●] Shares ShengdaTech, Inc. Common Stock, $0.00001 Par Value Per Share UNDERWRITING AGREEMENT
[●]
Shares
Common
Stock, $0.00001 Par Value Per Share
[●],
2010
[●],
2010
Xxxxxx
Xxxxxxx & Co. International plc
00 Xxxxx
Xxxxxx, Xxxxxx Xxxxx
Xxxxxx,
X00 0XX
Xxxxxx
Xxxxxxx
As
Representative (as defined below) of the
several
Underwriters (as defined below) named
in
Schedule I hereto
Ladies
and Gentlemen:
ShengdaTech,
Inc., a Nevada corporation (the “Company”), proposes to issue
and sell to the several Underwriters named in Schedule I hereto (the “Underwriters”) [●] shares of
its common stock, $0.0001 par value per share (the “Firm Shares”). The
Company also proposes to issue and sell to the several Underwriters not more
than an additional [●] shares of its common stock, $0.0001 par value per share
(the “Additional
Shares”) if and to the extent that you, as the representative of the
Underwriters (the “Representative”), shall have
determined to exercise, on behalf of the Underwriters, the right to purchase
such shares of common stock granted to the Underwriters in Section 2
hereof. The Firm Shares and the Additional Shares are hereinafter
collectively referred to as the “Shares.” The shares of common
stock, $0.0001 par value per share of the Company to be outstanding after giving
effect to the sales contemplated hereby are hereinafter referred to as the
“Common
Stock.”
The
Company has filed with the Securities and Exchange Commission (the “Commission”) a registration
statement, including a prospectus, relating to the Shares. The
registration statement as amended at the time it becomes effective, including
the information (if any) deemed to be part of the registration statement at the
time of effectiveness pursuant to Rule 430A under the Securities Act of
1933, as amended (the “Securities Act”), is
hereinafter referred to as the “Registration Statement”; the
prospectus in the form first used to confirm sales of the Shares (or in the form
first made available to the Underwriters by the Company to meet requests of
purchasers pursuant to Rule 173 under the Securities Act) is hereinafter
referred to as the “Prospectus.” If the
Company has filed an abbreviated registration statement to register additional
shares of Common Stock pursuant to Rule 462(b) under the Securities Act
(the “Rule 462
Registration Statement”), then any reference herein to the term “Registration Statement” shall
be deemed to include such Rule 462 Registration Statement.
1
For
purposes of this Agreement, “free writing prospectus” has
the meaning set forth in Rule 405 under the Securities Act, “Time of Sale Prospectus” means
the preliminary prospectus together with the free writing prospectuses, if any,
each identified in Schedule II hereto, and “broadly available road show”
means a “bona fide electronic road show” as defined in Rule 433(h)(5) under the
Securities Act that has been made available without restriction to any
person. As used herein, the terms “Registration Statement,”
“preliminary prospectus,” “Time of Sale Prospectus” and “Prospectus” shall
include the documents, if any, incorporated by reference therein.
(a) The
Registration Statement has become effective; no stop order suspending the
effectiveness of the Registration Statement is in effect, and no proceedings for
such purpose are pending before or threatened by the Commission.
(b) 1.
The Registration Statement, when it became effective, did not contain and, as
amended or supplemented, if applicable, will not contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, (i) the Registration
Statement and the Prospectus comply and, as amended or supplemented, if
applicable, will comply in all material respects with the Securities Act and the
applicable rules and regulations of the Commission thereunder, (ii) the Time of
Sale Prospectus does not, and at the time of each sale of the Shares in
connection with the offering when the Prospectus is not yet available to
prospective purchasers and at the Closing Date (as defined in Section 4),
the Time of Sale Prospectus, as then amended or supplemented by the Company, if
applicable, will not, contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, (iii) each broadly
available road show, if any, when considered together with the Time of Sale
Prospectus, does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading and (iv) the
Prospectus does not contain and, as amended or supplemented, if applicable, will
not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, except that the representations and
warranties set forth in this paragraph do not apply to statements or omissions
in the Registration Statement, the Time of Sale Prospectus or the Prospectus
based upon information relating to any Underwriter furnished to the Company in
writing by such Underwriter through the Representative expressly for use
therein.
2
(c) At
the time of filing the Registration Statement and as of the date hereof, the
Company was not and is not an “ineligible issuer” in connection with the
offering pursuant to Rules 164, 405 and 433 under the Securities
Act. Any free writing prospectus that the Company is required to file
pursuant to Rule 433(d) under the Securities Act has been, or will be, filed
with the Commission in accordance with the requirements of the Securities Act
and the applicable rules and regulations of the Commission
thereunder. Each free writing prospectus that the Company has filed,
or is required to file, pursuant to Rule 433(d) under the Securities Act or that
was prepared by or on behalf of or used or referred to by the Company complies
or will comply in all material respects with the requirements of the Securities
Act and the applicable rules and regulations of the Commission
thereunder. Except for the free writing prospectuses, if any,
identified in Schedule II hereto, and electronic road shows, if any, each
furnished to the Representative before first use, the Company has not prepared,
used or referred to, and will not, without the Representative’s prior consent,
prepare, use or refer to, any free writing prospectus.
(d) The
Company has been duly incorporated, is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, has the
corporate power and authority to own its property and to conduct its business as
described in the Time of Sale Prospectus and is duly qualified to transact
business and is in good standing in each jurisdiction in which the conduct of
its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or be in
good standing would not have a material adverse effect on the Company and its
Subsidiaries (as defined below), taken as a whole. All constitutive
documents of the Company comply with the requirements of applicable laws of the
jurisdiction of its incorporation and are in full force and
effect. Complete and correct copies of all constitutive documents of
the Company and all amendments thereto have been delivered to the
Representative, no change will be made to any such constitutive documents on or
after the date of this Agreement through and including the Closing
Date.
(e) Each
of Xxxxx Xxxxx Ltd., Shandong Haize Nanomaterials Co., Ltd., Shandong Bangsheng
Chemical Co., Ltd., Shaanxi Haize Nanomaterials Co., Ltd., Zibo Jiaze
Nanomaterials Co., Ltd. and Anhui Yuanzhong Nanomaterials Co., Ltd. (each a
“Subsidiary” and
collectively called the “Subsidiaries”) has been duly
incorporated, is validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation, has the corporate power and
authority to own its property and to conduct its business as described in the
Time of Sale Prospectus and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification, except to the
extent that the failure to be so qualified or be in good standing would not have
a material adverse effect on the Company and its Subsidiaries, taken as a
whole. The Company has no subsidiaries or controlled affiliates other
than the Subsidiaries. All constitutive documents of each of the
Subsidiaries comply with the requirements of applicable laws of its jurisdiction
of incorporation and are in full force and effect. All of the equity
interests in each Subsidiary have been duly and validly authorized and issued,
are fully paid and non-assessable and are owned directly or indirectly through
Subsidiaries by the Company, free and clear of all liens, encumbrances, equities
or claims.
