2,855,652 Shares PUDA COAL, INC. Common Stock UNDERWRITING AGREEMENT
2,855,652
Shares
Common
Stock
February
11, 2010
Xxxxx
Xxxxxx Carret & Co., LLC
Newbridge
Securities Corporation
c/o Xxxxx
Xxxxxx, Carret & Co., LLC
000
Xxxxxxxxx Xxxxxx
Xxx Xxxx,
XX 00000-0000
Ladies
and Gentlemen:
Puda
Coal, Inc., a Delaware corporation (the “Company”), proposes,
subject to the terms and conditions stated herein, to issue and sell to Xxxxx
Xxxxxx, Carret & Co/, LLC (“Brean”) and Newbridge Securities Corporation
(“Newbridge”, referred to collectively with Brean as the “Underwriter”) an
aggregate of 2,855,652 authorized but unissued shares (the “Underwritten Shares”)
of Common Stock, par value $0.001 per share (the “Common Stock”), of
the Company. The Company has
granted the Underwriter the option to purchase an aggregate of up to 428,348
additional shares of Common Stock (the “Additional Shares”)
as may be necessary to cover over-allotments made in connection with the
offering. The Underwritten Shares and Additional Shares are
collectively referred to as the “Shares.”
The
Company and the Underwriter hereby confirm their agreement as
follows:
1. Registration
Statement and Prospectus. The Company has prepared and filed
with the Securities and Exchange Commission (the “Commission”) a
registration statement on Form S-3 (File No. 333-163474) under the Securities
Act of 1933, as amended (the “Securities Act”) and
the rules and regulations (the “Rules and
Regulations”) of the Commission thereunder, and such amendments to such
registration statement (including post effective amendments) as may have been
required to the date of this Agreement. Such registration statement,
as amended (including any post effective amendments) has been declared effective
by the Commission. Such registration statement, including amendments
thereto (including post effective amendments thereto) at such time, the exhibits
and any schedules thereto at such time, the documents incorporated by reference
therein pursuant to Item 12 of Form S-3 under the Securities Act at such time
and the documents and information otherwise deemed to be a part thereof or
included therein by Rule 430B under the Securities Act or otherwise pursuant to
the Rules and Regulations at such time, is herein called the “Registration
Statement.” If the Company has filed or files an abbreviated
registration statement pursuant to Rule 462(b) under the Securities Act (the
“Rule 462 Registration
Statement”), then any reference herein to the term Registration Statement
shall include such Rule 462 Registration Statement.
The
Company is filing with the Commission pursuant to Rule 424 under the Securities
Act a final prospectus supplement relating to the Shares to a form of prospectus
included in the Registration Statement. Such prospectus in the form
in which it appears in the Registration Statement is hereinafter called the
“Base
Prospectus,” and such final prospectus supplement as filed, along with
the Base Prospectus, is hereinafter called the “Final
Prospectus.” Such Final Prospectus and any preliminary
prospectus supplement or “red xxxxxxx,” in the form in which they shall be filed
with the Commission pursuant to Rule 424(b) under the Securities Act (including
the Base Prospectus as so supplemented) is hereinafter called a “Prospectus.” Any
reference herein to the Base Prospectus, the Final Prospectus or a Prospectus
shall be deemed to include the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 under the Securities Act as of the date of such
Prospectus.
For
purposes of this Agreement, all references to the Registration Statement, the
Rule 462 Registration Statement, the Base Prospectus, the Final Prospectus, the
Prospectus or any amendment or supplement to any of the foregoing shall be
deemed to include the copy filed with the Commission pursuant to its Interactive
Data Electronic Applications system. All references in this Agreement
to financial statements and schedules and other information which is
“described,” “contained,” “included” or “stated” in the Registration Statement,
the Rule 462 Registration Statement, the Base Prospectus, the Final Prospectus
or the Prospectus (or other references of like import) shall be deemed to mean
and include all such financial statements, pro forma financial information and
schedules and other information which is incorporated by reference in or
otherwise deemed by the Rules and Regulations to be a part of or included in the
Registration Statement, the Rule 462 Registration Statement, the Base Prospectus
or the Prospectus, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement, the Rule 462
Registration Statement, the Base Prospectus, the Final Prospectus or the
Prospectus shall be deemed to mean and include the subsequent filing of any
document under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that
is deemed to be incorporated therein by reference therein or otherwise deemed by
the Rules and Regulations to be a part thereof.
2. Representations
and Warranties of the Company Regarding the Offering.
(a) The
Company represents and warrants to, and agrees with, the Underwriter, as of the
date hereof and as of the Closing Date (as defined in Section 4(c) below),
except as otherwise indicated, as follows:
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(i) At
each time of effectiveness, at the date hereof and at the Closing Date, the
Registration Statement and any post-effective amendment thereto complied or will
comply in all material respects with the requirements of the Securities Act and
the Rules and Regulations 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 Time of Sale Disclosure Package (as defined in
Section 2(a)(iii)(A)(1) below) as of the date hereof and at the Closing Date,
and the Final Prospectus, as amended or supplemented, at the time of filing
pursuant to Rule 424(b) under the Securities Act and at the Closing Date, 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, 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 shall not apply to statements in or
omissions from the Registration Statement or any Prospectus in reliance upon,
and in conformity with, written information furnished to the Company by the
Underwriter specifically for use in the preparation thereof. The
Registration Statement (including each document incorporated by reference
therein) contains all exhibits and schedules required to be filed by the
Securities Act or the Rules and Regulations. No order preventing or
suspending the effectiveness or use of the Registration Statement or any
Prospectus is in effect and no proceedings for such purpose have been instituted
or are pending, or, to the knowledge of the Company, are contemplated or
threatened by the Commission.
(ii) The
documents incorporated by reference in the Registration Statement, the Time of
Sale Disclosure Package and any Prospectus, when they became effective or were
filed with the Commission, as the case may be, conformed in all material
respects to the requirements of the Securities Act or the Exchange Act, as
applicable, were filed on a timely basis with the Commission and none of such
documents, when they were filed (or, if amendments to such documents were filed,
when such amendments were filed), contained an untrue statement of a material
fact or omitted to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. Any further documents so filed and incorporated by
reference in the Registration Statement, the Time of Sale Disclosure Package or
the Final Prospectus, when such documents are filed with the Commission, will
conform in all material respects to the requirements of the Exchange Act, and
will not contain an untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(iii) (A) The
Company has provided a copy to the Underwriter of each Issuer Free Writing
Prospectus (as defined below) used in the sale of Shares. The Company has
filed all Issuer Free Writing Prospectuses required to be so filed with the
Commission, and no order preventing or suspending the effectiveness or use of
any Issuer Free Writing Prospectus is in effect and no proceedings for such
purpose have been instituted or are pending, or, to the knowledge of the
Company, are contemplated or threatened by the Commission. When taken
together with the rest of the Time of Sale Disclosure Package or the Final
Prospectus, since its first use and at all relevant times since then,
no Issuer Free Writing Prospectus has, does or will include (1) any untrue
statement of a material fact or omission 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, or (2) information
that conflicted, conflicts or will conflict with the information contained
in the Registration Statement or the Final Prospectus. The
representations and warranties set forth in the immediately preceding sentence
shall not apply to statements in or omissions from the Time of Sale Disclosure
Package, the Final Prospectus or any Issuer Free Writing Prospectus in reliance
upon, and in conformity with, written information furnished to the Company by
the Underwriter specifically for use in the preparation thereof. As
used in this paragraph and elsewhere in this Agreement:
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(1) “Time of Sale Disclosure
Package” means the Base Prospectus, the Prospectus most recently
filed with the Commission before the time of this Agreement, including any
preliminary prospectus supplement deemed to be a part thereof, each Issuer Free
Writing Prospectus.
(2) “Issuer Free Writing
Prospectus” means any “issuer free writing prospectus,” as defined in
Rule 433 under the Securities Act, relating to the Shares that (A) is required
to be filed with the Commission by the Company, or (B) is exempt from filing
pursuant to Rule 433(d)(5)(i) or (d)(8) under the Securities Act, in each case
in the form filed or required to be filed with the Commission or, if not
required to be filed, in the form retained in the Company’s records pursuant to
Rule 433(g) under the Securities Act.
