•] SHARES CHINA CERAMICS CO., LTD. UNDERWRITING AGREEMENT
[•]
SHARES
[•], 2010
XXXX
CAPITAL PARTNERS, LLC
00
Xxxxxxxxx Xxxxx Xxxxx
Xxxxxxx
Xxxxx, XX 00000
MAXIM
GROUP LLC
000
Xxxxxxxxx Xxxxxx
Xxx Xxxx,
XX 00000
As
Representatives of the Underwriters
named
on Schedule A
hereto
Ladies
and Gentlemen:
China
Ceramics Co., Ltd., a corporation organized and existing under the laws of the
British Virgin Islands (the “Company”), confirms its
agreement, subject to the terms and conditions set forth herein, with each of
the underwriters listed on Exhibit A hereto
(collectively, the “Underwriters”), for whom Xxxx
Capital Partners, LLC and Maxim Group LLC are acting as representatives (in such
capacity, the “Representatives”), to sell and
issue to the Underwriters an aggregate of [•] shares, no par value (the
“Shares”) of the Company
(the “Firm
Shares”). The Firm Shares are more fully described in the
Registration Statement and Prospectus referred to below.
The
offering and sale of the Shares contemplated by this underwriting agreement
(this “Agreement”) is
referred to herein as the “Offering.”
1.1
Firm Shares;
Over-Allotment Option.
(a) Purchase of Firm
Shares. On the basis of the representations and warranties herein
contained, but subject to the terms and conditions herein set forth, the Company
agrees to issue and sell, severally and not jointly, to the several
Underwriters, an aggregate of [•] Firm
Shares of the Company at a purchase price (net of discounts and commissions) of
$[•]
per Firm Share. The Underwriters, severally and not jointly, agree to
purchase from the Company the number of Firm Shares set forth opposite their
respective names on Schedule A attached
hereto and made a part hereof at a purchase price (net of discounts and
commissions) of $[•] per Firm
Share.
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Capital Partners, LLC
Maxim
Group LLC
[•], 2010
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(b) Payment and
Delivery. Delivery and payment for the Firm Shares shall be
made at [10:00 A.M.], New York time, on the third Business Day following the
effective date (the “Effective
Date”) of the Registration Statement (or the fourth Business Day
following the Effective Date, if the Registration Statement is declared
effective after 4:30 p.m.) or at such earlier time as shall be agreed upon by
the Representatives and the Company at the offices of the Representatives or at
such other place as shall be agreed upon by the Representatives and the
Company. The hour and date of delivery and payment for the Firm Shares is
called the “Closing
Date.” The closing of the payment of
the purchase price for, and delivery of certificates representing, the Firm
Shares is referred to herein as the “Closing.” Payment for the Firm Shares shall be made on
the Closing Date at the Representatives’ election by wire transfer in Federal
(same day) funds or by certified or bank cashier’s check(s) in New York Clearing
House funds. Any remaining proceeds (less commissions, expense
allowance and actual expense payments or other fees payable pursuant to this
Agreement) shall be paid to the order of the Company upon delivery to you of
certificates (in form and substance satisfactory to the Underwriters)
representing the Firm Shares (or through the full fast transfer facilities of
the Depository Trust Company (the “DTC”)) for the account of the
Underwriters. The Firm Shares shall be registered in such name or names
and in such authorized denominations as the Representatives may request in
writing at least two Business Days prior to the Closing Date. The Company
will permit the Representatives to examine and package the Firm Shares for
delivery, at least one full Business Day prior to the Closing Date. The
Company shall not be obligated to sell or deliver the Firm Shares except upon
tender of payment by the Representatives for all the Firm Shares.
(c) Option Shares.
For the purposes of covering any over-allotments in connection with the
distribution and sale of the Firm Shares, the Representatives on behalf of the
Underwriters is, hereby granted, an option to purchase up to an additional 15%
of the number of Firm Shares or [•] shares
(the "Option Shares") to
be offered by the Company in the Offering (the “Over-allotment
Option”). The Firm Shares and the Option Shares are
hereinafter collectively referred to as the “Securities”. The
purchase price to be paid for the Option Shares (net of discounts and
commissions) will be $[•] per
Option Share.
(d) Exercise of
Option. The Over-allotment Option granted pursuant to
Section 1.1(c) hereof may be exercised by the Representatives as to all (at
any time) or any part (from time to time) of the Option Shares within 45 days
after the Effective Date. The Underwriters will not be under any
obligation to purchase any Option Shares prior to the exercise of the
Over-allotment Option. The Over-allotment Option granted hereby may be
exercised by the giving of oral notice to the Company from the Representatives,
which must be confirmed in writing by overnight mail or facsimile transmission
setting forth the number of Option Shares to be purchased and the date and time
for delivery of and payment for the Option Shares, which will not be later than
five Business Days
after the date of the notice or such other time as shall be agreed upon by the
Company and the Representatives, at the offices of the Representatives or at
such other place as shall be agreed upon by the Company and the
Representatives. If such delivery and payment for the Option Shares does
not occur on the Closing Date, the date and time of the closing for such Option
Shares will be as set forth in the notice (hereinafter the “Option Closing Date”).
Upon exercise of the Over-allotment Option, the Company will become obligated to
convey to the Underwriters, and, subject to the terms and conditions set forth
herein, the Underwriters will become obligated to purchase, the number of Option
Shares specified in such notice.
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Capital Partners, LLC
Maxim
Group LLC
[•], 2010
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(e) Payment and Delivery of
Option Shares. Payment for the Option Shares shall be made on the
Option Closing Date at the Representatives’ election by wire transfer in Federal
(same day) funds or by certified or bank cashier’s check(s) in New York Clearing
House funds, by deposit of the price per Option Share to the Company upon
delivery to the Underwriters of certificates (in form and substance satisfactory
to the Underwriters) representing the Option Shares (or through the full fast
transfer facilities of DTC) for the account of the Underwriters. The
certificates representing the Option Shares to be delivered will be in such
denominations and registered in such names as the Representatives requests not
less than two Business Days prior to the Closing Date or the Option Closing
Date, as the case may be, and will be made available to the Representatives for
inspection, checking and packaging at the aforesaid office of the Company’s
transfer agent or correspondent not less than one full Business Day prior to
such Closing Date or Option Closing Date.
2. Representations and
Warranties of the Company.
2.1 The
Company represents, warrants and covenants to, and agrees with, each of the
Underwriters that, as of the date hereof and as of the Closing
Date:
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Capital Partners, LLC
Maxim
Group LLC
[•], 2010
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(a) The
Company has prepared and filed with the Securities and Exchange Commission (the
“Commission”) a
registration statement on Form F-1 (Registration No. 333-[•]), and amendments thereto,
and related preliminary prospectuses for the registration under the Securities
Act of 1933, as amended (the “Securities Act”), of the
Securities which registration statement, as so amended (including post-effective
amendments, if any), has been declared effective by the Commission and copies of
which have heretofore been delivered to the Underwriters. The
registration statement, as amended at the time it became effective, including
the prospectus, financial statements, schedules, exhibits and other information
(if any) deemed to be part of the registration statement at the time of
effectiveness pursuant to Rule 430A under the Securities Act, is hereinafter
referred to as the “Registration
Statement.” If the Company has filed or is required pursuant
to the terms hereof to file a registration statement pursuant to Rule 462(b)
under the Securities Act registering additional Shares (a “Rule 462(b) Registration
Statement”), then, unless otherwise specified, any reference herein to
the term “Registration Statement” shall be deemed to include such Rule 462(b)
Registration Statement. Other than a Rule 462(b) Registration
Statement, which, if filed, becomes effective upon filing, no other document
with respect to the Registration Statement has heretofore been filed with the
Commission. All of the Securities have been registered under the
Securities Act pursuant to the Registration Statement or, if any Rule 462(b)
Registration Statement is filed, will be duly registered under the Securities
Act with the filing of such Rule 462(b) Registration Statement. The
Company has complied to the Commission’s satisfaction with all requests of the
Commission for additional or supplemental information. Based on
communications from the Commission, no stop order suspending the effectiveness
of either the Registration Statement or the Rule 462(b) Registration Statement,
if any, has been issued and no proceeding for that purpose has been initiated or
threatened by the Commission. The Company, if required by the
Securities Act and the rules and regulations of the Commission (the “Rules and Regulations”),
proposes to file the Prospectus with the Commission pursuant to Rule 424(b)
under the Securities Act (“Rule
424(b)”). The prospectus, in the form in which it is to be
filed with the Commission pursuant to Rule 424(b), or, if the prospectus is not
to be filed with the Commission pursuant to Rule 424(b), the prospectus in the
form included as part of the Registration Statement at the time the Registration
Statement became effective, is hereinafter referred to as the “Prospectus,” except that if
any revised prospectus or prospectus supplement shall be provided to the
Underwriters by the Company for use in connection with the Offering which
differs from the Prospectus (whether or not such revised prospectus or
prospectus supplement is required to be filed by the Company pursuant to Rule
424(b)), the term “Prospectus” shall also refer to such revised prospectus or
prospectus supplement, as the case may be, from and after the time it is first
provided to the Underwriters for such use. Any preliminary prospectus
or prospectus subject to completion included in the Registration Statement or
filed with the Commission pursuant to Rule 424 under the Securities Act is
hereafter called a “Preliminary
Prospectus.” Any reference herein to the Registration
Statement, any Preliminary Prospectus or the Prospectus shall be deemed to refer
to and include the exhibits incorporated by reference therein pursuant to the
Rules and Regulations on or before the effective date of the Registration
Statement, the date of such Preliminary Prospectus or the date of the
Prospectus, as the case may be. Any reference herein to the terms
“amend”, “amendment” or “supplement” with respect to the Registration Statement,
any Preliminary Prospectus or the Prospectus shall be deemed to refer to and
include: (i) the filing of any document under the Securities Exchange Act of
1934, as amended, and together with the Rules and Regulations promulgated
thereunder (the “Exchange
Act”) after the effective date of the Registration Statement, the date of
such Preliminary Prospectus or the date of the Prospectus, as the case may be,
which is incorporated therein by reference, and (ii) any such document so
filed. All references in this Agreement to the Registration
Statement, the Rule 462(b) Registration Statement, a Preliminary Prospectus and
the Prospectus, or any amendments or supplements to any of the foregoing shall
be deemed to include any copy thereof filed with the Commission pursuant to its
Electronic Data Gathering, Analysis and Retrieval System (“XXXXX”).
(b) The
Company has filed with the Commission a Form 8-A (File Number 001-[•]) providing for the
registration under the Exchange Act of the Shares. The registration
of the Shares under the Exchange Act has been declared effective by the
Commission on the date hereof.
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Capital Partners, LLC
Maxim
Group LLC
[•], 2010
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(c) At
the time of the effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement or the effectiveness of any post-effective amendment to
the Registration Statement, when the Prospectus is filed or first used within
the meaning of the Rules and Regulations, when any supplement to or amendment of
the Prospectus is filed with the Commission, when any document filed under the
Exchange Act was or is filed, at all other subsequent times until the completion
of the public offer and sale of the Securities, and at the Closing Date, if any,
the Registration Statement and the Prospectus and any amendments thereof and
supplements or exhibits thereto complied or will comply in all material respects
with the applicable provisions of the Securities Act, the Exchange Act and the
Rules and Regulations, and did not and will not contain an untrue statement of a
material fact and did not and will not omit to state any material fact required
to be stated therein or necessary in order to make the statements therein: (i)
in the case of the Registration Statement, not misleading, and (ii) in the case
of the Prospectus in light of the circumstances under which they were made, not
misleading. When any Preliminary Prospectus was first filed with the
Commission (whether filed as part of the registration statement for the
registration of the Securities or any amendment thereto or pursuant to Rule
424(a) under the Securities Act) and when any amendment thereof or supplement
thereto was first filed with the Commission, such Preliminary Prospectus and any
amendments thereof and supplements thereto complied in all material respects
with the applicable provisions of the Securities Act, the Exchange Act and the
Rules and Regulations and did not contain an untrue statement of a material fact
and did not omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. No representation and
warranty is made in this subsection (c), however, with respect to any
information contained in or omitted from the Registration Statement or the
Prospectus or any related Preliminary Prospectus or any amendment thereof or
supplement thereto in reliance upon and in conformity with information furnished
in writing to the Company by or on behalf of any Underwriter through the
Representatives specifically for use therein. The parties acknowledge
and agree that such information provided by or on behalf of any Underwriter
consists solely of the names and corresponding share amounts set forth in the
table of the underwriters under the caption “Underwriting” and the concession
and reallowance figures and the paragraph relating to stabilization by the
Underwriters appearing under the caption “Underwriting” (the “Underwriters’
Information”).
(d) Neither:
(i) any Issuer-Represented General Free Writing Prospectus(es) (as defined
below) issued at or prior to the Time of Sale (as defined below) and the
Statutory Prospectus (as defined below), all considered together (collectively,
the “General Disclosure
Package”), nor (ii) any individual Issuer-Represented Limited-Use Free
Writing Prospectus(es) (as defined below), when considered together with the
General Disclosure Package, includes or included as of the Time of Sale, any
untrue statement of a material fact or omits or omitted as of the Time of Sale
to state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading. The
preceding sentence does not apply to statements in or omissions from any
Statutory Prospectus included in the Registration Statement or any
Issuer-Represented Free Writing Prospectus (as defined below) based upon and in
conformity with the Underwriters’ Information furnished to the Company by the
Representatives specifically for use therein.
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Maxim
Group LLC
[•], 2010
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(e) Each
Issuer-Represented Free Writing Prospectus, as of its issue date and at all
subsequent times through the completion of the public offer and sale of the
Securities or until any earlier date that the Company notified or notifies the
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, any Statutory Prospectus or
the Prospectus. If at any time following issuance of an
Issuer-Represented Free Writing Prospectus there occurred or occurs an event or
development as a result of which such Issuer-Represented Free Writing Prospectus
conflicted or would conflict with the information contained in the Registration
Statement, any Statutory Prospectus or the Prospectus relating to the Securities
or included or would include an untrue statement of a material fact or omitted
or would omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances prevailing at that subsequent time,
not misleading, the Company has notified or will notify promptly the
Representatives so that any use of such Issuer-Represented Free Writing
Prospectus may cease until it is promptly amended or supplemented by the
Company, at its own expense, to eliminate or correct such conflict, untrue
statement or omission. The foregoing two sentences do not apply to
statements in or omissions from any Issuer-Represented Free Writing Prospectus
based upon and in conformity with the Underwriters’ Information furnished to the
Company by the Representatives specifically for use therein.
(f) The
Company has not distributed and will not distribute any prospectus or other
offering material in connection with the offering and sale of the Securities
other than the General Disclosure Package or the Prospectus or other materials
permitted by the Act to be distributed by the Company. Unless the
Company obtains the prior consent of the Representatives, the Company has not
made and will not make any offer relating to the Securities that would
constitute an “issuer free writing prospectus,” as defined in Rule 433 under the
Act, or that would otherwise constitute a “free writing prospectus,” as defined
in Rule 405 under the Act, required to be filed with the
Commission. The Company has complied and will comply with the
requirements of Rules 164 and 433 under the Act applicable to any
Issuer-Represented Free Writing Prospectus as of its issue date and at all
subsequent times through the completion of the public offer and sale of the
Securities, including timely filing with the Commission where required,
legending and record keeping. The Company has satisfied and will
satisfy the conditions in Rule 433 under the Act to avoid a requirement to file
with the Commission any electronic road show.