3
(f) This
Agreement has been duly authorized, executed and delivered by the
Company.
(g) The
authorized capital stock of the Company conforms as to legal matters to the
description thereof contained in each of the Time of Sale Prospectus and the
Prospectus.
(h) The
shares of Common Stock outstanding prior to the issuance of the Shares have been
duly authorized and are validly issued, fully paid and
non-assessable. As of the date hereof, the Company has authorized and
outstanding capitalization as set forth in the sections of the Time of Sale
Prospectus and the Prospectus under the headings “Capitalization” and
“Description of Securities” and, as of the Closing Date, the Company shall have
authorized and outstanding capitalization as set forth in the sections of the
Time of Sale Prospectus and the Prospectus under the headings “Capitalization”
and “Description of Securities.”
(i) The
Shares have been duly authorized and, when issued and delivered in accordance
with the terms of this Agreement, will be validly issued, will have been issued
in compliance with all applicable securities laws, will be fully paid and
non-assessable, and the issuance of such Shares will not be subject to any
preemptive rights, resale rights, rights of first refusal or similar rights. The
Shares, when issued and delivered against payment therefor in accordance with
the terms of this Agreement, will be free of any restriction upon the voting or
transfer thereof pursuant to the Company’s constitutive documents or any
agreement or other instrument to which the Company is a party.
(j) The
execution and delivery by the Company of, and the performance by the Company of
its obligations under, this Agreement will not contravene any provision of
applicable law or the certificate of incorporation or by-laws of the Company or
any agreement or other instrument binding upon the Company or any of its
Subsidiaries that is material to the Company and its Subsidiaries, taken as a
whole, or any judgment, order or decree of any governmental body, agency or
court having jurisdiction over the Company or any Subsidiary, and no consent,
approval, authorization or order of, or qualification with, any governmental
body or agency is required for the performance by the Company of its obligations
under this Agreement, except such as may be required by the securities or Blue
Sky laws of the various states in connection with the offer and sale of the
Shares.
4
(k) There
has not occurred any material adverse change, or any development involving a
prospective material adverse change, in the condition, financial or otherwise,
or in the earnings, business or operations of the Company and the Subsidiaries,
taken as a whole, from that set forth in the Time of Sale
Prospectus.
(l) The
Company does not have any current plans to undertake any acquisition that would
require disclosure under Rule 3-05 of Regulation S-X or any other material
acquisition. The Company has not entered into any memorandum of
understanding, letter of intent, agreement or commitment relating to any
potential acquisition.
(m) There
are no legal or governmental proceedings pending or threatened to which the
Company or any of its Subsidiaries is a party or to which any of the properties
of the Company or any of its Subsidiaries is subject 2. that would not have a
material adverse effect on the Company and its Subsidiaries, taken as a whole,
or on the power or ability of the Company to perform its obligations under this
Agreement or to consummate the transactions contemplated by the Time of Sale
Prospectus or 3. that are required to be described in the Registration Statement
or the Prospectus and are not so described; and there are no statutes,
regulations, contracts or other documents that are required to be described in
the Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement that are not described or filed as required.
(n) Each
preliminary prospectus filed as part of the registration statement as originally
filed or as part of any amendment thereto, or filed pursuant to Rule 424
under the Securities Act, complied when so filed in all material respects with
the Securities Act and the applicable rules and regulations of the Commission
thereunder.
(o) The
Company is not, and after giving effect to the offering and sale of the Shares
and the application of the proceeds thereof as described in the Time of Sale
Prospectus and the Prospectus will not be, required to register as an
“investment company” as such term is defined in the Investment Company Act of
1940, as amended.
(p) The
Company does not expect to be a passive foreign investment company for United
States federal income tax purposes for its current taxable year ending
December 31, 2010 or for the foreseeable future.
5
(q) Neither
the Company nor any of the Subsidiaries is in breach or violation of any
provision of applicable law or its respective constitutive documents, or in
default under (nor has any event occurred which, with notice, lapse of time or
both, would result in any breach or violation of, constitute a default under or
give the holder of any indebtedness (or a person acting on such holder’s behalf)
the right to require the repurchase, redemption or repayment of all or a part of
such indebtedness under) any agreement or other instrument binding upon the
Company or any of the Subsidiaries that is material to the Company and the
Subsidiaries, taken as a whole, or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the Company or any
of the Subsidiaries.
(r) The
Company and its Subsidiaries 4. are in compliance with any and all applicable
foreign, United States federal, state and local 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”), 5. have
received all permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective businesses and 6. are
in compliance with all terms and conditions of any such permit, license or
approval, except where such noncompliance with Environmental Laws, failure to
receive required permits, licenses or other approvals or failure to comply with
the terms and conditions of such permits, licenses or approvals would not,
singly or in the aggregate, have a material adverse effect on the Company and
its Subsidiaries, taken as a whole.
(s) There
are no costs or liabilities associated with Environmental Laws (including,
without limitation, any capital or operating expenditures required for clean-up,
closure of properties or compliance with Environmental Laws or any permit,
license or approval, any related constraints on operating activities and any
potential liabilities to third parties) which would, singly or in the aggregate,
have a material adverse effect on the Company and its Subsidiaries, taken as a
whole. The Company is not responsible for any costs or liabilities
(including, without limitation, any expenditures required for clean-up, land
reclamation or compliance with Environmental Laws) with respect to Shandong
Bangsheng Chemical Co., Ltd.
(t) There
are no contracts, agreements or understandings between the Company and any
person granting such person the right to require the Company to file a
registration statement under the Securities Act with respect to any securities
of the Company or to require the Company to include such securities with the
Shares registered pursuant to the Registration Statement.
6
(u) Neither
the Company nor any of its Subsidiaries or affiliates, nor any director, officer
or employee, nor, to the Company’s best knowledge, any agent or representative
of the Company or of any of its Subsidiaries or affiliates, has taken or will
take any action in furtherance of an offer, payment, promise to pay, or
authorization or approval of the payment or giving of money, property, gifts or
anything else of value, directly or indirectly, to any “government official”
(including any officer or employee of a government or government-owned or
controlled entity or of a public international organization, or any person
acting in an official capacity for or on behalf of any of the foregoing, or any
political party or party official or candidate for political office) to
influence official action or secure an improper advantage; and the Company and
its Subsidiaries and affiliates have conducted their businesses in compliance
with applicable anti-corruption laws and have instituted and maintain and will
continue to maintain policies and procedures designed to promote and achieve
compliance with such laws and with the representation and warranty contained
herein.
