AEGIS CAPITAL CORP.
AEGIS
CAPITAL CORP.
May
26,
2008
This
letter agreement (this “Agreement”) confirms the engagement of AEGIS CAPITAL
CORP Inc. (“ACC”) and TIANJIN SHENGKAI INDUSTRIAL TECHNOLOGY DEVELOPMENT CO.,
LTD. (“SHENGKAI” or the “Company”) as non-exclusive placement agent and
financial advisor to arrange the sale of equity or equity-linked securities
including convertible preferred, convertible debt and debt with warrants
(“Equity” or the “Securities”) on behalf of the Company as noted below.
a.
Pipe
Financing.
ACC
will use its best efforts to provide up to $20,000,000 USD in financing to
SHENGKAI. This financing will be accomplished under the terms and conditions
that are mutually agreeable to SHENGKAI, ACC and its investors.
Retention.
Subject
to the terms and conditions of this Agreement, SHENGKAI hereby engages ACC
to
act on behalf of the Company as its non-exclusive placement agent and financial
advisor during the Authorization Period (as defined below), to arrange for
the
sale of Securities in an amount and on terms and conditions satisfactory to
the
Company, and ACC hereby accepts such engagement.
Authorization
Period.
ACC’s
engagement shall become effective upon the signing of this agreement and shall
remain effective for a period of ninety (90) calendar days. The Company may,
upon thirty (30) days notice, terminate this agreement.
Compensation.
SHENGKAI shall pay ACC the compensation set forth below:
a. Cash
Fee for Equity.
SHENGKAI shall pay ACC a cash placement fee equal to one 1% per cent on any
gross proceeds received by the Company in connection with the sale of Securities
or a Financing. In addition SHENGKAI will pay Aegis Asia Capital Corp. a
non-accountable allowance of 6% of the gross proceeds raised in the financing..
The cash placement fee shall be paid by wire transfer on the closing date on
which the Company receives such aggregate consideration.
4. Representations,
Warranties and Covenants of SHENGKAI.
SHENGKAI represents and warrants to, and covenants with, ACC as
follows:
a.
Neither
the Company nor any person acting on its behalf has taken, and SHENGKAI shall
not and shall not permit its affiliates to take, directly or indirectly, any
action so as to cause any of the transactions contemplated by this Agreement
to
fail to be entitled to exemption from registration or qualification under all
applicable securities laws or which constitutes general advertising or general
solicitation (as those terms are used in Regulation D under the Securities
Act)
with respect to the Securities.
b.
SHENGKAI
shall take and shall cause its affiliates to take such actions as may be
required to cause compliance with this Agreement. ACC acknowledges that it
may
cause its affiliates to perform any of its obligations hereunder; provided,
however, that SHENGKAI’s intention to do so (or any action by SHENGKAI or ACC in
respect thereof) shall not relieve SHENGKAI from its obligation to perform
such
obligations when due.
c. The
Company will furnish, or cause to be furnished, to ACC such information as
ACC
believes appropriate to its engagement hereunder (all such information, the
"Information"), and the Company represents that all such Information will be
accurate and complete in all material respects. The Company will promptly notify
ACC of any change that may be material in such Information. It is understood
that ACC will be entitled to rely on and use the Information and other
information that is publicly available without independent verification, and
will not be responsible in any respect for the accuracy, completeness or
reasonableness of all such Information or to conduct any independent
verification or any appraisal or physical inspection of properties or
assets.
000
Xxxxxxx Xxx., 00xx
Xxxxx, Xxx Xxxx, XX 00000 (212) 813-100/Fax (000) 000-0000
Member
NASD/PCX/SIPC
AEGIS
CAPITAL CORP.
5.
Representations,
Warranties and Covenants of ACC.
ACC
represents and warrants to, and covenants with, SHENGKAI as
follows:
a. None
of
ACC, its affiliates or any person acting on behalf of ACC or any of such
affiliates has engaged or will engage in any general solicitation or general
advertising (as those terms are used in Regulation D under the Securities Act)
with respect to the Securities.
b.
ACC
will
use its best efforts to conduct the offering and sale of Securities so that
Securities are sold in a transaction or series of transactions exempt from
registration under the Securities Act.
c.
ACC
will
send Materials related to the Financings only to persons that the ACC reasonably
believes are “accredited investors” (as defined under Rule 501(a) of the
Securities Act).