(g) Each
Underwriter agrees that, unless it obtains the prior written consent of the
Company, it will not make any offer relating to the Securities that would
constitute an Issuer-Represented Free Writing Prospectus (as defined below) or
that would otherwise (without taking into account any approval, authorization,
use or reference thereto by the Company) constitute a “free writing prospectus”
required to be filed by the Company with the Commission (as defined herein) or
retained by the Company under Rule 433 of the Securities Act; provided that the
prior written consent of the Company hereto shall be deemed to have been given
in respect of any Issuer-Represented General Free Writing Prospectuses
referenced on Schedule
C attached hereto
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Capital Partners, LLC
Maxim
Group LLC
[•], 2010
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As used
in this Agreement, the terms set forth below shall have the following
meanings:
(i) “Time of Sale” means [•] [P.M.] (Eastern time) on
the date of this Agreement.
(ii) “Statutory Prospectus” as of
any time means the prospectus that is included in the Registration Statement
immediately prior to that time. For purposes of this definition,
information contained in a form of prospectus that is deemed retroactively to be
a part of the Registration Statement pursuant to Rule 430A or 430B shall be
considered to be included in the Statutory Prospectus as of the actual time that
form of prospectus is filed with the Commission pursuant to Rule 424(b) under
the Act.
(iii) “Issuer-Represented Free Writing
Prospectus” means any “issuer free writing prospectus,” as defined in
Rule 433 under the Act, relating to the Securities that (A) is required to be
filed with the Commission by the Company, or (B) is exempt from filing pursuant
to Rule 433(d)(5)(i) under the Act because it contains a description of the
Securities or of the offering that does not reflect the final terms or pursuant
to Rule 433(d)(8)(ii) because it is a “bona fide electronic road show,” as
defined in Rule 433 of the Regulations, 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
Act.
(iv) “Issuer-Represented General Free
Writing Prospectus” means any Issuer-Represented Free Writing Prospectus
that is intended for general distribution to prospective investors, as evidenced
by its being specified in Schedule C to this Agreement.
(v) “Issuer-Represented Limited-Use Free
Writing Prospectus” means any Issuer-Represented Free Writing Prospectus
that is not an Issuer-Represented General Free Writing
Prospectus. The term Issuer-Represented Limited-Use Free Writing
Prospectus also includes any “bona fide electronic road show,” as defined in
Rule 433 of the Regulations, that is made available without restriction pursuant
to Rule 433(d)(8)(ii), even though not required to be filed with the
Commission.
(h) Xxxxx
Xxxxxxxx (“Xxxxx Xxxxxxxx”), whose reports relating to
the Company are included in the Registration Statement, are independent public
accountants as required by the Securities Act, the Exchange Act and the Rules
and Regulations and such accountants are not in violation of the auditor
independence requirements of the Xxxxxxxx-Xxxxx Act of 2002 (“Sarb-Ox”).
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Capital Partners, LLC
Maxim
Group LLC
[•], 2010
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(i) Subsequent
to the respective dates as of which information is presented in the Registration
Statement, the General Disclosure Package and the Prospectus, and except as
disclosed in the Registration Statement, the General Disclosure Package and the
Prospectus: (i) the Company has not declared, paid or made any dividends or
other distributions of any kind on or in respect of its capital stock, and (ii)
there has been no material adverse change (or, to the knowledge of the Company,
any development which has a high probability of involving a material adverse
change in the future), whether or not arising from transactions in the ordinary
course of business, in or affecting: (A) the business, condition (financial or
otherwise), results of operations, shareholders’ equity, properties or prospects
of the Company and its Subsidiaries (as defined below), taken as a whole; (B)
the long-term debt or capital stock of the Company or any of its Subsidiaries;
or (C) the Offering or consummation of any of the other transactions
contemplated by this Agreement, the Registration Statement, the General
Disclosure Package and the Prospectus (a “Material Adverse
Change”). Since the date of the latest balance sheet presented
in the Registration Statement, the General Disclosure Package and the
Prospectus, neither the Company nor any Subsidiary has incurred or undertaken
any liabilities or obligations, whether direct or indirect, liquidated or
contingent, matured or unmatured, or entered into any transactions, including
any acquisition or disposition of any business or asset, which are material to
the Company and the Subsidiaries taken as a whole, except for liabilities,
obligations and transactions which are disclosed in the Registration Statement
and the Prospectus.
(j) As
of the dates indicated in the Registration Statement, the General Disclosure
Package and the Prospectus, the authorized, issued and outstanding shares of
capital stock of the Company were as set forth in the Registration Statement,
the General Disclosure Package and the Prospectus in the column headed “Actual”
under the section thereof captioned “Capitalization” and, after giving effect to
the Offering and the other transactions (excluding the offer and sale of the
Over-allotment Shares) contemplated by this Agreement, the Registration
Statement, the General Disclosure Package and the Prospectus, and the exercise
of the outstanding warrants of the Company immediately prior to the Closing,
will be as set forth in the column headed “Pro form as adjusted” in such
section. All of the issued and outstanding shares of capital stock of
the Company, including the outstanding Shares, units and warrants of the
Company, are fully paid and non-assessable and have been duly and validly
authorized and issued, in compliance with all applicable state, federal and
foreign securities laws and not in violation of or subject to any preemptive or
similar right that does or will entitle any Person (as defined below), upon the
issuance or sale of any security, to acquire from the Company or any Subsidiary
any Relevant Security. As used herein, the term “Relevant Security” means any
Shares or other security of the Company or any Subsidiary that is convertible
into, or exercisable or exchangeable for Shares or equity securities, or that
holds the right to acquire any Shares or equity securities of the Company or any
Subsidiary or any other such Relevant Security, except for such rights as may
have been fully satisfied or waived prior to the effectiveness of the
Registration Statement. As used herein, the term “Person” means any foreign or
domestic individual, corporation, trust, partnership, joint venture, limited
liability company or other entity. Except as set forth in, or
contemplated by, the Registration Statement, the General Disclosure Package and
the Prospectus, on the Effective Date and on the Closing Date, there will be no
options, warrants, or other rights to purchase or otherwise acquire any
authorized, but unissued Shares or any security convertible into Shares, or any
contracts or commitments to issue or sell Shares or any such options, warrants,
rights or convertible securities.
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Maxim
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[•], 2010
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(k) The
Securities have been duly and validly authorized and, when issued, delivered and
paid for in accordance with this Agreement on the Closing Date and Option
Closing Date, as the case may be, will be duly and validly issued, fully
paid and non-assessable, will have been issued in compliance with all applicable
state, federal and foreign securities laws and will not have been issued in
violation of or subject to any preemptive or similar right that does or will
entitle any Person to acquire any Relevant Security from the Company or any
Subsidiary upon issuance or sale of the Securities in the
Offering. The Securities conform to the descriptions thereof
contained in the Registration Statement, the General Disclosure Package and the
Prospectus. Except as disclosed in the Registration Statement, the
General Disclosure Package and the Prospectus, neither the Company nor any
Subsidiary has outstanding warrants, options to purchase, or any preemptive
rights or other rights to subscribe for or to purchase, or any contracts or
commitments to issue or sell, any Relevant Security.
(l) The
descriptions of the ownership structure of the Company and its subsidiaries and
non-subsidiary controlled companies as set forth in Exhibit 21 to the
Registration Statement (collectively, the “Subsidiaries”) and the
restructuring set forth in the Registration Statement under the caption
“Corporate History and Structure” are accurate and complete. The ownership
structure of the Company and Subsidiaries, both currently and after giving
effect to the offering of the Securities (the “Corporate Structure”), are in
compliance with existing laws and regulations of the People’s Republic of China
(“PRC”). All
consent, approval, authorization or order of, or registration or filing with any
Governmental Authority required for the restructuring transactions resulting
into the Corporate Structure (collectively, the “Restructuring”), including,
without limitation, (A) the acquisition of Jinjiang Hengda Ceramics Co., Ltd.
(“Hengda”) by Stand Best
Creation Limited, (B) the acquisition of Jiangxi Hengdali Ceramic and
Constructional Materials Co., Ltd. (“Hengdali,” together with
Hengda, the “PRC
Companies”) by Hengda, and (C) the acquisition of China Ceramics Co.,
Ltd. by China Holdings Acquisition Corp., have been duly obtained, and none of
such governmental authorizations has been withdrawn or revoked nor, to the
Company’s knowledge, are there circumstances which may give rise to such
governmental authorizations being withdrawn or revoked, or is subject to any
condition precedent which has not been fulfilled or performed. The Restructuring
did not and/or does not (A) contravene or conflict with any provision of any
applicable PRC laws and regulations, (B) contravene or conflict with the
respective articles of association, business license or other constitutional
documents of any of the Company and its Subsidiaries, or (C) conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any license, indenture, mortgage, deed of trust,
loan agreement, note, lease or other agreement or instrument to which any of the
Company and its Subsidiaries is a party or by which any of the Company and its
Subsidiaries is bound or to which any of the property or assets of any of the
Company and its Subsidiaries is subject, except in the case of (c) where
non-compliance would not reasonably be expected to have a Material Adverse
Effect (as defined below). The PRC Companies operate their businesses
in compliance with all PRC laws and regulations, except where non-compliance
would not reasonably be expected to have a Material Adverse
Effect.
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Maxim
Group LLC
[•], 2010
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(m) Except
for the Subsidiaries, the Company holds no ownership or other interest, nominal
or beneficial, direct or indirect, in any corporation, partnership, joint
venture or other business entity. All of the issued and outstanding
shares of capital stock of, or other ownership interests in, each Subsidiary
have been duly and validly authorized and issued and are fully paid and
non-assessable and are owned, directly or indirectly, by the Company, free and
clear of any lien, charge, mortgage, pledge, security interest, claim, equity,
trust or other encumbrance, preferential arrangement, defect or restriction of
any kind whatsoever (any “Lien”). No
director, officer or key employee of the Company named in the Prospectus holds
any direct equity, debt or other pecuniary interest in any Subsidiary or any
Person with whom the Company or any Subsidiary does business or is in privity of
contract with, other than, in each case, indirectly through the ownership by
such individuals of Shares.
(n) Each
of the Company and the Subsidiaries has been duly incorporated, formed or
organized, and validly exists as a corporation, partnership or limited liability
company in good standing under the laws of its jurisdiction of incorporation,
formation or organization. Each of the Company and the Subsidiaries
has all requisite power and authority to carry on its business as it is
currently being conducted and as described in the Registration Statement, the
General Disclosure Package and the Prospectus, and to own, lease and operate its
respective properties. Each of the Company and the Subsidiaries is
duly qualified to do business and is in good standing as a foreign corporation,
partnership or limited liability company in each jurisdiction in which the
character or location of its properties (owned, leased or licensed) or the
nature or conduct of its business makes such qualification necessary, except, in
each case, for those failures to be so qualified or in good standing which
(individually and in the aggregate) would not reasonably be expected to have a
material adverse effect on: (i) the business, condition (financial or
otherwise), results of operations, shareholders’ equity, properties or prospects
of the Company and the Subsidiaries, taken as a whole; (ii) the long-term debt
or capital stock of the Company or any Subsidiary; or (iii) the Offering or
consummation of any of the other transactions contemplated by this Agreement,
the Registration Statement, the General Disclosure Package and the Prospectus
(any such effect being a “Material Adverse
Effect”).
(o) Neither
the Company nor any Subsidiary: (i) is in violation of its certificate or
articles of incorporation, memorandum and articles of association, by-laws,
certificate of formation, limited liability company agreement, joint venture
agreement, partnership agreement or other organizational documents, (ii) is in
default under, and no event has occurred which, with notice or lapse of time or
both, would constitute a default under or result in the creation or imposition
of any Lien upon any of its property or assets pursuant to, any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which it is a party or by which it is bound or to which any of its property or
assets is subject or (iii) is in violation in any respect of any law, rule,
regulation, ordinance, directive, judgment, decree or order of any judicial,
regulatory or other legal or governmental agency or body, foreign or domestic,
except (in the case of clause (ii) above) for any Lien disclosed in the
Registration Statement, the General Disclosure Package and the
Prospectus.
Xxxx
Capital Partners, LLC
Maxim
Group LLC
[•], 2010
Page 11
of 45
(p) The
Company has full right, power and authority to execute and deliver this
Agreement and all other agreements, documents, certificates and instruments
required to be delivered pursuant to this Agreement. The Company has
duly and validly authorized this Agreement and each of the transactions
contemplated by this Agreement. This Agreement has been duly and
validly executed and delivered by the Company and constitutes the legal, valid
and binding obligations of the Company and is enforceable against the Company in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors’ rights generally and except as enforceability may be subject to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(q) The
execution, delivery, and performance of this Agreement and all other agreements,
documents, certificates and instruments required to be delivered pursuant to
this Agreement, and consummation of the transactions contemplated by this
Agreement do not and will not: (i) conflict with, require consent under or
result in a breach of any of the terms and provisions of, or constitute a
default (or an event which with notice or lapse of time, or both, would
constitute a default) under, or result in the creation or imposition of any Lien
upon any property or assets of the Company or any Subsidiary pursuant to, any
indenture, mortgage, deed of trust, loan agreement or other agreement,
instrument, franchise, license or permit to which the Company or any Subsidiary
is a party or by which the Company or any Subsidiary or their respective
properties, operations or assets may be bound or (ii) violate or conflict with
any provision of the certificate or articles of incorporation, by-laws,
certificate of formation, limited liability company agreement, partnership
agreement or other organizational documents of the Company or any Subsidiary, or
(iii) violate or conflict with any law, rule, regulation, ordinance, directive,
judgment, decree or order of any judicial, regulatory or other legal or
governmental agency or body, domestic or foreign, except in the case of
subsections (i) and (iii) for any default, conflict or violation that would not
have or reasonably be expected to have a Material Adverse Effect.
(r) Each
of the Company and the Subsidiaries has all consents, approvals, authorizations,
orders, registrations, qualifications, licenses, filings and permits of, with
and from all judicial, regulatory and other legal or governmental agencies and
bodies and all third parties, foreign and domestic (collectively, the “Consents”), to own, lease and
operate its properties and conduct its business as it is now being conducted and
as disclosed in the Registration Statement, the General Disclosure Package and
the Prospectus, and each such Consent is valid and in full force and
effect. Neither the Company nor any Subsidiary has received notice of
any investigation or proceedings which results in or, if decided adversely to
the Company or any Subsidiary, could reasonably be expected to result in, the
revocation of, or imposition of a materially burdensome restriction on, any
Consent. No Consent contains a materially burdensome restriction not
adequately disclosed in the Registration Statement, the General Disclosure
Package and the Prospectus.
Xxxx
Capital Partners, LLC
Maxim
Group LLC
[•], 2010
Page 12
of 45
(s) Each
of the Company and the Subsidiaries is in compliance with all applicable laws,
rules, regulations, ordinances, directives, judgments, decrees and orders,
foreign and domestic, except for any non-compliance the consequences of which
would not have or reasonably be expected to have a Material Adverse
Effect. Neither the Company, nor any of its Affiliates (within the
meaning of Rule 144 under the Securities Act) (“Affiliates”) has received any
notice or other information from any regulatory or other legal or governmental
agency relating to any default or potential decertification by the Company, or
any of its Affiliates.