(v) The
operations of the Company and its Subsidiaries are and have been conducted at
all times in material compliance with all applicable financial recordkeeping and
reporting requirements, including those of the Bank Secrecy Act, as amended by
Title III of the Uniting and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT
Act), and the applicable anti-money laundering statutes of jurisdictions where
the Company and its Subsidiaries conduct business, the rules and regulations
thereunder and any related or similar rules, regulations or guidelines, issued,
administered or enforced by any governmental agency (collectively, the “Anti-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 Anti-Money Laundering Laws is pending or, to
the best knowledge of the Company, threatened.
(w) (i) The
Company represents that neither the Company nor any of its Subsidiaries, nor any
director, officer or employee, nor, to the Company’s best knowledge, any agent,
affiliate or representative of the Company or of any of its Subsidiaries, is an
individual or entity (“Person”) that is, or is owned
or controlled by a Person that is:
(A) the
subject of any sanctions administered or enforced by the U.S. Department of
Treasury’s Office of Foreign Assets Control (“OFAC”), the United Nations
Security Council (“UNSC”), the European Union
(“EU”), Her Majesty’s
Treasury (“HMT”), or
other relevant sanctions authority (collectively, “Sanctions”), nor
(B) located,
organized or resident in a country or territory that is the subject of Sanctions
(including, without limitation, Burma/Myanmar, Cuba, Iran, North Korea, Sudan
and Syria).
7
(ii) The Entity represents
and covenants that it will not, directly or indirectly, use the proceeds of the
offering, or lend, contribute or otherwise make available such proceeds to any
subsidiary, joint venture partner or other Person:
(A) to
fund or facilitate any activities or business of or with any Person or in any
country or territory that, at the time of such funding or facilitation, is the
subject of Sanctions; or
(B) in
any other manner that will result in a violation of Sanctions by any Person
(including any Person participating in the offering, whether as underwriter,
advisor, investor or otherwise).
(iii) The Entity represents
and covenants that for the past five years, it has not knowingly engaged in, is
not now knowingly engaged in, and will not engage in, any dealings or
transactions with any Person, or in any country or territory, that at the time
of the dealing or transaction is or was the subject of Sanctions.
(x) Subsequent
to the respective dates as of which information is given in each of the
Registration Statement, the Time of Sale Prospectus and the Prospectus, (i) the
Company and its Subsidiaries have not incurred any material liability or
obligation, direct or contingent, nor entered into any material transaction;
(ii) the Company has not purchased any of its outstanding capital stock, nor
declared, paid or otherwise made any dividend or distribution of any kind on its
capital stock; and (iii) there has not been any material change in the capital
stock, short-term debt or long-term debt of the Company and its
Subsidiaries.
(y) The
Company and its 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 which is material to the business of the Company and its Subsidiaries, in
each case free and clear of all liens, encumbrances and defects except such as
are described in the Time of Sale Prospectus or such as do not materially affect
the value of such property and do not interfere with the use made and proposed
to be made of such property by the Company and its Subsidiaries; and any real
property and buildings held under lease by the Company and its Subsidiaries are
held by them under valid, subsisting and enforceable leases with such exceptions
as are not material and do not interfere with the use made and proposed to be
made of such property and buildings by the Company and its Subsidiaries, in each
case except as described in the Time of Sale Prospectus.
(z) The
Company and its Subsidiaries own or possess, or can acquire on reasonable terms,
all material patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service marks and
trade names currently employed by them in connection with the business now
operated by them, and neither the Company nor any of its Subsidiaries has
received any notice of infringement of or conflict with asserted rights of
others with respect to any of the foregoing which, singly or in the aggregate,
if the subject of an unfavorable decision, ruling or finding, would have a
material adverse effect on the Company and its Subsidiaries, taken as a
whole.
8
(aa) Each
of the Company and the Subsidiaries has full power, authority and legal right to
enter into, execute, assume, deliver and perform its obligations under each of
the contracts and agreements referred to or described in the Time of Sale
Prospectus and the Prospectus or filed as an exhibit to the Registration
Statement to which it is a party (the “Disclosed Contracts”), and has
authorized, executed and delivered each of the Disclosed Contracts, and,
assuming due authorization, execution and delivery by the other parties thereto,
the Disclosed Contracts constitute valid, legal and binding obligations of the
Company or such Subsidiary, enforceable against it in accordance with the terms
thereof, subject, in each case as to enforceability, to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors’ rights and to general equity
principles. Neither the Company nor any of the Subsidiaries has sent or received
any communication regarding termination of, or intent not to renew, any of the
Disclosed Contracts, and no such termination or non-renewal has been threatened
by the Company or any of the Subsidiaries or, to the best knowledge of the
Company after due inquiry, any other party to any such contract or
agreement.
(bb) No
material labor dispute with the employees of the Company or any of its
Subsidiaries exists, to the knowledge of the Company, is imminent; and the
Company is not aware of any existing, threatened or imminent labor disturbance
by the employees of any of its principal suppliers, manufacturers or contractors
that could have a material adverse effect on the Company and its Subsidiaries,
taken as a whole.
(cc) The
Company and each of its Subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as
are prudent and customary in the businesses in which they are engaged; neither
the Company nor any of its Subsidiaries has been refused any insurance coverage
sought or applied for; and neither the Company nor any of its Subsidiaries has
any reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that
would not have a material adverse effect on the Company and its Subsidiaries,
taken as a whole.
9
(dd) The
Company and its Subsidiaries possess all certificates, authorizations and
permits issued by the appropriate regulatory authorities necessary to conduct
their respective businesses, and neither the Company nor any of its Subsidiaries
has received any notice of proceedings relating to the revocation or
modification of any such certificate, authorization or permit which, singly or
in the aggregate, if the subject of an unfavorable decision, ruling or finding,
would have a material adverse effect on the Company and its Subsidiaries, taken
as a whole.
(ee) Each
of the Company and its Subsidiaries has filed all U.S. federal, state, local and
foreign tax returns required to be filed through the date of this Agreement or
have requested extensions thereof (except where the failure to file would not,
individually or in the aggregate, have a material adverse effect) and have paid
all taxes required to be paid thereon (except for cases in which the failure to
file or pay would not have a material adverse effect, or, except as currently
being contested in good faith and for which reserves required by U.S. GAAP have
been created in the financial statements of the Company), and no tax deficiency
has been determined adversely to the Company or any of its Subsidiaries which
has had (nor does the Company nor any of its Subsidiaries have any notice or
knowledge of any tax deficiency which could reasonably be expected to be
determined adversely to the Company or its Subsidiaries and which could
reasonably be expected to have) a material adverse effect. All local and
national governmental tax holidays, exemptions, waivers, financial subsidies,
and other local and national tax relief, concessions and preferential treatment
enjoyed by the Company or any of the Subsidiaries in the People’s Republic of
China (the “PRC”) as
described in the Time of Sale Prospectus and the Prospectus are valid, binding
and enforceable and do not violate any laws, regulations, rules, orders,
decrees, guidelines, judicial interpretations, notices or other legislation of
the PRC.
