4,000,000 Shares HUIHENG MEDICAL, INC. Common Stock UNDERWRITING AGREEMENT
4,000,000
Shares
Common
Stock
__________,
2008
Xxxx
Capital Partners, LLC
00
Xxxxxxxxx Xxxxx
Xxxxxxx
Xxxxx, XX 00000
Chardan
Capital Markets, LLC
00
Xxxxx
Xxxxxx, Xxxxx 0000
Xxx
Xxxx,
XX 00000
As
Representatives of the Several Underwriters named in Schedule I
hereto
Ladies
and Gentlemen:
Huiheng
Medical, Inc., a Nevada corporation (“Company”),
proposes to issue and sell to the several Underwriters (as defined below) an
aggregate of 4,000,000 shares of its common stock, $0.001 par value per share
(the “Common
Stock”).
It
is
understood that, subject to the conditions hereinafter stated, an aggregate
of
4,000,000 shares of the Common Stock (the “Firm
Securities”)
will
be sold to the several Underwriters named in Schedule I hereto (the
“Underwriters”)
in
connection with the offering (the “Offering”)
and
sale of such Firm Securities. Xxxx Capital Partners, LLC (“Xxxx”)
and
Chardan Capital Markets, LLC (“Chardan”)
shall
act as the representatives (the “Representatives”)
of the
several Underwriters. In addition, as set forth below the Company and certain
of
the shareholders of the Company (the “Selling
Stockholders”)
named
in Schedule II hereto propose to issue and sell to the Underwriters, upon the
terms and conditions set forth in Section 3, an aggregate of up to 600,000
additional shares of the Common Stock (“Optional
Securities”).
Of
the Optional Securities, up to ____ shares are to be issued and sold by the
Company and up to___ shares are to be sold by the Selling Stockholders, each
Selling Stockholder selling up to the amount set forth opposite such Selling
Stockholder’s name in Schedule II hereto. The Firm Securities and the Optional
Securities are hereinafter called the “Securities.”
The
Company and the Selling Shareholders are hereinafter sometimes individually
referred to each as a “Seller”
and
collectively referred to as the “Sellers”.
This
is
to confirm the agreement concerning the purchase of the Securities from the
Company and the Selling Stockholders by the Underwriters.
1. Representations
and Warranties of the Company.
The
Company represents and warrants to, and agrees with, each Underwriter
that:
(a) The
Company has prepared and filed with the Securities and Exchange Commission
(the
“Commission”)
a
registration statement on Form SB-2 (and amended the registration statement
on
Form S-1) (File No. 333-146975), which contains a form of prospectus to be
used
in connection with the public offering and sale of the Securities. Such
registration statement, as amended, including the financial statements, exhibits
and schedules thereto, in the form in which it was declared effective by the
Commission under the Securities Act of 1933, as amended (the “Securities
Act”)
and
the rules and regulations promulgated thereunder (the “Rules
and Regulations”),
including any required information deemed to be a part thereof at the time
of
effectiveness pursuant to Rule 430A under the Securities Act, is called the
“Registration
Statement.”
Any
registration statement filed by the Company pursuant to Rule 462(b) under the
Securities Act is called the “Rule
462(b) Registration Statement”,
and
from and after the date and time of filing of the Rule 462(b) Registration
Statement the term “Registration
Statement”
shall
include the Rule 462(b) Registration Statement. Any preliminary prospectus
included in the Registration Statement is hereinafter called a “preliminary
prospectus.”
The
term “Prospectus”
shall
mean the final prospectus relating to the Securities that is first filed
pursuant to Rule 424(b) after the date and time that this Agreement is executed
and delivered by the parties hereto (the “Execution
Time”)
or, if
no filing pursuant to Rule 424(b) is required, shall mean the form of final
prospectus relating to the Securities included in the Registration Statement
at
the time it became effective. All references in this Agreement to the
Registration Statement, the Rule 462(b) Registration Statement, a preliminary
prospectus, the Prospectus, or any amendments or supplements to any of the
foregoing, shall include any copy thereof filed with the Commission pursuant
to
its Electronic Data Gathering, Analysis and Retrieval System (“XXXXX”).
(b) The
Registration Statement and any Rule 462(b) Registration Statement have been
declared effective by the Commission under the Securities Act. 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 any Rule 462(b) Registration
Statement is in effect and no proceedings for such purpose have been instituted
or are pending or, to the best knowledge of the Company, are contemplated or
threatened by the Commission or any state regulatory authority.
The
final
preliminary prospectus included in the Disclosure Package (as defined below)
and
the Prospectus when filed complied in all material respects with the Securities
Act and the rules thereunder and, if filed by electronic transmission pursuant
to XXXXX (except as may be permitted by Regulation S-T under the Securities
Act), was identical to the copy thereof delivered to the Underwriters for use
in
connection with the offer and sale of the Securities. Each of the Registration
Statement, any Rule 462(b) Registration Statement and any post-effective
amendment thereto, at the time it became effective and at the date hereof,
the
Closing Date and any Subsequent Closing Date, complied and will comply in all
material respects with the Securities Act and did not and 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.
The Prospectus (including any Prospectus wrapper), as amended or supplemented,
as of its date and at the date hereof, the Closing Date and any Option Closing
Date, 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 the light of the circumstances under which they were made, not misleading.
The representations and warranties set forth in the two immediately preceding
sentences do not apply to statements in or omissions from the Registration
Statement, any Rule 462(b) Registration Statement, or any post-effective
amendment thereto, or the Prospectus, or any amendments or supplements thereto,
made in reliance upon and in conformity with information relating to any
Underwriter furnished to the Company in writing by the Representatives expressly
for use therein, it being understood and agreed that the only such information
furnished by the Representatives consists of the information described as such
in Section 12 hereof.
2
(c) There
are
no contracts or other documents required to be described in the Prospectus
or to
be filed as exhibits to the Registration Statement which have not been described
or filed as required. Each contract or other instrument (however characterized
or described) to which the Company or its Subsidiaries (as hereinafter defined)
is a party or by which their property or business is or may be bound or affected
and that is (i) referred to in the Prospectus, or (ii) material to the business,
has been duly and validly executed, is in full force and effect and is
enforceable against the Company or the Subsidiaries, as the case may be, and,
to
the Company’s knowledge, the other parties thereto in accordance with its terms,
except (x) as such enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting creditors’ rights generally, (y) as
enforceability of any indemnification or contribution provision may be limited
under the federal and state securities laws, and (z) that the remedy of specific
performance and injunctive and other forms of equitable relief may be subject
to
the equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought, and none of such contracts or instruments
has been assigned by the Company or its Subsidiaries, and neither the Company
or
its Subsidiaries nor, to the Company’s knowledge, any other party is in breach
or default thereunder and, to the Company’s knowledge, no event has occurred
that, with the lapse of time or the giving of notice, or both, would constitute
a breach or default thereunder. None of the Company or any of its Subsidiaries
has sent or received any communication regarding termination of, or intent
not
to renew, any of the contracts or agreements referred to in clause (ii) above
or
referred to or described in the Prospectus, or referred to or described in,
or
filed as an exhibit to, the Registration Statement, and no such termination
or
non-renewal has been threatened by the Company or any of its Subsidiaries or,
to
the Company’s knowledge after due inquiry, any other party to any such contract
or agreement. None of the material provisions of such contracts or instruments
violates or will result in a violation of any existing applicable law, rule,
regulation, judgment, order or decree of any governmental agency or court,
domestic or foreign, having jurisdiction over the Company or its Subsidiaries
or
any of their assets or businesses, including, without limitation, those relating
to environmental laws and regulations.
(d) The
term
“Disclosure
Package”
shall
mean, collectively, (i) the preliminary prospectus that is included in the
Registration Statement immediately prior to the Initial Sale Time (as defined
below), if any, as amended or supplemented, (ii) the issuer free writing
prospectuses as defined in Rule 433 of the Securities Act (each, an
“Issuer
Free Writing Prospectus”)
identified in Schedule III hereto, and (iii) any other free writing prospectus
that the parties hereto shall hereafter expressly agree in writing to treat
as
part of the Disclosure Package. As of ____________ (Eastern time) on the date
of
this Agreement (the “Initial
Sale Time”),
the
Disclosure Package did not contain any untrue statement of a material fact
or
omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The preceding sentence does not apply to statements in or omissions
from the Disclosure Package based upon and in conformity with written
information furnished to the Company by the Representatives specifically for
use
therein, it being understood and agreed that the only such information furnished
by or on behalf of any Underwriter consists of the information described as
such
in Section 12 hereof.
3
(e) Each
Issuer Free Writing Prospectus, as of its issue date and at all subsequent
times
through the completion of the Offering or until any earlier date that the
Company notified or notifies the Representatives as described in the next
sentence, did not, does not and will not include any information that
conflicted, conflicts or will conflict with the information contained in the
Registration Statement. The foregoing sentence does not apply to statements
in
or omissions from any Issuer Free Writing Prospectus based upon and in
conformity with written information furnished to the Company by the
Representatives specifically for use therein, it being understood and agreed
that the only such information furnished by any Underwriter consists of the
information described as such in Section 12 hereof.
(f) The
Company has delivered to the Representatives one complete manually signed copy
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 preliminary prospectuses and the Prospectus, as amended
or supplemented, in such quantities and at such places as the Representatives
have reasonably requested for each of the Underwriters.
(g) The
Company has filed with the Commission a registration statement on Form 8-A
(No.
001-_______) providing for the registration of shares of Common Stock of the
Company under the Exchange Act (“8-A Registration Statement”). Such registration
was declared effective by the Commission on ___________, 2008. No stop order
suspending the effectiveness of such registration statement has been issued
and
no proceeding for that purpose has been initiated or threatened by the
Commission. The 8-A Registration Statement when it became effective conformed,
and any further amendments thereto will conform, in all material respects to
the
requirements of the Exchange Act and the rules and regulations of the Commission
thereunder, and did not and will not, as of the applicable effective date,
contain an untrue statement of a material fact or omit to state a material
fact
required to be stated therein or necessary to make the statements therein not
misleading.
(h) The
Company has not distributed and will not distribute, prior to the later of
the
Option Closing Date (as defined in Section 4 below) and the completion of the
Underwriters’ distribution of the Securities, any offering material in
connection with the offering and sale of the Securities other than any
preliminary prospectus, the Prospectus, any Issuer Free Writing Prospectus
reviewed and consented to by the Representatives or included in Schedule III
hereto or the Registration Statement.
(i) UHY
VOCATION HK CPA LIMITED(formerly known as UHY ZTHZ HK CPA Limited) (“UHY”), a
foreign auditor whose report appears in the Registration Statement, and is
included in the Disclosure Package and the Prospectus, is recognized by the
staff of the Commission and is allowed to practice before the Commission. The
financial statements and schedules (including the related notes) included in
the
Registration Statement, and included in the Disclosure Package and the
Prospectus, present fairly the financial condition, the results of the
operations and changes in financial condition of the entities purported to
be
shown thereby at the dates or for the periods indicated and have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis throughout the periods indicated. All adjustments necessary
for
a fair presentation of results for such periods have been made. The Registration
Statement discloses all material off-balance sheet transactions, arrangements,
obligations (including contingent obligations) and other relationships of the
Company with unconsolidated entities or other persons that may have a material
current or future effect on the Company’s financial condition, changes in
financial condition, results of operations, liquidity, capital expenditures,
capital resources, or significant components of revenues or expenses. The
selected financial, operating and statistical data set forth in any preliminary
prospectus included in the Disclosure Package and the Prospectus under the
captions “Prospectus Summary,” “Selected Consolidated Financial Data” and
“Management’s Discussion and Analysis of Financial Condition and Results of
Operations” fairly present, when read in conjunction with the Company’s
financial statements and the related notes and schedules and on the basis stated
in the Registration Statement, the information set forth therein.
4
(j) Each
of
the Company and its Subsidiaries (as defined in Section 14 hereof) has been
duly organized and is validly existing as a corporation in good standing under
the laws of the jurisdiction of its organization, with full power and authority
(corporate and other) to own or lease its properties and conduct its business
as
described in the Disclosure Package and Prospectus, and is duly qualified to
do
business and is in good standing as a foreign corporation in each jurisdiction
in which the character of the business conducted by it or the location of the
properties owned or leased by it makes such qualification necessary; each of
the
Company and its Subsidiaries is in possession of and operating in compliance
with all franchises, grants, authorizations, licenses, permits, easements,
consents, certificates and orders required for the conduct of its business,
all
of which are valid and in full force and effect (except where any failure to
do
so would not result in a material adverse change in the condition (financial
or
otherwise), business, prospects, properties or results of operations of the
Company and its Subsidiaries considered as a whole) (“Material
Adverse Effect”);
and
neither the Company nor any of its Subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such franchise,
grant, authorization, license, permit, easement, consent, certificate or order
which, individually or in the aggregate, if the subject of an unfavorable
decision, would result, individually or in the aggregate, in having a Material
Adverse Effect.
(k) The
capitalization of the Company is as set forth in the Disclosure Package and
Prospectus, and the Company’s capital stock conforms to the description thereof
contained under the caption “Description of Capital Stock” in the Disclosure
Package and Prospectus; the outstanding shares of capital stock have been duly
authorized, validly issued, fully paid and nonassessable and have been issued
in
compliance with federal and state securities laws. There are no preemptive
rights or other rights to subscribe for or to purchase, or any restriction
upon
the voting or transfer of, any shares of capital stock pursuant to the Company’s
charter, by-laws or other governing documents or any agreement or other
instrument to which the Company or any of its Subsidiaries is a party or by
which any of them may be bound. None of the outstanding shares of capital stock
were issued in violation of any preemptive rights, rights of first refusal
or
other similar rights to subscript for or purchase securities of the Company.