6. Indemnification.
The
Company agrees to the indemnification and other agreements set forth in the
attached Indemnification Agreement, the provisions of which are incorporated
herein by reference.
7. Survival
of Certain Provisions.
The
expense, indemnification, reimbursement and contribution obligations of SHENGKAI
provided herein and in the attached Indemnification Agreement and ACC’s rights
to compensation (which term includes all fees, amounts and Warrants due or
which
may become due) shall remain operative and in full force and effect regardless
of (i) any withdrawal, termination or consummation of or failure to initiate
or
consummate any transaction described herein or (ii) any termination or the
completion or expiration of this Agreement.
8. Notices.
Notice
given pursuant to any of the provisions of this Agreement shall be given in
writing and shall be sent by recognized overnight courier (a) if to the Company,
to Mr. Xxxx Xxxx Tianjin ShengKai Industrial Technology Development Co., Ltd
Xx.
00, Xxxxxxxx Xx.,
Xxxxxx
(Xxxxxxxxxx) Xxx. Area, Tianjin, P. R. China with a copy to Xxxx X. Xxxx, Esq.
of Sichenzia Xxxx Xxxxxxxx Xxxxxxx LLP at 00 Xxxxxxxx 00xx
Xxxxx,
Xxx Xxxx, XX 00000 and (b) if to ACC, to its office at 000 Xxxxxxx Xxxxxx,
00xx
xxxxx,
Xxx Xxxx, XX 00000 Attention Xxxxxx Xxxx.
10. Confidentiality.
No
financial advice rendered by ACC pursuant to this Agreement may be disclosed
publicly in any manner without ACC’s prior written consent, except as may be
required by law, regulation or court order but subject to the limitation below.
If the Company is required or reasonably expects to be so required to disclose
any advice, SHENGKAI shall provide ACC with prompt notice thereof so that ACC
may seek a protective order or other appropriate remedy and take reasonable
efforts to assure that all of such advice disclosed will be covered by such
order or other remedy. Whether or not such a protective order or other remedy
is
obtained, SHENGKAI will and will cause its affiliates to disclose only that
portion of such advice, which the Company is so required to
disclose.
11.
Miscellaneous.
This
Agreement (including the attached Indemnification Agreement) sets forth the
entire agreement between the parties, supersedes and merges all prior written
or
oral agreements with respect to the subject matter hereof, may only be amended
in writing and shall be governed by the laws of the State of New York applicable
to agreements made and to be performed entirely within such State. The parties
shall make reasonable efforts to resolve any dispute concerning this Agreement,
its construction or its alleged breach by face-to-face negotiations. If such
negotiations fail to resolve the dispute, the dispute shall be finally decided
by arbitration in accordance with the rules then in effect of the American
Arbitration Association. Any arbitration will be conducted in the New York
City
metropolitan area. SHENGKAI (for the Company, for anyone claiming through or
in
the name of the Company and on behalf of the equity holders of the Company)
and
ACC each hereby irrevocably waives any right it may have to trial by jury in
respect of any claim arising out of this Agreement or the transactions
contemplated hereby.
000
Xxxxxxx Xxx., 00xx
Xxxxx, Xxx Xxxx, XX 00000 (212) 813-100/Fax (000) 000-0000
Member
NASD/PCX/SIPC
AEGIS
CAPITAL CORP.
Either
party may assign this Agreement with the prior written consent of the other
party.
If
any
provision of this Agreement is determined to be invalid or unenforceable in
any
respect, such determination will not effect such provision in any other respect
or any other provision of this Agreement.
Please
confirm that the foregoing correctly sets forth our agreement by signing and
returning to ACC the enclosed duplicate copy of this Agreement.
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Very
truly yours,
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AEGIS
CAPITAL CORP, AEGIS ASIA CAPITAL CORP.
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By:
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/s/
Xxxxxx X. Xxxx
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Name:
Xxxxxx X. Xxxx
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Title:
CEO – Aegis Capital Corp.
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ACCEPTED
AND AGREED TO
This
26th
day of
May 2008
TIANJIN
SHENGKAI INDUSTRIAL TECHNOLOGY DEVELOPMENT CO., LTD.
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/s/
Xxxx Xxxx
|
|
| Name: Xxxx Xxxx | |
| Title: Chairman & CEO | |
000
Xxxxxxx Xxx., 00xx
Xxxxx, Xxx Xxxx, XX 00000 (212) 813-100/Fax (000) 000-0000
Member
NASD/PCX/SIPC