(ff) Except
as described in the Time of Sale Prospectus, no Subsidiary is currently
prohibited, directly or indirectly, from paying any dividends to the Company,
from making any other distribution on such Subsidiary’s capital stock, 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 of the Company.
(gg) KPMG,
whose report on the consolidated financial statements of the Company and the
Subsidiaries is included in the Registration Statement, the Time of Sale
Prospectus and the Prospectus, are independent registered public accountants as
required by the Securities Act and by the rules of the Public Company Accounting
Oversight Board. Xxxxxx, Xxxxxxx & Xxxxxxx, P.C., whose report on
the consolidated financial statements of the Company and the Subsidiaries is
included in the Registration Statement, the Time of Sale Prospectus and the
Prospectus, are independent registered public accountants as required by the
Securities Act and by the rules of the Public Company Accounting Oversight
Board.
10
(hh) The
financial statements included in the Registration Statement, the Time of Sale
Prospectus and the Prospectus, together with the related notes and schedules
thereto, present fairly the consolidated financial position of the Company and
the Subsidiaries as of the dates indicated and the consolidated results of
operations, cash flows and changes in shareholders’ equity of the Company for
the periods specified and have been prepared in compliance as to form in all
material respects with the applicable accounting requirements of the Securities
Act and the related rules and regulations adopted by the Commission and in
conformity with United States GAAP applied on a consistent basis during the
periods involved; the other financial and statistical data contained in the
Registration Statement, the Time of Sale Prospectus and the Prospectus are
accurately and fairly presented and prepared on a basis consistent with the
financial statements and books and records of the Company; there are no
financial statements (historical or pro forma) that are required to be included
in the Registration Statement, the Time of Sale Prospectus or the Prospectus
that are not included as required; and the Company and the Subsidiaries do not
have any material liabilities or obligations, direct or contingent (including
any off-balance sheet obligations) not described in the Registration Statement,
the Time of Sale Prospectus and the Prospectus.
(ii) The
section entitled “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” in the Time of Sale Prospectus and the Prospectus
accurately and fully describes (i) accounting policies that the Company
believes are the most important in the portrayal of the Company’s financial
condition and results of operations and that require management’s most
difficult, subjective or complex judgments, (ii) judgments and
uncertainties affecting the application of critical accounting policies and
(iii) the likelihood that materially different amounts would be reported
under different conditions or using different assumptions and an explanation
thereof. The Company’s directors and management have reviewed and agreed with
the selection, application and disclosure of the Company’s critical accounting
policies as described in the Time of Sale Prospectus and the Prospectus and have
consulted with its independent accountants with regards to such
disclosure.
(jj) The
Company has established and maintains disclosure controls and procedures (as
such term is defined in Rule 13a-15 under the Exchange Act), which: (i) are
designed to ensure that material information relating to the Company is made
known to the Company’s principal executive officer and its principal financial
officer by others within the Company, particularly during the periods in which
the periodic reports required under the Exchange Act are required to be
prepared; (ii) provide for the periodic evaluation of the effectiveness of such
disclosure controls and procedures at the end of the periods in which the
periodic reports are required to be prepared; and (iii) are effective in all
material respects to perform the functions for which they were
established.
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(kk) Except
as described in the Time of Sale Prospectus, based on the evaluation of its
disclosure controls and procedures, the Company is not aware of (i) any material
weakness or significant deficiency in the design or operation of internal
controls which could adversely affect the Company’s ability to record, process,
summarize and report financial data or any material weaknesses in internal
controls; (ii) any matter which could result in a restatement of the
Company’s financial statements for any annual or interim period during the
current fiscal year or prior fiscal years; or (iii) any fraud, whether or not
material, that involves management or other employees who have a role in the
Company’s internal controls.
(ll) 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 directors or officers of the Company or any
of their respective family members. The Company has not, in violation of
Xxxxxxxx-Xxxxx Act of 2002 (the “Xxxxxxxx-Xxxxx Act”), directly or indirectly,
including through a subsidiary, 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 officer of the Company and there is and
has been no failure on the part of the Company or any of its directors or
officers, in their capacities as such, to comply with any other provision of
Xxxxxxxx-Xxxxx.
(mm) The
Auditor has not been engaged by the Company to perform any “prohibited
activities” (as defined in Section 10A of the Exchange Act).
(nn) Except
as described in the Time of Sale Prospectus, there are no material off-balance
sheet arrangements (as defined in Item 303 of Regulation S-K) that have or are
reasonably likely to have a Material Adverse Effect.
(oo) The
Company is actively taking steps to ensure that it will be in compliance with
all other applicable provisions of the Xxxxxxxx-Xxxxx Act, any related rules and
regulations promulgated by the Commission and corporate governance requirements
under applicable NASDAQ regulations upon the effectiveness of such provisions
and has no reason to believe that it will not be able to comply with such
provisions at the time of effectiveness. There is and has been no
failure on the part of the Company or any of its directors or officers, in their
capacities as such, to comply with any provision of the Xxxxxxxx-Xxxxx Act,
including, without limitation, Section 402 related to loans and Sections 302 and
906 related to certifications.
12
(pp) The
Time of Sale Prospectus and the Prospectus 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 be materially affect its liquidity and are reasonably likely to
occur.
(qq) Each
of the Company and its Subsidiaries maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management’s general or specific authorizations;
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability; (iii) access to assets is permitted only in
accordance with management’s general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences. Except as described in the Time of Sale Prospectus,
since the end of the Company’s most recent audited fiscal year, there has been
(i) no material weakness in the Company’s internal control over financial
reporting (whether or not remediated) and (ii) 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.
(rr) There
are no material relationships or transactions between the Company or any of the
Subsidiaries on one hand and their respective 10% or greater shareholders,
affiliates, directors or officers or any affiliates or members of the immediate
families of such persons, on the other hand, that are not disclosed in the Time
of Sale Prospectus.
(ss) The
Company has not sold, issued or distributed any shares of Common Stock during
the six-month period preceding the date hereof, including any sales pursuant to
Rule 144A under, or Regulation D or S of, the Securities Act, other
than shares issued pursuant to employee benefit plans, qualified stock option
plans or other employee compensation plans or pursuant to outstanding options,
rights or warrants.
(tt) Any
third-party statistical and market-related data included the Registration
Statement, the Time of Sale Prospectus and the Prospectus are based on or
derived from sources that the Company believes to be reliable and
accurate.