(B) At
the time of filing of the Registration Statement and at the date hereof, the
Company was not and is not an “ineligible issuer,” as defined in Rule 405 under
the Securities Act or an “excluded issuer” as defined in Rule 164 under the
Securities Act.
(C) Each
Issuer Free Writing Prospectus satisfied, as of its issue date and at all
subsequent times through the Prospectus Delivery Period, all other conditions as
may be applicable to its use as set forth in Rules 164 and 433 under the
Securities Act, including any legend, record-keeping or other
requirements.
(iv) The
financial statements of the Company, together with the related notes, included
or incorporated by reference in the Registration Statement, the Time of Sale
Disclosure Package and the Final Prospectus comply in all material respects with
the applicable requirements of the Securities Act and the Exchange Act and
fairly present the financial condition of the Company as of the dates indicated
and the results of operations and changes in cash flows for the periods therein
specified in conformity with generally accepted accounting principles
consistently applied throughout the periods involved; and the supporting
schedules included in the Registration Statement present fairly the information
required to be stated therein. No other financial statements, pro
forma financial information or schedules are required under the Securities Act
to be included or incorporated by reference in the Registration Statement, the
Time of Sale Disclosure Package or the Final Prospectus. To the
Company’s knowledge, Xxxxx Xxxxxxxx Xxxxx Xxxxxx and Xxxxxx, LLP, which has
expressed its opinion with respect to the financial statements and schedules
filed as a part of the Registration Statement and included in the Registration
Statement, the Time of Sale Disclosure Package and the Final Prospectus is an
independent public accounting firm with respect to the Company within the
meaning of the Securities Act and the Rules and Regulations.
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(v) The
Company had a reasonable basis for, and made in good faith, each
“forward-looking statement” (within the meaning of Section 27A of the Act or
Section 21E of the Exchange Act) contained or incorporated by reference in the
Registration Statement, the Time of Sale Disclosure Package or the Final
Prospectus.
(vi) All
statistical or market-related data included or incorporated by reference in the
Registration Statement, the Time of Sale Disclosure Package or the Final
Prospectus are based on or derived from sources that the Company reasonably
believes to be reliable and accurate, and the Company has obtained the written
consent to the use of such data from such sources, to the extent
required.
(vii) The
Common Stock is registered pursuant to Section 12(b) of the Exchange Act and is
included or approved for inclusion on NYSE AMEX. There is no action pending by
the Company or, to the Company’s knowledge, for NYSE AMEX to delist the Common
Shares from the NYSE AMEX, nor has the Company received any notification that
the NYSE AMEX is
contemplating terminating such listing. When issued, the Shares will
be listed on the NYSE AMEX.
(viii)
The Company has not taken, directly or indirectly, any
action that is designed to or that has constituted or that would reasonably be
expected to cause or result in the stabilization or manipulation of the price of
any security of the Company to facilitate the sale or resale of the
Shares.
(ix)
The Company is not and during the past three years neither the Company nor
any predecessor was: (A) a blank check company as defined in Rule 419(a)(2) of
the Securities Act, or (B) a shell company, other than a business combination
shell company, each as defined in Rule 405 of the Securities Act.
(x)
The Company is not and, after giving effect
to the offering and sale of the Shares, will not be an “investment company,” as
such term is defined in the Investment Company Act of 1940, as
amended.
(xi) The
Company was at the time of filing the Registration Statement, and at the date
hereof, remains eligible to use Form S-3 under the Securities Act.
(b) Any
certificate signed by any officer of the Company and delivered to the
Underwriter or to the Underwriter’s counsel shall be deemed a representation and
warranty by the Company to the Underwriter as to the matters covered
thereby.
3. Representations
and Warranties Regarding the Company.
(a) The
Company represents and warrants to and agrees with, the Underwriter, except as
set forth in the Registration Statement, the Time of Sale Disclosure Package and
the Prospectus, as follows:
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(i) Each
of the Company and its subsidiaries has been duly organized and is validly
existing as a corporation in good standing under the laws of its jurisdiction of
incorporation. Each of the Company and its subsidiaries has the corporate power
and authority to own its properties and conduct its business as currently being
carried on and as described in the Registration Statement, the Time of Sale
Disclosure Package and the Prospectus, and is duly qualified to do business as a
foreign corporation in good standing in each jurisdiction in which it owns or
leases real property or in which the conduct of its business makes such
qualification necessary and in which the failure to so qualify would have or is
reasonably likely to result in a material adverse effect upon the business,
prospects, properties, operations, condition (financial or otherwise) or results
of operations of the Company and its subsidiaries, taken as a whole, or in its
ability to perform its obligations under this Agreement (“Material Adverse
Effect”).
(ii) The
Company has the power and authority to enter into this Agreement and to
authorize, issue and sell the Shares as contemplated by this
Agreement. This Agreement has been duly authorized, executed and
delivered by the Company, and constitutes a valid, legal and binding obligation
of the Company, enforceable in accordance with its terms, except as rights to
indemnity hereunder may be limited by federal or state securities laws and
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting the rights of creditors generally and
subject to general principles of equity.
(iii) The
execution, delivery and performance of this Agreement and the consummation of
the transactions herein contemplated will not (A) result in a breach or
violation of any of the terms and provisions of, or constitute a default under,
any law, rule or regulation to which the Company or any subsidiary is subject,
or by which any property or asset of the Company or any subsidiary is bound or
affected, (B) conflict with, result in any violation or breach of, or constitute
a default (or an event that with notice or lapse of time or both would become a
default) under, or give to others any right of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both) of,
any agreement, lease, credit facility, debt, note, bond, mortgage, indenture or
other instrument (the “Contracts”) or
obligation or other understanding to which the Company or any subsidiary is a
party of by which any property or asset of the Company or any subsidiary is
bound or affected, except to the extent that such conflict, default,
termination, amendment, acceleration or cancellation right is not reasonably
likely to result in a Material Adverse Effect, or (C) result in a breach or
violation of any of the terms and provisions of, or constitute a default under,
the Company’s charter or by-laws.
(iv) Neither
the Company nor any of its subsidiaries is in violation, breach or default under
its certificate of incorporation, by-laws or other equivalent organizational or
governing documents, except where the violation, breach or default in the case
of a subsidiary of the Company is not reasonably likely to result in a Material
Adverse Effect.
(v) All
consents, approvals, orders, authorizations and filings required on the part of
the Company and its subsidiaries in connection with the execution, delivery or
performance of this Agreement have been obtained or made, other than such
consents, approvals, orders and authorizations the failure of which to make or
obtain is not reasonably likely to result in a Material Adverse
Effect.
6
(vi) All
of the issued and outstanding shares of capital stock of the Company are duly
authorized and validly issued, fully paid and nonassessable, and have been
issued in compliance with all applicable securities laws, and conform to the
description thereof in the Registration Statement, the Time of Sale Disclosure
Package and the Prospectus. Except for the issuances of options or
restricted stock in the ordinary course of business, since the respective dates
as of which information is provided in the Registration Statement, the Time of
Sale Disclosure Package or the Prospectus, the Company has not entered into or
granted any convertible or exchangeable securities, options, warrants,
agreements, contracts or other rights in existence to purchase or acquire from
the Company any shares of the capital stock of the Company. The
Shares, when issued, will be duly authorized and validly issued, fully paid and
nonassessable, will be issued in compliance with all applicable securities laws,
and will be free of preemptive or registration rights.
(vii) Each
of the Company and its subsidiaries has filed all returns (as hereinafter
defined) required to be filed with taxing authorities prior to the date hereof
or has duly obtained extensions of time for the filing thereof. Each
of the Company and its subsidiaries has paid all taxes (as hereinafter defined)
shown as due on such returns that were filed and has paid all taxes imposed on
or assessed against the Company or such respective subsidiary. The
provisions for taxes payable, if any, shown on the financial statements filed
with or as part of the Registration Statement are sufficient for all accrued and
unpaid taxes, whether or not disputed, and for all periods to and including the
dates of such consolidated financial statements. Except as disclosed
in writing to the Underwriter, (i) no issues have been raised (and are currently
pending) by any taxing authority in connection with any of the returns or taxes
asserted as due from the Company or its subsidiaries, and (ii) no waivers of
statutes of limitation with respect to the returns or collection of taxes have
been given by or requested from the Company or its subsidiaries. The
term “taxes”
mean all federal, state, local, foreign, and other net income, gross income,
gross receipts, sales, use, ad valorem, transfer, franchise, profits, license,
lease, service, service use, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, property, windfall profits, customs,
duties or other taxes, fees, assessments, or charges of any kind whatever,
together with any interest and any penalties, additions to tax, or additional
amounts with respect thereto. The term “returns” means all
returns, declarations, reports, statements, and other documents required to be
filed in respect to taxes.
