudiced as a proximate result of such failure. In case
any
such action is brought against any indemnified party and such indemnified party
seeks or intends to seek indemnity from an indemnifying party, the indemnifying
party will be entitled to participate in, and, to the extent that it shall
elect, jointly with all other indemnifying parties similarly notified, 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 reasonably satisfactory to such indemnified party; provided, however,
if
the defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that a conflict may arise between the positions of the indemnifying party and
the indemnified party in conducting the defense of any such action or that
there
may be legal defenses available to it and/or other indemnified parties which
are
different from or additional to those available to the indemnifying party,
the
indemnified party or parties shall have the right to select separate counsel
to
assume such legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties. Upon receipt of notice
from the indemnifying party to such indemnified party of such indemnifying
party’s election so to assume the defense of such action and approval by the
indemnified party of counsel, the indemnifying party will not be liable to
such
indemnified party under this Section 7 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless: (i) the indemnified party shall have employed separate counsel
in accordance with the proviso to the next preceding sentence (it being
understood, however, that the indemnifying party shall not be liable for the
expenses of more than one separate counsel (together with local counsel),
approved by the indemnifying party), representing the indemnified parties who
are parties to such action); (ii) the indemnifying party shall not have employed
counsel satisfactory to the indemnified party to represent the indemnified
party
within a reasonable time after notice of commencement of the action; or (iii)
the indemnifying party has authorized the employment of counsel for the
indemnified party at the expense of the indemnifying party, in each of which
cases the fees and expenses of counsel shall be at the expense of the
indemnifying party.
19
(e) Settlements.
The
indemnifying party under this Section 7 shall not be liable for any settlement
of any proceeding effected without its written consent, which consent shall
not
be unreasonably withheld, but if settled with such consent or if there be a
final judgment for the plaintiff, the indemnifying party agrees to indemnify
the
indemnified party against any loss, claim, damage, liability or expense by
reason of such settlement or judgment. Notwithstanding the foregoing sentence,
if at any time an indemnified party shall have requested an indemnifying party
to reimburse the indemnified party for fees and expenses of counsel as
contemplated by Section 7(d) hereof, the indemnifying party agrees that it
shall
be liable for any settlement of any proceeding effected without its written
consent if (i) such settlement is entered into more than 45 days after the
receipt by such indemnifying party of the aforesaid request, and (ii) such
indemnifying party shall have not reimbursed such indemnified party in
accordance with such request prior to the date of such settlement. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement, compromise or consent to the entry of judgment
in
any pending or threatened action, suit or proceeding in respect of which any
indemnified party is or could have been a party and indemnity was or could
have
been sought hereunder by such indemnified party, unless such settlement,
compromise or consent includes: (A) an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such action,
suit or proceeding; and (B) does not include a statement as to or an admission
of fault, culpability or a failure to act by or on behalf of any indemnified
party.
(f) Contribution.
If the
indemnification provided for in this Section 7 is for any reason held to be
unavailable to or otherwise insufficient to hold harmless an indemnified party
in respect of any losses, claims, damages, liabilities or expenses (or actions
or proceedings in respect thereof) referred to therein, then each indemnifying
party shall contribute to the aggregate amount paid or payable by such
indemnified party, as incurred, as a result of any losses, claims, damages,
liabilities or expenses (or actions or proceedings in respect thereof) referred
to therein (i) in such proportion as is appropriate to reflect the relative
benefits received by the indemnifying parties, on the one hand, and the
indemnified parties, on the other hand, from the Offering of the Securities
pursuant to this Agreement, or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only such relative benefits but also the relative fault of the
indemnifying parties, on the one hand, and the indemnified parties, on the
other
hand, in connection with the statements or omissions or the inaccuracies in
the
representations and warranties herein that resulted in such losses, claims,
damages, liabilities or expenses (or actions or proceedings in respect thereof),
as well as any other relevant equitable considerations. The relative benefits
received by the indemnifying parties, on the one hand, and the indemnified
parties, on the other hand, in connection with the Offering of Securities
pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from such Offering of Securities pursuant
to this Agreement (before deducting expenses) received by the indemnifying
parties, and the total Placement Agent fees received by the indemnified parties,
in each case as set forth on the cover page of the applicable Prospectus
Supplement bear to the aggregate offering price of the Securities set forth
on
such cover. The relative fault of the indemnifying parties, on the one hand,
and
the indemnified parties, on the other hand, 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 or any such
inaccurate or alleged inaccurate representation or warranty relates to
information supplied by the indemnifying parties, on the one hand, or the
indemnified parties, on the other hand, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
20
The
amount paid or payable by a party as a result of the losses, claims, damages,
liabilities and expenses referred to above shall be deemed to include, subject
to the limitations set forth in Section 7(d) above, any legal or other fees
or
expenses reasonably incurred by such party in connection with investigating
or
defending any action or claim. The provisions set forth in Section 7(d)
with respect to notice of commencement of any action shall apply if a claim
for
contribution is to be made under this Section 7(f); provided,
however,
that no
additional notice shall be required with respect to any action for which notice
has been given under Section 7(d) for purposes of indemnification.