(uu) Each
“forward-looking statement” (within the meaning of Section 27A of the Act or
Section 21E of the Exchange Act) contained in the Registration
Statement, Time of Sale Prospectus and the Prospectus and each free writing
prospectus, if any, has been made or reaffirmed with a reasonable basis and in
good faith.
13
(vv) The
statements in the Time of Sale Prospectus and the Prospectus under the
heading “Description of Securities” insofar as they purport to constitute a
summary of the terms of the Common Stock, and under the headings “Risk Factors,”
“Shares Eligible For Future Sale,” “Taxation” and “Underwriting” insofar as such
statements summarize legal matters, agreements, documents or proceedings
discussed therein, are accurate, complete and fair summaries of such matters
described therein in all material respects.
(ww) The
Shares have been duly authorized for listing on the NASDAQ Global
Market.
(xx) The
Company has taken no action designed to, or likely to have the effect of,
terminating the registration of the Common Stock under the Exchange Act or the
listing of the Common Stock on the NASDAQ Global Market, nor has the Company
received any notification that the Commission or the NASDAQ Global Market is
contemplating terminating such registration or listing.
(yy) 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 this offering.
(zz) Neither
the Company nor any of the Subsidiaries nor any of their respective directors,
officers, affiliates or controlling persons has taken, directly or indirectly,
any action designed, or which has constituted or might reasonably be expected to
cause or result in the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the
Shares.
(aaa) The
Registration Statement, any preliminary prospectus, the Prospectus and
any free writing prospectus and the filing of the Registration
Statement, any preliminary prospectus, the Prospectus and any
free writing prospectus with the Commission have been duly authorized
by and on behalf of the Company, and the Registration Statement has been duly
executed pursuant to such authorization by and on behalf of the
Company.
(bbb) No
transaction, stamp, capital or other issuance, registration, transaction,
transfer or withholding taxes or duties are payable in the PRC, the British
Virgin Islands or the State of Nevada by or on behalf of the Underwriters to any
PRC, British Virgin Islands or the State of Nevada taxing authority in
connection with (i) the issuance, sale and delivery of the Shares by the
Company, (ii) the purchase from the Company of the Shares by the
Underwriters, (C) the execution and delivery of this
Agreement.
(ccc) Each
of the Company and its Subsidiaries has taken all necessary steps to comply
with, and to ensure compliance by all of the Company’s direct or indirect
shareholders and option holders who are PRC residents with any applicable rules
and regulations of the State Administration of Foreign Exchange of the PRC (the
“SAFE Rules and
Regulations”), including, without limitation, requiring each shareholder
and option holder that is, or is directly or indirectly owned or controlled by,
a PRC resident to complete any registration and other procedures required under
applicable SAFE Rules and Regulations.
14
(ddd) (i)
The Company is aware of, and has been advised as to, the content of the Rules on
Mergers and Acquisitions of Domestic Enterprises by Foreign Investors jointly
promulgated on August 8, 2006 by the Ministry of Commerce, the State Assets
Supervision and Administration Commission, the State Administration of Taxation,
the State Administration of Industry and Commerce, the China Securities
Regulatory Commission (“CSRC”) and the State
Administration of Foreign Exchange of the PRC (the “M&A Rules”), in particular
the relevant provisions thereof that purport to require offshore special purpose
vehicles controlled directly or indirectly by PRC-incorporated companies or PRC
residents and established for the purpose of obtaining a stock exchange listing
outside of the PRC to obtain the approval of the CSRC prior to the listing and
trading of their securities on any stock exchange located outside of the PRC.
The Company has received legal advice specifically with respect to the M&A
Rules from its PRC counsel and the Company understands such legal advice. In
addition, the Company has communicated such legal advice in full to each of its
directors that signed the Registration Statement and each such director has
confirmed that he or she understands such legal advice.
(eee) The
issuance and sale of the Shares and the consummation of the transactions
contemplated by this Agreement, the Registration Statement, the Time of Sale
Prospectus and the Prospectus are not and will not be, as of the date hereof and
on the Closing Date, affected by the M&A Rules or any official
clarifications, guidance, interpretations or implementation rules in connection
with or related to the M&A Rules, including the guidance and notices issued
by the CSRC on September 8 and September 21, 2006 (together with the
M&A Rules, the “M&A
Rules and Related Clarifications”).
(fff) The
M&A Rules and Related Clarifications do not require the Company to obtain
the approval of the CSRC prior to the issuance and sale of the Shares, or the
consummation of the transactions contemplated by this Agreement, the
Registration Statement, the Time of Sale Prospectus and the
Prospectus.
(ggg) The
statements set forth in the Time of Sale Prospectus and the Prospectus under the
heading “Risk Factors—Risks Related to This Offering—If the China Securities
Regulatory Commission, or CSRC, or another PRC regulatory agency determines that
its approval was required in connection with this offering, we may become
subject to penalties.” are fair and accurate summaries of the matters described
therein, and nothing has been omitted from such summaries that would make them
misleading in any material respect.
15
(hhh) The
Registration Statement, the Prospectus, the Time of Sale Prospectus and any
preliminary prospectus comply, and any amendments or supplements thereto will
comply, with any applicable laws or regulations of foreign jurisdictions in
which the Prospectus, the Time of Sale Prospectus or any preliminary prospectus,
as amended or supplemented, if applicable, are distributed.
(iii) The
choice of the laws of the State of New York as the governing law of this
Agreement is a valid choice of law under the laws of the State of Nevada, the
British Virgin Islands and the PRC and will be
honored by courts in the State of Nevada, the British Virgin Islands and the
PRC. The Company has the power to submit, and pursuant to Section 14 of
this Agreement, has legally, validly, effectively and irrevocably submitted, to
the personal jurisdiction of each New York Court (as defined in
Section 14), and the Company has the power to designate, appoint and
authorize, and pursuant to Section 14 of this Agreement, has legally,
validly, effectively and irrevocably designated, appointed and authorized, the
Authorized Agent (as defined in Section 14 hereof) for service of process,
in each case, in any action arising out of or relating to this Agreement or the
transactions contemplated hereby, and service of process effected on such
Authorized Agent will be effective to confer valid personal jurisdiction over
the Company as provided in Section 14 hereof.
(jjj) None
of the Company, any of the Subsidiaries or any of their respective properties,
assets or revenues has any right of immunity, under the laws of the State of
Nevada, the British Virgin Islands the PRC or the State of New York, from any
legal action, suit or proceeding, the giving of any relief in any such legal
action, suit or proceeding, set-off or counterclaim, the jurisdiction of any the
State of Nevada, the British Virgin Islands, PRC, New York or United States
federal court, service of process, attachment upon or prior to judgment, or
attachment in aid of execution of judgment, or execution of a judgment, or other
legal process or proceeding for the giving of any relief or for the enforcement
of a judgment, in any such court, with respect to its obligations, liabilities
or any other matter under or arising out of or in connection with this
Agreement; 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 the
Subsidiaries waives or will waive such right to the extent permitted by law and
has consented to such relief and enforcement as provided in Section 14 of
this Agreement.