(viii) Since
the respective dates as of which information is given in the Registration
Statement, the Time of Sale Disclosure Package or the Prospectus, (a) neither
the Company nor any of its subsidiaries has incurred any material liabilities or
obligations, direct or contingent, or entered into any material transactions
other than in the ordinary course of business, (b) the Company has not declared
or paid any dividends or made any distribution of any kind with respect to its
capital stock; (c) there has not been any change in the capital stock of the
Company or any of its subsidiaries (other than a change in the number of
outstanding shares of Common Stock due to the issuance of shares upon the
exercise of outstanding options or warrants or the issuance of restricted stock
awards or restricted stock units under the Company’s existing stock awards plan,
or any new grants thereof in the ordinary course of business), (d) there has not
been any material change in the Company’s long-term or short-term debt, and (e)
there has not been the occurrence of any Material Adverse Effect.
7
(ix) There
is not pending or, to the knowledge of the Company, threatened, any action, suit
or proceeding to which the Company or any of its subsidiaries is a party or of
which any property or assets of the Company is the subject before or by any
court or governmental agency, authority or body, or any arbitrator or mediator,
which is reasonably likely to result in a Material Adverse Effect.
(x)
The Company and each of its subsidiaries holds, and is in
compliance with, all franchises, grants, authorizations, licenses, permits,
easements, consents, certificates and orders (“Permits”) of any
governmental or self-regulatory agency, authority or body required for the
conduct of its business, and all such Permits are in full force and effect, in
each case except where the failure to hold, or comply with, any of them is not
reasonably likely to result in a Material Adverse Effect.
(xi) The
Company and its subsidiaries have good and marketable title to all property
(whether real or personal) described in the Registration Statement, the Time of
Sale Disclosure Package and the Prospectus as being owned by them that are
material to the business of the Company, in each case free and clear of all
liens, claims, security interests, other encumbrances or defects, except those
that are not reasonably likely to result in a Material Adverse
Effect. The property held under lease by the Company and its
subsidiaries is held by them under valid, subsisting and enforceable leases with
only such exceptions with respect to any particular lease as do not interfere in
any material respect with the conduct of the business of the Company and its
subsidiaries.
(xii) The
Company and each of its subsidiaries owns or possesses or has valid right to use
all patents, patent applications, trademarks, service marks, trade names,
trademark registrations, service xxxx registrations, copyrights, licenses,
inventions, trade secrets and similar rights (“Intellectual
Property”) necessary for the conduct of the business of the Company and
its subsidiaries as currently carried on and as described in the Registration
Statement, the Time of Sale Disclosure Package and the Prospectus. To
the knowledge of the Company, no action or use by the Company or any of its
subsidiaries will involve or give rise to any infringement of, or license or
similar fees for, any Intellectual Property of others, except where such action,
use, license or fee is not reasonably likely to result in a Material Adverse
Effect. Neither the Company nor any of its subsidiaries has received
any notice alleging any such infringement or fee.
(xiii) The
Company and each of its subsidiaries has complied with, is not in violation of,
and has not received any notice of violation relating to any law, rule or
regulation relating to the conduct of its business, or the ownership or
operation of its property and assets, including, without limitation, (A) the
Currency and Foreign Transactions Reporting Act of 1970, as amended, or any
money laundering laws, rules or regulations, (B) any laws, rules or regulations
related to health, safety or the environment, including those relating to the
regulation of hazardous substances, (C) the Xxxxxxxx-Xxxxx Act and the rules and
regulations of the Commission thereunder, (D) the Foreign Corrupt Practices Act
of 1977 and the rules and regulations thereunder, and (E) the Employment
Retirement Income Security Act of 1974 and the rules and regulations thereunder,
in each case except where the failure to be in compliance is not reasonably
likely to result in a Material Adverse Effect.
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(xiv) Neither
the Company nor any of its subsidiaries nor, to the knowledge of the Company,
any director, officer, employee, representative, agent or affiliate of the
Company or any of its subsidiaries is currently subject to any U.S. sanctions
administered by the Office of Foreign Assets Control of the U.S. Treasury
Department (“OFAC”); and the
Company will not directly or indirectly use the proceeds of the offering of the
Shares contemplated hereby, or lend, contribute or otherwise make available such
proceeds to any person or entity, for the purpose of financing the activities of
any person currently subject to any U.S. sanctions administered by
OFAC.
(xv) The
Company and each of its subsidiaries carries, or is covered by, insurance in
such amounts and covering such risks as is adequate for the conduct of its
business and the value of its properties and as is customary for companies
engaged in similar businesses in similar industries in the territory where the
operation of the Company is located.
(xvi) No
labor dispute with the employees of the Company or any of its subsidiaries
exists or, to the knowledge of the Company, is imminent that is reasonably
likely to result in a Material Adverse Effect.
(xvii) Neither
the Company, its subsidiaries nor, to its knowledge, any other party is in
violation, breach or default of any Contract that is reasonably likely to result
in a Material Adverse Effect.
(xviii) No
supplier, customer, distributor or sales agent of the Company
has notified the Company that it intends to discontinue
or decrease the rate of business done with the Company, except
where such decrease is not reasonably likely to result in a Material Adverse
Effect.
(xix) 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 Underwriter 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 Underwriter’s
compensation, as determined by FINRA.
(xx) Except
as disclosed to the Underwriter 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.
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(xxi) 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 to the Underwriter or as specifically authorized
herein.
(xxii) 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 Underwriter and its 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.
(xxiii) Other
than the Underwriter, no person has the right to act as an underwriter or as a
financial advisor to the Company in connection with the transactions
contemplated hereby.
4. Representations
and Warranties of the Company Regarding the PRC.
(i) The
Company represents and warrants to, and agrees with, the Underwriter, as of the
date hereof and as of the Closing Date, as follows:
(ii) The
Company conducts substantially all of its operations and generates substantially
all of its revenue through (i) Shanxi Putai Resources Limited, a wholly-owned
enterprise formed under the laws of the People’s Republic of China (“PRC”), and (ii)
Shanxi Puda Coal Group Co., Ltd., a wholly foreign-owned enterprise formed under
the laws of the PRC ”) (collectively as the “PRC
Subsidiaries. The PRC Subsidiaries are collectively referred
to hereinafter as the
“PRC
Entities.”
(iii) Each
of the PRC Entities has been duly established, is validly existing as a company
in good standing under the laws of the PRC, has the corporate power and
authority to own its property and to conduct its business as described in the
Registration Statement, the Time of Sale Disclosure Package and the Prospectus,
and is duly qualified to transact business in each jurisdiction in which the
conduct of its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or be in
good standing would not, singly or in the aggregate, have a Material Adverse
Effect. Each PRC Entity has applied for and obtained all requisite
business licenses, clearance and permits required under PRC law as necessary for
the conduct of its businesses, and each PRC Entity has complied in
all material respects with all PRC Laws in connection with foreign exchange,
including without limitation, carrying out all relevant filings, registrations
and applications for relevant permits with the PRC State Administration of
Foreign Exchange and any other relevant authorities, and all such
permits are validly subsisting. The registered capital of each PRC
Entity has been fully paid up in accordance with the schedule of payment
stipulated in its respective articles of association, approval document,
certificate of approval and legal person business license (hereinafter referred
to as the “Establishment
Documents”) and in compliance with PRC laws and regulations, and there is
no outstanding capital contribution commitment for any PRC
Entity. The Establishment Documents of the PRC Entities have been
duly approved in accordance with the laws of the PRC and are valid and
enforceable. The business scope specified in the Establishment
Documents of each PRC Entity complies with the requirements of all relevant PRC
laws and regulations. The outstanding equity interests of each PRC
Entity is owned of record by the respective entities or individuals identified
as the registered holders thereof in the Registration Statement, the Time of
Sale Disclosure Package and the Prospectus.
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(iv) No
PRC Subsidiary is currently prohibited, directly or indirectly, from paying any
dividends to the Company (or the Company’s subsidiary that holds the outstanding
equity interest of such PRC Subsidiary).