The
Company and the Placement Agent agree that it would not be just and equitable
if
contributions pursuant to this Section 7(f) were determined by pro rata
allocation or by any other method of allocation which does not take account
of
the equitable considerations referred to above in this Section 7(f).
Notwithstanding the provisions of this Section 7(f): (i) the Placement Agent
shall not be required to contribute any amount in excess of the amount of the
Placement Agent fees actually received by the Placement Agent pursuant to this
Agreement; and (ii) no person guilty of fraudulent misrepresentation (within
the
meaning of Section 11(f) of the Act) shall be entitled to contribution from
any
person who was not guilty of such fraudulent misrepresentation.
(g) Timing
of Any Payments of Indemnification.
Any
losses, claims, damages, liabilities or expenses for which an indemnified party
is entitled to indemnification or contribution under this Section 7 shall be
paid by the indemnifying party to the indemnified party as such losses, claims,
damages, liabilities or expenses are incurred, but in all cases, within
forty-five (45) days of invoice to the indemnifying party.
(h) Acknowledgements
of Parties.
The
parties to this Agreement hereby acknowledge that they are sophisticated
business persons who were represented by counsel during the negotiations
regarding the provisions hereof including, without limitation, the provisions
of
this Section 7, and are fully informed regarding said provisions. They further
acknowledge that the provisions of this Section 7 fairly allocate the risks
in
light of the ability of the parties to investigate the Company and its business
in order to assure that adequate disclosure is made in the Registration
Statement, the Disclosure Package and each Prospectus Supplement as required
by
the Act and the Exchange Act.
Section
8. Representations
and Indemnities to Survive Delivery.
The
respective indemnities, agreements, representations, warranties and other
statements of the Company or any person controlling the Company, of its
officers, and of the Placement Agent set forth in or made pursuant to this
Agreement will remain in full force and effect, regardless of any investigation
made by or on behalf of the Placement Agent, the Company, or any of its or
their
partners, officers or directors or any controlling person, as the case may
be,
and will survive delivery of and payment for the Securities sold hereunder
and
any termination of this Agreement. A successor to a Placement Agent, or to
the
Company, its directors or officers or any person controlling the Company, shall
be entitled to the benefits of the indemnity, contribution and reimbursement
agreements contained in this Agreement.
21
Section
9. Notices.
All
communications hereunder shall be in writing and shall be mailed, hand delivered
or telecopied and confirmed to the parties hereto as follows:
If
to the
Placement Agent:
▇▇▇▇
Capital Partners, LLC
▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
Attention:
Managing Director
With
a copy to:
DLA
Piper
US LLP
▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile:
▇ (▇▇▇) ▇▇▇ ▇▇▇-▇▇▇▇
Attention:
▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
If
to the
Company:
▇▇▇ ▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇
▇▇▇▇
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇, Hong Kong
People’s
Republic of China
Facsimile:
(▇▇▇) ▇▇▇▇-▇▇▇▇
Attention:
Company Secretary
With
a copy to:
▇▇▇▇▇▇▇▇▇▇▇
& ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ LLP
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
Attention:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Any
party
hereto may change the address for receipt of communications by giving written
notice to the others.
22
Section
10. Successors.
This
Agreement will inure to the benefit of and be binding upon the parties hereto,
and to the benefit of the employees, officers and directors and controlling
persons referred to in Section 7 hereof, and to their respective successors,
and
personal representative, and no other person will have any right or obligation
hereunder.
Section
11. Partial
Unenforceability.