(kkk) Except
as described in the Time of Sale Prospectus, any final judgment for a fixed sum
of money rendered by a New York Court having jurisdiction under its own domestic
laws in respect of any suit, action or proceeding against the Company based upon
this Agreement would be recognized and enforced by (A) the State of Nevada
courts without re-examining the merits of the case under the common law doctrine
of obligation; and (B) PRC courts, subject to compliance with relevant
civil procedural requirements under the PRC Civil Procedures Law. It is not
necessary that this Agreement, the Time of Sale Prospectus, the Prospectus or
any other document be filed or recorded with any court or other authority in the
State of Nevada, the British Virgin Islands or the PRC.
16
On the
basis of the representations and warranties contained in this Agreement, and
subject to its terms and conditions, the Company agrees to sell to the
Underwriters the Additional Shares, and the Underwriters shall have the right to
purchase, severally and not jointly, up to [●] Additional Shares at the Purchase
Price, provided, however, that the amount paid by the Underwriters for any
Additional Shares shall be reduced by an amount per share equal to any dividends
declared by the Company and payable on the Firm Shares but not payable on such
Additional Shares. The Representative may exercise this right on
behalf of the Underwriters in whole or from time to time in part by giving
written notice not later than 30 days after the date of this
Agreement. Any exercise notice shall specify the number of Additional
Shares to be purchased by the Underwriters and the date on which such shares are
to be purchased. Each purchase date must be at least one business day
after the written notice is given and may not be earlier than the closing date
for the Firm Shares nor later than ten business days after the date of such
notice. Additional Shares may be purchased as provided in
Section 4 hereof solely for the purpose of covering over-allotments made in
connection with the offering of the Firm Shares. On each day, if any,
that Additional Shares are to be purchased (an “Option Closing Date”), each
Underwriter agrees, severally and not jointly, to purchase the number of
Additional Shares (subject to such adjustments to eliminate fractional shares as
the Representative may determine) that bears the same proportion to the total
number of Additional Shares to be purchased on such Option Closing Date as the
number of Firm Shares set forth in Schedule I hereto opposite the name of
such Underwriter bears to the total number of Firm Shares.
17
4. Payment and
Delivery. Payment for the Firm Shares shall be made to the
Company in Federal or other funds immediately available in New York City against
delivery of such Firm Shares for the respective accounts of the several
Underwriters at 10:00 a.m., New York City time, on [●], 2010, or at such other
time on the same or such other date, not later than [●], 2010, as shall be
designated in writing by the Representative. The time and date of
such payment are hereinafter referred to as the “Closing Date.”
Payment
for any Additional Shares shall be made to the Company in Federal or other funds
immediately available in New York City against delivery of such Additional
Shares for the respective accounts of the several Underwriters at 10:00 a.m.,
New York City time, on the date specified in the corresponding notice described
in Section 2 or at such other time on the same or on such other date, in
any event not later than [●], 2010, as shall be designated in writing by the
Representative.
The Firm
Shares and Additional Shares shall be registered in such names and in such
denominations as the Representative shall request in writing not later than one
full business day prior to the Closing Date or the applicable Option Closing
Date, as the case may be. The Firm Shares and Additional Shares shall
be delivered to the Representative on the Closing Date or an Option Closing
Date, as the case may be, for the respective accounts of the several
Underwriters, with any transfer taxes payable in connection with the transfer of
the Shares to the Underwriters duly paid, against payment of the Purchase Price
therefor.
5. Conditions to the Underwriters’
Obligations. The obligations of the Company to sell the Shares
to the Underwriters and the several obligations of the Underwriters to purchase
and pay for the Shares on the Closing Date are subject to the condition that the
Registration Statement shall have become effective not later than [●] (New York
City time) on the date hereof.
The
several obligations of the Underwriters are subject to the following further
conditions:
(a) Subsequent
to the execution and delivery of this Agreement and prior to the Closing
Date:
(i) there
shall not have occurred any downgrading, nor shall any notice have been given of
any intended or potential downgrading or of any review for a possible change
that does not indicate the direction of the possible change, in the rating
accorded any of the securities of the Company or any of its subsidiaries by any
“nationally recognized statistical rating organization,” as such term is defined
for purposes of Rule 436(g)(2) under the Securities Act; and
18
(ii) there
shall not have occurred any change, or any development involving a prospective
change, in the condition, financial or otherwise, or in the earnings, business
or operations of the Company and its Subsidiaries, taken as a whole, from that
set forth in the Time of Sale Prospectus as of the date of this Agreement that,
in the judgment of the Representative, is material and adverse and that makes
it, in the judgment of the Representative, impracticable to market the Shares on
the terms and in the manner contemplated in the Time of Sale
Prospectus.
(b) Prior
to and on the Closing Date, no stop order suspending the effectiveness of the
Registration Statement shall have been issued under the Securities Act and no
proceedings for that purpose shall have been instituted or shall be contemplated
by the Commission.
(c) The
representations and warranties of the Company and the Controlling Shareholder
contained in this Agreement and any certificates delivered pursuant to this
Agreement shall be true and correct as of the Closing Date, and each of the
Company and the Controlling Shareholder shall have complied with all of the
agreements, performed all of its obligations and satisfied all of the conditions
hereunder on its part that are required to be complied with, performed or
satisfied on or before the Closing Date.
(d) The
Underwriters shall have received on the Closing Date a certificate, dated the
Closing Date and signed by the Chief Executive Officer and the Chief Financial
Officer of the Company, to the effect set forth in Section 5(a)(i) above
and to the effect that the representations and warranties of the Company and the
Controlling Shareholder contained in this Agreement are true and correct as of
the Closing Date and that the Company has complied with all of the agreements
and satisfied all of the conditions on its part to be performed or satisfied
hereunder on or before the Closing Date.
The
officer signing and delivering such certificate may rely upon the best of his or
her knowledge as to proceedings threatened.
(e) The
Underwriters shall have received on the Closing Date a certificate, dated the
Closing Date and signed by the Chief Financial Officer of the Company with
respect to certain operating data contained in the Registration Statement, the
Time of Sale Prospectus and the Prospectus in form and substance satisfactory to
the Underwriters.
19
(f) The
Underwriters shall have received on the Closing Date an opinion of Cadwalader,
Xxxxxxxxxx & Xxxx LLP, United States counsel for the Company, dated the
Closing Date, substantially in the form of Exhibit A hereto.