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 other than those accurately described in the Disclosure
Package and the Prospectus. The description of the Company’s stock option, stock
bonus and other stock plans or arrangements, and the options or other rights
granted thereunder, set forth in the Disclosure Package and the Prospectus
accurately and fairly presents the information required to be shown with respect
to such plans, arrangements, options and rights. Neither the filing of the
Registration Statement nor the offering or sale of the Securities as
contemplated by this Agreement gives rise to any rights, other than those which
have been waived or satisfied, for or relating to the registration of any shares
of Common Stock. All of the outstanding shares of capital stock of each
Subsidiary of the Company have been duly authorized and validly issued, are
fully paid and nonassessable and are owned directly or indirectly by the
Company, free and clear of any claim, lien, encumbrance or security interest.
All of the issued share capital of Allied Moral Holdings, Ltd. (“Allied
Moral”)
is
owned by the Company and has been duly and validly authorized and issued and
is
fully paid and non-assessable. Other than Allied Moral and the Subsidiaries
owned by Allied Moral, the Company does not own, directly or indirectly, any
shares of stock or any other equity interests or long-term debt securities
of
any corporation or other entity. Allied Moral owns all of the issued share
capital of Tibet Changdu Huiheng Development Company, Ltd. (“Changdu
Huiheng”),
which
shares have been duly and validly authorized and issued, and are fully paid
and
non-assessable. Other than Changdu Huiheng and the other subsidiaries owned
by
Changdu Huiheng, Allied Moral does not own, directly or indirectly, any shares
of stock or any other equity interests or long-term debt securities of any
corporation or other entity. All of the issued share capital of Wuhan Kanqiao
Medical New Technology Company, Ltd. (“Wuhan
Kanqiao”)
are
owned by Changdu Huiheng, which shares have been duly and validly authorized
and
issued, and are fully paid and non-assessable. Changdu Huiheng duly and validly
owns the equity interest of Shenzhen Hyper Technology Company, Ltd.
(“Shenzhen
Hyper”)
and
Beijing Yuankang Kbeta Nuclear Technology Co., Ltd. (“Beijing
Kbeta”)
in the
percentages set forth in the Prospectus under the caption “Business-Huiheng
Medical’s Background,” free and clear of all liens, encumbrances, equities or
claims. Other than Wuhan Kanqiao, Shenzhen Hyper and Beijing Kbeta, Changdu
Huiheng does not own, directly or indirectly, any shares of stock or any other
equity interests or long-term debt securities of any corporation or other
entity. Allied Moral, Changdu Huiheng, Wuhan Kanqiao, Shenzhen Hyper and Beijing
Kbeta are the Company’s only Subsidiaries. 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 any
Subsidiary.
5
(l) Subsequent
to the respective dates as of which information is given in the Disclosure
Package and the Prospectus, and except as described or contemplated in the
Disclosure Package and Prospectus: neither the Company nor any of its
Subsidiaries has incurred any liabilities or obligations, direct or contingent,
nor entered into any transactions not in the ordinary course of business, which
in either case are material to the Company or such Subsidiary, as the case
may
be; there has not been any Material Adverse Effect; and there has been no
dividend or distribution of any kind declared, paid or made by the Company
on
any class of its capital stock.
(m) Neither
the Company nor any of its Subsidiaries is, or with the giving of notice or
lapse of time or both would be, in violation of or in default under, nor will
the execution or delivery hereof or consummation of the transactions
contemplated hereby result in a violation of, or constitute a default under,
the
certificate of incorporation, bylaws or other governing documents of the Company
or any of its Subsidiaries, or any agreement, contract, mortgage, deed of trust,
loan agreement, note, lease, indenture or other instrument, to which the Company
or any of its Subsidiaries is a party or by which any of them is bound, or
to
which any of their properties is subject, nor will the performance by the
Company of its obligations hereunder violate any law, rule, administrative
regulation or decree of any court, or any governmental agency or body having
jurisdiction over the Company, its Subsidiaries or any of their properties,
or
result in the creation or imposition of any lien, charge, claim or encumbrance
upon any property or asset of the Company or any of its Subsidiaries. Except
for
permits and similar authorizations required under the Securities Act and the
securities or “Blue Sky” laws of certain jurisdictions and for such permits and
authorizations which have been obtained, no consent, approval, authorization
or
order of any court, governmental agency or body or financial institution is
required in connection with the consummation of the transactions contemplated
by
this Agreement.
(n) This
Agreement has been duly authorized, executed and delivered by the Company and
constitutes a legal, valid and binding obligation of the Company and is
enforceable against the Company in accordance with its terms.
6
(o) The
Securities to be purchased by the Underwriters from the Company have been duly
authorized for issuance and sale pursuant to this Agreement and, when issued
and
delivered by the Company pursuant to this Agreement, will be validly issued,
fully paid and nonassessable. The issuance of the Securities pursuant to this
Agreement will not be subject to any preemptive rights, rights of first refusal
or other similar rights to subscribe for or purchase securities of the Company.
The Securities to be purchased by the Underwriters from the Selling Stockholders
have been duly authorized and are validly issued, fully paid and non-assessable.
There are no restrictions upon the voting or transfer of the Securities under
the Company’s charter or by-laws or any agreement or other instrument to which
the Company is a party or otherwise filed as an exhibit to the Registration
Statement.
(p) The
warrants to purchase Common Stock to be issued to the Underwriters (the
“Underwriter
Warrants”)
pursuant to Section 5(n) have been duly authorized for issuance. The Company
has
reserved 322,000 shares of its Common Stock for issuance upon exercise of the
Underwriter Warrants and when issued and paid for in accordance with the terms
of the Underwriter Warrants, such Common Stock will be validly issued, fully
paid and nonassessable. The issuance of the Common Stock pursuant to the
Underwriter Warrants will not be subject to any preemptive rights, rights of
first refusal or other similar rights to subscribe for or purchase securities
of
the Company. There will be no restrictions upon the voting or transfer of the
Common Stock issuable pursuant to the Underwriter Warrants under the Company’s
charter or by-laws or any agreement or other instrument to which the Company
is
a party or otherwise filed as an exhibit to the Registration Statement.
(q) The
Company and its Subsidiaries have good and marketable title in fee simple to
all
items of real property and good and marketable title to all personal property
owned by them, in each case clear of all liens, encumbrances and defects except
such as are described or referred to in the Disclosure Package and Prospectus
or
such as do not materially affect the value of such property and do not interfere
with the use made or proposed to be made of such property by the Company or
such
Subsidiaries; and any real property and buildings held under lease by the
Company and its Subsidiaries are held by them under valid, existing and
enforceable leases with such exceptions as are not material and do not interfere
with the use made or proposed to be made of such property and buildings by
the
Company or such Subsidiaries.
(r) Except
as
described in the Disclosure Package and Prospectus, there is no litigation
or
governmental proceeding to which the Company or any of its Subsidiaries is
a
party or to which any property of the Company or any of its Subsidiaries is
subject or which is pending or, to the knowledge of the Company, threatened
against the Company which individually or in the aggregate might result in
any
Material Adverse Effect, which would materially and adversely affect the
consummation of this Agreement or the transactions contemplated hereby or which
is required to be disclosed in the Disclosure Package and
Prospectus.
(s) Neither
the Company nor any Subsidiary is in violation of any law, ordinance,
governmental rule or regulation or court decree to which it may be subject
which
violation might have a Material Adverse Effect.
(t) The
Company has not taken and may not take, directly or indirectly, any action
designed to cause or result in, or which has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of
the
price of the shares of Common Stock to facilitate the sale or resale of the
Securities.
7
(u) The
Company and its Subsidiaries have filed all necessary federal, state and foreign
income and franchise tax returns, and all such tax returns are complete and
correct in all material respects, and the Company and its Subsidiaries have
not
failed to pay any taxes which were payable pursuant to said returns or any
assessments with respect thereto. The Company has no knowledge of any tax
deficiency which has been or is likely to be threatened or asserted against
the
Company or its Subsidiaries.
(v) The
Company maintains a system of internal accounting controls sufficient to provide
reasonable assurances that (i) transactions are executed in accordance with
management’s general or specific authorization; (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles in the United States and to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management’s general or specific authorization; (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences and (v) the Company and its Subsidiaries have made and kept books,
records and accounts which, in reasonable detail, accurately and fairly reflect
the transactions and dispositions of assets of such entity. Except as disclosed
in the Registration Statement, the Disclosure Package and the Prospectus, since
the date of the most recent evaluation of such system of internal accounting
controls, there has been no material change in internal control over financial
reporting, including any corrective actions with regard to significant
deficiencies or material weaknesses.
(w) Except
as
described in the Disclosure Package and Prospectus, the Company has established
and maintains and evaluates a system of internal control over financial
reporting (as such term is defined in Rule 13a-15(f) of the Exchange Act) that
complies with the requirements of the Exchange Act and has been designed by
the
Company’s principal executive officer and principal financial officer, or under
their supervision, to provide reasonable assurance regarding the reliability
of
financial reporting and the preparation of financial statements for external
purposes in accordance with US GAAP. All material weaknesses, if any, in
internal controls have been identified to the Company’s independent auditors.
Since the date of the latest audited financial statements included in the
Prospectus, there has been no change in the Company’s internal control over
financial reporting or in other factors that could significantly affect internal
controls, including any corrective actions with regard to significant
deficiencies and material weaknesses, and, except as described in the
Prospectus, the Company’s independent accountants have not notified the Company
of any “reportable conditions” (as that term is defined under standards
established by the American Institute of Certified Public Accountants) in the
Company’s internal accounting controls, or other weaknesses or deficiencies in
the design or operation of the Company’s internal accounting controls, that have
materially affected, or are reasonably likely to materially affect, the
Company’s internal control over financial reporting, or could adversely affect
the Company’s ability to record, process, summarize and report financial data
consistent with the assertions of the Company’s management in the financial
statements. The Company has established and maintains and evaluates disclosure
controls and procedures (as such term is defined in Rule 13a-15(e) of the
Exchange Act) that comply with the requirements of the Exchange Act, such
disclosure controls and procedures have been designed to ensure that material
information relating to the Company and its Subsidiaries is made known to the
Company’s principal executive officer and principal financial officer by others
within those entities; and such disclosure controls and procedures are effective
to perform the functions for which they were established.
(x) The
Company and its Subsidiaries maintain insurance of the types and in the amounts
generally deemed adequate for its business, including, but not limited to,
directors’ and officers’ insurance, insurance covering real and personal
property owned or leased by the Company and its Subsidiaries against theft,
damage, destruction, acts of vandalism and all other risks customarily insured
against, all of which insurance is in full force and effect. The Company has
not
been refused any insurance coverage sought or applied for, and the Company
has
no reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that
would not have a Material Adverse Effect.
8
(y) Neither
the Company nor any of its Subsidiaries or any of their respective officers,
directors, employees, agents or any other person acting on behalf of the Company
or its Subsidiaries has, directly or indirectly, given or agreed to give any
money, gift or similar benefit (other than legal price concessions to customers
in the ordinary course of business) to any customer, supplier, employee or
agent
of a customer or supplier, or official or employee of any governmental agency
or
instrumentality of any government (domestic or foreign) or any political party
or candidate for office (domestic or foreign) or any political party or
candidate for office (domestic or foreign) or other person who was, is, or
may
be in a position to help or hinder the business of the Company (or assist it
in
connection with any actual or proposed transaction) that (i) might subject
the
Company or its Subsidiaries to any damage or penalty in any civil, criminal
or
governmental litigation or proceeding, (ii) if not given in the past, might
have
had a material adverse effect on the assets, business or operations of the
Company and its Subsidiaries as reflected in any of the financial statements
contained in the Disclosure Package and the Prospectus or (iii) if not continued
in the future, might adversely affect the assets, business, operations or
prospects of the Company and its Subsidiaries. The Company’s internal accounting
controls and procedures are sufficient to cause the Company to comply with
the
Foreign Corrupt Practices Act of 1977, as amended.
(z) The
Company is not and, after giving effect to the offering and sale of the
Securities and the application of the proceeds thereof as described under the
caption “Use of Proceeds” in the Disclosure Package or the Prospectus, will not
be an “investment company” as defined in the Investment Company Act of 1940, as
amended.
(aa) Except
as
disclosed in the Disclosure Package or the Prospectus, there are no contracts,
agreements or understandings between the Company and any person that would
give
rise to a valid claim against the Company or any Underwriter for a brokerage
commission, finder’s fee or other like payment in connection with the
Offering.
(bb) Except
as
disclosed in the Disclosure Package or the Prospectus, there are no contracts,
agreements or understandings between the Company and any person granting such
person the right to require the Company to file a registration statement under
the Securities Act with respect to any securities of the Company owned or to
be
owned by such person or to require the Company to include such securities in
the
securities registered pursuant to a Registration Statement or in any securities
being registered pursuant to any other registration statement filed by the
Company under the Securities Act.
(cc) [The
Securities and the Common Stock reserved for issuance under the Underwriter
Warrants have been approved for listing on the Nasdaq Capital Market subject
only to official notice of issuance. The Common Stock of the Company has been
registered under Section 12(b) of the Securities Exchange Act of 1934, as
amended (the “Exchange
Act”).]