(t) No
Consent of, with or from any judicial, regulatory or other legal or governmental
agency or body or any third party, foreign or domestic is required for the
execution, delivery and performance of this Agreement or consummation of each of
the transactions contemplated by this Agreement, including the issuance, sale
and delivery of the Securities to be issued, sold and delivered hereunder,
except the registration under the Securities Act of the Securities, which has
become effective, and such Consents as may be required under state securities or
blue sky laws or the by-laws and rules of the Nasdaq [Capital] Market, where the
Shares have been approved for listing, and the Financial Industry Regulatory
Authority, Inc. (“FINRA”) in connection with the
purchase and distribution of the Securities by the Underwriters, each of which
has been obtained and is in full force and effect.
(u) Except
as disclosed in the Registration Statement, the General Disclosure Package and
the Prospectus, there is no judicial, regulatory, arbitral or other legal or
governmental proceeding or other litigation or arbitration, domestic or foreign,
pending to which the Company or any Subsidiary is a party or of which any
property, operations or assets of the Company or any Subsidiary is the subject
which, individually or in the aggregate, if determined adversely to the Company
or any Subsidiary, would reasonably be expected to have a Material Adverse
Effect. To the Company’s knowledge, no such proceeding, litigation or
arbitration is threatened or contemplated; and the defense of all such
proceedings, litigation and arbitration against or involving the Company or any
Subsidiary would not reasonably be expected to have a Material Adverse
Effect.
(v) The
financial statements, including the notes thereto, and the supporting schedules
included in the Registration Statement, the General Disclosure Package and the
Prospectus comply in all material respects with the requirements of the
Securities Act, the Exchange Act and present fairly the financial position as of
the dates indicated and the cash flows and results of operations for the periods
specified of the Company and its consolidated Subsidiaries. Except as
otherwise stated in the Registration Statement, the General Disclosure Package
and the Prospectus, said financial statements have been prepared in conformity
with International Financial Reporting Standards as issued by the International
Accounting Standards Board and applied on a consistent basis throughout the
periods involved, except in the case of unaudited financials which are subject
to normal year end adjustments and do not contain certain
footnotes. The supporting schedules included in the Registration
Statement, the General Disclosure Package and the Prospectus present fairly the
information required to be stated therein. No other financial
statements or supporting schedules are required to be included or incorporated
by reference in the Registration Statement, the General Disclosure Package or
the Prospectus. The other financial and statistical information
included in the Registration Statement, the General Disclosure Package and the
Prospectus present fairly the information included therein and have been
prepared on a basis consistent with that of the financial statements that are
included in the Registration Statement, the General Disclosure Package and the
Prospectus and the books and records of the respective entities presented
therein.
Xxxx
Capital Partners, LLC
Maxim
Group LLC
[•], 2010
Page 13
of 45
(w) There
are no pro forma or as adjusted financial statements which are required to be
included in the Registration Statement, the General Disclosure Package and the
Prospectus in accordance with Regulation S-X which have not been included as so
required. The pro forma and pro forma as adjusted financial
information included in the Registration Statement, the General Disclosure
Package and the Prospectus has been properly compiled and prepared in accordance
with the applicable requirements of the Securities Act and the Rules and
Regulations and include all adjustments necessary to present fairly in
accordance with generally accepted accounting principles the pro forma and as
adjusted financial position of the respective entity or entities presented
therein at the respective dates indicated and their cash flows and the results
of operations for the respective periods specified. The assumptions
used in preparing the pro forma and pro forma as adjusted financial information
included in the Registration Statement, the General Disclosure Package and the
Prospectus provide a reasonable basis for presenting the significant effects
directly attributable to the transactions or events described
therein. The related pro forma and pro forma as adjusted adjustments
give appropriate effect to those assumptions; and the pro forma and pro forma as
adjusted financial information reflect the proper application of those
adjustments to the corresponding historical financial statement
amounts.
(x) The
statistical, industry-related and market-related data included in the
Registration Statement, the General Disclosure Package and the Prospectus are
based on or derived from sources which the Company reasonably and in good faith
believes are reliable and accurate, and such data agree with the sources from
which they are derived.
(y) The
Company is subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act and files reports with the Commission on the XXXXX
system. The Shares are registered pursuant to Section 12(b) of the
Exchange Act and the outstanding Shares are listed on the Nasdaq [Capital]
Market. The outstanding Warrants and Units are quoted on the OTC
Bulletin Board and are registered pursuant to Section 12(g) of the Exchange
Act. The Company has taken no action designed to, or likely to have
the effect of, terminating the registration of the Shares under the Exchange Act
or de-listing the Shares from the Nasdaq [Capital] Market, nor has the Company
received any notification that the Commission or Nasdaq Stock Exchange is
contemplating terminating such registration or listing. Since January
1, 2008, the Company has timely filed all reports, schedules, forms, statements
and other documents required to be filed by it with the Commission pursuant to
the reporting requirements of the Exchange Act (all of the foregoing, and all
other documents and registration statements heretofore filed by the Company with
the Commission being hereinafter referred to as the “SEC
Documents”). None of the SEC Documents, at the time they were
filed with the Commission (except those SEC Documents that were subsequently
amended), contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. As of their respective dates, the financial
statements of the Company included (or incorporated by reference) in the SEC
Documents complied in all material respects with applicable accounting
requirements and the published rules and regulations of the Commission or other
applicable rules and regulations with respect thereto (except those SEC
Documents that were subsequently amended).
Xxxx
Capital Partners, LLC
Maxim
Group LLC
[•], 2010
Page 14
of 45
(z) The
Company has established and maintains disclosure controls and procedures (as
defined in Rules 13a-14 and 15d-14 under the Exchange Act) and such controls and
procedures are effective in ensuring that material information relating to the
Company, including its Subsidiaries, is made known to the principal executive
officer and the principal financial officer. The Company has utilized
such controls and procedures in preparing and evaluating the disclosures in the
Registration Statement, in the General Disclosure Package and in the
Prospectus.
(aa) Except
as disclosed in the Registration Statement, the General Disclosure Package and
the Prospectus, the Company and the Subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurances that (A)
transactions are executed in accordance with management’s general or specific
authorization; (B) transactions are recorded as necessary to permit preparation
of financial statements in conformity with United States generally accepted
accounting principles and to maintain accountability for assets; (C) access to
assets is permitted only in accordance with management’s general or specific
authorization; and (D) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences. Except as described in the Registration
Statement, the General Disclosure Package or in the Prospectus, since January 1,
2008, there has been no change in the Company’s internal control over financial
reporting that has materially affected, or is reasonably likely to materially
affect, the Company’s internal control over financial reporting.
(bb) The
Company’s Board of Directors has validly appointed an audit committee whose
composition satisfies the requirements of the rules and regulations of the
Nasdaq Stock Market and the Board of Directors and/or audit committee has
adopted a charter that satisfies the requirements of the rules and regulations
of the Nasdaq Stock Market. The audit committee has reviewed the
adequacy of its charter within the past twelve months. Except as
disclosed in the Registration Statement, the General Disclosure Package and the
Prospectus, the Board of Directors nor the audit committee has been informed,
nor is any director of the Company aware, of: (i) any significant deficiencies
and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the
Company’s ability to record, process, summarize and report financial
information; or (ii) any fraud, whether or not material, that involves
management or other employees who have a significant role in the Company’s
internal control over financial reporting.
Xxxx
Capital Partners, LLC
Maxim
Group LLC
[•], 2010
Page 15
of 45
(cc) Neither
the Company nor any of its Affiliates has taken, directly or indirectly, any
action which constitutes or is designed to cause or result in, or which could
reasonably be expected to constitute, cause or result in, the stabilization or
manipulation of the price of any security to facilitate the sale or resale of
the Securities.
(dd) Neither
the Company nor any of its Affiliates has, prior to the date hereof, made any
offer or sale of any securities which are required to be “integrated” pursuant
to the Securities Act or the Rules and Regulations with the offer and sale of
the Securities pursuant to the Registration Statement. Except as
disclosed in the Registration Statement, the General Disclosure Package, the
Prospectus, neither Company nor any of its Affiliates has sold or issued any
Relevant Security 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 issued pursuant to
employee benefit plans, qualified stock option plans or the employee
compensation plans or pursuant to outstanding options, rights or warrants as
described in the Registration Statement, the General Disclosure Package and the
Prospectus.
(ee) All
information contained in the questionnaires completed by each of the Company’s
officers and directors immediately prior to the Offering and provided to the
Representatives as well as the biographies of such individuals in the
Registration Statement is true and correct in all material respects and the
Company has not become aware of any information which would cause the
information disclosed in the questionnaires completed by the directors and
officers to become inaccurate and incorrect.
(ff) No
director or officer of the Company is subject to any non-competition agreement
or non-solicitation agreement with any employer or prior employer which could
materially affect his ability to be and act in his respective capacity of the
Company.
(gg) Except
as disclosed in the Registration Statement, the General Disclosure Package and
the Prospectus, no holder of any Relevant Security has any rights to require
registration of any Relevant Security as part or on account of, or otherwise in
connection with, the offer and sale of the Securities contemplated hereby, and
any such rights so disclosed have either been fully complied with by the Company
or effectively waived by the holders thereof, and any such waivers remain in
full force and effect.
(hh) The
conditions for use of Form F-1 to register the Offering under the Securities
Act, as set forth in the General Instructions to such Form, have been
satisfied.
Xxxx
Capital Partners, LLC
Maxim
Group LLC
[•], 2010
Page 16
of 45
(ii) The
Company is not and, at all times up to and including consummation of the
transactions contemplated by this Agreement, and after giving effect to
application of the net proceeds of the Offering, will not be, subject to
registration as an “investment company” under the Investment Company Act of
1940, as amended, and is not and will not be an entity “controlled” by an
“investment company” within the meaning of such act.
(jj) No relationship, direct or indirect,
exists between or among any of the Company or any Affiliate of the Company, on
the one hand, and any director, officer, shareholder, customer or supplier of
the Company or any affiliate of the Company, on the other hand, which is
required by the Securities Act, the Exchange Act or the Rules and Regulations to
be described in the Registration Statement or the Prospectus which is not so
described as required. There are no outstanding loans, advances
(except normal advances for business expenses in the ordinary course of
business) or guarantees of indebtedness by the Company to or for the benefit of
any of the officers or directors of the Company or any of their respective
family members, except as described in the Registration Statement, the General
Disclosure Package and the Prospectus. The Company has not, in
violation of the Sarb-Ox directly or indirectly, including through a Subsidiary
(other than as permitted under the Sarb-Ox for depositary institutions),
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.
(kk) The
Company is in compliance with the provisions of Sarb-Ox and the Rules and
Regulations promulgated thereunder and related or similar rules and regulations
promulgated by the Nasdaq Stock 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).
(ll) Except
as disclosed in the Registration Statement, the General Disclosure Package and
the Prospectus, there are no contracts, agreements or understandings between the
Company and any Person that would give rise to a valid claim against the Company
or any Underwriter for a brokerage commission, finder’s fee or other like
payment in connection with the transactions contemplated by this Agreement or,
to the Company’s knowledge, any arrangements, agreements, understandings,
payments or issuance with respect to the Company or any of its officers,
directors, shareholders, partners, employees, Subsidiaries or Affiliates that
may affect the Underwriters’ compensation as determined by
FINRA.
Xxxx
Capital Partners, LLC
Maxim
Group LLC
[•], 2010
Page 17
of 45
(mm) The
Company and each Subsidiary owns or leases all such properties as are necessary
to the conduct of its business as presently operated and as proposed to be
operated as described in the Registration and the Prospectus. The
Company and the Subsidiaries have good and marketable title in fee simple to all
real property and good and marketable title to all personal property owned by
them, in each case free and clear of all Liens except such as are described in
the Registration Statement, the General Disclosure Package and the Prospectus or
such as do not (individually or in the aggregate) materially affect the business
or prospects of the Company or any of the Subsidiaries. Any real
property and buildings held under lease or sublease by the Company and the
Subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as are not material to, and do not interfere with, the use
made and proposed to be made of such property and buildings by the Company and
the Subsidiaries. Neither the Company nor any Subsidiary has received
any notice of any claim adverse to its ownership of any real or personal
property or of any claim against the continued possession of any real property,
whether owned or held under lease or sublease by the Company or any
Subsidiary.
(nn) The
Company and each Subsidiary: (i) owns or possesses adequate right to use all
patents, patent applications, trademarks, service marks, trade names, trademark
registrations, service xxxx registrations, copyrights, licenses, formulae,
customer lists, and know-how and other intellectual property (including trade
secrets and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures, “Intellectual Property”)
necessary for the conduct of their respective businesses as being conducted and
as described in the Registration Statement, the General Disclosure and
Prospectus and (ii) have no knowledge that the conduct of their respective
businesses do or will conflict with, and they have not received any notice of
any claim of conflict with, any such right of others. To the Company’s
knowledge, all material technical information developed by and belonging to the
Company or any Subsidiary which has not been patented has been kept confidential
so as, among other things, all such information may be deemed proprietary to the
Company. Except as set forth in the Registration Statement, the General
Disclosure Package or the Prospectus, neither the Company nor any Subsidiary has
granted or assigned to any other Person any right to sell the current products
and services of the Company and its Subsidiaries or those products and services
described in the Registration Statement and Prospectus. To the
Company’s best knowledge, there is no infringement by third parties of any such
Intellectual Property; there is no pending or, to the Company’s knowledge,
threatened action, suit, proceeding or claim by others challenging the Company’s
or any Subsidiary’s rights in or to any such Intellectual Property, and the
Company is unaware of any facts which would form a reasonable basis for any such
claim; and there is no pending or, to the Company’s knowledge, threatened
action, suit, proceeding or claim by others that the Company or any Subsidiary
infringes or otherwise violates any patent, trademark, copyright, trade secret
or other proprietary rights of others, and the Company is unaware of any other
fact which would form a reasonable basis for any such claim.
Xxxx
Capital Partners, LLC
Maxim
Group LLC
[•], 2010
Page 18
of 45
(oo) The
agreements and documents described in the Registration Statement, the General
Disclosure Package and the Prospectus conform to the descriptions thereof
contained therein and there are no agreements or other documents required to be
described in the Registration Statement, the General Disclosure Package or the
Prospectus or to be filed with the Commission as exhibits to the Registration
Statement, that have not been so described or filed. Each agreement
or other instrument (however characterized or described) to which the Company is
a party or by which its property or business is or may be bound or affected and
(i) that is referred to in the Registration Statement, the General Disclosure
Package or the Prospectus or attached as an exhibit thereto, or (ii) is material
to the Company’s business, has been duly and validly executed by the Company, is
in full force and effect in all material respects and is enforceable against the
Company 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 foreign, 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 agreements or instruments has been assigned by the Company, and
neither the Company 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. To the Company’s
knowledge, performance by the Company of the material provisions of such
agreements or instruments will not 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
any of its assets or businesses, including, without limitation, those relating
to environmental laws and regulations.
(pp) 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 since the date of the Company’s formation,
except as disclosed in the Registration Statement, the General Disclosure
Package and the Prospectus.
(qq) The
disclosures in the Registration Statement, the General Disclosure Package and
the Prospectus concerning the effects of foreign, federal, state and local
regulation on the Company’s business 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.