(g) The
Underwriters shall have received on the Closing Date an opinion of Xxxxxx Xxxxxx
& Xxxxxxx, the State of Nevada counsel for the Company, dated the Closing
Date, substantially in the form of Exhibit B hereto.
(h) The
Underwriters shall have received on the Closing Date an opinion of Xxxxxx &
Calder, the British Virgin Islands counsel for the Company, dated the Closing
Date, substantially in the form of Exhibit C hereto.
(i) The
Underwriters shall have received on the Closing Date an opinion of C&I
Partners, PRC counsel for the Company, dated the Closing Date, substantially in
the form of Exhibit D hereto.
The
opinions described in Sections 5(f) through 5(i) above shall be rendered to
the Underwriters at the request of the Company and shall so state
therein.
(j) The
Underwriters shall have received on the Closing Date an opinion of Shearman
& Sterling LLP, United States counsel for the Underwriters, dated the
Closing Date, in the form and substance satisfactory to the
Representative.
(k) The
Underwriters shall have received on the Closing Date an opinion of King &
Wood, PRC counsel for the Underwriters, dated the Closing Date, in the form and
substance satisfactory to the Representative
(l) The
Underwriters shall have received, on each of the date hereof and the Closing
Date, a letter dated the date hereof or the Closing Date, as the case may be, in
form and substance satisfactory to the Underwriters, from KPMG and Xxxxxx,
Xxxxxxx & Xxxxxxx, P.C., independent public accountants, containing
statements and information of the type ordinarily included in accountants’
“comfort letters” to underwriters with respect to the financial statements and
certain financial information contained in the Registration Statement, the Time
of Sale Prospectus and the Prospectus; provided that the letter
delivered by KPMG on the Closing Date shall use a “cut-off date” not earlier
than the date hereof.
(m) The
“lock-up” agreements, each substantially in the form of Exhibit E hereto,
between the Representative and certain shareholders, and officers and directors
of the Company relating to sales and certain other dispositions of shares of
Common Stock or certain other securities, delivered to the Representative on or
before the date hereof, shall be in full force and effect on the Closing
Date.
20
(n) The
FINRA shall not have raised any objection with respect to the fairness or
reasonableness of the underwriting, or other arrangements of the transactions,
contemplated hereby.
(o) The
Company shall have furnished to the Representative such other documents and
certificates as to the accuracy and completeness of any statement in the
Registration Statement, the Time of Sale Prospectus and the Prospectus as of the
Closing Date, as the Representative may reasonably request.
The
several obligations of the Underwriters to purchase Additional Shares hereunder
are subject to the delivery to the Representative on the applicable Option
Closing Date of such documents as the Representative may reasonably request with
respect to the good standing of the Company, the due authorization and issuance
of the Additional Shares to be sold on such Option Closing Date and other
matters related to the issuance of such Additional Shares.
(a) To
file the Prospectus with the Commission within the time periods specified by
Rule 424(b) and Rule 430A under the Securities Act.
(b) To
furnish to the Representative, without charge, [four] signed copies of the
Registration Statement (including exhibits thereto) and for delivery to each
other Underwriter a conformed copy of the Registration Statement (without
exhibits thereto) and to furnish to the Representative in New York City, without
charge, prior to [10:00 a.m.] New York City time on the business day next
succeeding the date of this Agreement and during the period mentioned in
Section 6(f) or 6(g) below, as many copies of the Time of Sale Prospectus,
the Prospectus and any supplements and amendments thereto or to the Registration
Statement as the Representative may reasonably request.
(c) Before
amending or supplementing the Registration Statement, the Time of Sale
Prospectus or the Prospectus, to furnish to the Representative a copy of each
such proposed amendment or supplement and not to file any such proposed
amendment or supplement to which the Representative reasonably objects, and to
file with the Commission within the applicable period specified in
Rule 424(b) under the Securities Act any prospectus required to be filed
pursuant to such Rule.
(d) To
furnish to the Representative a copy of each proposed free writing prospectus to
be prepared by or on behalf of, used by, or referred to by the Company and not
to use or refer to any proposed free writing prospectus to which the
Representative reasonably objects.
21
(e) Not
to take any action that would result in an Underwriter or the Company being
required to file with the Commission pursuant to Rule 433(d) under the
Securities Act a free writing prospectus prepared by or on behalf of the
Underwriter that the Underwriter otherwise would not have been required to file
thereunder.
(f) If
the Time of Sale Prospectus is being used to solicit offers to buy the Shares at
a time when the Prospectus is not yet available to prospective purchasers and
any event shall occur or condition exist as a result of which it is necessary to
amend or supplement the Time of Sale Prospectus in order to make the statements
therein, in the light of the circumstances, not misleading, or if any event
shall occur or condition exist as a result of which the Time of Sale Prospectus
conflicts with the information contained in the Registration Statement then on
file, or if, in the opinion of counsel for the Underwriters, it is necessary to
amend or supplement the Time of Sale Prospectus to comply with applicable law,
forthwith to prepare, file with the Commission and furnish, at its own expense,
to the Underwriters and to any dealer upon request, either amendments or
supplements to the Time of Sale Prospectus so that the statements in the Time of
Sale Prospectus as so amended or supplemented will not, in the light of the
circumstances when the Time of Sale Prospectus is delivered to a prospective
purchaser, be misleading or so that the Time of Sale Prospectus, as amended or
supplemented, will no longer conflict with the Registration Statement, or so
that the Time of Sale Prospectus, as amended or supplemented, will comply with
applicable law.
(g) If,
during such period after the first date of the public offering of the Shares as
in the opinion of counsel for the Underwriters the Prospectus (or in lieu
thereof the notice referred to in Rule 173(a) of the Securities Act) is required
by law to be delivered in connection with sales by an Underwriter or dealer, any
event shall occur or condition exist as a result of which it is necessary to
amend or supplement the Prospectus in order to make the statements therein, in
the light of the circumstances when the Prospectus (or in lieu thereof the
notice referred to in Rule 173(a) of the Securities Act) is delivered to a
purchaser, not misleading, or if, in the opinion of counsel for the
Underwriters, it is necessary to amend or supplement the Prospectus to comply
with applicable law, forthwith to prepare, file with the Commission and furnish,
at its own expense, to the Underwriters and to the dealers (whose names and
addresses the Representative will furnish to the Company) to which Shares may
have been sold by the Representative on behalf of the Underwriters and to any
other dealers upon request, either amendments or supplements to the Prospectus
so that the statements in the Prospectus as so amended or supplemented will not,
in the light of the circumstances when the Prospectus (or in lieu thereof the
notice referred to in Rule 173(a) of the Securities Act) is delivered to a
purchaser, be misleading or so that the Prospectus, as amended or supplemented,
will comply with applicable law.
22
(h) To
endeavor to qualify the Shares for offer and sale under the securities or Blue
Sky laws of such jurisdictions as the Representative shall reasonably
request.