(v) None
of the PRC Entities nor any of their properties, assets or revenues are entitled
to any right of immunity on the grounds of sovereignty from any legal action,
suit or proceeding, from set-off or counterclaim, from the jurisdiction of any
court, from services of process, from attachment prior to or in aid of execution
of judgment, or from any other legal process or proceeding for the giving of any
relief or for the enforcement of any judgment.
(vi) It
is not necessary that this Agreement, the Registration Statement, the Time of
Sale Disclosure Package, the Prospectus or any other document be filed or
recorded with any governmental agency, court or other authority in the
PRC.
(vii) No
transaction, stamp, capital or other issuance, registration, transaction,
transfer or withholding taxes or duties are payable in the PRC by or on behalf
of the Underwriter to any PRC taxing authority in connection with (i) the
issuance, sale and delivery of the Shares by the Company and the delivery of the
Shares to or for the account of the Underwriter, (ii) the purchase from the
Company and the initial sale and delivery by the Underwriter of the Shares to
purchasers thereof, or (iii) the execution and delivery of this
Agreement.
(viii) The
Company has taken all necessary steps to comply with, and to ensure compliance
by all of the Company’s direct or indirect shareholders and option holders who
are PRC residents with, any applicable rules and regulations of the PRC State
Administration of Foreign Exchange of the PRC (the “SAFE Rules and
Regulations”), including, without limitation, requiring each shareholder
and option holder that is, or is directly or indirectly owned or controlled by,
a PRC resident to complete any registration and other procedures required under
applicable SAFE Rules and Regulations.
11
(ix) The
issuance and sale of the Shares, the listing and trading of the Shares on the
NYSE AMEX and the consummation of the transactions contemplated by this
Agreement, the Registration Statement, the Time of Sale Disclosure Package and
the Prospectus are not and will not be, as of the date hereof and on the Closing
Date, affected by the M&A Rules or any official clarifications, guidance,
interpretations or implementation rules in connection with or related to the
M&A Rules, including the guidance and notices issued by the CSRC on
September 8 and September 21, 2006 (together with the M&A Rules, the “M&A Rules and Related
Clarifications”).
(x) The
Company has taken all necessary steps to ensure compliance by each of its
shareholders, option holders, directors, officers and employees that is, or is
directly or indirectly owned or controlled by, a PRC resident or citizen with
any applicable rules and regulations of the relevant PRC government agencies
(including but not limited to the PRC Ministry of Commerce, the PRC National
Development and Reform Commission and the PRC State Administration of Foreign
Exchange) relating to overseas investment by PRC residents and citizens (the
“PRC Overseas
Investment and Listing Regulations”), including, requesting each
shareholder, option holder, director, officer, employee and participant that is,
or is directly or indirectly owned or controlled by, a PRC resident or citizen
to complete any registration and other procedures required under applicable PRC
Overseas Investment and Listing Regulations.
(xi) As
of the date hereof, the M&A Rules and Related Clarifications do not require
the Company to obtain the approval of the CSRC prior to the issuance and sale of
the Shares, the listing and trading of the Shares on the NYSE AMEX, or the
consummation of the transactions contemplated by this Agreement, the
Registration Statement, the Time of Sale Disclosure Package or the
Prospectus.
5. Purchase,
Sale and Delivery of Shares.
(a) On
the basis of the representations, warranties and agreements herein contained,
but subject to the terms and conditions herein set forth, the Company agrees to
issue and sell the Underwritten Shares to the Underwriter, and
the Underwriter agrees to purchase the Underwritten Shares. The
purchase price for each Underwritten Share shall be $4.465 per share (the “Per Share
Price”).
12
Payment
of the purchase price for and delivery of the Additional Shares shall be made at
the Option Closing Date in the same manner and at the same office as the payment
for the Underwritten Shares as set forth in
subparagraph (c) below. For the purpose of expediting the checking of
the certificate for the Additional Shares by the Underwriter, the Company agrees
to make a form of such certificate available to the Underwriter for such purpose
at least one full business day preceding the Option Closing Date.
The
Underwritten Shares will be delivered by the
Company to the Underwriter against payment of the purchase price therefor by
wire transfer of same day funds payable to the order of the Company at the
offices of Xxxxx Xxxxxx, Carret & Company, LLC, 000 Xxxxxxxxx Xxxxxx, Xxx
Xxxx, XX 00000-0000, or such other location as may be mutually acceptable, at
9:00 a.m. EST, on the third (or if the Underwritten Shares are priced, as
contemplated by Rule 15c6-1(c) under the Exchange Act, after 4:30 p.m. Eastern
time, the fourth) full business day following the date hereof, or at such other
time and date as the Underwriter and the Company determine pursuant to Rule
15c6-1(a) under the Exchange Act, or, in the case of the Additional Shares, at
such date and time set forth in the Option Notice. The time and date
of delivery of the Underwritten Shares or the Additional Shares, as applicable,
is referred to herein as the “Closing
Date.” If the Underwriter so elects, delivery of the
Underwritten Shares and Additional Shares
may be made by credit through full fast transfer to the account at The
Depository Trust Company designated by the Underwriter. Certificates
representing the Shares, in definitive form and in such denominations and
registered in such names as the Underwriter may request upon at least two
business days’ prior notice to the Company, will be made available for checking
and packaging not later than 10:30 a.m. PDT on the business day next preceding
the Closing Date at the above addresses, or such other location as may be
mutually acceptable.
6. Covenants.
(a) The
Company covenants and agrees with the Underwriter as follows:
(i) During
the period beginning on the date hereof and ending on the later of the Closing
Date or such date as determined by the Underwriter the Prospectus is no longer
required by law to be delivered in connection with sales by an underwriter or
dealer (the “Prospectus Delivery
Period”), prior to amending or supplementing the Registration Statement,
including any Rule 462 Registration Statement, the Time of Sale Disclosure
Package or the Prospectus, the Company shall furnish to the Underwriter for
review and comment a copy of each such proposed amendment or supplement, and the
Company shall not file any such proposed amendment or supplement to which the
Underwriter reasonably objects.
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(ii) From
the date of this Agreement until the end of the Prospectus Delivery Period, the
Company shall promptly advise the Underwriter in writing (A) of the receipt of
any comments of, or requests for additional or supplemental information from,
the Commission, (B) of the time and date of any filing of any post-effective
amendment to the Registration Statement or any amendment or supplement to the
Time of Sale Disclosure Package, the Prospectus or any Issuer Free Writing
Prospectus, (C) of the time and date that any post-effective amendment to the
Registration Statement becomes effective and (D) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or of any order preventing or suspending its use or the use of the
Time of Sale Disclosure Package or any Issuer Free Writing 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. If the Commission shall enter
any such stop order at any time during the Prospectus Delivery Period, the
Company will use its reasonable efforts to obtain the lifting of such order at
the earliest possible moment. Additionally, the Company agrees that
it shall comply with the provisions of Rules 424(b), 430A and 430B, as
applicable, under the Securities Act and will use its reasonable efforts to
confirm that any filings made by the Company under Rule 424(b) or Rule 433 were
received in a timely manner by the Commission (without reliance on Rule
424(b)(8) or 164(b) of the Securities Act).
(iii) (A) During
the Prospectus Delivery Period, the Company will comply with all requirements
imposed upon it by the Securities Act, as now and hereafter amended, and by the
Rules and Regulations, as from time to time in force, and by the Exchange Act,
as now and hereafter amended, so far as necessary to permit the continuance of
sales of or dealings in the Shares as contemplated by the provisions hereof, the
Time of Sale Disclosure Package, the Registration Statement and the
Prospectus. If during such period any event occurs the result of
which the Prospectus (or if the Prospectus is not yet available to prospective
purchasers, the Time of Sale Disclosure Package ) would include an untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances then existing, not
misleading, or if during such period it is necessary or appropriate in the
opinion of the Company or its counsel or the Underwriter or its counsel to amend
the Registration Statement or supplement the Prospectus (or if the Prospectus is
not yet available to prospective purchasers, the Time of Sale Disclosure Package
) to comply with the Securities Act or to file under the Exchange Act any
document that would be deemed to be incorporated by reference in the Prospectus
in order to comply with the Securities Act or the Exchange Act, the Company will
promptly notify the Underwriter and will amend the Registration Statement or
supplement the Prospectus (or if the Prospectus is not yet available to
prospective purchasers, the Time of Sale Disclosure Package) or file such
document (at the expense of the Company) so as to correct such statement or
omission or effect such compliance.