9
(dd) The
Company has taken all necessary actions to ensure that, upon and at all times
after the filing of the Registration Statement, the Company and its Subsidiaries
and their respective officers and directors, in their capacities as such, will
be in compliance in all material respects with the applicable provisions of
the
Xxxxxxxx-Xxxxx Act of 2002 (“Xxxxxxxx-Xxxxx Act”) and the rules and regulations
promulgated thereunder and related or similar rules and regulations promulgated
by the Nasdaq Market or any other governmental or self regulatory entity or
agency, except for such violations which, singly or in the aggregate, would
not
have a Material Adverse Effect. Without limiting the generality of the
foregoing: (i) all members of the Company’s board of directors who are required
to be “independent” (as that term is defined under applicable laws, rules and
regulations), including, without limitation, all members of the audit committee
of the Company’s board of directors, meet the qualifications of independence as
set forth under applicable laws, rules and regulations and (ii) the audit
committee of the Company’s board of directors has at least one member who is an
“audit committee financial expert” (as that term is defined under applicable
laws, rules and regulations).
(ee) No
consent, approval, authorization, or order of, or filing with, any governmental
agency or body or any court is required for the consummation of the transactions
contemplated by this Agreement in connection with the issuance and sale of
the
Securities by the Company, except such as have been obtained and made under
the
Securities Act and such as may be required by the Financial Industry Regulatory
Authority (“FINRA”)
or
under state securities laws or the laws of any foreign
jurisdiction.
(ff) The
execution, delivery and performance of this Agreement, and the issuance and
sale
of the Securities will not result in a breach or violation of any of the terms
and provisions of, or constitute a default under, (i) any statute, any
rule, regulation or order of any governmental agency or body or any court,
domestic or foreign, having jurisdiction over the Company, except in the case
of
this clause (i) for such breaches, violations or defaults which would not,
individually or in the aggregate, have a Material Adverse Effect or
(ii) any agreement or instrument to which the Company is a party or by
which the Company is bound, except in the case of this clause (ii) for such
breaches, violations or defaults which would not, individually or in the
aggregate, have a Material Adverse Effect, or (iii) the charter or by-laws
of the Company, and the Company has full power and authority to authorize,
issue
and sell the Securities as contemplated by this Agreement.
(gg) The
Company is not presently doing business with the government of Cuba or with
any
person or affiliate located in Cuba.
(hh) Each
of
the Company and its Subsidiaries has generally enjoyed a satisfactory
employer-employee relationship with its employees and is in compliance in all
material respects with all federal, state and local laws and regulations
respecting the employment of its employees and employment practices, terms
and
conditions of employment and wages and hours relating thereto. No labor dispute
with the employees of the Company or any Subsidiary exists or, to the knowledge
of the Company, is imminent that might have a Material Adverse
Effect.
10
(ii) The
Company and its Subsidiaries own or possess the right to use sufficient
trademarks, trade names, patent rights, copyrights, domain names, licenses,
approvals, trade secrets, inventions, technology, know-how and other similar
rights (collectively, “Intellectual
Property Rights”)
as are
(i) necessary or material to conduct its business as now conducted and as
described in the Disclosure Package and the Prospectus and as are
(ii) necessary or material for the commercialization of the products
described in the Disclosure Package and the Prospectus as being under
development. Except as set forth in the Disclosure Package and the Prospectus,
(a) there is no pending or, to the Company’s knowledge, threatened action,
suit, proceeding, or claim by others challenging the rights of the Company
or
any of its Subsidiaries in or to any such Intellectual Property Rights that,
if
decided adversely to the Company would, individually or in the aggregate, have
a
Material Adverse Effect, and the Company is unaware of any facts which would
form a reasonable basis for any such claim; (b) there is no pending or, to
the Company’s knowledge, threatened action, suit, proceeding, or claim by others
that the Company or any of its Subsidiaries infringes, misappropriates, or
otherwise violates any Intellectual Property Rights of others that, if decided
adversely to the Company would, individually or in the aggregate, have a
Material Adverse Effect, and the Company is unaware of any facts which would
form a reasonable basis for any such claim; (c) there is no pending or, to
the Company’s knowledge, threatened action, suit, proceeding, or claim by others
challenging the validity, scope, or enforceability of any such Intellectual
Property Rights owned by the Company or its Subsidiaries and the Company is
unaware of any facts which would form a reasonable basis for any such claim;
(d) to the Company’s knowledge, the operation of the business of the
Company and its Subsidiaries as now conducted, and as described in the
Disclosure Package and the Prospectus, and in connection with the development
and commercialization of the products described in the Disclosure Package and
the Prospectus does not infringe any claim of any patent or published patent
application; (e) there is no prior art of which the Company is aware that
may render any patent owned or licensed by the Company or its Subsidiaries
invalid or any patent application owned or licensed by the Company unpatentable
which has not been disclosed to the applicable government patent office; and
(f) the Company’s granted or issued patents, registered trademarks, and
registered copyrights have been duly maintained and are in full force and in
effect, and none of the patents, trademarks and copyrights have been adjudged
invalid or unenforceable in whole or in part. Neither the Company nor any of
its
Subsidiaries is a party to or bound by any options, licenses or agreements
with
respect to the Intellectual Property Rights of any other person or entity that
are required to be set forth in the Disclosure Package and the Prospectus and
are not described therein in all material respects. None of the technology
or
intellectual property used by the Company and its Subsidiaries in its business
has been obtained or is being used by the Company or its Subsidiaries in
violation of any contractual obligation binding on the Company or its
Subsidiaries, or, to the Company’s knowledge, any of its officers, directors, or
employees or otherwise in violation of the rights of any persons. No third
party
has been granted by the Company or its Subsidiaries rights to the Intellectual
Property Rights of the Company or its Subsidiaries that, if exercised, could
enable such party to develop products competitive to those of the Company as
described in the Disclosure Package and the Prospectus.
(jj) The
Company has duly and properly filed or caused to be filed with the U.S. Patent
and Trademark Office (the “PTO”)
and
applicable foreign and international patent authorities all patent applications
owned by the Company and its Subsidiaries (the “Company
Patent Applications”).
To
the knowledge of the Company, the Company has complied with the PTO’s duty of
candor and disclosure for the Company Patent Applications and has made no
material misrepresentation in the Company Patent Applications. To the Company’s
knowledge, the Company Patent Applications disclose patentable subject matters.
The Company has not been notified of any inventorship challenges nor has any
interference been declared or provoked nor is any material fact known by the
Company that would preclude the issuance of patents with respect to the Company
Patent Applications or would render such patents, if issued, invalid or
unenforceable.
11
(kk) Neither
the Company or any of its Subsidiaries has breached and is currently in breach
of any provision of any license, contract or other agreement governing the
use
by the Company or its Subsidiaries of Intellectual Property Rights owned by
third parties (collectively, the “Licenses”)
and,
except as described in the Disclosure Package and the Prospectus, no third
party
has alleged any such breach and the Company is unaware of any facts that would
form a reasonable basis for such a claim. To the Company’s knowledge, no other
party to the Licenses has breached or is currently in breach of any provision
of
the Licenses. Each of the Licenses is in full force and effect and constitutes
a
valid and binding agreement between the parties thereto, enforceable in
accordance with its terms, and there has not occurred any breach or default
under any such Licenses or any event that with the giving of notice or lapse
of
time would constitute a breach or default thereunder. Except as would not have
a
Material Adverse Effect, neither the Company nor any of its Subsidiaries has
been and is currently involved in any disputes regarding the Licenses. To the
Company’s knowledge, all patents licensed to the Company pursuant to the
Licenses are valid, enforceable and being duly maintained. To the Company’s
knowledge, all patent applications licensed to the Company pursuant to the
Licenses are being duly prosecuted.
(ll) The
Company and its Subsidiaries are in compliance in all material respects with
all
applicable rules and regulations of the State Food and Drug Administration
of
the PRC (the “SFDA”),
the
U.S. Food and Drug Administration (the “FDA”),
or any
foreign, state or local governmental or self-regulatory body exercising
comparable authority, and all related applicable laws, statutes, ordinances,
rules or regulations (including, without limitation, the Federal Food, Drug
and
Cosmetic Act, as amended, the Good Manufacturing Practice regulations and
similar foreign laws and regulations), the enforcement of which, individually
or
in the aggregate, would be expected to result in a Material Adverse
Effect.
(mm) To
the
Company’s knowledge, there are no rulemaking or similar proceedings before the
SFDA, the FDA, PTO, or any foreign, state or local governmental or
self-regulatory body exercising comparable authority, which affect or involve
the Company, its Subsidiaries, or any of the products that the Company has
developed, is developing or proposes to develop or uses or proposes to use
which, if the subject of an action unfavorable to the Company, would result
in a
Material Adverse Effect.
(nn) The
Company and each Subsidiary possess such valid and current certificates,
authorizations, approvals or permits issued by the appropriate state, federal,
foreign regulatory agencies or bodies necessary to conduct their respective
businesses, including the marketing and sale of the Company’s products as
described in the Disclosure Package and the Prospectus 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 result in a Material Adverse
Effect.
(oo) There
are
no business relationships or related-party transactions involving the Company
or
any Subsidiary or any other person required to be described in the Disclosure
Package and the Prospectus that have not been described as
required.
12
(pp) Except
as
would not, individually or in the aggregate, result in a Material Adverse Effect
(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 Environmental 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 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 or any of its Subsidiaries
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, 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
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, 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.
(qq) The
Company 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, or its “ERISA Affiliates” (as defined
below) are in compliance in all material respects with ERISA. “ERISA
Affiliates”
means,
with respect to the Company, 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 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, or any of its ERISA
Affiliates. No “employee benefit plan” established or maintained by the Company
or any of its ERISA Affiliates, if such “employee benefit plan” were terminated,
would have any “amount of unfunded benefit liabilities” (as defined under
ERISA). Neither the Company, nor any of its 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 or any of its 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.
13
(rr) No
relationship, direct or indirect, exists between or among any of the Company
or
any affiliate of the Company, on the one hand, and any director, officer,
shareholder, customer or supplier of the Company or any affiliate of the
Company, on the other hand, which is required by the Act, the Exchange Act
or
the Regulations to be described in the Disclosure Package or the Prospectus
which is not so described and described as required. There are no outstanding
loans, advances (except normal advances for business expenses in the ordinary
course of business) or guarantees of indebtedness by the Company to or for
the
benefit of any of the officers or directors of the Company or any person
connected with such officer or director (including his/her spouse, infant
children, any company or undertaking in which he/she holds a controlling
interest), except as disclosed in the Disclosure Package or the Prospectus.
The
Company has not, in violation of the Xxxxxxxx-Xxxxx Act, directly or indirectly,
including through a Subsidiary (other than as permitted under the Xxxxxxxx-Xxxxx
Act for depositary institutions), extended or maintained credit, arranged for
the extension of credit, or renewed an extension of credit, in the form of
a
personal loan to or for any director or executive officer of the
Company.
(ss) The
market data and industry forecasts included in the Registration Statement and
the Disclosure Package and the Prospectus were obtained or derived from industry
publications that are and were not at any time under the Company’s control which
the Company reasonably and in good faith believes are reliable and accurate,
and
such data agree with the sources from which they are derived.
(tt) .Except
as described in the Disclosure Package and the Prospectus, there are no claims,
payments, issuances, arrangements or understandings for services in the nature
of a finder’s, consulting or origination fee with respect to the introduction of
the Company to the Underwriters or the sale of the Shares hereunder or any
other
arrangements, agreements, understandings, payments or issuances with respect
to
the Company that may affect the Underwriters’ compensation, as determined by
FINRA.
(uu) Except
as
disclosed to the Representatives in writing, the Company has not made any direct
or indirect payments (in cash, securities or otherwise) to (i) any person,
as a
finder’s fee, investing fee or otherwise, in consideration of such person
raising capital for the Company or introducing to the Company persons who
provided capital to the Company, (ii) any FINRA member, or (iii) any person
or
entity that has any direct or indirect affiliation or association with any
FINRA
member within the 12-month period prior to the date on which the Registration
Statement was filed with the Commission (“Filing
Date”)
or
thereafter.
(vv) None
of
the net proceeds of the offering will be paid by the Company to any
participating FINRA member or any affiliate or associate of any participating
FINRA member, except as specifically authorized herein.
(ww) To
the
Company’s knowledge, no (i) officer or director of the Company or its
Subsidiaries, (ii) owner of 5% or more of the Company’s unregistered securities
or that of its Subsidiaries or (iii) owner of any amount of the Company’s
unregistered securities acquired within the 180-day period prior to the Filing
Date, has any direct or indirect affiliation or association with any FINRA
member. The Company will advise the Representatives and their counsel if it
becomes aware that any officer, director or stockholder of the Company or its
Subsidiaries is or becomes an affiliate or associated person of a FINRA member
participating in the Offering.
(xx) Neither
the Company nor any of its affiliates has, prior to the date hereof, made any
offer or sale of any securities which are required to be “integrated” pursuant
to the Securities Act or the Rules and Regulations with the offer and sale
of
the Securities pursuant to the Registration Statement. Except as disclosed
in
the Registration Statement and Prospectus or in any public filings relating
to
the Company filed with the Commission, neither Company nor any of its affiliates
has sold or issued any Common Stock, options or warrants to purchase shares
of
Common Stock, or securities convertible into shares of Common Stock, during
the
six-month period preceding the date of the Prospectus, including but not limited
to any sales pursuant to Rule 144A or Regulation D or S under the Securities
Act, other than shares of Common Stock issued pursuant to employee benefit
plans, qualified stock option plans or employee compensation plans or pursuant
to outstanding options, rights or warrants as described in the Registration
Statement and the Prospectus.