(rr) Each
of the Company and the Subsidiaries has accurately prepared and timely filed all
federal, state, foreign, including the PRC and the Hong Kong Special
Administrative Region (“Hong
Kong”), and other tax returns that are required to be filed by it and has
paid or made provision for the payment of all taxes, assessments, governmental
or other similar charges, including without limitation, all sales and use taxes
and all taxes which the Company or any Subsidiary is obligated to withhold from
amounts owing to employees, creditors and third parties, with respect to the
periods covered by such tax returns (whether or not such amounts are shown as
due on any tax return). No deficiency assessment with respect to a
proposed adjustment of the Company’s or any Subsidiary’s federal, state, local
or foreign, including the PRC and Hong Kong, taxes is pending or, to the
Company’s knowledge, threatened. The accruals and reserves on the
books and records of the Company and the Subsidiaries in respect of tax
liabilities for any taxable period not finally determined are adequate to meet
any assessments and related liabilities for any such period and, since the date
of the Company’s most recent audited financial statements, the Company and the
Subsidiaries have not incurred any liability for taxes other than in the
ordinary course of its business. There is no tax lien, whether
imposed by any federal, state, foreign or other taxing authority, outstanding
against the assets, properties or business of the Company or any
Subsidiary. Neither the Company nor any Subsidiary is required to
make any tax filings in the British Virgin Islands.
Xxxx
Capital Partners, LLC
Maxim
Group LLC
[•], 2010
Page 19
of 45
(ss) No
labor disturbance by the employees of the Company or any Subsidiary currently
exists or, to the Company’s knowledge, is likely to occur.
(tt) The
Company and each Subsidiary have at all times operated their respective
businesses (i) in compliance with any and all applicable federal, state, local,
PRC and other foreign laws and regulations relating to the protection of human
health and safety, the environment or hazardous or toxic substances or wastes,
pollutants or contaminants (“Environmental Laws”), (ii)
have received and are in compliance with all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) have not received notice of any actual or
potential liability under any environmental law, except where such
non-compliance with Environmental Laws, failure to receive required permits,
licenses or other approvals, or liability would not, individually or in the
aggregate, have a Material Adverse Effect.
(uu) As
set forth in the Registration Statement, the General Disclosure Package or the
Prospectus, neither the Company nor any Subsidiary is a party to or subject to
any employment contract or arrangement providing for annual future compensation,
or the opportunity to earn annual future compensation (whether through fixed
salary, bonus, commission, options or otherwise) of more than $120,000 to any
officer, consultant, director or employee.
(pp) Neither
the Company nor any of its Subsidiaries is required to perform any of
obligations under the U.S. Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations thereunder. Except as required by
applicable laws and as disclosed in the Registration Statement, the General
Disclosure Package and the Prospectus, none of the Company and its Subsidiaries
has, or is obligated to provide, any Benefit Plan. For purposes
hereof, “Benefit Plan”
means any plan, contract or other arrangement, formal or informal, whether oral
or written, providing any benefit to any present or former officer, director or
employee, or dependent or beneficiary thereof, including any profit sharing,
deferred compensation, share option, performance share, employee share purchase,
severance, retirement, health, death or disability benefits or insurance plan.
No employee of the Company and its Subsidiaries is owed any back wages or other
compensation for services rendered except as set forth on the Company’s
consolidated financial statements. Each of the Company and its
Subsidiaries has complied in all material respects with all applicable laws
related to employment, the Benefit Plans and other employee benefits. The
execution of this Agreement, the Representatives’ Warrants or consummation of
the Offering does not constitute a triggering event under any Benefit Plan or
any other employment contract, whether or not legally enforceable, which (either
alone or upon the occurrence of any additional or subsequent event) will or may
result in any payment (of severance pay or otherwise), acceleration, increase in
vesting, or increase in benefits to any current or former participant, employee
or director of the Company or any Subsidiary other than an event that is not
material to the financial condition or business of the Company or any
Subsidiary, either individually or taken as a whole.
Xxxx
Capital Partners, LLC
Maxim
Group LLC
[•], 2010
Page 20
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(vv) Neither
the Company, any Subsidiary nor, to the Company’s knowledge, any of their
respective employees or agents has at any time during the last five (5) years:
(i) made any unlawful contribution to any candidate for foreign office, or
failed to disclose fully any contribution in violation of law, or (ii) made any
payment to any federal or state governmental officer or official, including the
PRC, or other Person charged with similar public or quasi-public duties, other
than payments that are not prohibited by the laws of the United States of any
jurisdiction thereof.
(ww)
The Company has not offered, or caused the
Underwriters to offer, the Firm Shares to any Person or entity with the
intention of unlawfully influencing: (i) a customer or supplier of the Company
or any Subsidiary to alter the customer’s or supplier’s level or type of
business with the Company or any Subsidiary or (ii) a journalist or publication
to write or publish favorable information about the Company, any Subsidiary or
its products or services.
(xx)
The Company is in compliance with all applicable PRC and other foreign and
U.S. laws, rules, regulations, ordinances, directives, judgments, decrees and
orders (including, without limitation, all securities and tax laws, rules and
regulations of the PRC), except for such non-compliance as would not have a
Material Adverse Effect. As of the date hereof and as of the Closing
Date and Option Closing Date, if any, and except as contemplated by this
Agreement, neither the Company nor any Subsidiary operates within the United
States or any state or territory thereof.
(yy) As
of the date hereof and as of the Closing Date and Option Closing Date, if any,
and except as contemplated by this Agreement, neither the Company nor any
Subsidiary operates within the United States or any state or territory thereof
in such a manner so as to subject the Company or its operations or businesses to
registration as a foreign company doing business in any state within the United
States or to any of the following laws in any material respect: (i) the Bank
Secrecy Act, as amended, (ii) the Uniting and Strengthening of America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of
2001, as amended, (iii) the Foreign Corrupt Practices Act of 1977, as amended,
(iv) the Currency and Foreign Transactions Reporting Act of 1970, as amended,
(v) the Employee Retirement Income Security Act of 1974, as amended, (vi) the
Money Laundering Control Act of 1986, as amended (vii) the rules and regulations
promulgated under any such law, or any successor law, or any judgment, decree or
order of any applicable administrative or judicial body relating to such law and
(viii) any corresponding law, rule, regulation, ordinance, judgment, decree or
order of any state or territory of the United States or any administrative or
judicial body thereof.
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Capital Partners, LLC
Maxim
Group LLC
[•], 2010
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(qq) Each
of the Company and Subsidiaries, and to the knowledge of the Company, each of
its Affiliates and any of the respective officers, directors, supervisors,
managers, agents or employees of each of the foregoing, has not violated, its
participation in the offering will not violate, and the Company has instituted
and maintains policies and procedures designed to ensure continued compliance
with, each of the following laws: (a) anti-bribery laws, including
but not limited to, any applicable law, rule, or regulation of any locality,
including but not limited to any law, rule, or regulation promulgated to
implement the OECD Convention on Combating Bribery of Foreign Public Officials
in International Business Transactions, signed December 17, 1997, including
the U.S. Foreign Corrupt Practices Act of 1977, as amended, or any other law,
rule or regulation of similar purposes and scope, (b) anti-money laundering
laws, including but not limited to, applicable federal, state, international,
foreign or other laws, regulations or government guidance regarding anti-money
laundering, including, without limitation, U.S. Currency and Foreign
Transactions Reporting Act of 1970, Title 18 US. Code section 1956 and 1957, the
Patriot Act, the Bank Secrecy Act, and international anti-money laundering
principles or procedures by an intergovernmental group or organization, such as
the Financial Action Task Force on Money Laundering, of which the United States
and/or PRC is a member and with which designation representative of the United
States and/or PRC to the group or organization continues to concur, all as
amended, and any executive order, directive, or regulation pursuant to the
authority of any of the foregoing, or any orders or licenses issued thereunder
(collectively, the “Money
Laundering Laws”) or (c) laws and regulations imposing U.S. economic
sanctions measures, including, but not limited to, the International Emergency
Economic Powers Act, the Trading with the Enemy Act, the United Nations
Participation Act and the Syria Accountability and Lebanese Sovereignty Act, all
as amended, and any executive order, directive, or regulation pursuant to the
authority of any of the foregoing, including the regulations of the United
States Treasury Department set forth under 31 CFR, Subtitle B, Chapter V, as
amended, or any orders or licenses issued thereunder. The operations of the
Company and its Subsidiaries are and have been conducted at all times in
compliance with applicable financial recordkeeping and reporting requirements of
the Money Laundering Laws and no action, suit or proceeding by or before any
court or governmental agency, authority or body or any arbitrator involving the
Company or any of its Subsidiaries with respect to the Money Laundering Laws is
pending or, to the knowledge of the Company, threatened.
(zz)
Except as set forth in the
Registration Statement and the Prospectus, no holders of any securities of the
Company or any rights exercisable for or convertible or exchangeable into
securities of the Company have the right to require the Company to register any
such securities of the Company under the Act or to include any such securities
in a registration statement to be filed by the Company.
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Capital Partners, LLC
Maxim
Group LLC
[•], 2010
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(aaa) Neither
the Company nor, to the knowledge of the Company, any director, officer, agent,
employee or Affiliate of the Company 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, or
lend, contribute or otherwise make available such proceeds to any joint venture
partner or other person or entity, for the purpose of
financing the activities of any person currently subject
to any U.S. sanctions administered by OFAC.
(rr)
None of the Subsidiaries is currently prohibited, directly or
indirectly, from paying any dividends to the Company, from making any other
distribution on such Subsidiary’s share capital, from repaying to the Company
any loans or advances to such Subsidiary from the Company or from transferring
any of such Subsidiary’s property or assets to the Company or any other
Subsidiary, except as described in or contemplated by the Registration
Statement, the General Disclosure Package and the Prospectus; except as
described in the Registration Statement, the General Disclosure Package and the
Prospectus, any dividends and other distributions declared with respect to
after-tax retained earnings on the equity interests of the PRC Companies may
under PRC laws and regulations be paid to the Company; and all such dividends
and distributions will not be subject to withholding or other taxes under PRC
laws and regulations and are otherwise free and clear of any other tax,
withholding or deduction in the PRC, and without the necessity of obtaining any
governmental authorization in the PRC.
(ss) Except
as described in the Registration Statement, the General Disclosure Package and
the Prospectus, each of the Company and Subsidiaries has taken or is in the
process of taking all reasonable steps (to the extent required of the Company
and each such Subsidiary under PRC laws and regulations) to comply with, and to
ensure compliance by each of (i) its principal stockholders as disclosed in the
Registration Statement, the General Disclosure Package and the Prospectus, and
(ii) any other persons known to the Company that are required to comply (in
connection with their interests in the Company) with applicable rules and
regulations of the relevant PRC governmental agencies (including, without
limitation, the Ministry of Commerce, National Development and Reform Commission
and the State Administration of Foreign Exchange) relating to overseas
investment by PRC residents and citizens or overseas listing by offshore special
purpose vehicles controlled directly or indirectly by PRC companies and
individuals, such as the Company (the “PRC Overseas Investment and Listing
Regulations”), including, without limitation, requesting such persons to
complete any registration and other procedures required under applicable PRC
Overseas Investment and Listing Regulations.
(tt)
As of the date hereof, as of the date
of the Prospectus, the Closing Date and the Option Closing Date, if any, the
Rules on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors
jointly promulgated by the Ministry of Commerce, the State Assets Supervision
and Administration Commission, the State Tax Administration, the
State Administration of Industry and Commerce, the China Securities Regulatory
Commission (“CSRC”) and
the State Administration of Foreign Exchange of the PRC on August 8, 2006 (the
“M&A Rules”) or any
official clarifications, guidance, interpretations or implementation rules in
connection with or related to the M&A Rules did not and do not apply to the
issuance and sale of the Securities, the quotation and trading of the Securities
on the NASDAQ Capital Market, the acquisition of China Ceramics Co., Ltd. by
China Holdings Acquisition Corp., or the consummation of the transactions
contemplated by this Agreement. Nor is CSRC or other PRC government approval
required in connection with the above.
Xxxx
Capital Partners, LLC
Maxim
Group LLC
[•], 2010
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(uu) Each
of the Company and Subsidiaries has full power, authority and legal right to
enter into, execute, adopt, assume, deliver and perform its respective
obligations under each of the contracts disclosed, included or incorporated by
reference in the Registration Statement, the General Disclosure Package and the
Prospectus (including without limitation those related to the Restructuring,
collectively, the “Material
Contracts”) to which it is a party. Each of the Company and
its Subsidiaries has duly authorized, executed and delivered each of the
Material Contracts to which it is a party, and each Material Contract
constitutes the valid, legal and binding obligations enforceable against the
Company and/or its respective Subsidiary in accordance with its terms. The
execution, delivery and performance of the Material Contracts by the Company
and/or its respective Subsidiary, and the consummation of the transactions
contemplated thereunder, do not (A) result in any violation of the business
license, articles of association, other constitutional documents (if any) or
governmental authorizations of the Company and/or its respective Subsidiary; (B)
result in any violation of or penalty under any applicable law; or (C) conflict
with or result in a breach or violation of any of the material terms or
provisions of, or constitute a material default under, any other contract,
license, bond, debenture, indenture, mortgage, deed of trust, loan agreement,
note, lease or other agreement or instrument to which the Company and/or its
respective Subsidiary is a party or by which any of them is bound or to which
any of their property or assets is subject, except in the case of clauses (B)
and (C) above, such violation, breach, conflict or default would not result in a
Material Adverse Effect. All consents, approvals, authorizations or orders of,
or registrations or filings with any Governmental Authority required for the
execution, delivery and performance of the Material Contracts and the
consummation of the transactions contemplated thereunder have been duly obtained
and are in full force and effect.
(vv) Approval
of the shareholders of the Company under the rules and regulations of the NASDAQ
Capital Market or other applicable laws and regulations is not required for the
Company to issue and deliver the Securities to the several
Underwriters.
(ww) There
are no affiliations or associations between (i) any member of the FINRA and (ii)
the Company or, to the knowledge of the Company, any of the Company’s officers,
directors or 5% or greater security holders or any beneficial owner of the
Company’s unregistered equity securities that were acquired at any time on or
after the 180th day immediately preceding the date the Prospectus was initially
filed with the Commission, except as disclosed in the General Disclosure Package
and in the Prospectus.
(xx)
The Registration Statement, the General Disclosure
Package and the Prospectus each fairly and accurately describe all material
trends, demands, commitments and events known to the Company, and uncertainties,
and the potential effects thereof, that the Company believes would materially
affect its liquidity and are reasonably likely to occur. As used
herein, the phrase “reasonably likely” refers to a disclosure threshold lower
than “more likely than not.”
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Capital Partners, LLC
Maxim
Group LLC
[•], 2010
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(yy) None
of the Company, Subsidiary or any of their respective properties or assets has
any immunity from the jurisdiction of any court or from any legal process
(whether through service or notice, attachment prior to judgment, attachment in
aid of execution or otherwise) under the laws of the PRC, British Virgin
Islands, Hong Kong, New York or United States federal law; and, to the extent
that the Company, any of the Subsidiaries or any of their respective properties,
assets or revenues may have or may hereafter become entitled to any such right
of immunity in any such court in which proceedings may at any time be commenced,
each of the Company and its Subsidiaries waive and will waive such right to the
extent permitted by law.
(zz)
The statements set forth in the Registration
Statement, the General Disclosure Package and the Prospectus under the captions
“Risk Factors— If the China Securities Regulatory Commission, or CSRC, or
another Chinese regulatory agency, determines that CSRC approval is required in
connection with this offering we may become subject to penalties” and “Risk
Factors— PRC foreign exchange control may limit our ability to utilize our
profits effectively and affect our ability to receive dividends and other
payments from our PRC subsidiary” are a fair and accurate summary in all
material respects of the matters described therein, and nothing has been omitted
from such summary which would make the same misleading in any material
respect.