(B) If
at any time following the issuance of an Issuer Free Writing Prospectus there
occurred or occurs an event or development the result of which such Issuer Free
Writing Prospectus conflicted or would conflict with the information contained
in the Registration Statement or any Prospectus or included or would include an
untrue statement of a material fact or omitted or would omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances prevailing at that subsequent time, not misleading, the Company
has promptly notified or promptly will notify the Underwriter and has promptly
amended or will promptly amend or supplement, at its own expense, such Issuer
Free Writing Prospectus to eliminate or correct such conflict, untrue statement
or omission.
14
(iv) The
Company shall take or cause to be taken all necessary action to qualify the
Shares for sale under the securities laws of such jurisdictions as the
Underwriter reasonably designates and to continue such qualifications in effect
so long as required for the distribution of the Shares, except that the Company
shall not be required in connection therewith to qualify as a foreign
corporation or as a dealer in securities in any jurisdiction in which it is not
so qualified, to execute a general consent to service of process in any state or
to subject itself to taxation in respect of doing business in any jurisdiction
in which it is not otherwise subject.
(v) The
Company will furnish to the Underwriter and counsel for the Underwriter copies
of the Registration Statement, each Prospectus, any Issuer Free Writing
Prospectus, and all amendments and supplements to such documents, in each case
as soon as available and in such quantities as the Underwriter may from time to
time reasonably request.
(vi) The
Company, whether or not the transactions contemplated hereunder are consummated
or this Agreement is terminated, will pay or cause to be paid (A) all
expenses (including transfer taxes allocated to the respective transferees)
incurred in connection with the delivery to the Underwriter of the Shares, (B)
all expenses and fees (including, without limitation, fees and expenses of the
Company’s counsel) in connection with the preparation, printing, filing,
delivery, and shipping of the Registration Statement (including the financial
statements therein and all amendments, schedules, and exhibits thereto), the
Shares, the Time of Sale Disclosure Package, the Prospectus, any Issuer Free
Writing Prospectus and any amendment thereof or supplement thereto, (C) all
reasonable filing fees and reasonable fees and disbursements of the
Underwriter’s counsel incurred in connection with the qualification of the
Shares for offering and sale by the Underwriter or by dealers under the
securities or blue sky laws of the states and other jurisdictions that the
Underwriter shall designate, (D) the fees and expenses of any transfer agent or
registrar, (E) the reasonable filing fees and reasonable fees and disbursements
of Underwriter’s counsel incident to any required review and approval by FINRA,
of the terms of the sale of the Shares, (F) listing fees, if any, and (G) all
other costs and expenses incident to the performance of its obligations
hereunder that are not otherwise specifically provided for
herein (the
“Underwriter’s
Expenses”). If this Agreement is
terminated by the Underwriter in accordance with the provisions of Section 6 or
Section 9, the Company will reimburse the Underwriter for all out-of-pocket
disbursements (including, but not limited to, reasonable fees and disbursements
of counsel, travel expenses, postage, facsimile and telephone charges) incurred
by the Underwriter in connection with its investigation, preparing to market and
marketing the Shares or in contemplation of performing its obligations
hereunder. Notwithstanding anything contained herein, the maximum
amount payable by the Company for Underwriter’s Expenses (including counsel
fees, disbursements and other reasonable out-of-pocket expenses pursuant to this
Section 5(a)(vii) shall be $50,000, unless the Offering is consummated, in which
case, the Underwriter will bear all of its out-of-pocket expenses (excluding its
legal expenses hereunder up to a maximum of $30,000).
15
(vii) The
Company intends to apply the net proceeds from the sale of the Shares to be sold
by it hereunder for the purposes set forth in the Time of Sale Disclosure
Package and in the Final Prospectus.
(viii) The
Company has not taken and will not take, directly or indirectly, during the
Prospectus Delivery Period, any action designed to or which might reasonably be
expected to cause or result in, or that has constituted, the stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Shares.
(ix) The
Company represents and agrees that, unless it obtains the prior written consent
of the Underwriter, and the Underwriter represents and agrees that, unless it
obtains the prior written consent of the Company, it has not made and will not
make any offer relating to the Shares that would constitute an Issuer Free
Writing Prospectus. Any such free writing prospectus consented to by
the Company and the Underwriter is hereinafter referred to as a “Permitted Free Writing
Prospectus.” The Company represents that it has treated or
agrees that it will treat each Permitted Free Writing Prospectus as an “issuer
free writing prospectus,” as defined in Rule 433, and has complied or will
comply with the requirements of Rule 433 applicable to any Permitted Free
Writing Prospectus, including timely Commission filing where required, legending
and record-keeping.
(x)
The Company hereby agrees that, without the prior written consent of the
Underwriter, it will not, during the period ending 90 days after the date hereof
(“Lock-Up
Period”), (i) offer, pledge, issue, sell, contract to sell, purchase,
contract to purchase, lend, or otherwise transfer or dispose of, directly or
indirectly, any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock; or (ii) enter into any swap or
other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of the Common Stock, whether any such
transaction described in clause (i) or (ii) above is to be settled by delivery
of Common Stock or such other securities, in cash or otherwise; or (iii) file
any registration statement with the Commission relating to the offering of any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock. The restrictions contained in the
preceding sentence shall not apply to (1) the Shares to be sold hereunder, (2)
the issuance of Common Stock upon the exercise of options or warrants
disclosed as outstanding in the Registration Statement (excluding exhibits
thereto) or the Prospectus, or (3) the issuance of employee stock options not
exercisable during the Lock-Up Period and the grant of restricted stock awards
or restricted stock units pursuant to equity incentive plans described in the
Registration Statement (excluding exhibits thereto) and the
Prospectus. Notwithstanding the foregoing, if (x) the Company issues
an earnings release or material news, or a material event relating to the
Company occurs, during the last 17 days of the Lock-Up Period, or (y) prior to
the expiration of the Lock-Up Period, the Company announces that it will release
earnings results during the 16-day period beginning on the last day of the
Lock-Up Period, the restrictions imposed by this clause shall continue to apply
until the expiration of the 18-day period beginning on the issuance of the
earnings release or the occurrence of the material news or material event,
unless the Underwriter waives such extension in writing.
16
7. Conditions of the
Underwriter’s Obligations. The obligations of the Underwriter
hereunder to purchase the Shares are subject to the accuracy, as of the date
hereof and at the Closing Date (as if made at the Closing Date), of and
compliance with all representations, warranties and agreements of the Company
contained herein, the performance by the Company of its obligations hereunder
and the following additional conditions:
(a) If
filing of the Prospectus, or any amendment or supplement thereto, or any Issuer
Free Writing Prospectus, is required under the Securities Act or the Rules and
Regulations, the Company shall have filed the Prospectus (or such amendment or
supplement) or such Issuer Free Writing Prospectus with the Commission in the
manner and within the time period so required (without reliance on Rule
424(b)(8) or 164(b) under the Securities Act); the Registration Statement shall
remain effective; no stop order suspending the effectiveness of the Registration
Statement or any part thereof, any Rule 462 Registration Statement, or any
amendment thereof, nor suspending or preventing the use of the Time of Sale
Disclosure Package, the Prospectus or any Issuer Free Writing Prospectus shall
have been issued; no proceedings for the issuance of such an order shall have
been initiated or threatened; any request of the Commission or the Underwriter
for additional information (to be included in the Registration Statement, the
Time of Sale Disclosure Package, the Prospectus, any Issuer Free Writing
Prospectus or otherwise) shall have been complied with to the Underwriter’s
satisfaction.
(b) FINRA
shall have raised no objection to the fairness and reasonableness of the
underwriting terms and arrangements.
(c) The
Underwriter shall not have reasonably determined, and advised the Company, that
the Registration Statement, the Time of Sale Disclosure Package or the
Prospectus, or any amendment thereof or supplement thereto, or any Issuer Free
Writing Prospectus, contains an untrue statement of fact which is material, or
omits to state a fact which is material and is required to be stated therein or
necessary to make the statements therein not misleading.