14
(yy) Except
as
set forth in the Disclosure Package and the Prospectus, no person has the right
to act as an underwriter or as a financial advisor to the Company in connection
with the Offering.
(zz) The
statements set forth in the Prospectus under the caption “Management’s
Discussion and Analysis of Financial Condition and Results of Operation” insofar
as they purport to describe the internal controls of the Company and its
Subsidiaries are true, accurate, complete and fair summaries in all material
respects.
(aaa) The
section entitled "Management's Discussion and Analysis of Financial Condition
and Results of Operations - Significant Accounting Policies" in the Prospectus
truly, accurately and completely in all material respects describes: (i)
accounting policies which the Company believes are the most important in the
portrayal of the Company and its Subsidiaries financial condition and results
of
operations and which require management's most difficult, subjective or complex
judgments ("Critical Accounting Policies"); (ii) judgments and uncertainties
affecting the application of Critical Accounting Policies; and (iii) the
likelihood that materially different amounts would be reported under different
conditions or using different assumptions; and the Company's Board of Directors
and management have reviewed and agreed with the selection, application and
disclosure of Critical Accounting Policies and have consulted with its legal
counsel and independent accountants with regard to such disclosure.
(bbb) None
of
Shenzhen Hyper, Beijing Kbeta or Wuhan Kanqiao is currently prohibited directly
or indirectly, from paying any dividends or other distributions to Changdu
Huiheng, except as disclosed in the Disclosure Package and the Prospectus.
Other
than as set forth in the Disclosure Package and the Prospectus, dividends
declared with respect to after-tax retained earnings on the equity interests
of
Shenzhen Hyper, Beijing Kbeta or Wuhan Kanqiao may under the current laws and
regulations of the PRC be paid to the Company in U.S. dollars, and all such
dividends and other distributions will not be subject to withholding or other
taxes under the laws and regulations of the PRC and are otherwise free and
clear
of any other tax, withholding or deduction in the PRC, and without the necessity
of obtaining any authorization from a governmental agency or court in the PRC.
Changdu Huiheng is currently not prohibited directly or indirectly, from paying
any dividends or other distributions to Allied Moral, except as disclosed in
the
Disclosure Package and the Prospectus. Other than as set forth in the Disclosure
Package and the Prospectus, divdends declared with respect to after-tax retained
earnings on the equity interests of Changdu Huiheng may under the current laws
and regulations of Tibet be paid to the Company in U.S. dollars, and all such
dividends and other distributions will not be subject to withholding or other
taxes under the laws and regulations of Tibet and are otherwise free and clear
of any other tax, withholding or deduction in Tibet, and without the necessity
of obtaining any authorization from a governmental agency or court in
Tibet.
15
(ccc) The
events and transactions described in the Disclosure Package and the Prospectus
regarding the restructuring of ownership interests of Shenzhen Hyper, Beijing
Kbeta and Wuhan Kbeta do not (i) contravene any provision of applicable law
or
statute, rule on regulation of any governmental agency or court having
jurisdiction over the Company or its Subsidiaries (including but not limited
to
the Ministry of Commerce, the China Securities Regulatory Commission, the State
Administration of Industry and Commence, the National Development and Reform
Commission, the State-owned Asset Administration Commission and the State Tax
Bureau); (ii) contravene the articles of association, business license or other
constituent documents of the Company or its Subsidiaries; (iii) conflict with
or
result in a breach or violation of the terms of any agreement or instrument
to
which the Company or its Subsidiaries is a party.
(ddd) No
securities of the Company have been sold by the Company or by or on behalf
of,
or for the benefit of, any person or persons controlling, controlled by, or
under common control with the Company within the three years prior to the date
hereof, except as disclosed in the Registration Statement.
(eee) The
disclosures in the Registration Statement concerning the effects of Federal,
State and local regulation on the Company’s business purpose as currently
contemplated are correct in all material respects and do not omit to state
a
material fact necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading.
(fff) Except
as
disclosed in the Disclosure Package or the Prospectus, since the date of the
latest audited financial statements included in the Disclosure Package or the
Prospectus there has been no Material Adverse Effect, nor any development or
event involving a prospective Material Adverse Effect, in the condition
(financial or other), business, properties or results of operations of the
Company and its Subsidiaries taken as a whole.
Any
certificate signed by an officer of the Company and delivered to the
Representatives or to counsel for the Underwriters shall be deemed to be a
representation and warranty by the Company to each Underwriter as to the matters
set forth therein.
The
Company acknowledges that the Underwriters and, for purposes of the opinions
to
be delivered pursuant to Section 6 hereof, counsels to the Company and
counsel to the Underwriters, will rely upon the accuracy and truthfulness of
the
foregoing representations and hereby consents to such reliance.
2. Representations
and Warranties of the Selling Stockholders.
Each
Selling Stockholder represents and warrants to, and agrees with, each
Underwriter that:
(a) This
Agreement has been duly authorized, executed and delivered by or on behalf
of
such Selling Stockholder.
(b) The
execution and delivery by such Selling Stockholder of, and the performance
by
such Selling Stockholder of its obligations under, this Agreement, the Custody
Agreement signed by such Selling Stockholder and the Company, as Custodian,
relating to the deposit of the Securities to be sold by such Selling Stockholder
(the “Custody
Agreement”),
and
the Power of Attorney appointing certain individuals as such Selling
Stockholder’s attorneys-in-fact to the extent set forth therein, relating to the
transactions contemplated hereby and by the Registration Statement (the
“Power
of Attorney”),
will
not contravene any provision of applicable law, or the certificate of
incorporation or by-laws or similar corporate organizational documents of such
Selling Stockholder (if such Selling Stockholder is a corporation or other
entity), or any agreement or other instrument binding upon such Selling
Stockholder or any judgment, order or decree of any governmental body, agency
or
court having jurisdiction over such Selling Stockholder, and no consent,
approval, authorization or order of, or qualification with, any governmental
body or agency is required for the performance by such Selling Stockholder
of
its obligations under this Agreement or the Custody Agreement or Power of
Attorney of such Selling Stockholder, except such as may be required by the
securities or Blue Sky laws of the various states in connection with the offer
and sale of the Securities.
16
(c)
Such
Selling Stockholder has, and on the Closing Date will have, good title to,
or a
valid “security entitlement” within the meaning of Section 8-501 of the New York
Uniform Commercial Code in respect of, the Securities to be sold by such Selling
Stockholder free and clear of all security interests, claims, liens, equities
or
other encumbrances other than pursuant to this Agreement, the Custody Agreement
and the Power of Attorney, and the legal right and power, and all authorization
and approval required by law, to enter into this Agreement, the Custody
Agreement and the Power of Attorney and to sell, transfer and deliver the
Securities to be sold by such Selling Stockholder or a security entitlement
in
respect of such Securities.
(d) The
Custody Agreement and the Power of Attorney have been duly authorized, executed
and delivered by such Selling Stockholder and are valid and binding agreements
of such Selling Stockholder.
(e) Delivery
of the Securities to be sold by such Selling Stockholder and payment therefor
pursuant to this Agreement will pass good title to such Securities, free and
clear of any adverse claim within the meaning of Section 8-102 of the New York
Uniform Commercial Code, to each Underwriter who has purchased such Securities
without notice of an adverse claim within the meaning of Section 8-105 of the
New York Uniform Commercial Code.
(f) The
information provided by such Selling Stockholder for inclusion in the
Registration Statement and the Prospectus is true and accurate.
(g)
Such
Selling Shareholder is not prompted by any information concerning the Company
or
its subsidiaries which is not set forth in the Registration Statement and the
Prospectus to sell its Securities pursuant to this Agreement.
3. Purchase
of the Securities by the Underwriters.
(a) Subject
to the terms and conditions and upon the basis of the representations,
warranties and agreements herein set forth, the Company agrees to issue and
sell
to the Underwriters, and each of the Underwriters agrees, severally and not
jointly, to purchase at a price of $__________ per share, the number of Firm
Securities set forth opposite such Underwriter’s name in Schedule I hereto,
subject to adjustment in accordance with Section 8 hereof. The Underwriters
agree to offer the Firm Securities to the public as set forth in the
Prospectus.
(b) The
Company and each Selling Stockholder hereby grants to the Underwriters an option
to purchase from the Company and each Selling Stockholder, on a pro rata basis,
solely for the purpose of covering over-allotments in connection with the
distribution and sale of the Firm Securities, all or any portion of the Optional
Securities for a period of forty-five (45) days from the date hereof at the
purchase price per Share set forth above. Optional Securities shall be purchased
from the Company and the Selling Stockholders, severally and not jointly, for
the accounts of the several Underwriters in proportion to the number of Firm
Securities set forth opposite such Underwriter’s name in Schedule I hereto,
except that the respective purchase obligations of each Underwriter shall be
adjusted by the Representatives so that no Underwriter shall be obligated to
purchase fractional Optional Securities. No Optional Securities shall be sold
and delivered unless the Firm Securities previously have been, or simultaneously
are, sold and delivered.
17
4. Delivery
of and Payment for Securities. Delivery
of certificates for the Firm Securities to be purchased by the Underwriters
from
the Company and payments therefor shall be made at the offices of Chardan or
Xxxx (or such other place as mutually may be agreed upon), on the third full
Business Day following the date hereof or, if the pricing of the Firm Securities
occurs after 4:30 p.m., New York City time, on the fourth full Business Day
thereafter, or at such other date as shall be determined by the Representatives
and the Company (the “First
Closing Date”).
The
option to purchase Optional Securities granted in Section 3 hereof may be
exercised during the term thereof by written notice to the Company and the
Custodian from the Representatives. Such notice shall set forth the aggregate
number of Optional Securities as to which the option is being exercised and
the
time and date, not earlier than either the First Closing Date or the second
Business Day after the date on which the option shall have been exercised nor
later than the fifth Business Day after the date of such exercise, as determined
by the Representatives, when the Optional Securities are to be delivered (the
“Option
Closing Date”).
Delivery and payment for such Optional Securities is to be at the offices set
forth above for delivery and payment of the Firm Securities. (The First Closing
Date and the Option Closing Date are herein individually referred to as the
“Closing
Date”
and
collectively referred to as the “Closing
Dates”.)
Delivery
of certificates for the Securities shall be made by or on behalf of the Sellers
to the Representatives, for the respective accounts of the Underwriters, against
payment by the Representatives, for the several accounts of the Underwriters,
of
the purchase price therefor by (i) Federal funds wire transfer or
(ii) certified or official bank check payable in next day funds to the
order of such Sellers. The certificates for the Securities shall be registered
in such names and denominations as the Representatives shall have requested
at
least two full Business Days prior to the applicable Closing Date, and shall
be
made available for checking and packaging at a location in New York, New York
as
may be designated by the Representatives at least one full Business Day prior
to
such Closing Date. Time shall be of the essence and delivery at the time and
place specified in this Agreement is a further condition to the obligations
of
each Underwriter.
5. Covenants.
The
Company covenants and agrees with each Underwriter that:
(a) During
such period beginning on the Initial Sale Time and ending on the later of the
Closing Date or such date, as in the opinion of counsel for the Underwriters,
the Prospectus is no longer required by law to be delivered in connection with
sales as contemplated by this Agreement by an Underwriter or dealer, including
in circumstances where such requirement may be satisfied pursuant to Rule 172
(the “Prospectus
Delivery Period”),
prior
to amending or supplementing the Registration Statement (including any
registration statement filed under Rule 462(b) under the Securities Act), the
Disclosure Package or the Prospectus, the Company shall furnish to the
Representatives for review a copy of each such proposed amendment or supplement,
and the Company shall not file any such proposed amendment or supplement to
which the Representatives reasonably object.
18
(b) After
the
date of this Agreement, the Company shall promptly advise the Representatives
in
writing (i) when the Registration Statement, if not effective at the Execution
Time, shall have become effective, (ii) of the receipt of any comments of,
or
requests for additional or supplemental information from, the Commission, (iii)
of the time and date of any filing of any post-effective amendment to the
Registration Statement or any amendment or supplement to any preliminary
prospectus or the Prospectus, (iv) of the time and date that any post-effective
amendment to the Registration Statement becomes effective and (v) of the
issuance by the Commission of any stop order suspending the effectiveness of
the
Registration Statement or any post-effective amendment thereto or of any order
or notice preventing or suspending the use of the Registration Statement, any
preliminary prospectus or the Prospectus, or of any proceedings to remove,
suspend or terminate from listing or quotation the Common Stock from any
securities exchange upon which it is listed for trading or included or
designated for quotation, or of the threatening or initiation of any proceedings
for any of such purposes. 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) and 434, as
applicable, under the Securities 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) were received in
a
timely manner by the Commission.