(aaa) Under
the laws of British Virgin Islands, the courts of British Virgin Islands
recognize and give effect to the choice of law provisions set forth in Section
14 hereof and enforce judgments of U.S. courts obtained against the Company to
enforce this Agreement. Under the laws and regulations of the PRC,
the courts of the PRC recognize and give effect to the choice of law provisions
set forth in Section 14 hereof and enforce judgments of U.S. courts obtained
against the Company to enforce this Agreement.
(bbb) As
used in this Agreement, references to matters being “material” with respect to the
Company or its Subsidiaries shall mean a material event, change, condition,
status or effect related to the condition (financial or otherwise), properties,
assets (including intangible assets), liabilities, business, prospects,
operations or results of operations of the Company or the applicable
Subsidiaries, either individually or taken as a whole, as the context
requires.
(ccc) As
used in this Agreement, the term “knowledge of the Company” (or
similar language) shall mean the knowledge of the officers and directors of the
Company and the applicable Subsidiaries who are named in the Prospectus, with
the assumption that such officers and directors shall have made reasonable and
diligent inquiry of the matters presented (with reference to what is customary
and prudent for the applicable individuals in connection with the discharge by
the applicable individuals of their duties as officers, directors or managers of
the Company or the applicable Subsidiaries).
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Capital Partners, LLC
Maxim
Group LLC
[•], 2010
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Any
certificate signed by or on behalf of the Company and delivered to the
Underwriters or to Pillsbury Xxxxxxxx Xxxx Xxxxxxx LLP (“Underwriters’ Counsel”) shall
be deemed to be a representation and warranty by the Company to each Underwriter
listed on Schedule
A hereto as to the matters covered thereby.
3. Offering. Upon
authorization of the release of the Firm Shares by the Representatives, the
Underwriters propose to offer the Shares for sale to the public upon the terms
and conditions set forth in the Prospectus.
4. Covenants of the
Company. The Company acknowledges, covenants and agrees with
the Underwriters that:
(a) The
Registration Statement and any amendments thereto have been declared effective,
and if Rule 430A is used or the filing of the Prospectus is otherwise required
under Rule 424(b), the Company will file the Prospectus (properly completed if
Rule 430A has been used) pursuant to Rule 424(b) within the prescribed time
period and will provide evidence satisfactory to the Representatives of such
timely filing.
(b) During
the period beginning on the date hereof and ending on the later of the Closing
Date (or Option Closing Date, if any) or such date, as in the opinion of counsel
for the Underwriter, the Prospectus is no longer required by law to be delivered
(or in lieu thereof the notice referred to in Rule 173(a) under the Securities
Act is no longer required to be provided), in connection with sales by an
underwriter or dealer (the “Prospectus Delivery Period”),
prior to amending or supplementing the Registration Statement, the General
Disclosure Package or the Prospectus, the Company shall furnish to the
Underwriter 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 Underwriter reasonably object within 36 hours of delivery thereof to the
Underwriter and its counsel.
(c) After
the date of this Agreement, the Company shall promptly advise the Underwriters
in writing (i) of the receipt of any comments of, or requests for additional or
supplemental information from, the Commission, (ii) of the time and date of any
filing of any post-effective amendment to the Registration Statement or any
amendment or supplement to any Prospectus, the General Disclosure Package or the
Prospectus, (iii) of the time and date that any post-effective amendment to the
Registration Statement becomes effective and (iv) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or any post-effective amendment thereto or of any order preventing or
suspending its use or the use of any Prospectus, the General Disclosure Package,
the Prospectus or any Issuer-Represented Free Writing Prospectus, or of any
proceedings to remove, suspend or terminate from listing the Shares from any
securities exchange upon which they are listed for trading, 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, 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 Rule 164(b)).
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Capital Partners, LLC
Maxim
Group LLC
[•], 2010
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(d) (i)
During the Prospectus Delivery Period, the Company will comply as far as it is
able 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 so far as necessary to permit the continuance of
sales of or dealings in the Securities as contemplated by the provisions hereof,
the General Disclosure Package, and the Registration Statement and the
Prospectus. If during such period any event occurs as a result of
which the Prospectus (or if the Prospectus is not yet available to prospective
purchasers, the General 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 Underwriters or counsel to the
Underwriters to amend the Registration Statement or supplement the Prospectus
(or if the Prospectus is not yet available to prospective purchasers, the
General Disclosure Package ) to comply with the Securities Act or to file under
the Exchange Act any document which 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 Underwriters and will amend
the Registration Statement or supplement the Prospectus (or if the Prospectus is
not yet available to prospective purchasers, the General Disclosure Package) or
file such document (at the expense of the Company) so as to correct such
statement or omission or effect such compliance.
(ii) If
at any time following issuance of an Issuer-Represented Free Writing Prospectus
there occurred or occurs an event or development as a result of which such
Issuer-Represented Free Writing Prospectus conflicted or would conflict with the
information contained in the Registration Statement, the Statutory Prospectus or
the Prospectus or included or would include an untrue statement of a material
fact or omitted or would omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances prevailing at
that subsequent time, not misleading, the Company has promptly notified or
promptly will notify the Underwriters and has promptly amended or will promptly
amend or supplement, at its own expense, such Issuer-Represented Free Writing
Prospectus to eliminate or correct such conflict, untrue statement or
omission.
(e) The
Company will promptly deliver to the Underwriters and Underwriters’ Counsel a
signed copy of the Registration Statement, as initially filed and all amendments
thereto, including all consents and exhibits filed therewith, and will maintain
in the Company’s files manually signed copies of such documents for at least
five (5) years after the date of filing thereof. The Company will
promptly deliver to each of the Underwriters such number of copies of any
Preliminary Prospectus, the Prospectus, the Registration Statement, and all
amendments of and supplements to such documents, if any, and all documents which
are exhibits to the Registration Statement and Prospectus or any amendment
thereof or supplement thereto, as the Underwriters may reasonably
request. Prior to [10:00 A.M.], New York time, on the business day
next succeeding the date of this Agreement and from time to time thereafter, the
Company will furnish the Underwriters with copies of the Prospectus in New York
City in such quantities as the Underwriters may reasonably
request.
Xxxx
Capital Partners, LLC
Maxim
Group LLC
[•], 2010
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(f) The
Company consents to the use and delivery of the Preliminary Prospectus by the
Underwriters in accordance with Rule 430 and Section 5(b) of the Securities
Act.
(g) If
the Company elects to rely on Rule 462(b) under the Securities Act, the Company
shall both file a Rule 462(b) Registration Statement with the Commission in
compliance with Rule 462(b) and pay the applicable fees in accordance with Rule
111 of the Act by the earlier of: (i) 10:00 p.m., New York City time, on the
date of this Agreement, and (ii) the time that confirmations are given or sent,
as specified by Rule 462(b)(2).
(h) The
Company will use its best efforts, in cooperation with the Representatives, at
or prior to the time of effectiveness of the Registration Statement, to qualify
the Securities for offering and sale under the securities laws relating to the
offering or sale of the Securities of such jurisdictions, domestic or foreign,
as the Representatives may designate and to maintain such qualification in
effect for so long as required for the distribution thereof; except that in no
event shall the Company be obligated in connection therewith to qualify as a
foreign corporation or to execute a general consent to service of process or to
subject itself to taxation if it is otherwise not so subject.
(i) The
Company will make generally available to its security holders as soon as
practicable, but in any event not later than 15 months after the end of the
Company’s current fiscal quarter, an earnings statement (which need not be
audited) covering a 12-month period that shall satisfy the provisions of Section
11(a) of the Securities Act and Rule 158 of the Rules and
Regulations.
(j) Following
the Closing Date, the Company and any of the individuals listed on Schedule B hereto
(the “Lock-Up Parties”)
shall not sell or otherwise dispose of any securities of the Company, whether
publicly or in a private placement during the period that their respective
lock-up agreements are in effect. The Company will deliver to the
Representatives the agreements of Lock-Up Parties to the foregoing effect prior
to the Closing Date, which agreements shall be substantially in the form
attached hereto as Annex I. The Company
will enforce the terms of each lock-up agreement and issue stop-transfer
instructions to the transfer agent for the Ordinary Shares with respect to any
transaction or contemplated transaction that would constitute a breach of or
default under the applicable lock-up agreement.
Xxxx
Capital Partners, LLC
Maxim
Group LLC
[•], 2010
Page 28
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(h) To
the extent the Company remains subject to Sarb-Ox, the Company and its
Subsidiaries will maintain such controls and other procedures, including without
limitation those required by Sections 302 and 906 of Sarb-Ox and the applicable
regulations thereunder, that are designed to ensure that information required to
be disclosed by the Company in the reports that it files or submits under the
Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the Commission’s rules and forms, including without
limitation, controls and procedures designed to ensure that information required
to be disclosed by the Company in the reports that it files or submits under the
Exchange Act is accumulated and communicated to the Company’s management,
including its principal executive officer and its principal financial officer,
or persons performing similar functions, as appropriate to allow timely
decisions regarding required disclosure, to ensure that material information
relating to Company, including its Subsidiaries, is made known to them by others
within those entities.
(k) During
the period of three (3) years from the Closing Date (or Option Closing Date, if
any), to the extent such information is not available on XXXXX, the Company will
make available to the Underwriters copies of all reports or other communications
(financial or other) furnished to security holders or from time to time
published or publicly disseminated by the Company, and will deliver to the
Underwriters: (i) as soon as they are available, copies of any reports,
financial statements and proxy or information statements furnished to or filed
with the Commission or any national securities exchange on which any class of
securities of the Company is listed; and (ii) such additional information
concerning the business and financial condition of the Company as the
Representatives may from time to time reasonably request (such financial
information to be on a consolidated basis to the extent the accounts of the
Company and the Subsidiaries are consolidated in reports furnished to its
security holders generally or to the Commission).
(l) Prior
to the Closing Date, the Company will not issue any press release or other
communication directly or indirectly or hold any press conference with respect
to the Company and/or its Subsidiaries, their condition, financial or otherwise,
or the earnings, business, operations or prospects of any of them, or the
offering of the Securities (except for routine oral marketing communications in
the ordinary course of business and consistent with the past practices of the
Company and of which the Underwriters are notified), without two-day prior
written consent of the Representatives.
(m) The
Company will not issue press releases or engage in any other publicity, without
the Representatives’ prior written consent, for a period ending at 5:00 p.m.
Eastern time on the first business day following the forty-fifth (45th) day
following the Closing Date, other than normal and customary releases issued in
the ordinary course of the Company’s business.
(n) The
Company will apply the net proceeds from the sale of the Securities as set forth
under the caption “Use of Proceeds” in the Prospectus. Without the
written consent of the Representatives, no proceeds of the Offering will be used
to pay outstanding loans from officers, directors or shareholders or to pay any
accrued salaries or bonuses to any employees or former employees.
Xxxx
Capital Partners, LLC
Maxim
Group LLC
[•], 2010
Page 29
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(o) The
Company will use its best efforts to effect and maintain the listing of the
Securities on the NASDAQ Stock Market, the New York Stock Exchange or
NYSE/Amex. If the Company fails to maintain the listing of its Shares
on a nationally recognized exchange, for a period of three (3) years from the
effective date of the Registration Statement, the Company, at its expense, shall
obtain and keep current a listing in the Standard & Poor’s Corporation
Records Services or the Xxxxx’x Industrial Manual; provided that Xxxxx’x OTC
Industrial Manual is not sufficient for these purposes.
(p) The
Company, during the period when the Prospectus is required to be delivered under
the Securities Act or the Exchange Act, will file all documents required to be
filed with the Commission pursuant to the Securities Act, the Exchange Act and
the Rules and Regulations within the time periods required thereby.
(q) The
Company will use its best efforts to do and perform all things required to be
done or performed under this Agreement by the Company prior to the Closing Date
(or Option Closing Date, if any), and to satisfy all conditions precedent to the
delivery of the Securities.
(r) The
Company will not take, and will cause its Affiliates not to take, directly or
indirectly, any action which constitutes or is designed to cause or result in,
or which could reasonably be expected to constitute, cause or result in, the
stabilization or manipulation of the price of any security to facilitate the
sale or resale of the Securities.
(s) The
Company shall cause to be prepared and delivered to the Representatives, at its
expense, within one (1) business day from the effective date of this Agreement,
an Electronic Prospectus to be used by the
Underwriters in connection with the Offering. As used herein, the
term “Electronic
Prospectus” means a form of prospectus, and any amendment or supplement
thereto, that meets each of the following conditions: (i) it shall be encoded in
an electronic format, satisfactory to the Representatives, that may be
transmitted electronically by the other Underwriters to offerees and purchasers
of the Securities for at least the period during which a Prospectus relating to
the Securities is required to be delivered under the Securities Act; (ii) it
shall disclose the same information as the paper prospectus and prospectus filed
pursuant to XXXXX, except to the extent that graphic and image material cannot
be disseminated electronically, in which case such graphic and image material
shall be replaced in the electronic prospectus with a fair and accurate
narrative description or tabular representation of such material, as
appropriate; and (iii) it shall be in or convertible into a paper format or an
electronic format, satisfactory to the Representatives, that will allow
recipients thereof to store and have continuously ready access to the prospectus
at any future time, without charge to such recipients (other than any fee
charged for subscription to the Internet as a whole and for on-line
time). The Company hereby confirms that it has included or will
include in the Prospectus filed pursuant to XXXXX or otherwise with the
Commission and in the Registration Statement at the time it was declared
effective an undertaking that, upon receipt
of a request by an investor or his or her Representatives within the period when
a prospectus relating to the Securities is required to be delivered under the
Securities Act, the Company shall transmit or cause to be transmitted promptly,
without charge, a paper copy of the Prospectus.
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Maxim
Group LLC
[•], 2010
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(t) The
Company represents and agrees that, unless it obtains the prior written consent
of the Representatives, and each of the Representatives 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 Securities that would
constitute an “issuer free writing prospectus,” as defined in Rule 433 under the
Securities Act, or that would otherwise constitute a “free writing prospectus,”
as defined in Rule 405 under the Securities Act, required to be filed with the
Commission; provided that the prior written consent of the parties hereto shall
be deemed to have been given in respect of the free writing prospectuses
included in Schedule
C. Any such free writing prospectus consented to by the
Company and the Representatives are hereinafter referred to as a “Permitted Free Writing
Prospectus.” The Company represents that it has treated or
agrees that it will treat each Permitted Free Writing Prospectus as an “issuer
free writing prospectus,” as defined in Rule 433, and has complied and will
comply with the requirements of Rule 433 applicable to any Permitted Free
Writing Prospectus, including timely Commission filing where required, legending
and record keeping.
(u) The
Company and its Subsidiaries will comply with all applicable provisions of
Sarb-Ox.
5. Consideration; Payment of
Expenses.
(a) The
Representatives reserve the right to reduce any item of compensation or adjust
the terms thereof as specified herein in the event that a
determination shall be made by FINRA to the effect that the Underwriters’
aggregate compensation is in excess of FINRA Rules or that the terms thereof
require adjustment.