The
invalidity or unenforceability of any section, paragraph or provision of this
Agreement shall not affect the validity or enforceability of any other section,
paragraph or provision hereof. If any Section, paragraph or provision of this
Agreement is for any reason determined to be invalid or unenforceable, there
shall be deemed to be made such minor changes (and only such minor changes)
as
are necessary to make it valid and enforceable.
Section
12. Governing
Law Provisions.
(a) Governing
Law.
This
agreement shall be governed by and construed in accordance with the internal
laws of the state of California applicable to agreements made and to be
performed in such state.
(b) Consent
to Jurisdiction.
Any
legal suit, action or proceeding arising out of or based upon this Agreement
or
the transactions contemplated hereby (“Related
Proceedings”)
may be
instituted in the federal courts of the United States of America located in
the
Borough of Manhattan, New York, New York, or the courts of the State of New
York
in each case located in the Borough of Manhattan, New York, New York
(collectively, the “Specified
Courts”),
and
each party irrevocably submits to the exclusive jurisdiction (except for
proceedings instituted in regard to the enforcement of a judgment of any such
court (a “Related
Judgment”),
as to
which such jurisdiction is non-exclusive) of such courts in any such suit,
action or proceeding. Service of any process, summons, notice or document by
mail to such party’s address set forth above shall be effective service of
process for any suit, action or other proceeding brought in any such court.
The
parties irrevocably and unconditionally waive any objection to the laying of
venue of any suit, action or other proceeding in the Specified Courts and
irrevocably and unconditionally waive and agree not to plead or claim in any
such court that any such suit, action or other proceeding brought in any such
court has been brought in an inconvenient forum.
Section
13. General
Provisions.
(a) This
Agreement constitutes the entire agreement of the parties to this Agreement
and
supersedes all prior written or oral and all contemporaneous oral agreements,
understandings and negotiations with respect to the subject matter hereof.
This
Agreement may be executed in two or more counterparts, each one of which shall
be an original, with the same effect as if the signatures thereto and hereto
were upon the same instrument. This Agreement may not be amended or modified
unless in writing by all of the parties hereto, and no condition herein (express
or implied) may be waived unless waived in writing by each party whom the
condition is meant to benefit. Section headings herein are for the convenience
of the parties only and shall not affect the construction or interpretation
of
this Agreement.
(b) The
Company acknowledges that in connection with the offering of the Securities:
(i)
the Placement Agent has acted at arms length, are not agents of, and owe no
fiduciary duties to the Company or any other person, (ii) Placement Agent owes
the Company only those duties and obligations set forth in this Agreement and
(iii) the Placement Agent may have interests that differ from those of the
Company. The Company waives to the full extent permitted by applicable law
any
claims it may have against the Placement Agent arising from an alleged breach
of
fiduciary duty in connection with the offering of the Securities
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remainder of this page has been intentionally left blank.]
23
If
the
foregoing is in accordance with your understanding of our agreement, please
sign
below whereupon this instrument, along with all counterparts hereof, shall
become a binding agreement in accordance with its terms.
| Very truly yours, | ||
|
a
Colorado corporation
|
||
| |
|
|
| By: | ||
| Name: | ||
| Title | ||
The
foregoing Placement Agency Agreement is hereby confirmed and accepted as of
the
date first above written.
▇▇▇▇
CAPITAL PARTNERS LLC
By:
Name:
Title:
24
Schedule
I
Warrants
to be granted to the Placement Agent at each Closing
Concurrently
with each Closing, the Company will issue to the Placement Agent warrants to
purchase a number of shares of Common Stock equal to 3.0% of the number of
Shares issued in connection with such Closing (the "Warrants"). The Warrants
will be exercisable into the same class of Common Stock as issued as part of
the
Offering, have a strike price equal to 120% of the closing price of the
Company's Common Stock on the Closing Date and have a term of three years.
The
Warrants are not exercisable prior to the date that is six months from the
Closing Date. The Warrants will provide for cashless or "net" exercise at all
times. In the event Investors are issued warrants as part of the Offering,
the
terms and conditions of the Warrants shall be the same as such Investors'
warrants, except to the extent that the aforementioned term and form of payment
provisions of the Investors' warrants and the Warrants differ, in which case
this Agreement shall control as to those terms of the Warrants.
25
Exhibit
A
List
of Company Subsidiaries
Shanghai
Chengtong Precision Strip Co., Ltd. (China)
26
Exhibit
B
Form
of Subscription Agreement
27