(d) On
or after the date hereof (i) no downgrading shall have occurred in the rating
accorded any of the Company’s securities by any “nationally recognized
statistical organization,” as that term is defined by the Commission for
purposes of Rule 436(g)(2) under the Securities Act, and (ii) no such
organization shall have publicly announced that it has under surveillance or
review, with possible negative implications, its rating of any of the Company’s
securities.
17
(e) On
the Closing Date, there shall have been furnished to the Underwriter the opinion
and negative assurance letters of Xxxxxxx Procter LLP, dated the Closing Date
and addressed to the Underwriter substantially in the form as set forth in Schedule II.
(f) On
the Closing Date, there shall have been furnished to the Underwriter the opinion
the Company’s China counsel, dated the Closing Date and addressed to the
Underwriter, in form and substance reasonably satisfactory to the Underwriter,
to the effect set forth in Schedule III.
(g) The
Underwriter shall have received a letter of Xxxxx Xxxxxxxx Xxxxx Xxxxxx and
Xxxxxx, LLP, on the date hereof and on the Closing Date addressed to the
Underwriter, confirming that they are independent public accountants within the
meaning of the Securities Act and are in compliance with the applicable
requirements relating to the qualifications of accountants under Rule 2-01 of
Regulation S-X of the Commission, and confirming, as of the date of each such
letter (or, with respect to matters involving changes or developments since the
respective dates as of which specified financial information is given in the
Time of Sale Disclosure Package, as of a date not prior to the date hereof or
more than five days prior to the date of such letter), the conclusions and
findings of said firm with respect to the financial information and other
matters required by the Underwriter.
(h) On
the Closing Date, there shall have been furnished to the Underwriter a
certificate, dated the Closing Date and addressed to the Underwriter, signed by
the chief executive officer and the chief financial officer of the Company, in
their capacity as officers of the Company, to the effect that:
(i) The
representations and warranties of the Company in this Agreement are true and
correct, in all material respects, as if made at and as of the 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 the Closing
Date;
(ii) No
stop order or other order (A) suspending the effectiveness of the Registration
Statement or any part thereof or any amendment thereof, (B) suspending the
qualification of the Shares for offering or sale, or (C) suspending or
preventing the use of the Time of Sale Disclosure Package, the Prospectus or any
Issuer Free Writing Prospectus, has been issued, and no proceeding for that
purpose has been instituted or, to their knowledge, is contemplated by the
Commission or any state or regulatory body; and
(iii) There
has been no occurrence of any event resulting or reasonably likely to result in
a Material Adverse Effect during the period from and after the date of this
Agreement and prior to the Closing Date.
(i) On
or before the date hereof, the Underwriter shall have received duly executed
“lock-up” agreements, in a form acceptable to the Underwriter, between the
Underwriter and Xxxx Xxxx and Xxx Xxxx.
(j) The
Company shall
have furnished to the Underwriter and its counsel such additional documents,
certificates and evidence as the Underwriter or its counsel may have reasonably
requested.
18
If any
condition specified in this Section 6 shall not have been fulfilled when and as
required to be fulfilled, this Agreement may be terminated by the Underwriter by
notice to the Company at any time at or prior to the Closing Date and such
termination shall be without liability of any party to any other party, except
that Section 5(a)(vii), Section 7 and Section 8 shall survive any such
termination and remain in full force and effect.
8. Indemnification
and Contribution.
(a) The
Company agrees to indemnify, defend and hold harmless the Underwriter,
its affiliates, directors and officers and employees, and each
person, if any, who controls the Underwriter within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act, from and against any
losses, claims, damages or liabilities to which the Underwriter or such person
may become subject, under the Securities Act or otherwise (including in
settlement of any litigation if such settlement is effected with the written
consent of the Company), insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon (i) an untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, including the information deemed to be a part of the
Registration Statement at the time of effectiveness and at any subsequent time
pursuant to Rules 430A and 430B of the Rules and Regulations, the Time of Sale
Disclosure Package, the Prospectus, or any amendment or supplement thereto
(including any documents filed under the Exchange Act and deemed to be
incorporated by reference into the Registration Statement or the Prospectus), or
any Issuer Free Writing Prospectus, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, (ii) in whole or in
part, any inaccuracy in the representations and warranties of the Company
contained herein, or (iii) in whole or in part, any failure of the Company to
perform its obligations hereunder or under law, and will reimburse the
Underwriter for any legal or other expenses reasonably incurred by it in
connection with evaluating, investigating or defending against such loss, claim,
damage, liability or action; provided, however, that the
Company shall not be liable in any such case to the extent that any such loss,
claim, damage, liability or action arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
the Registration Statement, the Time of Sale Disclosure Package, the Prospectus,
or any amendment or supplement thereto or any Issuer Free Writing Prospectus, in
reliance upon and in conformity with written information furnished to the
Company by the Underwriter specifically for use in the preparation
thereof.
(b) The
Underwriter will indemnify, defend and hold harmless the Company , its
respective affiliates, directors, officers and employees, and each person, if
any, who controls the Company within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act, from and against any losses, claims,
damages or liabilities to which the Company may become subject, under the
Securities Act or otherwise (including in settlement of any litigation, if such
settlement is effected with the written consent of such Underwriter), insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon an untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement, the Time of Sale
Disclosure Package, the Prospectus, or any amendment or supplement thereto or
any Issuer Free Writing Prospectus, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in the
Registration Statement, the Time of Sale Disclosure Package, the Prospectus, or
any amendment or supplement thereto or any Issuer Free Writing Prospectus in
reliance upon and in conformity with written information furnished to the
Company by the Underwriter specifically for use in the preparation thereof, and
will reimburse the Company for any legal or other expenses reasonably incurred
by the Company in connection with defending against any such loss, claim,
damage, liability or action.
19
(c) Promptly
after receipt by an indemnified party under subsection (a) or (b) above of
notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party under such
subsection, notify the indemnifying party in writing of the commencement
thereof; but the failure to notify the indemnifying party shall not relieve the
indemnifying party from any liability that it may have to any indemnified party
except to the extent such indemnifying party has been materially prejudiced by
such failure. In case any such action shall be brought against any
indemnified party, and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
in, and, to the extent that it shall wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of the indemnifying party’s election so to
assume the defense thereof, the indemnifying party shall not be liable to such
indemnified party under such subsection for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof; provided,
however, that if (i)
the indemnified party has reasonably concluded (based on advice of counsel) that
there may be legal defenses available to it or other indemnified parties that
are different from or in addition to those available to the indemnifying party,
(ii) a conflict or potential conflict exists (based on advice of counsel to the
indemnified party) between the indemnified party and the indemnifying party (in
which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party), or (iii) the indemnifying
party has not in fact employed counsel reasonably satisfactory to the
indemnified party to assume the defense of such action within a reasonable time
after receiving notice of the commencement of the action, the indemnified party
shall have the right to employ a single counsel to represent it in any claim in
respect of which indemnity may be sought under subsection (a) or (b) of this
Section 7, in which event the reasonable fees and expenses of such separate
counsel shall be borne by the indemnifying party or parties and reimbursed to
the indemnified party as incurred.
The
indemnifying party under this Section 7 shall not be liable for any settlement
of any proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party against any loss, claim, damage,
liability or expense by reason of such settlement or judgment. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement, compromise or consent to the entry of judgment in
any pending or threatened action, suit or proceeding in respect of which any
indemnified party is a party or could be named and indemnity was or would be
sought hereunder by such indemnified party, unless such settlement, compromise
or consent (a) includes an unconditional release of such indemnified party from
all liability for claims that are the subject matter of such action, suit or
proceeding and (b) does not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of any indemnified
party.
20
(d) If
the indemnification provided for in this Section 7 is unavailable or
insufficient to hold harmless an indemnified party under subsection (a) or (b)
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) or (b) above, (i) in such proportion
as is appropriate to reflect the relative benefits received by the Company on the one hand and the
Underwriter on the other from the offering and sale of the Shares 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 on
the one hand and the Underwriter 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 on the one hand and the Underwriter on the
other shall be deemed to be in the same proportion as the total net proceeds
from the offering (before deducting expenses) received by the Company bear to
the total underwriting discounts and commissions received by the Underwriter, in
each case as set forth in the table on the cover page of the Final
Prospectus. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Underwriter and the parties’ relevant
intent, knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. The Company and the Underwriter
agree that it would not be just and equitable if contributions pursuant to this
subsection (e) were to be determined by pro rata allocation or by any other
method of allocation that does not take account of the equitable considerations
referred to in the first sentence of this subsection (e). The amount
paid 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 that is the subject of this subsection
(e). Notwithstanding the provisions of this subsection (e), the
Underwriter shall not be required to contribute any amount in excess of the
amount of the Underwriter’s commissions referenced in Section 4(a) actually
received by the Underwriter pursuant to this Agreement. 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.