(b) Whether
or not the transactions contemplated by this Agreement, the Registration
Statement and the Prospectus are consummated or this Agreement is terminated,
the Company hereby agrees to pay all costs and expenses incident to the
performance of its obligations hereunder, including the following:
(i) all
expenses in connection with the preparation, printing, formatting for XXXXX and
filing of the Registration Statement, any Preliminary Prospectus, General
Disclosure Package and the Prospectus and any and all exhibits, amendments and
supplements thereto and the mailing and delivering of a sufficient quantity of
copies thereof to the Underwriters and dealers as the Representatives may
reasonably request;
(ii) all
fees and expenses in connection with the filing of Corporate Offerings Business
& Regulatory Analysis (“COBRADesk”) filings with
FINRA, including the fees and disbursements of counsel for the Underwriters in
connection with such filing;
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(iii) all
fees and expenses in connection with filing of the Registration Statement and
Prospectus with the Commission;
(iv) the
fees, disbursements and expenses of the Company’s counsel and accountants in
connection with the registration of the Securities under the Securities Act and
the Offering;
(v)
all expenses in
connection with the qualifications of the Securities for offering and sale under
state or foreign securities or blue sky laws, including the fees and
disbursements of counsel for the Underwriters in connection with such
qualification and in connection with any blue by survey undertaken by such
counsel;
(vi) all
fees and expenses in connection with listing the Securities on the Nasdaq
[Capital] Market;
(vii) all
travel expenses of the Company’s officers and employees and any other expense of
the Company incurred in connection with attending or hosting meetings with
prospective purchasers of the Securities;
(viii)
any stock transfer taxes incurred in connection with this
Agreement or the Offering;
(ix)
the cost of preparing stock certificates representing the
Securities;
(x)
the cost and charges of any transfer agent or registrar for the
Securities; and
(xi) all
other costs and expenses incident to the performance of the Company obligations
hereunder which are not otherwise specifically provided for in this Section
5.
6. Conditions of Underwriters’
Obligations. The obligations of the Underwriters to purchase
and pay for the Firm Shares or Option Shares, as the case may be, as provided
herein shall be subject to: (i) the accuracy of the representations and
warranties of the Company herein contained, as of the date hereof and as of the
Closing Date (ii) the absence from any certificates, opinions, written
statements or letters furnished to the Representatives or to Underwriters’
Counsel pursuant to this Section 6 of any misstatement or omission (iii) the
performance by the Company of its obligations hereunder, and (iv) each of the
following additional conditions. For purposes of this Section 6, the
terms “Closing Date” and “Closing” shall refer to the Closing Date for the Firm
Shares or Option Shares, as the case may be, and each of the foregoing and
following conditions must be satisfied as of each Closing.
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(a) The
Registration Statement shall have become effective and all necessary regulatory
or listing approvals shall have been received not later than 5:30 P.M., New York
time, on the date of this Agreement, or at such later time and date as shall
have been consented to in writing by the Representatives. If the
Company shall have elected to rely upon Rule 430A under the Securities Act, the
Prospectus shall have been filed with the Commission in a timely fashion in
accordance with the terms hereof and a form of the Prospectus containing
information relating to the description of the Securities and the method of
distribution and similar matters shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period; and, at or prior to
the Closing Date or the actual time of the Closing, no stop order suspending the
effectiveness of the Registration Statement or any part thereof, or any
amendment thereof, nor suspending or preventing the use of the General
Disclosure Package, the Prospectus or any Issuer Free Writing Prospectus shall
have been issued; no proceedings for the issuance of such an order shall have
been initiated or threatened; any request of the Commission for additional
information (to be included in the Registration Statement, the General
Disclosure Package, the Prospectus, any Issuer Free Writing Prospectus or
otherwise) shall have been complied with to the Representatives’ satisfaction;
and FINRA shall have raised no objection to the fairness and reasonableness of
the underwriting terms and arrangements.
(b) The
Representatives shall not have reasonably determined, and advised the Company,
that the Registration Statement, the General Disclosure Package or the
Prospectus, or any amendment thereof or supplement thereto, or any Issuer Free
Writing Prospectus, contains an untrue statement of fact which, in the
Representatives’ reasonable opinion, is material, or omits to state a fact
which, in the Representatives’ reasonable opinion, is material and is required
to be stated therein or necessary to make the statements therein not
misleading.
(c) The
Representatives shall have received (i) the favorable written opinion of Loeb
& Loeb, LLP, United States legal counsel for the Company, dated as of the
Closing Date, addressed to the Representatives of the Underwriters in the form
attached hereto as Annex II, (ii) the
favorable written opinion of Xxxxxx Westwood & Riegels, British Virgin
Islands legal counsel for the Company, dated as of the Closing Date, addressed
to the Representatives of the Underwriters in the form attached hereto as Annex III, and (iii)
the favorable written opinion of Titan & Partner, legal counsel for the
Company with respect to the laws of the PRC dated as of the Closing Date,
addressed to the Representatives of the Underwriters in the form attached hereto
as Annex
IV.
(d) All
proceedings taken in connection with the sale of the Shares herein contemplated
shall be satisfactory in form and substance to the Representatives and to
Underwriters’ Counsel.
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(e) The
Representatives shall have received a certificate of the Chief Executive Officer
and Chief Financial Officer of the Company, dated as of each Closing Date to the
effect that: (i) the condition set forth in subsection (a) of this Section 6 has
been satisfied, (ii) as of the date hereof and as of the applicable Closing
Date, the representations and warranties of the Company set forth in Sections 1
and 2 hereof are accurate, (iii) as of the applicable Closing Date, all
agreements, conditions and obligations of the Company to be performed or
complied with hereunder on or prior thereto have been duly performed or complied
with, (iv) the Company and the Subsidiaries have not sustained any material loss
or interference with their respective businesses, whether or not covered by
insurance, or from any labor dispute or any legal or governmental proceeding,
(v) no stop order suspending the effectiveness of the Registration Statement or
any post-effective amendment thereof has been issued and no proceedings therefor
have been initiated or threatened by the Commission, (vi) there are no pro forma
or as adjusted financial statements that are required to be included or
incorporated by reference in the Registration Statement and the Prospectus
pursuant to the Rules and Regulations which are not so included or incorporated
by reference and (vii) subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus there has
not been any Material Adverse Change or any development involving a prospective
Material Adverse Change, whether or not arising from transactions in the
ordinary course of business.
(f) On
the date of this Agreement and on the Closing Date, the Representatives shall
have received a “cold comfort” letter from Xxxxx Xxxxxxxx as of the date of the
date of delivery and addressed to the Underwriters and in form and substance
satisfactory to the Representatives and Underwriters’ Counsel, confirming that
they are independent certified public accountants with respect to the Company
and its Subsidiaries within the meaning of the Securities Act and the Rules and
Regulations, and stating, as of the date of delivery (or, with respect to
matters involving changes or developments since the respective dates as of which
specified financial information is given in the Prospectus, as of a date not more than three (3)
days prior to the date of such letter), the conclusions and findings of such
firm with respect to the financial information and other matters relating to the
Registration Statement covered by such letter.
(g) Subsequent
to the execution and delivery of this Agreement or, if earlier, the dates as of
which information is given in the Registration Statement (exclusive of any
amendment thereof) and the Prospectus (exclusive of any supplement thereto),
there shall not have been any change in the capital stock or long-term debt of
the Company or any Subsidiary or any change or development involving a change,
whether or not arising from transactions in the ordinary course of business, in
the business, condition (financial or otherwise), results of operations,
shareholders’ equity, properties or prospects of the Company and the
Subsidiaries, taken as a whole, including but not limited to the occurrence of
any fire, flood, storm, explosion, accident, act of war or terrorism or other
calamity, the effect of which, in any such case described above, is, in the sole
judgment of the Representatives, so material and adverse as to make it
impracticable or inadvisable to proceed with the Offering on the terms and in
the manner contemplated in the Prospectus (exclusive of any
supplement).
(h) The
Representatives shall have received a lock-up agreement from each Lock-Up Party,
duly executed by the applicable Lock-Up Party, in each case substantially in the
form attached as Annex
X.
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(i) The
Securities shall have been approved for quotation on the Nasdaq [Capital]
Market.
(j) FINRA
shall have confirmed that it has not raised any objection with respect to the
fairness and reasonableness of the underwriting terms and
arrangements.
(k) The
Representatives shall have received a certificate of the Company’s Secretary,
dated such Closing Date, in form and substance satisfactory to the
Representatives.
(l) No
action shall have been taken and no statute, rule, regulation or order shall
have been enacted, adopted or issued by any federal, state or foreign
governmental or regulatory authority that would, as of the Closing Date, prevent
the issuance or sale of the Securities; and no injunction or order of any
federal, state or foreign court shall have been issued that would, as of the
Closing Date, prevent the issuance or sale of the Securities.
(m) The
Company shall have furnished the Underwriters and Underwriters’ Counsel with
such other certificates, opinions or other documents as they may have reasonably
requested.
If any of
the conditions specified in this Section 6 shall not have been fulfilled when
and as required by this Agreement, or if any of the certificates, opinions,
written statements or letters furnished to the Representatives or to
Underwriters’ Counsel pursuant to this Section 6 shall not be reasonably
satisfactory in form and substance to the Representatives and to Underwriters’
Counsel, all obligations of the Underwriters hereunder may be cancelled by the
Representatives at, or at any time prior to, the consummation of the
Closing. Notice of such cancellation shall be given to the Company in
writing, or by telephone. Any such telephone notice shall be
confirmed promptly thereafter in writing.
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7. Indemnification.
(a) The
Company agrees to indemnify and hold harmless the Underwriters and each Person,
if an, who controls each Underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, against any losses, claims,
damages or liabilities to which such party 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 General 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 Prospectus), any Issuer Free
Writing Prospectus or in any materials or information provided to investors by,
or with the approval of, the Company in connection with the marketing of the
offering of the Securities (“Marketing Materials”),
including any roadshow or investor presentations made to investors by the
Company (whether in person or electronically) or arise out of or are based upon
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
will reimburse such indemnified party for any legal or other expenses reasonably
incurred by it in connection with investigating or defending against such loss,
claim, damage, liability or action; or (ii) in whole or in part upon any
inaccuracy in the representations and warranties of the Company contained
herein; or (iii) in whole or in part upon any failure of the Company to perform
its obligations hereunder or under law; provided, however, that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage, liability or action arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in the
Registration Statement, any Preliminary Prospectus, the General Disclosure
Package, the Prospectus, or any such amendment or supplement, any Issuer Free
Writing Prospectus or in any Marketing Materials, in reliance upon and in
conformity with the Underwriters Information.
(b) Each
Underwriter, severally and not jointly, shall indemnify and hold harmless the
Company, each of the directors of the Company, each of the officers of the
Company who shall have signed the Registration Statement, and each other Person,
if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, against any losses,
liabilities, claims, damages and expenses whatsoever as incurred (including but
not limited to attorneys’ fees and any and all expenses whatsoever incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever, and any and all amounts paid in settlement
of any claim or litigation), joint or several, to which they or any of them may
become subject under the Securities Act, the Exchange Act or otherwise, insofar
as such losses, liabilities, claims, damages or expenses (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, as
originally filed or any amendment thereof, or any related Preliminary Prospectus
or the Prospectus, or in any amendment thereof or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
any such loss, liability, claim, damage or expense arises out of or is based
upon any such untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity with the
Underwriters’ Information; provided, however, that in no
case shall any Underwriter be liable or responsible for any amount in excess of
the underwriting discount applicable to the Securities to be purchased by such
Underwriter hereunder. The parties agree that such information
provided by or on behalf of any Underwriter through the Representatives consists
solely of the material referred to in the last sentence of Section 2.1(c)
hereof.
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(c) Promptly
after receipt by an indemnified party under subsection (a) or (b) above of
notice of any claims or the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify each party against whom indemnification is
to be sought in writing of the claim or the commencement thereof (but the
failure so to notify an indemnifying party shall not relieve the indemnifying
party from any liability which it may have under this Section 7 to the extent
that it is not materially prejudiced as a result thereof and in any event shall
not relieve it from any liability that such indemnifying party may have
otherwise than on account of the indemnity agreement hereunder). In
case any such claim or action is brought against any indemnified party, and it
notifies an indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate, at its own expense in the defense of such
action, and to the extent it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel satisfactory to
such indemnified party; provided however, that counsel to the indemnifying party
shall not (except with the written consent of the indemnified party) also be
counsel to the indemnified party. Notwithstanding the foregoing, the
indemnified party or parties shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless (i) the employment of
such counsel shall have been authorized in writing by one of the indemnifying
parties in connection with the defense of such action, (ii) the indemnifying
parties shall not have employed counsel to have charge of the defense of such
action within a reasonable time after notice of commencement of the action,
(iii) the indemnifying party does not diligently defend the action after
assumption of the defense, or (iv) such indemnified party or parties shall have
reasonably concluded that there may be defenses available to it or them which
are different from or additional to those available to one or all of the
indemnifying parties (in which case the indemnifying parties shall not have the
right to direct the defense of such action on behalf of the indemnified party or
parties), in any of which events such fees and expenses shall be borne by the
indemnifying parties. No indemnifying party shall, without the prior
written consent of the indemnified parties, effect any settlement or compromise
of, or consent to the entry of judgment with respect to, any pending or
threatened claim, investigation, action or proceeding in respect of which
indemnity or contribution may be or could have been sought by an indemnified
party under this Section 7 or Section 8 hereof (whether or not the indemnified
party is an actual or potential party thereto), unless (x) such settlement,
compromise or judgment (i) includes an unconditional release of the indemnified
party from all liability arising out of such claim, investigation, action or
proceeding and (ii) does not include a statement as to or an admission of fault,
culpability or any failure to act, by or on behalf of the indemnified party, and
(y) the indemnifying party confirms in writing its indemnification obligations
hereunder with respect to such settlement, compromise or
judgment.
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8. Contribution. In
order to provide for contribution in circumstances in which the indemnification
provided for in Section 7 hereof is for any reason held to be unavailable from
any indemnifying party or is insufficient to hold harmless a party indemnified
thereunder, the Company and the Underwriters shall contribute to the aggregate
losses, claims, damages, liabilities and expenses of the nature contemplated by
such indemnification provision (including any investigation, legal and other
expenses incurred in connection with, and any amount paid in settlement of, any
action, suit or proceeding or any claims asserted, but after deducting in the
case of losses, claims, damages, liabilities and expenses suffered by the
Company, any contribution received by the Company from Persons, other than the
Underwriters, who may also be liable for contribution, including Persons who
control the Company within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, officers of the Company who signed the
Registration Statement and directors of the Company) as incurred to which the
Company and one or more of the Underwriters may be subject, in such proportions
as is appropriate to reflect the relative benefits received by the Company and
the Underwriters from the Offering or, if such allocation is not permitted by
applicable law, in such proportions as are appropriate to reflect not only the
relative benefits referred to above but also the relative fault of the Company
and the Underwriters in connection with the statements or omissions which
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations. The relative benefits
received by the Company and the Underwriters shall be deemed to be in the same
proportion as (x) the total proceeds from the Offering (net of underwriting
discounts and commissions but before deducting expenses) received by the Company
bears to (y) the underwriting discount or commissions received by the
Underwriters, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault of each of the Company and of the
Underwriters shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company or the Underwriters and the parties’ relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or
omission. The Company and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this Section 8 were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to above in this
Section. The aggregate amount of losses, liabilities, claims, damages
and expenses incurred by an indemnified party and referred to above in this
Section 8 shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any judicial,
regulatory or other legal or governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission. Notwithstanding the
provisions of this Section 8: (i) no Underwriter shall be required to contribute
any amount in excess of the amount by which the discounts and commissions
applicable to the Securities underwritten by it and distributed to the public
exceeds the amount of any damages which such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission and (ii) no Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 8, each Person, if
any, who controls an Underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act shall have the same rights to
contribution as such Underwriter, and each Person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act, each officer of the Company who shall have signed the
Registration Statement and each director of the Company shall have the same
rights to contribution as the Company, subject in each case to clauses (i) and
(ii) of the immediately preceding sentence. Any party entitled to
contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim for
contribution may be made against another party or parties, notify each party or
parties from whom contribution may be sought, but the omission to so notify such
party or parties shall not relieve the party or parties from whom contribution
may be sought from any obligation it or they may have under this Section 8 or
otherwise. The obligations of the Underwriters to contribute pursuant
to this Section 8 are several in proportion to the respective number of
Securities to be purchased by each of the Underwriters hereunder and not
joint.