(c) If
the
preliminary prospectus included in the Disclosure Package is being used to
solicit offers to buy the Securities and any event or development shall occur
or
condition exist as a result of which it is necessary to amend or supplement
the
Disclosure Package in order to make the statements therein, in the light of
the
circumstances under which they were made or then prevailing, as the case may
be,
not misleading (in which case the Company agrees to notify the Representatives
of any such event or condition), or if in the reasonable opinion of the
Representatives it is otherwise necessary to amend or supplement the Disclosure
Package to comply with law, the Company agrees to promptly prepare, file with
the Commission and furnish to the Underwriters and to dealers, at its own
expense, amendments or supplements to the Disclosure Package so that the
statements in the Disclosure Package as so amended or supplemented will not
be,
in the light of the circumstances under which they were made or then prevailing,
as the case may be, misleading or so that the Disclosure Package, as amended
or
supplemented, will comply with law; (ii) if, during the Prospectus Delivery
Period, any event or development shall occur or condition exist as a result
of
which it is necessary to amend or supplement the Registration Statement or
the
Prospectus in order to make the statements therein, in the light of the
circumstances under which they were made or then prevailing, as the case may
be,
not misleading (in which case the Company agrees to notify the Representatives
of any such event or condition), or if in the reasonable opinion of the
Representatives it is otherwise necessary to amend or supplement the
Registration Statement or the Prospectus to comply with law, including in
connection with the delivery of the Prospectus, the Company agrees to promptly
prepare, file with the Commission (and use its best efforts to have any
amendment to the Registration Statement or any new registration statement to
be
declared effective) and furnish to the Underwriters and to dealers, amendments
or supplements to the Registration Statement or the Prospectus, or any new
registration statement so that the statements in the Registration Statement
or
the Prospectus as so amended or supplemented will not be, in the light of the
circumstances under which they were made or then prevailing, as the case may
be,
misleading or so that the Registration Statement or the Prospectus, as amended
or supplemented, will comply with law.
19
(d) The
Company agrees that, unless it obtains the prior written consent of the
Representatives, it will not make any offer relating to the Common Stock that
would constitute an Issuer Free Writing Prospectus or that would otherwise
constitute a “free writing prospectus” (as defined in Rule 405 of the Securities
Act) required to be filed by the Company with the Commission or retained by
the
Company under Rule 433 of the Securities Act; provided that the prior written
consent of the Representatives hereto shall be deemed to have been given in
respect of the Free Writing Prospectuses included in Schedule III hereto. Any
such free writing prospectus consented to by the Representatives is hereinafter
referred to as a “Permitted
Free Writing Prospectus”.
The
Company agrees that (i) it has treated and will treat, as the case may be,
each
Permitted Free Writing Prospectus as an Issuer Free Writing Prospectus, and
(ii)
has complied and will comply, as the case may be, with the requirements of
Rules
164 and 433 of the Securities Act applicable to any Permitted Free Writing
Prospectus, including in respect of timely filing with the Commission, legending
and record keeping.
(e) The
Company shall furnish to the Underwriters, from time to time and without charge,
copies of the Registration Statement of which three shall be signed and shall
include exhibits and all amendments and supplements to any of such Registration
Statement, in each case as soon as available and in such quantities as the
Representatives may from time to time reasonably request.
(f) The
Company shall take or cause to be taken all necessary action and furnish to
whomever the Representatives may direct such information as may be required
in
qualifying the Securities for sale under the laws of such jurisdictions which
the Representatives shall designate and to continue such qualifications in
effect for as long as may be necessary for the distribution of the Securities;
except that in no event shall the Company be obligated in connection therewith
to qualify as a foreign corporation, or to execute a general consent for service
of process.
(g) The
Company shall make generally available to its securityholders, in the manner
contemplated by Rule 158(b) under the Securities Act, as soon as
practicable but in any event not later than 60 days after the end of its fiscal
quarter in which the first anniversary date of the effective date of the
Registration Statement occurs, an earning statement which will comply with
Section 11(a) of the Securities Act covering a period of at least 12
consecutive months beginning after the effective date of the Registration
Statement.
(h) The
Company will not, without the prior written consent of the Representatives
(which consent may be withheld in the Representatives’ sole discretion),
directly or indirectly, issue, sell, offer, agree to sell, contract or grant
any
option to sell (including, without limitation, pursuant to any short sale),
pledge, make any short sale of, maintain any short position with respect to,
transfer, establish or maintain an open “put equivalent position” within the
meaning of Rule 16a-1(h) under the Exchange Act, enter into any swap, derivative
transaction or other arrangement (whether such transaction is to be settled
by
delivery of common stock, other securities, cash or other consideration) that
transfers to another, in whole or in part, any of the economic consequences
of
ownership, or otherwise dispose of any shares of Common Stock, options or
warrants to acquire shares of Common Stock, or securities exchangeable or
exercisable for or convertible into shares of Common Stock, or publicly announce
an intention to do any of the foregoing, for a period commencing on the date
hereof and continuing through the close of trading on the date 90days after the
date of the Prospectus (the “Lock-Up
Period”).
20
Notwithstanding
the foregoing, for the purpose of allowing the Underwriters to comply with
NASD
Rule 2711(f)(4), if (1) during the last 17 days of the initial Lock-Up Period,
the Company releases earnings results or material news or a material event
relating to us occurs or (2) prior to the expiration of the initial Lock-Up
Period, the Company announces that it will release earnings results during
the
16-day period beginning on the last day of the initial Lock-Up Period, then
in
each case the Lock-Up Period will be extended until the expiration of the 18-day
period beginning on the date of release of the earnings results or material
news, as applicable, unless the Representatives waive, in writing, such
extension.
(i) The
Company shall cause each officer and director of the Company, the holders of
a
total of 14,551,013 shares of Common Stock and all holders of the Company’s
Series A Preferred Stock, to furnish to the Representatives, on or prior to
the
date of this Agreement, a letter or letters, in form and substance satisfactory
to counsel for the Underwriters, pursuant to which each such person shall agree
not to offer for sale, contract to sell, sell, distribute, grant any option,
right or warrant to purchase, pledge, hypothecate or otherwise dispose of,
directly or indirectly, any shares of Common Stock or any securities convertible
into, or exercisable or exchangeable for, shares of Common Stock during the
90
days (subject, in the case of the officers and directors of the Company, to
an
additional extension to accommodate for earnings or material news releases)
following the effective date of the Registration Statement, except with the
Representatives’ prior written consent.
(j) For
a
period of three years from the Effective Date, the Company, at its expense,
shall cause its regularly engaged independent certified public accountants
to
participate to review (as described in Statement on Audited Standards No.
100-Interim Financial Information) (but not audit) the Company’s financial
statements for each of the first three fiscal quarters prior to the announcement
of quarterly financial information, the filing of the Company’s Form 10-Q
quarterly reports and the mailing of any quarterly financial information to
stockholders.
(k) The
Company will take all necessary and appropriate actions to register with
Corporation Records Service (including annual report information) published
by
Standard and Poor’s Corporation and to maintain such publication with updated
quarterly information for a period of three years from the Effective Date,
including the payment of any necessary fees and expenses. The Company shall
take
such action as may be requested by the Representative to obtain a secondary
market trading exemption in such states as may be requested by the
Representative, including the payment of any necessary fees and expenses and
the
filing of requisite forms (e.g., Form 25101(b) for secondary market trading
in
the State of California) on the effective date of the Offering.
(l) The
Company shall retain a public relations firm acceptable to the Representatives
for a period of two years from the effective date of the Offering.
(m) For
a
period of three years from the effective date of the Offering, the Company
will
promptly furnish to Xxxx (Attn: ____________) and Chardan (Attn: Xxxxxx Xxxxxxx)
and its counsel copies of such financial statements and other periodic and
special reports as the Company from time to time files with any governmental
authority or furnishes generally to holders of any class of its securities,
and
promptly furnish to the Representative (i) a copy of each periodic report the
Company shall be required to file with the Commission, (ii) a copy of every
press release and every news item and article with respect to the Company or
its
affairs that was released by the Company, (iii) a copy of each Form 8-K or
Schedules 13D, 13G, 14D-1 or 13E-4 received or prepared by the Company, and
(iv)
such additional documents and information regarding the Company and the affairs
of any future subsidiaries of the Company as the Representatives may from time
to time reasonably request.
21
(n) For
a
period of three years following the effective date of the Offering, the Company
shall retain a transfer agent acceptable to the Representatives (“Transfer
Agent”)
and
will furnish to the Underwriters at the Company’s sole expense such transfer
sheets and position listings of the Company’s securities as the Representatives
may request, including the daily, weekly and monthly consolidated transfer
sheets of the transfer agent of the Company and the weekly position listings
of
the Depository Trust Company. _______________ is acceptable to the
Representatives.
(o) The
Company shall apply the net proceeds of the sale of the Securities sold by
it in
the manner specified in the Prospectus under the heading “Use of Proceeds” and
shall file such reports with the Commission with respect to the sale of the
Securities and the application of the proceeds therefrom as may be required
in
accordance with Rule 463 under the Securities Act.
(p) The
Company will furnish to its securityholders annual reports containing financial
statements audited by independent public accountants and quarterly reports
containing financial statements and financial information which may be
unaudited. During the period of five years from the date hereof, the Company
will deliver to the Representatives and, upon request, to each of the other
Underwriters, copies of each annual report of the Company and each other report
furnished by the Company to its securityholders and will deliver to the
Representatives, as soon as they are available, copies of any other reports
(financial or otherwise) which the Company shall publish or otherwise make
available to any of its securityholders as such, and as soon as they are
available, copies of any reports and financial statements furnished to or filed
with the Commission or FINRA.
(q) The
Company will use its best efforts to have the Securities and the Common Stock
reserved for issuance under the Underwriter Warrants listed on the Nasdaq
Capital Market.
(r) On
the
First Closing Date, the Company shall issue and deliver to the Representatives
the Underwriter Warrants to purchase 322,000 shares of Common Stock in the
name
or names and in such authorized denominations as the Representatives may
request. The Underwriter Warrants shall be in the form of Exhibit A attached
hereto.
(s) For
a
period equal to five (5) years from the date hereof, the Company will not take
any action or actions that may prevent or disqualify the Company’s use of Form
S-1 (or other appropriate form) for the registration of the shares of Common
Stock underlying the Underwriter Warrants under the Securities Act.
(t) For
a
period of [three] years from the effective date of the Offering, the Company
will use its best efforts to maintain the registration of the Securities under
the provisions of Section 12 of the Exchange Act.
(u) The
Company will maintain key person life insurance in an amount not less than
$[3,000,000] on the life of Xxx Xxxxxxxx, to be in effect as of the effective
date of the Offering, and pay the annual premiums therefor and name the Company
as the sole beneficiary thereof.
22
(v) Neither
the Company, nor, any of its Subsidiaries or any of their employees, directors
or stockholders has taken or will take, directly or indirectly, any action
designed to or that has constituted or that might reasonably be expected to
cause or result in, under the Exchange Act, or otherwise, stabilization or
manipulation of the price of any security of the Company to facilitate the
sale
or resale of the Securities.
(w) For
a
period of three years from the effective date of the Offering, the Company
shall
retain independent public accountants acceptable to the
Representatives.
(x) The
Company hereby grants Chardan the right of first refusal to manage or co-manage
any public underwriting or private placement of debt or equity securities
(excluding (i) sales to employees under any compensation or stock option plan
approved by the Board of the Company, (ii) shares issued in payment of the
consideration for an acquisition and (iii) conventional banking arrangements
and
commercial debt financing) of the Company or any of its Subsidiaries or
successor of the Company during the eighteen (18) month period following the
Closing Date. If Chardan fails to accept in writing any such proposal for such
public or private sale within 10 business days after receipt of a written notice
from the Company containing such proposal, then Chardan will have no claim
or
right with respect to any such sale contained in any such notice. If,
thereafter, such proposal is modified in any material respect, the Company
will
adopt the same procedure as with respect to the original proposed public or
private sale and Chardan shall have the right of first refusal with respect
to
such revised proposal.
(y) Upon
consummation of the Offering, the Company will enter into a non-exclusive
financial advisory agreement with Chardan for a period of twenty-four (24)
months from the Closing Date, whereby the Company shall retain Chardan as its
Investment Banker and Financial Advisor. The services Chardan shall provide
pursuant to such agreement include advising the Company with respect to its
strategic planning process and business plans including an analysis of markets,
products, positioning, organization and staffing, potential strategic alliances,
capital requirements, valuation, funding, and working closely with the Company’s
management team to develop a set of long and short-term goals with special
focus
on enhancing corporate and shareholder value, and reviewing the Company’s
presentation and marketing materials used to present the Company to the
investment community. Chardan will advise and assist the Company in identifying,
evaluating, negotiating and structuring acquisitions, or strategic investments
or partnerships which may be accomplished through a purchase or sale of all
or a
portion of the stock or assets, a merger, joint venture, licensing or marketing
agreement or arrangement or other business combination or arrangement with
any
entity. As will be more fully detailed in the mutually negotiated financial
advisory agreement, the Company will pay Chardan a $10,000 monthly retainer
for
its advisory services. Moreover, the Company will pay any and all mutually
negotiated fees for any prospective capital raise that is contemplated in said
advisory agreement.
(z) The
Company will not issue a press release or engage in any other publicity until
25
days after the effective date of the Registration Statement without the prior
written consent of the Representatives.