(e) The
obligations of the Company under this Section 7
shall be in addition to any liability that the Company may otherwise have and
the benefits of such obligations shall extend, upon the same terms and
conditions, to each person, if any, who controls the Underwriter within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act;
and the obligations of the Underwriter under this Section 7 shall be in addition
to any liability that the Underwriter may otherwise have and the benefits of
such obligations shall extend, upon the same terms and conditions, to the
Company, and its respective officers, directors and
each person who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act.
21
(f) For
purposes of this Agreement, the Underwriter confirms, and the Company
acknowledges, that there is no information concerning the Underwriter furnished
in writing to the Company by the Underwriter specifically for preparation of or
inclusion in the Registration Statement, the Time of Sale Disclosure Package,
the Prospectus or any Issuer Free Writing Prospectus, other than the statements
set forth in the last paragraph on the cover page of the Prospectus and the
statements set forth in the “Underwriting” section of the Prospectus and Time of
Sale Disclosure Package, only insofar as such statements relate to the amount of
selling concession and re-allowance or to over-allotment and related activities
that may be undertaken by the Underwriter.
9. Representations
and Agreements to Survive Delivery. All
representations, warranties, and agreements of the Company herein or in
certificates delivered pursuant hereto, including, but not limited to, the
agreements of the Underwriter and the Company contained in Section 5(a)(vii) and
Section 7 hereof, shall remain operative and in full force and effect regardless
of any investigation made by or on behalf of the 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 Shares to and by
the Underwriter hereunder.
10. Termination
of this Agreement.
(a) The
Underwriter shall have the right to terminate this Agreement by giving notice to
the Company as
hereinafter specified at any time at or prior to the Closing Date, if (i)
trading in the Company’s Common Stock shall have been suspended by the
Commission or the NYSE Amex or trading in securities
generally on the Nasdaq Global Market, New York Stock Exchange or NYSE Amex
shall have been suspended, (ii) minimum or maximum prices for trading shall have
been fixed, or maximum ranges for prices for securities shall have been
required, on the Nasdaq Global Market, New York Stock Exchange or NYSE Amex, by
such exchange or by order of the Commission or any other governmental authority
having jurisdiction, (iii) a banking moratorium shall have been declared by
federal or state or the PRC authorities, (iv) there shall have occurred any
attack on, outbreak or escalation of hostilities or act of terrorism involving
the United States or the PRC, any declaration by the United States or the PRC of
a national emergency or war, any change in financial markets, any substantial
change or development involving a prospective substantial change in United
States or the PRC or other international
political, financial or economic conditions or any other calamity or crisis, or
(v) the Company suffers any loss by strike, fire, flood, earthquake, accident or
other calamity, whether or not covered by insurance, the effect of which, in
each case described in this subsection (a), in the Underwriter’s reasonable
judgment is material and adverse and makes it impractical or inadvisable to
proceed with the completion of the sale of and payment for the
Shares. Any such termination shall be without liability of any party
to any other party except that the provisions of Section 5(a)(vii) and Section 7
hereof shall at all times be effective and shall survive such
termination.
(b) If
the Underwriter elects to terminate this Agreement as provided in this Section,
the Company and the Selling Stockholders shall be notified
promptly by the Underwriter by telephone, confirmed by letter.
22
11. Notices. Except as
otherwise provided herein, all communications hereunder shall be in writing and,
if to Brean, shall be mailed, delivered faxed or e-mailed to Xxxxx Xxxxxx,
Carret & Co., LLC, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, XX 00000, fax
number: (000) 000-0000, Attention: Xxxxx Xxxxxxxxx, Managing
Director; and, if to Newbridge, shall be mailed, delivered faxed or e-mailed to
Newbridge Securities Corporation, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx,
XX 00000, fax number: (000) 000.0000, Attention: Xxxxx Xxxxxxxxxx,
Managing Director; and if to the Company, shall be mailed, delivered, faxed or
e-mailed to it at 000 Xxxxx Xxxxxx, Xxxxxxx, Xxxxxx Xxxxxxxx, PRC, fax number:
x00 (000) 0000000, e-mail:_xxxxxx@xxxxx.xxx, Attention: Ms. Xxxxx Xx;
or to such other address as the person to be notified may have requested in
writing. Any party to this Agreement may change such address for
notices by sending to the parties to this Agreement written notice of a new
address for such purpose.
12. Persons Entitled
to Benefit of Agreement. This Agreement
shall inure to the benefit of and be binding upon the parties hereto and their
respective successors and assigns and the controlling persons, officers and
directors referred to in Section 7. Nothing in this Agreement is
intended or shall be construed to give to any other person, firm or corporation
any legal or equitable remedy or claim under or in respect of this Agreement or
any provision herein contained. The term “successors and assigns” as
herein used shall not include any purchaser, as such purchaser, of any of the
Shares from the Underwriter.
13. Absence of
Fiduciary Relationship. The Company acknowledges and agrees
that: (a) the Underwriter has been retained solely to act as underwriter in
connection with the sale of the Shares and that no fiduciary, advisory or agency
relationship between the Company and the Underwriter has
been created in respect of any of the transactions contemplated by this
Agreement, irrespective of whether the Underwriter has advised or is advising
the Company on other matters; (b) the price and other terms of the Shares set
forth in this Agreement were established by the Company following discussions
and arms-length negotiations with the Underwriter and the Company is capable of
evaluating and understanding and understands and accepts the terms, risks and
conditions of the transactions contemplated by this Agreement; (c) it has been
advised that the Underwriter and its affiliates are engaged in a broad range of
transactions that may involve interests that differ from those of the
Company and that
the Underwriter has no obligation to disclose such interest and transactions to
the Company by virtue of any fiduciary, advisory or agency relationship; (d) it
has been advised that the Underwriter is acting, in respect of the transactions
contemplated by this Agreement, solely for the benefit of the Underwriter, and
not on behalf of the Company.
14. Amendments and
Waivers. No supplement,
modification or waiver of this Agreement shall be binding unless executed in
writing by the party to be bound thereby. The failure of a party to
exercise any right or remedy shall not be deemed or constitute a waiver of such
right or remedy in the future. No waiver of any of the provisions of
this Agreement shall be deemed or shall constitute a waiver of any other
provision hereof (regardless of whether similar), nor shall any such waiver be
deemed or constitute a continuing waiver unless otherwise expressly
provided.
23
15. Partial
Unenforceability. The invalidity
or unenforceability of any section, paragraph, clause or provision of this
Agreement shall not affect the validity or enforceability of any other section,
paragraph, clause or provision.
16. Governing
Law. This Agreement
shall be governed by and construed in accordance with the laws of the State of
New York.
17. Counterparts. This
Agreement may be executed in one or more counterparts and, if executed in more
than one counterpart, the executed counterparts shall each be deemed to be an
original and all such counterparts shall together constitute one and the same
instrument.
24
Please
sign and return to the Company the enclosed duplicates of this letter whereupon
this letter will become a binding agreement between the Company and
the Underwriter in accordance with its terms.
|
Very
truly yours,
|
||
|
By:
|
/s/ Xxxxx Xx
|
|
|
Name:
|
Xxxxx Xx
|
|
|
Title:
|
Chief Financial
Officer
|
|
|
Confirmed
as of the date first above-
|
||
|
mentioned
by the Underwriter.
|
||
|
XXXXX
XXXXXX, CARRET & COMPANY, LLC
|
||
|
By:
|
/s/ Xxxx Xxxxxxxx
|
|
|
Name:
|
Xxxx Xxxxxxxx
|
|
|
Title:
|
Managing Director
|
|
[Signature
page to Underwriting Agreement]
Confirmed
as of the date first above-
mentioned
by the Underwriter.
|
NEWBRIDGE
SECURITIES CORPORATION
|
||
|
By:
|
/s/ Xxxxxxx Xxxxxxxxx
|
|
|
Name:
|
Xxxxxxx Xxxxxxxxx
|
|
|
Title:
|
Executive Managing Director, Investment
Banking
|
|
[Signature
page to Underwriting Agreement]
SCHEDULE
I
|
Number of
Underwritten
Shares to be Sold
|
Number of
Additional Shares
to be Sold
|
|||||||
|
Company:
|
||||||||
| 2,855,652 | 428,348 | |||||||
|
Total
|
||||||||
SCHEDULE
II
Company
Opinions
1. The
Company has been duly incorporated and is validly existing as a corporation in
good standing under the laws of the State of Delaware, with the requisite
corporate power to own its properties, and to conduct its business, as described
in the Registration Statement and the Final Prospectus.