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9. Underwriter
Default.
(a) If
any Underwriter or Underwriters shall default in its or their obligation to
purchase Firm Shares hereunder, and if the Firm Shares with respect to which
such default relates (the “Default Shares”) do not (after
giving effect to arrangements, if any, made by the Representatives pursuant to
subsection (b) below) exceed in the aggregate 10% of the number of Firm Shares,
each non-defaulting Underwriter, acting severally and not jointly, agrees to
purchase from the Company that number of Default Shares that bears the same
proportion of the total number of Default Shares then being purchased as the
number of Firm Shares set forth opposite the name of such Underwriter on Schedule A hereto
bears to the aggregate number of Firm Shares set forth opposite the names of the
non-defaulting Underwriters, subject, however, to such adjustments to eliminate
fractional shares as the Representatives in their sole discretion shall
make.
(b) In
the event that the aggregate number of Default Shares exceeds 10% of the number
of Firm Shares, the Representatives may in their discretion arrange for
themselves or for another party or parties (including any non-defaulting
Underwriter or Underwriters who so agree) to purchase the Default Shares on the
terms contained herein. In the event that within five calendar days
after such a default the Representatives do not arrange for the purchase of the
Default Shares as provided in this Section 9, this Agreement shall thereupon
terminate, without liability on the part of the Company with respect thereto
(except in each case as provided in Sections 4, 6, 7, 9 and 11(d)) or the
Underwriters.
(c) In
the event that any Default Shares are to be purchased by the non-defaulting
Underwriters, or are to be purchased by another party or parties as aforesaid,
the Representatives or the Company shall have the right to postpone the Closing
Date for a period, not exceeding five (5) business days, in order to effect
whatever changes may thereby be made necessary in the Registration Statement or
the Prospectus or in any other documents and arrangements, and the Company
agrees to file promptly any amendment or supplement to the Registration
Statement or the Prospectus which, in the reasonable opinion of Underwriters’
Counsel, may thereby be made necessary or advisable. The term
“Underwriter” as used in this Agreement shall include any party substituted
under this Section 9 with like effect as if it had originally been a party to
this Agreement with respect to such Firm Shares.
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10. Survival of Representations
and Agreements. All representations, warranties, and
agreements of the Company herein or in certificates delivered pursuant hereto,
including but not limited to the agreements of the several Underwriters and the
Company contained in Sections 7 and 8 hereof, shall remain operative and in full
force and effect regardless of any investigation made by or on behalf of any
Underwriter or any controlling person thereof, or 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. Effective Date of Agreement;
Termination.
(a) This
Agreement shall become effective upon the later of: (i) receipt by the
Representatives and the Company of notification of the effectiveness of the
Registration Statement or (ii) the execution of this
Agreement. Notwithstanding any termination of this Agreement, the
provisions of this Section 11 and of Sections 1, 4, 6, 7 and 11 through 16,
inclusive, shall remain in full force and effect at all times after the
execution hereof.
(b) The
Representatives shall have the right to terminate this Agreement at any time
prior to the consummation of the Closing
if: (i) any domestic or international event or act or occurrence has materially
disrupted, or in the opinion of the Representatives will in the immediate future
materially disrupt, the market for the Company’s securities or securities in
general; or (ii) trading on the New York Stock Exchange, the Nasdaq Stock Market
or the NYSE Amex shall have been suspended or been made subject to material
limitations, or minimum or maximum prices for trading shall have been fixed, or
maximum ranges for prices for securities shall have been required, on the New
York Stock Exchange, the Nasdaq Stock Market or the NYSE Amex or by order of the
Commission or any other governmental authority having jurisdiction; or (iii) a
banking moratorium has been declared by any state or federal authority or if any
material disruption in commercial banking or securities settlement or clearance
services shall have occurred; (iv) any downgrading shall have occurred in the
Company’s corporate credit rating or the rating accorded the Company’s debt
securities or trust preferred stock by any “nationally recognized statistical
rating organization” (as defined for purposes of Rule 436(g) under the
Securities Act) or if any such organization shall have been publicly announced
that it has under surveillance or review, with possible negative implications,
its rating of any of the Company’s debt securities; or (v) (A) there shall have
occurred any outbreak or escalation of hostilities or acts of terrorism
involving the United States or there is a declaration of a national emergency or
war by the United States or (B) there shall have been any other calamity or
crisis or any change in political, financial or economic conditions if the
effect of any such event in (A) or (B), in the judgment of the Representatives,
is so material and adverse that such event makes it impracticable or
inadvisable to proceed with the offering, sale and delivery of the Firm Shares
on the terms and in the manner contemplated by the Prospectus.
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(c) Any
notice of termination pursuant to this Section 11 shall be in
writing.
(d) If
this Agreement shall be terminated pursuant to any of the provisions hereof
(other than pursuant to Section 9(b) hereof), or if the sale of the Securities
provided for herein is not consummated because any condition to the obligations
of the Underwriters set forth herein is not satisfied or because of any refusal,
inability or failure on the part of the Company to perform any agreement herein
or comply with any provision hereof, the Company will, subject to demand by the
Representatives, reimburse the Underwriters for only those out-of-pocket
expenses (including the fees and expenses of their counsel), actually incurred
by the Underwriters in connection herewith up to $150,000 less any amounts
previously paid by the Company.
12. Notices. All
communications hereunder, except as may be otherwise specifically provided
herein, shall be in writing, and:
(a) if
sent to the Representatives or any Underwriter, shall be mailed, delivered, or
faxed and confirmed in writing, to Xxxx Capital Partners, LLC, 00 Xxxxxxxxx
Xxxxx Xxxxx, Xxxxxxx Xxxxx, XX 00000, Attention: General Counsel, and to Maxim
Group LLC, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxxx
X. Xxxxxx, Director of Investment Banking, with a copy to
Underwriters’ Counsel at Pillsbury Xxxxxxxx Xxxx Xxxxxxx LLP, 0000 X Xxxxxx, XX,
Xxxxxxxxxx, Xxxxxxxx xx Xxxxxxxx 00000-0000, Attention: Xxxxxx X. Xxxxx, Esq.;
and
(b) if
sent to the Company, shall be mailed, delivered, or faxed and confirmed in
writing to the Company and its counsel at the addresses set forth in the
Registration Statement,.
provided, however, that any
notice to an Underwriter pursuant to Section 7 shall be delivered or sent by
mail or facsimile transmission to such Underwriter at its address set forth in
its acceptance facsimile to the Representatives, which address will be supplied
to any other party hereto by the Representatives upon request. Any
such notices and other communications shall take effect at the time of receipt
thereof.
13. Parties; Limitation of
Relationship. This Agreement shall inure solely to the benefit
of, and shall be binding upon, the Underwriters, the Company and the controlling
Persons, directors, officers, employees and agents referred to in Sections 7 and
8 hereof, and their respective successors and assigns, and no other Person shall
have or be construed to have any legal or equitable right, remedy or claim under
or in respect of or by virtue of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof
are intended to be for the sole and exclusive benefit of the parties hereto and
said controlling Persons and their respective successors, officers, directors,
heirs and legal Representatives, and it is not for the benefit of any other
Person. The term “successors and assigns” shall not include a
purchaser, in its capacity as such, of Securities from any of the
Underwriters.
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14. Governing
Law. This Agreement shall be deemed to have been executed and
delivered in New York and both this Agreement and the transactions contemplated
hereby shall be governed as to validity, interpretation, construction, effect,
and in all other respects by the laws of the State of New York, without regard
to the conflicts of laws principals thereof (other than Section 5-1401 of The
New York General Obligations Law). Each of the Underwriters and the
Company: (a) agrees that any legal suit, action or proceeding arising out of or
relating to this Agreement and/or the transactions contemplated hereby shall be
instituted exclusively in the Supreme Court of the State of New York, New York
County, or in the United States District Court for the Southern District of New
York, (b) waives any objection which it may have or hereafter to the venue of
any such suit, action or proceeding, and (c) irrevocably consents to the
jurisdiction of Supreme Court of the State of New York, New York County, or in
the United States District Court for the Southern District of New York in any
such suit, action or proceeding. Each of the Underwriters and the
Company further agrees to accept and acknowledge service of any and all process
which may be served in any such suit, action or proceeding in the Supreme Court
of the State of New York, New York County, or in the United States District
Court for the Southern District of New York and agrees that service of process
upon the Company mailed by certified mail to the Company’s address or delivered
by Federal Express via overnight delivery shall be deemed in every respect
effective service of process upon the Company, in any such suit, action or
proceeding, and service of process upon the Underwriters mailed by certified
mail to the Underwriters’ address or delivered by Federal Express via overnight
delivery shall be deemed in every respect effective service process upon the
Underwriter, in any such suit, action or proceeding. THE COMPANY (ON
BEHALF OF ITSELF, THE SUBSIDIARIES AND, TO THE FULLEST EXTENT PERMITTED BY LAW,
ON BEHALF OF ITS RESPECTIVE EQUITY HOLDERS AND CREDITORS) HEREBY WAIVE ANY RIGHT
THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED UPON, ARISING OUT
OF OR IN CONNECTION WITH THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT, THE REGISTRATION STATEMENT AND THE PROSPECTUS.
15. Entire
Agreement. This Agreement, together with the schedule and
exhibits attached hereto and as the same may be amended from time to time in
accordance with the terms hereof, contains the entire agreement among the
parties hereto relating to the subject matter hereof and there are no other or
further agreements outstanding not specifically mentioned herein.
16. Severability. If
any term or provision of this Agreement or the performance thereof shall be
invalid or unenforceable to any extent, such invalidity or unenforceability
shall not affect or render invalid or unenforceable any other provision of this
Agreement and this Agreement shall be valid and enforced to the fullest extent
permitted by law.
Xxxx
Capital Partners, LLC
Maxim
Group LLC
[•], 2010
Page 42
of 45
17. Amendment. This
Agreement may only be amended by a written instrument executed by each of the
parties hereto.
18. Waiver, etc.
The failure of any of the parties hereto to at any time enforce any of the
provisions of this Agreement shall not be deemed or construed to be a waiver of
any such provision, nor to in any way effect the validity of this Agreement or
any provision hereof or the right of any of the parties hereto to thereafter
enforce each and every provision of this Agreement. No waiver of any
breach, non-compliance or non-fulfillment of any of the provisions of this
Agreement shall be effective unless set forth in a written instrument executed
by the party or parties against whom or which enforcement of such waiver is
sought; and no waiver of any such breach, non-compliance or non-fulfillment
shall be construed or deemed to be a waiver of any other or subsequent breach,
non-compliance or non-fulfillment.
19. No Fiduciary
Relationship. The Company hereby acknowledges that the Underwriters are
acting solely as underwriters in connection with the offering of the Company’s
securities. The Company further acknowledge that the Underwriters are acting
pursuant to a contractual relationship created solely by this Agreement entered
into on an arm’s length basis and in no event do the parties intend that the
Underwriters act or be responsible as a fiduciary to the Company, its
management, shareholders, creditors or any other person in connection with any
activity that the Underwriters may undertake or have undertaken in furtherance
of the offering of the Company's securities, either before or after the date
hereof,. The Underwriters hereby expressly disclaim any fiduciary or similar
obligations to the Company, either in connection with the transactions
contemplated by this Agreement or any matters leading up to such transactions,
and the Company hereby confirms its understanding and agreement to that effect.
The Company hereby further confirms its understand that no Underwriter has
assumed an advisory or fiduciary responsibility in favor of the Company with
respect to the Offering contemplated hereby or the process leading thereto,
including any negotiation related to the pricing of the Securities; and the
Company has consulted its own legal and financial advisors to the extent it has
deemed appropriate in connection with this Agreement and the Offering. The
Company and the Underwriters agree that they are each responsible for making
their own independent judgments with respect to any such transactions, and that
any opinions or views expressed by the Underwriters to the Company regarding
such transactions, including but not limited to any opinions or views with
respect to the price or market for the Company's securities, do not constitute
advice or recommendations to the Company. The Company hereby waives and
releases, to the fullest extent permitted by law, any claims that the Company
may have against the Underwriters with respect to any breach or alleged breach
of any fiduciary or similar duty to the Company in connection with the
transactions contemplated by this Agreement or any matters leading up to such
transactions.
20. Counterparts. This
Agreement may be executed in any number of counterparts, each of which shall be
deemed to be an original, but all such counterparts shall together constitute
one and the same instrument. Delivery of a signed counterpart of this
Agreement by facsimile transmission shall constitute valid and sufficient
delivery thereof.
Xxxx
Capital Partners, LLC
Maxim
Group LLC
[•], 2010
Page 43 of
45
21. Headings. The
headings herein are inserted for convenience of reference only and are not
intended to be part of, or to affect the meaning or interpretation of, this
Agreement.
22. Time is of the
Essence. Time shall be of the essence of this
Agreement. As used herein, the term “business day” shall mean any day
other than a Saturday, Sunday or any day on which the major stock exchanges in
New York, New York are not open for business.
23. FINRA. The
Underwriters acknowledge, understand and agree to comply with all applicable
rules promulgated by FINRA and the National Association of Securities Dealers
(“NASD”), including but
not limited to NASD Rules 2420, 2730, 2740 and 2750.
[Signature
Pages Follow]
Xxxx
Capital Partners, LLC
Maxim
Group LLC
[•], 2010
Page 44 of
45
If the
foregoing correctly sets forth your understanding, please so indicate in the
space provided below for that purpose, whereupon this letter shall constitute a
binding agreement among us.