23
(aa) Whether
or not this Agreement becomes effective or is terminated or the sale of the
Securities to the Underwriters is consummated, the Company shall pay or cause
to
be paid (A) all expenses (including stock transfer taxes) incurred in
connection with the delivery to the several Underwriters of the Securities,
(B) all fees and expenses (including, without limitation, fees and expenses
of the Company’s accountants and counsel, but excluding fees and expenses of
counsel for the Underwriters) in connection with the preparation, printing,
filing, delivery and shipping of the Registration Statement (including the
financial statements therein and all amendments and exhibits thereto), each
preliminary prospectus, the Disclosure Package and the Prospectus as amended
or
supplemented and the printing, delivery and shipping of this Agreement and
other
underwriting documents, including Underwriters’ Questionnaires, Underwriters’
Powers of Attorney, Blue Sky Memoranda, the Agreement Among Underwriters and
Selected Dealer Agreements, (C) all filing fees and fees and disbursements
of counsel to the Underwriters incurred in connection with the qualification
of
the Securities for sale under state securities laws as provided in
Section 5(f) hereof, (D) the filing fee of FINRA and any applicable
expenses of counsel for the Underwriters in connection with a review of the
offering by FINRA, (E) any applicable listing fees, (F) the cost of
printing certificates representing the Securities, (G) the cost and charges
of any transfer agent or registrar, (H) a non-accountable expense allowance
equal to one percent (1%) of the gross proceeds received by the Company from
the
sale of the Securities of which such non-accountable expense allowance shall
be
allocated equally between Xxxx and Chardan and (I) all other costs and
expenses incident to the performance of its obligations hereunder which are
not
otherwise provided for in this Section. It is understood, however, that, except
as provided in this Section, Section 7 and Section 9 hereof, the
Underwriters shall pay all of their own costs and expenses, including the fees
of their counsel, stock transfer taxes on resale of any of the Securities by
them and any advertising expenses connected with any offers they may make.
If
the sale of the Securities provided for herein is not consummated by reason
of
acts of the Company pursuant to Section 9(a) hereof which prevent this
Agreement from becoming effective, or by reason of any failure, refusal or
inability on the part of the Company to perform any agreement on its part to
be
performed or because any other condition of the Underwriters’ obligations
hereunder is not fulfilled, unless the failure to perform the agreement or
fulfill the condition is due to the default or omission of any Underwriter,
the
Company shall reimburse the several Underwriters for all reasonable
out-of-pocket disbursements (including fees and disbursements of counsel)
incurred by the Underwriters in connection with their investigation, preparing
to market and marketing the Securities or in contemplation of performing their
obligations hereunder. The Company shall not in any event be liable to any
of
the Underwriters for loss of anticipated profits from the transactions covered
by this Agreement.
6. Conditions
of Underwriters’ Obligations.
The
respective obligations of the several Underwriters hereunder are subject to
the
accuracy, at and as of the date hereof and the First Closing Date (as if made
at
the First Closing Date) and, with respect to the Optional Securities, the Option
Closing Date (as if made at the Option Closing Date), of the representations
and
warranties of the Company and the Selling Stockholders contained herein, to
the
performance by the Company and the Selling Stockholders of their obligations
hereunder and to the following additional conditions:
(a) The
Registration Statement shall have become effective not later than ___ p.m.,
Eastern time, on the date of this Agreement, or such later time and date as
the
Representatives shall approve and all filings required by Rules 424, 430A and
433 under the Securities Act shall have been timely made; no stop order
suspending the effectiveness of the Registration Statement or any amendment
thereof shall have been issued; no proceedings for the issuance of such an
order
shall have been initiated or threatened; and any request of the Commission
for
additional information (to be included in the Registration Statement, the
Disclosure Package, the Prospectus, any Issuer Free Writing Prospectus or
otherwise) shall have been complied with to the Representatives’
satisfaction.
(b) No
Underwriter shall have advised the Company that the Registration Statement,
the
Disclosure Package or the Prospectus, or any amendment thereof or supplement
thereto, contains an untrue statement of fact which, in the Representatives’
opinion, is material, or omits to state a fact which, in the Representatives’
opinion, is material and is required to be stated therein or is necessary to
make the statements therein, in the light of the circumstances under which
they
were made, not misleading.
24
(c) On
each
Closing Date, the Representatives shall have received the favorable opinion
of
DLA Piper U.S. LLP, counsel for the Company, dated as of such Closing Date,
the
form of which is attached as Exhibit B.
(d) On
each
Closing Date, the Representatives shall have received the favorable opinion
of
________, PRC counsel for the Company, dated as of such Closing Date, the form
of which is attached hereto as Exhibit C.
(e) On
each
Closing Date the Representatives shall have received the favorable opinion
of
Loeb & Loeb LLP, counsel for the Underwriters, dated as of such Closing
Date, in form and substance satisfactory to the Representatives.
(f) There
shall have been furnished to the Representatives a certificate of the Company,
dated as of each Closing Date and addressed to the Representatives, signed
by
the Chief Executive Officer and by the Chief Financial Officer of the Company
to
the effect that:
(i) The
representations and warranties of the Company in this Agreement are true and
correct, as if made at 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 has been
issued, and no proceedings for that purpose have been initiated or are pending
or, to their knowledge, contemplated;
(iii) Any
and
all filings required by Rules 424, 430A, 430B and 430C under the Securities
Act
have been timely made;
(iv) The
signers of said certificate have carefully examined the Registration Statement
and the Disclosure Package and the Prospectus, and any amendments or supplements
thereto, and such documents contain all statements and information required
to
be included therein; the Registration Statement or any amendment thereto does
not include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading; and the Disclosure Package and the Prospectus or any
supplements thereto do not include any untrue statement of a material fact
or
omit to state any material fact required to be stated therein or necessary
to
make the statements therein, in the light of the circumstances under which
they
were made, not misleading;
(v) Since
the
effective date of the Registration Statement, there has occurred no event
required to be set forth in an amendment or supplement to the Registration
Statement or the Disclosure Package and the Prospectus which has not been so
set
forth; and
(vi) Since
the
effective date of the Registration Statement, neither the Company nor any of
its
Subsidiaries shall have sustained any loss by strike, fire, flood, accident
or
other calamity (whether or not insured), or shall have become a party to or
the
subject of any litigation, which is material to the Company or its Subsidiaries
taken as a whole, nor shall there have been a material adverse change in the
general affairs, business, key personnel, capitalization, financial position,
earnings or net worth of the Company and its Subsidiaries, whether or not
arising in the ordinary course of business, which loss, litigation or change,
in
the Representatives’ judgment, shall render it inadvisable to proceed with the
delivery of the Securities.
25
(g) On
the
date hereof, and on each Closing Date, the Representatives shall have received
from UHY, independent public or certified public accountants for the Company,
a
letter dated the date hereof addressed to the Representatives, on behalf of
the
several Underwriters, in form and substance satisfactory to the Representatives,
containing statements and information of the type ordinarily included in
accountant’s “comfort letters” to underwriters, delivered according to Statement
of Auditing Standards No. 72 (or any successor bulletin), with respect to the
audited and unaudited financial statements and certain financial information
contained in the Registration Statement and the Prospectus (and the
Representatives shall have received an additional five conformed copies of
such
accountants’ letter for each of the several Underwriters).
(h) The
Securities and the Common Stock reserved for issuance under the Underwriter
Warrants shall have been duly authorized for listing on the [Nasdaq Capital
Market].
(i) The
“lock-up” agreements between the Representatives and the stockholders, officers
and directors of the Company listed on Schedule III, delivered to the
Representatives on or before the date hereof, shall be in full force and effect
on each Closing Date.
(j) By
the
effective date of the Offering, the Underwriters shall have received clearance
from FINRA as to the amount of compensation allowable or payable to the
Underwriters as described in the Registration Statement.
(k) On
or
before each Closing Date, the Representatives and counsel for the Underwriters
shall have received such information, certificates, agreements, opinions and
other documents as they may reasonably require.
(l) On
the
Option Closing Date, the Representatives shall have received the favorable
opinion, dated as of the Option Closing Date, of counsel for the Selling
Stockholders, in form and substance satisfactory to counsel for the
Underwriters, to the effect set forth in Exhibit D hereto and to such further
effect as counsel to the Underwriters may reasonably request.
(m) The
Representatives shall have received a certificate of an Attorney-in-Fact on
behalf of each Selling Stockholder, dated as of the Option Closing Date, to
the
effect that (i) the representations and warranties of each Selling Stockholder
contained in Section 2 hereof are true and correct in all respects with the
same
force and effect as though made at and as of the Option Closing Date and (ii)
each Selling Stockholder has complied in all material respects with all
agreements and all conditions on its part to be performed under this Agreement
at or prior to the Option Closing Date.
(n) On
or
before each Closing Date, the Representatives and counsel for the Underwriters
shall have received such information, certificates, agreements, opinions and
other documents as they may reasonably require.
26
All
such
opinions, certificates, letters and documents shall be in compliance with the
provisions hereof only if they are satisfactory in form and substance to the
Representatives and to counsel for the Underwriters. The Company shall furnish
the Representatives with such conformed copies of such opinions, certificates,
letters and other documents as the Representatives shall reasonably request.
If
any of the conditions specified in this Section 6 shall not have been
fulfilled when and as required by this Agreement, this Agreement and all
obligations of the Underwriters hereunder may be canceled at, or at any time
prior to, the First Closing Date or the Option Closing Date, as the case may
be,
by the Representatives. Any such cancellation shall be without liability of
the
Underwriters to the Company. Notice of such cancellation shall be given to
the
Company in writing, or by telegraph or telephone and confirmed in
writing.
7. Indemnification
and Contribution.
(a) The
Company shall indemnify and hold harmless each Underwriter, its directors,
officers, employees and agents and each person, if any, who controls any
Underwriter within the meaning of the Securities Act and the Exchange Act
against any loss, claim, damage or liability, joint or several, as incurred,
to
which such Underwriter or such controlling person may become subject, under
the
Securities Act or otherwise, insofar as such loss, claim, damage or liability
(or action in respect thereof) arises out of or is based 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 or Rule 430C under
the Securities 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; or (ii) upon any untrue statement or alleged untrue statement
of
a material fact contained in any Issuer Free Writing Prospectus, any preliminary
prospectus, the Prospectus (or any amendment or supplement thereto) or any
“issuer information” filed or required to be filed pursuant to Rule 433 under
the Securities Act 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 and to reimburse each
Underwriter, its officers, directors, employees, agents and each such
controlling person for any and all expenses (including the fees and
disbursements of one counsel chosen by the Representatives) as such expenses
are
reasonably incurred by such Underwriter, its officers, directors, employees
and
agents 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
Representatives expressly for use in the Registration Statement, any Issuer
Free
Writing Prospectus, any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto). The indemnity agreement set forth in this
Section 7(a) shall be in addition to any liabilities that the Company may
otherwise have.
(b) Each
Underwriter severally, but not jointly, shall indemnify and hold harmless the
Company, the Selling Stockholders, the directors, officers and employees of
the
Company and each person, if any who controls the Company or any Selling
Stockholder within the meaning of the Securities Act or the Exchange Act against
any loss, claim, damage or liability, joint or several, as incurred, to which
the Company may become subject, under the Securities Act or otherwise, insofar
as such loss, claim, damage or liability (or action in respect thereof) arises
out of or is based upon any untrue or alleged untrue statement of a material
fact contained in the Registration Statement, any Issuer Free Writing
Prospectus, any preliminary prospectus or the Prospectus (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 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 the Registration
Statement, any Issuer Free Writing Prospectus, any preliminary prospectus,
the
Prospectus (or any amendment or supplement thereto), in reliance upon and in
conformity with written information furnished to the Company by the
Representatives expressly for use therein; and to reimburse the Company, the
Selling Stockholders or any such director, officer, employee or controlling
person for any legal and other expense reasonably incurred by the Company,
or
any such director, officer, employee 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 each Underwriter
may
otherwise have.
27
(c) Each
Selling Stockholder severally, but not jointly, shall indemnify and hold
harmless each Underwriter, its directors, officers, employees and agents and
each person, if any, who controls any Underwriter within the meaning of the
Securities Act and the Exchange Act to the extent and in the manner sect forth
in clause (a) above to the extent, but only to the extent, that an untrue
statement or alleged untrue statement or omission or alleged omission of a
material fact was made in the Registration Statement or the Prospectus or any
amendment or supplement thereto in reliance upon and in conformity with
information provided in writing to the Company or the Underwriters by such
Selling Stockholders specifically for use in the Registration Statement or
Prospectus. Notwithstanding any other provisions herein, the aggregate liability
under any provision in this Section 7 of any Selling Stockholder shall not
exceed the product of the number of shares of Common Stock sold by such Selling
Stockholder multiplied by the offering price of the Common Stock as set forth
in
the Prospectus.
(d) Promptly
after receipt by an indemnified party under subsection (a), (b) or (c) above
of
notice of any claim or the commencement of any action, the indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
claim or the commencement of that action; the failure to notify the indemnifying
party shall not relieve it from any liability which it may have to an
indemnified party otherwise than under such subsection. If any such claim or
action shall be brought against an indemnified party, and it shall notify the
indemnifying party thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from
the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable
to
the indemnified party under such subsection for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; except that the
Representatives shall have the right to employ counsel to represent it and those
other Underwriters who may be subject to liability arising out of any claim
in
respect of which indemnity may be sought by the Underwriters against the Company
under such subsection if, in the Representatives’ reasonable judgment, based
upon the advice of counsel, it is advisable for the Representatives and those
Underwriters to be represented by separate counsel, and in that event the fees
and expenses of such separate counsel shall be paid by the Company.