2. The
issuance of the Shares has been duly authorized and, when issued, delivered to
you, and paid for by you in accordance with the Agreement, the Shares
will be validly issued, fully paid and nonassessable.
3. The
holders of outstanding shares of capital stock of the Company are not entitled
to any preemptive right or right of first refusal, in each case to subscribe to
any additional shares of the Company’s capital stock ,set forth in or provided
for by the Company’s currently effective Certificate of Incorporation or By-Laws
(collectively, the “Company Governing
Documents”).
4. The
statements in the Base Prospectus, the most recent Prospectus that is part of
the Time of Sale Disclosure Package (the “Time of Sale
Prospectus”) and the Final Prospectus under the headings “Description of
Capital Stock – Common Stock” and in the Registration Statement in Part II,
Item 15, insofar as such statements purport to summarize legal matters, the
Certificate of Incorporation or the By-Laws discussed therein, fairly summarize
such legal matters the Certificate of Incorporation or the By-laws , in all
material respects.
5. The
Registration Statement has become effective under the Securities
Act. We are not aware of any stop order suspending the effectiveness
of the Registration Statement has been issued, or any proceedings for that
purpose have been instituted or overtly threatened by the
Commission. Any required filing of the Prospectus, and any required
supplement thereto, pursuant to Rule 424(b) under the Securities Act, has been
made in the manner and within the time period required by Rule
424(b).
6. The
Agreement has been duly authorized by all necessary corporate action on the part
of the Company and has been duly executed and delivered by the
Company.
7. The
Company is not required to register as an “investment company” as defined in the
Investment Company Act.
8. No
consent, approval, authorization or filing with or order of any U.S. Federal,
State of New York court or governmental agency or body having jurisdiction over
the Company is required, under the laws, rules and regulations of the United
States of America and the State of New York, that Xxxxxxx Procter has, in the
exercise of its customary due diligence, recognized, for the consummation by the
Company of the transactions contemplated by the Agreement, except (i) such as
have been made or obtained under the Securities Act and (ii) such as may be
required under the blue sky laws of any jurisdiction in connection with the
purchase and distribution of the Shares by you in the manner contemplated in the
Agreement and in the Final Prospectus, as to which we express no
opinion.
9. The
issue and sale of the Shares in accordance with the Agreement will not result in
a breach or violation of (or constitute any event that with notice, lapse of
time or both would result in a breach of violation of): (i) the
Company Governing Documents, (ii) any statute, rule, or regulation of
the United States of America or the State of Delaware which, in our experience,
is typically applicable to the transaction of the nature contemplated by the
Agreement and is applicable to the Company, (iii) any currently effective order,
writ, judgment, injunction, decree, or award issued by a U.S. Court that names
and has been entered against the Company and of which we have knowledge, or (iv)
any Contract that was filed as an exhibit to the Company’s most recent annual
report on Form 10-K, in each case (ii) through (iv) the breach or violation
of which would materially and adversely affect the Company. We expressly
limited our opinion under subparagraph (ii) above to the Delaware General
Corporations Law and the federal securities law of the United States of
America.
10. To
our knowledge, except as set forth in the Time of Sale Disclosure Package and
the Final Prospectus, the Company is not a party to any written agreement
granting any holders of securities of the Company rights to require the
registration under the Securities Act of resales of such
securities.
We have
also reviewed and relied upon certain corporate records and documents of the
Company, letters from counsel and accountants, and oral and written statements
and certificates of officers and other representatives of the Company and others
as to the existence and consequences of certain factual and other
matters.
The
purpose of our professional engagement was not to establish or confirm factual
matters or financial or quantitative information. Therefore, we are not passing
upon and do not assume any responsibility for the accuracy, completeness or
fairness of the statements or information contained or incorporated by reference
in the Registration Statement, the Time of Sale Disclosure Package or the Final
Prospectus (except to the extent expressly set forth in the numbered paragraph 5
of the separate opinion letter of Xxxxxxx Procter LLP to you as of this date)
and have not made, or undertaken any obligation to make, an independent check or
verification thereof (except as also stated in that opinion
letter). Moreover, many of the determinations required to be made in
the preparation of the Registration Statement, the Time of Sale Disclosure
Package and the Final Prospectus involve matters of a non-legal
nature.
However,
subject to the foregoing and based on our participation, review and reliance
described in the second preceding paragraph, (i) we, as U.S. counsel to the
Company, believe (a) the Registration Statement (as of its effective date), the
Time of Sale Prospectus (as of the Applicable Time), the Final Prospectus (as of
its date), and any further amendments and supplements thereto (as of their
respective dates), as applicable, made by the Company prior to the Closing Date
(other than the financial statements and schedules and other financial and
statistical data included therein or derived therefrom, as to which we express
no belief) appeared on their face to be appropriately responsive, and complied
as to form, in all material respects to the requirements of the Securities Act
and the applicable rules and regulations of the Commission thereunder and (b)
the documents incorporated by reference in the Registration Statement and the
Time of Sale Prospectus and the Final Prospectus (other than the financial
statements and schedules and other financial and statistical data included
therein or derived therefrom, as to which we express no belief), at the time
they were filed with the Commission, appeared on their face to be appropriately
responsive, and complied as to form, in all material respects to the
requirements of the Exchange Act and the applicable rules and regulations of the
Commission thereunder, and (ii) we confirm that no facts have come to our
attention that caused us to believe (a) that the Registration Statement or any
amendment thereto filed by the Company prior to the Closing Date (other than the
financial statements and schedules and other financial and statistical data
included therein or derived therefrom, as to which we express no belief), when
the Registration Statement or such amendment became effective, except as it
relates to any class of securities other than the Common Stock, 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 not misleading,
(b) that the Time of Sale Disclosure Package (other than the financial
statements and schedules and other financial and statistical data included
therein or derived therefrom, as to which we express no belief), as of 9:00 a.m.
EST on __________, 2010 (the “Applicable Time,” which, you have informed us, is
a time before the time of the first sale of the Shares by any Underwriter),
except as it relates to any class of securities other than the Common Stock,
contained any untrue statement of a material fact or omitted 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; or (c) that, as of
its date and as of the Closing Date, the Final Prospectus or any further
amendment or supplement thereto made by the Company prior to the Closing Date
(other than the financial statements and schedules and other financial and
statistical data included therein or derived therefrom, as to which we express
no belief), except as it relates to any class of securities other than the
Common Stock, contained or contains any untrue statement of a material fact or
omitted or omits to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. We do not express any belief with respect to the
assessments of or reports on the effectiveness of internal control over
financial reporting contained in the Registration Statement, the Time of Sale
Disclosure Package or the Final Prospectus.
In
addition, we supplementally inform you that, to our knowledge, there is no
action, suit or proceeding by or before any court or other governmental agency,
authority or body or any arbitrator in the U.S. pending or
overtly threatened against the Company or its properties by a third party of a
character required to be disclosed in the Registration Statement, the Time of
Sale Disclosure Package or the Final Prospectus that is not disclosed in the
Registration Statement, the Time of Sale Disclosure Package or the Final
Prospectus as required by the Securities Act and the rules
thereunder.
SCHEDULE
III
China
Opinions
|
(1)
|
Each
of Putai and Shanxi Coal is duly incorporated, validly exists and is in
good standing under PRC law. Each entity is qualified to own
its assets and operate its business and is an independent enterprise legal
person under PRC law.
|
|
(2)
|
Neither
Putai nor Shanxi Coal has been subject to any penalty of any government
authorities in China or is subject to any lawsuit or arbitration
proceedings in China. Neither Putai nor Shanxi Coal has violated any law
or regulation of PRC.
|
|
(3)
|
Each
of Putai and Shanxi Coal has all the certificates, permits and licenses as
disclosed in the 10-K.
|