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Very
truly yours,
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By:
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Name:
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Title:
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Xxxx
Capital Partners, LLC
Maxim
Group LLC
[•], 2010
Page 45 of
45
Accepted
by the Representatives, acting for themselves and as
Representatives
of the Underwriters named on Schedule A attached
hereto,
as
of the date first written above:
XXXX
CAPITAL PARTNERS, LLC
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By:
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Name:
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Title:
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MAXIM
GROUP LLC
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By:
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Name:
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Title:
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SCHEDULE
A
Underwriters
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Underwriter
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Number of Firm Shares
to be Purchased from the
Company
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Over-Allotment
Option Shares
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Xxxx
Capital Partners, LLC
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[•]
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[•]
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Maxim
Group LLC
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[•]
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[•]
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Total
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[•]
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[•]
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A-1
SCHEDULE
B
Lock-Up
Parties
A-2
SCHEDULE
C
Issuer-Represented General
Free Writing Prospectus
A-3
ANNEX
I
Form of Lock-Up
Agreement
______, 2010
XXXX
CAPITAL PARTNERS, LLC
00
Xxxxxxxxx Xxxxx Xxxxx
Xxxxxxx
Xxxxx, XX 00000
MAXIM
GROUP LLC
000
Xxxxxxxxx Xxxxxx
Xxx Xxxx,
XX 00000
as
representatives of the several underwriters
Ladies
and Gentlemen:
As an inducement to the underwriters
(the “Underwriters”)
to execute an underwriting agreement (the “Underwriting
Agreement”) providing for a public offering (the “Offering”)
of shares, no par value (the “Shares”),
of China Ceramics Co., Ltd., a corporation organized and existing under the laws
of the British Virgin Islands (the “Company”),
the undersigned hereby agrees that without, in each case, the prior written
consent of Xxxx Capital Partners, LLC and Maxim Group LLC (collectively, the
“Representatives”)
during the period specified in the second succeeding paragraph (the “Lock-Up
Period”), the undersigned will not (1) offer, pledge, announce the
intention to sell, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase, make any short sale or otherwise transfer or dispose of,
directly or indirectly, any Shares or any securities convertible into,
exercisable or exchangeable for or that represent the right to receive Shares
(including without limitation, Shares which may be deemed to be beneficially
owned by the undersigned in accordance with the rules and regulations of the
Securities and Exchange Commission and securities which may be issued upon
exercise of a stock option or warrant) whether now owned or hereafter acquired
(the “Undersigned’s
Securities”) or (2) enter into any swap or other agreement that
transfers, in whole or in part, any of the economic consequences of ownership of
the Undersigned’s Securities, whether any such transaction described in clause
(1) or (2) above is to be settled by delivery of Shares or such other
securities, in cash or otherwise. The foregoing restriction is
expressly agreed to preclude the undersigned from engaging in any hedging or
other transaction which is designed to or which reasonably could be expected to
lead to or result in a sale or disposition of the Undersigned’s Securities even
if such Undersigned’s Securities would be disposed of by someone other than the
undersigned. Such prohibited hedging or other transactions would
include without limitation any short sale or any purchase, sale or grant of any
right (including without limitation any put or call option) with respect to any
of the Undersigned’s Securities or with respect to any security that includes,
relates to, or derives any significant part of its value from such Undersigned’s
Securities.
I-1
In addition, the undersigned agrees
that, without the prior written consent of the
Representatives, it
will not, during the Lock-Up Period, make any demand for or exercise any right
with respect to, the registration of any Shares or any security convertible into
or exercisable or exchangeable for Shares.
The
initial Lock-Up Period will commence on the date of this Lock-Up Agreement and
continue and include the date 90 days after the date of the final prospectus
used to sell Shares in the Offering pursuant to the Underwriting Agreement,
provided, however, that 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 the Company 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 the occurrence of the material news or material event, as applicable,
unless the
Representatives waive, in writing, such
extension.
The
undersigned hereby acknowledges that the Company will be requested to agree in
the Underwriting Agreement to provide written notice to the undersigned of any
event that would result in an extension of the Lock-Up Period pursuant to the
previous paragraph and agrees that any such notice properly delivered will be
deemed to have been given to, and received by, the undersigned. The
undersigned further agrees that, prior to engaging in any transaction or taking
any other action that is subject to the terms of this Lock-Up Agreement during
the period from the date of this Lock-Up Agreement to and including the 34th day
following the expiration of the initial Lock-Up Period, it will give notice
thereof to the Company and will not consummate such transaction or take any such
action unless it has received written confirmation from the Company that the
Lock-Up Period (as may have been extended pursuant to the previous paragraph)
has expired.
Notwithstanding
the foregoing, (1) the undersigned may transfer the Undersigned’s Securities (i)
as a bona fide gift or
gifts and (ii) to any trust for the direct or indirect benefit of the
undersigned or the immediate family of the undersigned, or (2) if the
undersigned is a corporation, company, business trust, association, limited
liability company, partnership, limited liability partnership, limited liability
limited partnership or other entity (collectively, the “Entities”
or, individually, the “Entity”),
the undersigned may transfer Shares or securities convertible into or
exchangeable or exercisable for any Shares to any person or Entity which
controls, is directly or indirectly controlled by, or is under common control
with the undersigned and, if the undersigned is a partnership or limited
liability company, it may transfer the Shares or securities convertible into or
exchangeable or exercisable for any Shares to its partners, former partners or
an affiliated partnership (or members, former members or an affiliated limited
liability company) managed by the same manager or managing partner (or managing
member, as the case may be) or management company, or managed by an entity
controlling, controlled by, or under common control with, such manager or
managing partner (or managing member) or management company in accordance with
partnership (or membership) interests; provided, in each case of
transfer pursuant to clause (1) or (2), that (x) such transfer shall not
involve a disposition for value, (y) the transferee agrees in writing with the
Underwriters to be bound by the terms of this Lock-Up Agreement, and (z) no
filing by any party under Section 16(a) of the Securities Exchange Act of 1934,
as amended (the “Exchange
Act”), shall be required or shall be made voluntarily in connection with
such transfer. For purposes of this Lock-Up Agreement, “immediate
family” shall mean any relationship by blood, marriage or adoption, not more
remote than first cousin.
I-2
In
addition, the foregoing restrictions shall not apply to (i) the exercise of
stock options granted pursuant to the Company’s equity incentive plans; provided that it shall apply
to any of the Undersigned’s Securities issued upon such exercise, or
(ii) the establishment of any contract, instruction or plan (a “Plan”)
that satisfies all of the requirements of Rule 10b5-1(c)(1)(i)(B) under the
Exchange Act; provided
that no sales of the Undersigned’s Securities shall be made pursuant to such a
Plan prior to the expiration of the Lock-Up Period (as such may have been
extended pursuant to the provisions hereof), and such a Plan may only be
established if no public announcement of the establishment or existence thereof
and no filing with the Securities and Exchange Commission or other regulatory
authority in respect thereof or transactions thereunder or contemplated thereby,
by the undersigned, the Company or any other person, shall be required, and no
such announcement or filing is made voluntarily, by the undersigned, the Company
or any other person, prior to the expiration of the Lock-Up Period (as such may
have been extended pursuant to the provisions hereof).
In
furtherance of the foregoing, the Company and its transfer agent and registrar
are hereby authorized to decline to make any transfer of Shares if such transfer
would constitute a violation or breach of this Lock-Up Agreement.
The
undersigned understands that the undersigned shall be released from all
obligations under this Lock-Up Agreement if (i) the Company or the
Underwriters inform the other that it does not intend to proceed with the
Offering, (ii) the Purchase Agreement does not become effective, or if the
Underwriting Agreement (other than the provisions thereof which survive
termination) shall terminate or be terminated prior to payment for and delivery
of the Shares to be sold thereunder, or (iii) the Offering is not completed
by [December 31, 2010].
The
undersigned understands that the Underwriters are entering into the Underwriting
Agreement and proceeding with the Offering in reliance upon this Lock-Up
Agreement.
This
Lock-Up Agreement shall be governed by, and construed in accordance with, the
laws of the State of New York.
Whether
or not the Offering actually occurs depends on a number of factors, including
market conditions. Any Offering will only be made pursuant to the
Underwriting Agreement, the terms of which are subject to negotiation among the
parties thereto.
[Signature
Page Follows]
I-3
The
undersigned hereby represents and warrants that the undersigned has full power
and authority to enter into this Lock-Up Agreement and that, upon request, the
undersigned will execute any additional documents necessary in connection with
the enforcement hereof. All authority herein conferred or agreed to
be conferred and any obligations of the undersigned shall be binding upon the
successors, assigns, heirs or personal representatives of the
undersigned.
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Very
truly yours,
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Printed
Name of Holder
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By:
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Signature
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Printed
Name of Person Signing
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(and
indicate capacity of person signing if
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signing
as custodian, trustee, or on behalf
of
an entity)
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I-4
ANNEX
II
Form of Issuer Counsel US
Opinion
(a) The
Registration Statement, each Statutory Prospectus and the Prospectus and any
amendments or supplements thereto (other than the financial statements included
therein, as to which we express no opinion) each as of their respective dates
complied as to form in all material respects with the requirements of the Act
and Regulations. To your firm’s knowledge, no law, statute,
government order or mandate or rule or other regulation required to be described
in the Registration Statement, the General Disclosure Package or the Prospectus
is not described as required. The Securities and each agreement filed
as an exhibit to the Registration Statement conform in all material respects to
the description thereof contained in the Registration Statement, the General
Disclosure Package and the Prospectus.
(b) The
Registration Statement has been declared effective under the Act. No stop
order suspending the effectiveness of the Registration Statement has been issued
and, to your firm’s knowledge, no proceedings for that purpose have been
instituted or are pending or threatened under the Act. 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).
(c) To
your firm's knowledge, there is no action, suit or other proceeding before or by
any court of governmental agency or body, domestic or foreign, now pending, or
threatened against the Company that is required to be described in the
Registration Statement, the General Disclosure Package and the Prospectus that
is not so described. To your firm’s knowledge, there is no contract
or other document of a character required to be described in the Registration
Statement, the General Disclosure Package or the Prospectus, or to be filed as
an exhibit to the Registration Statement, which is not described or filed as
required.
(d) The
execution, delivery and performance of the Underwriting Agreement, the issuance
and sale of the Securities, the consummation of the transactions contemplated
thereby, and compliance by the Company with the terms and provisions hereof and
thereof, do not and will not, without the giving of notice or the lapse of time
or both, (a) conflict in any material respect with, or result in a material
breach of, any terms or provisions of, or constitute a material 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 or (b) violate, to your firm’s knowledge any judgment,
order or decree applicable to the Company or any subsidiary of any court,
domestic or foreign, or of any federal, state or other regulatory authority or
other governmental body having jurisdiction over the Company and its
subsidiaries and then respective properties or assets.
(e) No
consent, approval, authorization, order, registration, filing, qualification,
license or permit of or with any court or any judicial, regulatory or other
legal or governmental agency or body in the United States 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, the Registration Statement, the General Disclosure
Package and the Prospectus.
II-1
(f)
Except as set forth
in the Registration Statement, the General Disclosure Package and the
Prospectus, to your firm’s knowledge, no holders of securities of the Company
have rights to the registration of such securities under the Registration
Statement pursuant to any agreement or instrument of the Company or any
subsidiary.
(g) The
Securities have been approved for listing on the Nasdaq Capital Market upon
official notice of issuance.
(h) 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 in the
Prospectus, will not be, an “investment company” as defined in the Investment
Company Act.
(i)
The offers and sales of
the outstanding Shares were at all relevant times either registered under the
Act or exempt from such registration requirements.
In
addition, we have participated in conferences with officers and other
representatives of the Company, representatives of the independent public
accountants of the Company and representatives of the Underwriters at which the
contents of the Registration Statement, the General Disclosure Package and the
Prospectus were discussed and, although we are not passing upon and do not
assume responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement, the General Disclosure
Package or the Prospectus and, except as expressly stated in this opinion, have
not made any independent check or verification thereof, during the course of
such participation, nothing has come to our attention that causes us to believe
that (i) the Registration Statement, at the time of effectiveness, 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,
(ii) the General Disclosure Package, as of the of Time of Sale, included an
untrue statement of a material fact or omitted 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 or (iii) the
Prospectus, as of its date, or as of the date hereof, included or includes an
untrue statement of a material fact or omitted or omits 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.
II-2
ANNEX
III
Form of Issuer Counsel BVI
Opinion
(a) The
Company has the requisite corporate power and authority to execute and deliver
the Underwriting Agreement, and to perform its obligations thereunder, and all
corporate action required to be taken for the authorization, execution and
delivery of the Underwriting Agreement has been duly and validly
taken.
(b)
The Underwriting Agreement has been duly and validly
authorized, executed and delivered by the Company.
(c) The
Company has been duly organized and is validly existing as a corporation and is
in good standing under the laws of the British Virgin Islands. The
Company 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 General Disclosure Package and the Prospectus, and is duly
qualified to do business as a foreign corporation in good standing in each
jurisdiction in which the failure to qualify could reasonably be expected to
have a Material Adverse Effect on the Company.
(d) The
Company’s authorized equity capitalization is as set forth in the Registration
Statement, the General Disclosure Package and the Prospectus; and the capital
stock of the Company conforms to the description thereof contained in the
Registration Statement, General Disclosure Package and the
Prospectus. 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 stockholder of the Company arising by operation of
British Virgin Islands law or under the organizational documents of the
Company.
(e) 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 British Virgin
Islands law or under the Company’s organization documents or, to your firm’s
knowledge, similar rights that entitle or will entitle any person to acquire any
security from the Company upon issuance or sale thereof. The certificates
representing the Securities are in due and proper form.
(f)
The execution, delivery and performance of the Underwriting
Agreement, the issuance and sale of the Securities, the consummation of the
transactions contemplated thereby, and compliance by the Company with the terms
and provisions hereof and thereof, do not and will not, with or without the
giving of notice or the lapse of time, or both, (a) result in any violation of
the provisions of the organization documents of the Company or (b) violate any
British Virgin Islands statute, rule or regulation or, to your firm's knowledge,
any judgment, order or decree applicable to the Company or any subsidiary of any
court, domestic or foreign, or of any federal, state or other regulatory
authority or other governmental body having jurisdiction over the Company and
its subsidiaries and their respective properties or assets.
III-1
(g) To
your firm’s knowledge, there is no action, suit or other proceeding before or by
any court of governmental agency or body, domestic or foreign, now pending, or
threatened against the Company.
(h) No
consent, approval, authorization, order, registration, filing, qualification,
license or permit of or with any court or any judicial, regulatory or other
legal or governmental agency or body in the British Virgin Islands 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, the Registration Statement, the General Disclosure
Package and the Prospectus.
(i)
The statements under the captions “Description of
Securities,” “British Virgin Islands Company Considerations,” “Enforceability of
Civil Liabilities” and Item 6 of Part II of the Registration Statement, the
General Disclosure Package and the Prospectus, insofar as such statements
constitute a summary of the legal matters, documents or proceedings referred to
therein, fairly present the information called for with respect to such legal
matters, documents and proceedings.
(j)
Except as set forth in the Registration Statement,
the General Disclosure Package and the Prospectus, no holders of securities of
the Company have rights to the registration of such securities under the
Registration Statement pursuant to the organizational documents of the Company
or, to your firm’s knowledge, pursuant to any agreement or instrument of the
Company or any subsidiary.
(k) The
courts of the British Virgin Islands will observe and give effect to the choice
of the laws of the State of New York as the governing law of the Underwriting
Agreement, provided that, the British Virgin Islands court finds (i) that the
parties acted in good faith and without the intent to evade the laws of the
British Virgin Islands, (ii) New York is found to have a substantial
relationship to the transaction contemplated under the Underwriting Agreement,
and (iii) the provisions of the Underwriting Agreement are not found to violate
a fundamental public policy of the British Virgin Islands.
(l)
Final Judgments obtained in a New York court arising out
of or in relation to the obligations of the Company under the Underwriting
Agreement will be recognized and declared enforceable against the Company by
British Virgin Islands courts, provided that the judgment did not involve fraud,
lack of jurisdiction or lack of due process. Under British Virgin
Islands law, the properly filed foreign judgment will have the same effect and
is subject to the same procedures, defenses, and proceedings for reopening,
vacating or staying as a judgment obtained by a court in British Virgin
Islands.
III-2