28
(e) If
the
indemnification provided for in this Section 7 is unavailable or
insufficient to hold harmless an indemnified party under subsection (a), (b)
or
(c) above, then each indemnifying party shall contribute to the amount paid
or
payable by such indemnified party as a result of the losses, claims, damages
or
liabilities referred to in subsection (a), (b) or (c) above (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and each Selling Stockholder on the one hand and the Underwriters on
the
other from the offering of the Securities 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 the relative benefits referred
to in clause (i) above but also the relative fault of the Company or the Selling
Stockholders on the one hand and the Underwriters on the other in connection
with the statements or omissions that resulted in such losses, claims, damages
or liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Company and the Selling Stockholders on the
one hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Securities (before
deducting expenses) received by the Company and each Stockholder bear to the
total underwriting discounts and commissions received by the Underwriters,
in
each case as set forth in the table on the cover page of the Prospectus.
Relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
the
Company, the Selling Stockholders or the Underwriters and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. The Company, the Selling Stockholders and
the
Underwriters agree that it would not be just and equitable if contributions
pursuant to this subsection (e) were to be determined by pro rata allocation
(even if the Underwriters were treated as one entity for such purpose) or by
any
other method of allocation which does not take into account the equitable
considerations referred to in the first sentence of this subsection (e). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities referred to in the first sentence of this
subsection (e) shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
against any action or claim which is the subject of this subsection (e).
Notwithstanding the provisions of this subsection (e), no Underwriter shall
be
required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages that such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty
of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters’ obligations in
this subsection (e) to contribute are several in proportion to their respective
underwriting obligations and not joint. Each party entitled to contribution
agrees that upon the service of a summons or other initial legal process upon
it
in any action instituted against it in respect of which contribution may be
sought, it shall promptly give written notice of such service to the party
or
parties from whom contribution may be sought, but the omission so to notify
such
party or parties of any such service shall not relieve the party from whom
contribution may be sought from any obligation it may have hereunder or
otherwise (except as specifically provided in subsection (d)
hereof).
(f) The
obligations of the Company and each Selling Stockholder under this
Section 7 shall be in addition to any liability which the Company and the
Selling Stockholders may otherwise have; and the obligations of the Underwriters
under this Section 7 shall be in addition to any liability that the
respective Underwriters may otherwise have, and shall extend, upon the same
terms and conditions, to each director of the Company (including any person
who,
with his consent, is named in the Registration Statement as about to become
a
director of the Company), to each officer of the Company who has signed the
Registration Statement and to each person, if any, who controls the Company
within the meaning of the Securities Act, in either case, whether or not such
person is a party to any action or proceeding.
29
8. Substitution
of Underwriters.
If any
Underwriter defaults in its obligation to purchase the number of Securities
which it has agreed to purchase under this Agreement, the non-defaulting
Underwriters shall be obligated to purchase (in the respective proportions
which
the number of Securities set forth opposite the name of each non-defaulting
Underwriter in Schedule I hereto bears to the total number of Securities
set forth opposite the names of all the non- defaulting Underwriters in
Schedule I hereto) the Securities which the defaulting Underwriter agreed
but failed to purchase; except that the non-defaulting Underwriters shall not
be
obligated to purchase any of the Securities if the total number of Securities
which the defaulting Underwriter or Underwriters agreed but failed to purchase
exceeds 10% of the total number of Firm Securities, and any non-defaulting
Underwriter shall not be obligated to purchase more than 110% of the number
of
Securities set forth opposite its name in Schedule I hereto purchasable by
it pursuant to the terms of Section 3. If the foregoing maximums are
exceeded, (i) the non-defaulting Underwriters, and any other underwriters
satisfactory to the Representatives who so agree, shall have the right, but
shall not be obligated, to purchase (in such proportions as may be agreed upon
among them) all the Securities. If the non- defaulting Underwriters or the
other
underwriters satisfactory to the Representatives do not elect to purchase the
Securities which the defaulting Underwriter or Underwriters agreed but failed
to
purchase, this Agreement shall terminate without liability on the part of any
non-defaulting Underwriter or the Company except for the payment of expenses
to
be borne by the Company and the Underwriters as provided in Section (5)(o)
and the indemnity and contribution agreements of the Company, the Selling
Stockholders and the Underwriters contained in Section 7
hereof.
Nothing
contained herein shall relieve a defaulting Underwriter of any liability it
may
have for damages caused by its default. If the other underwriters satisfactory
to the Representatives are obligated or agree to purchase the Securities of
a
defaulting Underwriter, either the Representatives or the Company may postpone
the First Closing Date for up to five full Business Days in order to effect
any
changes that may be necessary in the Registration Statement, the Disclosure
Package or the Prospectus or in any other document or agreement, and to file
promptly any amendments or any supplements to the Registration Statement or
the
Disclosure Package or the Prospectus which in the Representatives’ opinion may
thereby be made necessary.
9. Effective
Date and Termination.
(a) This
Agreement shall become effective at ______ a.m., New York City time, on the
first full Business Day following the earlier of (i) the date hereof, or
(ii) the day on which the Representatives release the initial public
offering of the Firm Securities for sale to the public. The Representatives
shall notify the Company immediately after the Representatives have taken any
action which causes this Agreement to become effective. Until this Agreement
is
effective, it may be terminated by the Company or by the Representatives by
giving notice as hereinafter provided to the Representatives or by the
Representatives by giving notice as hereinafter provided to the Company, except
that the provisions of Sections 5(o) and 7 shall at all times be effective.
For the purpose of this Section, the Securities shall be deemed to have been
released for sale to the public upon release by the Representatives of an
electronic communication authorizing commencement of the offering the Securities
for sale by the Underwriters or other securities dealers.
30
(b) Until
the
First Closing Date, this Agreement may be terminated by the Representatives
by
giving notice as hereinafter provided to the Company, if (i) the Company
shall have failed, refused or been unable, at or prior to the First Closing
Date, to perform any agreement on its part to be performed hereunder unless
the
failure to perform any agreement is due to the default or omission by any
Underwriter, (ii) any other condition of the obligations of the
Underwriters hereunder is not fulfilled; (iii) trading in securities
generally on the New York Stock Exchange or the Nasdaq Global Market shall
have
been suspended or minimum or maximum prices shall have been established on
either of such exchanges or such market by the Commission or by such exchange
or
other regulatory body or governmental authority having jurisdiction;
(iv) trading or quotation in any of the Company’s securities shall have
been suspended or limited by the Commission or by the Nasdaq Global Market
or
other regulatory body of governmental authority having jurisdiction; (v) a
general banking moratorium shall have been declared by Federal or state
authorities; (vi) a material disruption in securities settlement, payment
or clearance services in the United States shall have occurred; (vii) there
shall have been any material adverse change in general economic, political
or
financial conditions or if the effect of international conditions on the
financial markets in the United States shall be such as, in the Representatives’
judgment, makes it inadvisable to proceed with the delivery of the Securities;
or (viii) any attack on, outbreak or escalation of hostilities, declaration
of war or act of terrorism involving the United States or any other national
or
international calamity or emergency if, in the Representatives’ judgment, the
effect of any such attack, outbreak, escalation, declaration, act, calamity
or
emergency makes it impractical or inadvisable to proceed with the completion
of
the public offering or the delivery of the Securities. Any termination of this
Agreement pursuant to this Section 9 shall be without liability on the part
of the Company or any Underwriter, except as otherwise provided in Sections
5(o)
or 7 hereof.
Any
notice referred to above may be given at the address specified in
Section 11 hereof in writing or by telegraph or telephone, and if by
telegraph or telephone, shall be immediately confirmed in writing.
(c) This
Agreement may also be terminated as provided in Section 8
hereof.
10. Survival
of Indemnities, Contribution, Warranties and
Representations.
All
representations, warranties, and agreements of the Company herein or in
certificates delivered pursuant hereto, and the agreements of the several
Underwriters and the Company contained in Section 7 hereof, shall remain
operative and in full force and effect regardless of any investigation made
by
or on behalf of any Underwriter or any controlling person thereof, or the
Company or any of its officers, directors, or controlling persons, and shall
survive delivery of, and payment for, the Securities to and by the Underwriters
hereunder.
11. 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 Representatives:
|
Xxxx
Capital Partners LLC
|
|
00
Xxxxxxxxx Xxxxx
|
|
|
Xxxxxxx
Xxxxx, Xxxxxxxxxx 00000
|
|
|
Facsimile:
(000) 000-0000
|
|
|
|
Attention:
Xxxx Xxxxxxx
|
31
|
Chardan
Capital Markets LLC
|
|
|
00
Xxxxx Xxxxxx, Xxxxx 0000
|
|
|
Xxx
Xxxx, Xxx Xxxx 00000
|
|
|
Attn:
Xxxxx Xxxxxxx, Chief Executive Officer
|
|
|
with
a copy to:
|
Loeb
& Loeb LLP
|
|
000
Xxxx Xxxxxx
|
|
|
Xxx
Xxxx, Xxx Xxxx 00000
|
|
|
Attention:
Xxxxxxxx Xxxxxxxx, Esq.
|
|
|
If
to the Company:
|
|
|
Huiheng
Building, Gaoxin 7 Street South
|
|
|
Keyuannan
Road, Nanshan Distric
|
|
|
Shenzhen
Guangdong, PRC 518057
|
|
|
with
a copy to:
|
DLA
Piper US LLP
|
|
0000
Xxxxxxxxx Xxxxx, Xxxxx 0000
|
|
|
Xxx
Xxxxx, XX 00000
|
|
|
Attn:
Xxxx Xxxx, Esq.
|
|
|
If
to the Selling
|
|
|
Stockholders:
|
|
|
with
a copy to:
|
|
12. Information
Furnished by Underwriters.
The
statements set forth under the caption “Underwriting” in the table in the first
paragraph concerning the number of shares each Underwriter has agreed to
purchase and in the paragraphs concerning sales by Underwriters to the public
at
the offering price and to dealers at such price less a concession and sales
by
Underwriters to discretionary accounts in any preliminary prospectus and the
Prospectus, constitute the only written information furnished by or on behalf
of
any Underwriter referred to in paragraphs (b) and (c) of Section 1 hereof
and in paragraphs (a) and (b) of Section 7 hereof.
13. Parties.
This
Agreement is made solely for the benefit of the several Underwriters, the
Company, the Selling Stockholders, any officer, director or controlling person
referred to in Section 8 hereof, and their respective successors and
assigns, and no other person shall acquire or have any right by virtue of this
Agreement. The term “successors and assigns,” as used in this Agreement, shall
not include any purchaser of any of the Securities from any of the Underwriters
merely by reason of such purchase.
14. Definition
of “Business Day” and “Subsidiary”.
For
purposes of this Agreement, (a) “Business Day” means any day on which the New
York Stock Exchange, Inc. is open for trading, and (b) “Subsidiary” has the
meaning set forth in Rule 405 under the Securities Act.
32
15. Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
New York, without giving effect to the choice of law or conflict of laws
principles thereof.
16. 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.
17. General
Provisions.
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. The Section headings herein are for the
convenience of the parties only and shall not affect the construction or
interpretation of this Agreement.
33
Please
confirm, by signing and returning to us two (2) counterparts of this Agreement,
that each of the Representatives is acting on behalf of itself and the several
Underwriters and that the foregoing correctly sets forth the agreement among
the
Company, the Selling Stockholders and the several Underwriters.
Very
truly yours,
|
By:
|
||
|
Name:
|
||
|
Title:
|
||
|
SCHEDULE
II ATTACHED HERETO
|
||
|
By:
|
||
|
Name:
|
||
|
As
Attorney-in-Fact acting on behalf of the Selling
|
||
|
Stockholders
named in Schedule II hereto
|
||
|
|
||
|
Confirmed
and accepted as of the date first above mentioned:
|
||
|
Xxxx
Capital Partners LLC,
|
||
|
As Representative of the Several Underwriters named in Schedule I
hereto
|
||
|
By:
|
||
|
[Authorized
Signatory]
|
||
|
Chardan
Capital Markets, LLC
|
||
|
As
Representative of the Several Underwriters named in Schedule I
hereto
|
||
|
By:
|
||
|
[Authorized
Signatory]
|
||
34
SCHEDULE
I
Underwriting
Agreement dated ______, 2008
|
Underwriter
|
Number
of Firm Securities
to
be Purchased
|
|
Xxxx
Capital Partners LLC
|
|
|
Chardan
Capital Markets, LLC
|
|
|
=========
|
SCHEDULE
II
SELLING
STOCKHOLDERS
SCHEDULE
III
Lock-Up
Agreements
SCHEDULE
IV
Issuer
Free Writing Prospectus
EXHIBIT
A
Form
of Underwriter Warrant
EXHIBIT
B
Form
of Opinion of Company Counsel
1. The
Company is duly organized, validly existing and in good standing under the
laws
of its jurisdiction of incorporation with power and authority to own, lease
and
operate its properties and conduct its business as currently conducted. The
Company is qualified as a foreign corporation in each jurisdiction in which
its
ownership or leasing of any properties or the character of its operations
requires such qualification or licensing, except where the failure to qualify
would not have a Material Adverse Effect on the Company.
2. Each
of
the Subsidiaries has been duly incorporated and is validly existing as a
corporation and in good standing under the laws of each of their respective
jurisdictions of organization, with power and authority (corporate or other)
to
own, lease and operate its properties and conduct its business as described
in
the Registration Statement and the Sale Preliminary Prospectus, and has been
duly qualified as a foreign corporation for the transaction of business and
is
in good standing under the laws of each other jurisdiction in which it owns
or
leases properties or conducts any business so as to require such qualification,
or is subject to no liability or disability by reason of the failure to be
so
qualified in any such jurisdiction that would not reasonably be expected to
have
a Material Adverse Effect.
3.
All
issued and outstanding securities of the Company have been duly authorized
and
validly issued and are fully paid and non-assessable; the holders thereof are
not subject to personal liability by reason of being such holders; and none
of
such securities were issued in violation of the preemptive rights of any
shareholder of the Company arising by operation of law or under the Articles
of
Incorporation or Bylaws of the Company. The offers and sales of the outstanding
securities of the Company were at all relevant times either registered under
the
Act or exempt from such registration requirements. The authorized and, to such
counsel’s knowledge, outstanding capital stock of the Company is as set forth in
the Prospectus.
4. The
Securities have been duly authorized and, when issued and paid for, will be
validly issued, fully paid and non-assessable; the holders thereof are not
and
will not be subject to personal liability by reason of being such holders.
The
Securities are not and will not be subject to the preemptive rights of any
holders of any security of the Company arising by operation of law or under
the
charter or by-laws of the Company. When issued, the Underwriter Warrants will
constitute valid and binding obligations of the Company to issue and sell,
upon
exercise thereof and payment therefor, the number and type of securities of
the
Company called for thereby, and such Underwriter Warrant, when issued, is
enforceable against the Company in accordance with its terms, except: (a) as
such enforceability may be limited by bankruptcy, insolvency, reorganization
or
similar laws affecting creditors’ rights generally; (b) as enforceability of any
indemnification or contribution provision may be limited under federal and
state
securities laws; and (c) that the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to the equitable defenses
and
to the discretion of the court before which any proceeding therefor may be
brought.
1
5. The
Underwriting Agreement and any other agreements entered into by the Company
in
connection with the Offering have each been duly and validly authorized and,
when executed and delivered by the Company, constitute, and the Underwriter
Warrants have been duly and validly authorized by the Company and, when executed
and delivered, will constitute, the valid and binding obligations of the
Company, enforceable against the Company in accordance with their respective
terms, except (a) as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting creditors’ rights
generally, (b) as enforceability of any indemnification or contribution
provisions may be limited under the federal and state securities laws, and
(c)
that the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to the equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought.
6. The
execution, delivery and performance of the Underwriting Agreement [, any other
agreements entered into by the Company in connection with the Offering] and
the
Underwriter Warrants and compliance by the Company with the terms and provisions
thereof and the consummation of the transactions contemplated thereby, and
the
issuance and sale of the Securities, do not and will not, with or without the
giving of notice or the lapse of time, or both, (a) to such counsel’s knowledge,
conflict with, or result in a breach of, any of the terms or provisions of,
or
constitute a default under, or result in the creation or modification of any
lien, security interest, charge or encumbrance upon any of the properties or
assets of the Company pursuant to the terms of, any mortgage, deed of trust,
note, indenture, loan, contract, commitment or other agreement or instrument
filed as an exhibit to the Registration Statement, (b) result in any violation
of the provisions of the charter or by-laws of the Company, or (c) to such
counsel’s knowledge, violate any U.S. statute or any judgment, order or decree,
rule or regulation applicable to the Company of any court, U.S. federal, state
or other regulatory authority or other governmental body having jurisdiction
over the Company, its properties or assets.
7. The
Registration Statement has been declared effective under the Act. To such
counsel’s knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose
have
been instituted or are pending or threatened under the Act.
8. Any
required filing of the Prospectus, and any supplements thereto, pursuant to
Rule
424(b) has been made in the manner and within the time period required by Rule
424(b).
9. The
8-A
Registration Statement has been declared effective. To such counsel’s knowledge,
no stop order suspending the effectiveness of the 8-A Registration Statement
has
been issued and no proceedings for that purpose have been instituted or are
pending or threatened.
10. The
Registration Statement, at the time it became effective, complied as to form
in
all material respects with the applicable requirements of the Act (except as
to
the financial statements, supporting schedules, footnotes, and other financial
and statistical information included therein, as to which such counsel may
express no opinion).
11. To
such
counsel’s knowledge, there is no action, suit or proceeding pending or overtly
threatened in writing by or before any U.S. federal or state court or
governmental agency, authority or body having jurisdiction over the Company,
its
business or property, and specifically naming the Company, of a character
required to be disclosed in the Prospectus that is not adequately disclosed
therein.
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12. To
such
counsel’s knowledge, there is no contract or other document of a character
required to be described in the Prospectus or to be filed as an exhibit to
the
Registration Statement that is not described or filed as required.
13. The
Company is not and, immediately after giving effect to the offering and sale
of
the Securities and the application of the proceeds thereof as described in
the
Prospectus, will not be an investment company under the Investment Company
Act
of 1940, as amended.
14. To
such
counsel’s knowledge, no other person has the right to have any securities of the
Company registered under the Registration Statement.
15. No
consent, approval, authorization, order, registration, filing, qualification,
license or permit of or with any U.S. federal or state court or any judicial,
regulatory or other legal or governmental agency or body is required for the
execution, delivery and performance by the Company of the Underwriting Agreement
or consummation by the Company of the transactions contemplated by the
Underwriting Agreement, except for: (a) such as may be required under state
securities or blue sky laws in connection with the purchase and distribution
of
the Securities by the Underwriters (as to which we express such counsel may
express no opinion); (b) such as have been made or obtained under the Act or
the
Exchange Act, or state securities or blue sky laws; and (c) such as are required
by FINRA.
The
opinion of counsel shall further include a statement to the effect that such
counsel has participated in conferences with officers and other representatives
of the Company, the Underwriters and the independent public accountants of
the
Company, at which conferences the contents of the Registration Statement and
the
Prospectus contained therein and related matters were discussed and, although
such counsel is not passing upon and does not assume any responsibility for
the
accuracy, completeness or fairness of the statements contained in the
Registration Statement and the Prospectus contained therein (except as otherwise
set forth in the foregoing opinion), solely on the basis of the foregoing
without independent check and verification, no facts have come to the attention
of such counsel which lead them to believe that the Registration Statement
or
any amendment thereto, at the time the Registration Statement or amendment
became effective, contained an untrue statement of a material fact or omitted
to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading or the Prospectus or any amendment or
supplement thereto, at the time they were filed pursuant to Rule 424(b) or
at
the date of such counsel’s opinion, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statement therein, in light of the circumstances under
which they were made, not misleading (except that such counsel need express
no
opinion with respect to (i) any disclosures relating to the laws, rules,
statutes or regulations of China (it being understood that the Underwriters
are
relying on the opinion of ___________ with respect to matters of Chinese law),
(ii) any disclosures relating to the laws, rules, statutes or regulations of
Nevada (it being understood that the Underwriters are relying on the opinion
of
___________ with respect to matters of Nevada law) or (iii) the financial
information and statistical data and information included in the Registration
Statement or the Prospectus).
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EXHIBIT
C
Form
of Opinion of PRC Counsel of the Company
1. Each
PRC
subsidiary of the Company (as set forth in the Registration Statement)(“PRC
Subsidiary”) has been duly incorporated and is validly existing and in good
standing under the laws of the PRC with full legal right, power and authority
(corporate and other), as authorized by the PRC government, to own, use, lease
and operate its assets and to conduct its business in the manner presently
conducted and as described in the Prospectus and is duly qualified to transact
business in any jurisdiction in which it owns or leases properties or conducts
any business, and such qualification is required, or is subject to no material
liability or disability by reason of the failure to be so qualified in any
such
jurisdiction; each of the Articles of Association, the business license and
other constituent documents of each PRC Subsidiary complies with all applicable
requirements of PRC law, including but not limited to the [PRC Company Law]
,
and each is in full force and effect.
2. All
of
the issued share capital of Allied Moral Holdings, Ltd. (“Allied Moral”) is
owned by the Company and have been duly and validly authorized and issued,
and
are fully paid and non-assessable. Allied Moral owns all of the issued share
capital of Changdu Huiheng Development Co., Ltd. (“Changdu Huiheng”), which
shares have been duly and validly authorized and issued, and are fully paid
and
non-assessable. Other than Changdu Huiheng, Allied Moral does not own, directly
or indirectly, any shares of stock or any other equity interests or long-term
debt securities of any corporation or other entity. All of issued share capital
of Wuhan Kanqiao Medical New Technology Co., Ltd. (“Wuhan Kanqiao”) are owned by
Changdu Huiheng and such shares been duly and validly authorized and issued,
and
are fully paid and non-assessable. Changdu Huiheng duly and validly owns the
equity interest of Shenzhen Hyper Technology Co., Ltd. (“Shenzhen Hyper”) and
Beijing Yuankang Kbeta Nuclear Technology Co., Ltd. (“Beijing Kbeta”) in the
percentages set forth in the Prospectus under the caption “Business-Huiheng
Medical’s Background,” free and clear of all liens, encumbrances, equities or
claims. Other than Shenzhen Hyper and Beijing Kbeta, Changdu Huiheng does not
own, directly or indirectly, any shares of stock or any other equity interests
or long-term debt securities of any corporation or other entity.
3. None
of
the PRC Subsidiaries are in violation of their respective Articles of
Association, business licenses or any other constituent documents or in default
in the performance or observance of any material obligation, agreement, covenant
or condition contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which any of the PRC
Subsidiaries is a party or by which they or any of their respective properties
may be bound.
4. There
are
no legal, governmental or arbitral proceedings before any court of the PRC
or
before or by any public, regulatory or governmental agency or body of the PRC
pending or, to the best of such counsel’s knowledge after due inquiry,
threatened against, or involving the properties or business of, any of the
PRC
Subsidiaries or to which any of the properties of the PRC Subsidiaries is
subject which are not disclosed in the Prospectus and will have a Material
Adverse Effect.
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5. No
Chinese law, rule, statute, government order or mandate or regulation required
to be described in the Prospectus is not described as required and insofar
as
the disclosures in the Registration Statement and Prospectus purport to
summarize matters of Chinese law, rules, statutes and regulations, such
disclosures constitute accurate summaries thereof in all material
respects.
The
opinion of PRC counsel shall further include a statement to the effect that
such
counsel has participated in conferences with officers and other representatives
of the Company and the PRC Subsidiaries, representatives of the independent
public accountants for the Company and representatives of the Underwriters
at
which the contents of the Registration Statement, the Prospectus and related
matters were discussed and although such counsel is not passing upon and does
not assume any responsibility for the accuracy, completeness or fairness of
the
statements contained in the Registration Statement and Prospectus, no facts
have
come to the attention of such counsel which should lead them to believe that
either the Registration Statement or the Prospectus or any amendment or
supplement thereto, as of the date of such opinion, solely with respect to
matters of Chinese law, rules, statutes and regulations contained any untrue
statement of a material fact or omitted to state a material fact required to
be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
2
Exhibit
D
Form
of Opinion of Counsel to Selling Stockholders
1. With
respect to the Selling Stockholders, no filing with, or consent, approval,
authorization or order of, any New York, Nevada or federal court or governmental
authority or agency, which has not been obtained, taken or made is required
under New York or federal law [or Nevada corporate law] for the performance
by
each Selling Stockholder of its respective obligations under the Underwriting
Agreement or in the Power of Attorney and the related Custody Agreement, or
in
connection with the offer, sale or delivery of the Securities to be sold by
the
Selling Stockholders in the manner set forth and subject to the terms and
conditions in the Underwriting Agreement, except for such filings, consents,
approvals, authorizations or orders as may be necessary under federal or state
securities laws, as to which such counsel may express no opinion, or as to
any
filing with, or consent, approval, authorization or order of, FINRA in
connection with the purchase and distribution of the Securities by the
Underwriters, as to which such counsel may express no opinion.
2. The
execution, delivery and performance of the Underwriting Agreement and the Power
of Attorney and the related Custody Agreement and the sale and delivery of
the
Securities and the consummation of the transactions contemplated in the
Underwriting Agreement and in the Registration Statement and compliance by
each
Selling Stockholder with its obligations under the Underwriting Agreement have
been duly authorized by all necessary corporate, partnership, LLC or other
company action on the part of such Selling Stockholder.
3. Each
Power of Attorney and each related Custody Agreement has been duly executed
and
delivered by the respective Selling Stockholders named therein and constitutes
the valid and binding agreement of such Selling Stockholder.
4. The
Underwriting Agreement has been duly executed and delivered by or on behalf
of
each Selling Stockholder.
5. With
respect to Selling Stockholders which are entities, the execution, delivery
and
performance of the Underwriting Agreement and the Power of Attorney and the
related Custody Agreement and the sale and delivery of the Securities and the
consummation of the transactions contemplated in the Underwriting Agreement
and
in the Registration Statement and compliance by such Selling Stockholders with
their obligations under the Underwriting Agreement do not and will not result
in
the creation or imposition of any charge or encumbrance upon the Securities
pursuant to any agreement known to such counsel nor, to such counsel’s
knowledge, will such action result in any violation of the provisions of the
charter or by-laws of the Selling Stockholders.
1
6. Upon
the
Underwriters’ acquiring possession of stock certificates representing the
Securities to be sold by the Selling Stockholders, endorsed to the Underwriters
and paying the purchase price therefor pursuant to the Underwriting Agreement,
each Underwriter will be a “protected purchaser” of the Securities to be
purchased by it (within the meaning of Section 8-303 of the New York Uniform
Commercial Code), assuming that no such Underwriter has notice of any “adverse
claim”, within the meaning of Section 8-105 of the New York Uniform Commercial
Code, to such Securities, and will acquire its interest in such Securities
(including, without limitation, all rights that such Selling Stockholder had
or
has the power to transfer in such Securities) free and clear of any adverse
claim within the meaning of Section 8-102 of the New York Uniform Commercial
Code.
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