(i) To
advise the Representative promptly and confirming such advice in writing, of any
request by the Commission for amendments or supplements to the Registration
Statement, the Time of Sale Prospectus, Prospectus or free writing prospectus or
for additional information with respect thereto, or of notice of institution of
proceedings for, or the entry of a stop order, suspending the effectiveness of
the Registration Statement and, if the Commission should enter a stop order
suspending the effectiveness of the Registration Statement, to use its best
efforts to obtain the lifting or removal of such order as soon as
possible.
(j) (i) To
make generally available to the Company’s security holders and to the
Representative as soon as practicable an earning statement covering a period of
at least twelve months beginning with the first fiscal quarter of the Company
occurring after the date of this Agreement which shall satisfy the provisions of
Section 11(a) of the Securities Act and the rules and regulations of the
Commission thereunder.
(ii) During
the period when the Prospectus is required to be delivered under the Securities
Act, to file all documents required to be filed with the Commission pursuant to
the Exchange Act within the time periods required by the Exchange Act and the
rules and regulations of the Commission thereunder; during the five-year period
after the date of this Agreement, to furnish to the Representative and, upon
request, to each of the other Underwriters, as soon as practicable after the end
of each fiscal year, a copy of its annual report to shareholders for such year;
and to furnish to the Representative (i) as soon as available, a copy of
each report of the Company filed with or furnished to the Commission under the
Exchange Act or mailed to shareholders, and (ii) from time to time, such
other information concerning the Company as the Representative may reasonably
request. However, so long as the Company is subject to the reporting
requirements of either Section 13 or Section 15(d) of the Exchange Act
and is timely filing reports with the Commission on its XXXXX reporting system,
it is not required to furnish such reports or statements filed through XXXXX to
the Underwriters.
(iii) To
apply the net proceeds to the Company from the sale of the Shares in the manner
set forth under the heading “Use of Proceeds” in the Time of Sale Prospectus and
the Prospectus and to file such reports with the Commission with respect to the
sale of the Shares and the application of the proceeds therefrom as may be
required by Rule 463 under the Securities Act; not to invest, or otherwise use
the proceeds received by the Company from its sale of the Shares in such a
manner (i) as would require any of the Company and its Subsidiaries to register
as an investment company under the 1940 Act, and (ii) that would result in the
Company being not in compliance with any applicable laws, rules and regulations
of the State Administration of Foreign Exchange of the PRC.
23
(iv) Not
to, and to cause the Subsidiaries not to, take, directly or indirectly, any
action designed to or that would constitute or that might reasonably be expected
to cause or result in the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the
Shares.
(v) The
Company will indemnify and hold harmless the Underwriters against any
documentary, stamp or similar issue tax, including any interest and penalties,
on the creation, issue and sale of the Shares to the Underwriters and on the
execution and delivery of this Agreement. All payments to be made by
the Company hereunder shall be made without withholding or deduction for or on
account of any present or future taxes, duties or governmental charges
whatsoever unless the Company is compelled by law to deduct or withhold such
taxes, duties or charges. In that event, the Company shall pay such
additional amounts as may be necessary in order that the net amounts received
after such withholding or deduction shall equal the amounts that would have been
received if no withholding or deduction had been made.
(vi) To
comply with the SAFE Rules and Regulations, and to use its best efforts to cause
its shareholders that are, or that are directly or indirectly owned or
controlled by, Chinese residents or Chinese citizens, to comply with the SAFE
Rules and Regulations applicable to them, including, without limitation,
requesting each such shareholder to complete any registration and other
procedures required under applicable SAFE Rules and Regulations.
24
(k) Whether
or not the transactions contemplated in this Agreement are consummated or this
Agreement is terminated, the Company agrees to pay or cause to be paid all
expenses incident to the performance of its obligations under this Agreement,
including: (i) the fees, disbursements and expenses of the Company’s counsel and
the Company’s accountants in connection with the registration and delivery of
the Shares under the Securities Act and all other fees or expenses in connection
with the preparation and filing of the Registration Statement, any preliminary
prospectus, the Time of Sale Prospectus, the Prospectus, any free writing
prospectus prepared by or on behalf of, used by, or referred to by the Company
and amendments and supplements to any of the foregoing, including all printing
costs associated therewith, and the mailing and delivering of copies thereof to
the Underwriters and dealers, in the quantities hereinabove specified, (ii) all
costs and expenses related to the transfer and delivery of the Shares to the
Underwriters, including any transfer or other taxes payable thereon, (iii) the
cost of printing or producing any Blue Sky or Legal Investment memorandum in
connection with the offer and sale of the Shares under state securities laws and
all expenses in connection with the qualification of the Shares for offer and
sale under state securities laws as provided in Section 6(h) hereof,
including filing fees and the reasonable fees and disbursements of counsel for
the Underwriters in connection with such qualification and in connection with
the Blue Sky or Legal Investment memorandum, (iv) all filing fees and the
reasonable fees and disbursements of counsel to the Underwriters incurred in
connection with the review and qualification of the offering of the Shares by
the FINRA, (v) the cost of printing certificates representing the Shares, (vi)
the costs and charges of any transfer agent or registrar, (vii) the costs and
expenses of the Company relating to investor presentations on any “road show”
undertaken in connection with the marketing of the offering of the Shares,
including, without limitation, expenses associated with the preparation or
dissemination of any electronic road show, expenses associated with the
production of road show slides and graphics, fees and expenses of any
consultants engaged in connection with the road show presentations with the
prior approval of the Company, travel and lodging expenses of the
representatives and officers of the Company and any such consultants, and the
cost of any aircraft chartered in connection with the road show, (viii) the
document production charges and expenses associated with printing this Agreement
and such other documents as may be required in connection with the offering,
issuance, sale, purchase and delivery of the Shares and (ix) all other costs and
expenses incident to the performance of the obligations of the Company hereunder
for which provision is not otherwise made in this Section. It is
understood, however, that except as provided in this Section, Section 8
entitled “Indemnity and Contribution” and the last paragraph of Section 10
below, the Underwriters will pay all of their costs and expenses, including fees
and disbursements of their counsel, stock transfer taxes payable on resale of
any of the Shares by them and any advertising expenses connected with any offers
they may make. [To be
discussed]
(l) The
Company also covenants with each Underwriter that, without the prior written
consent of the Representative on behalf of the Underwriters, it will not, during
the period ending 90 days after the date of the Prospectus, (1) offer,
pledge, 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, lend, or otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or (2) enter into any swap or other
arrangement that transfers to another, in whole or in part, any of the economic
consequences of ownership of the Common Stock, whether any such transaction
described in clause (1) or (2) above is to be settled by delivery of Common
Stock or such other securities, in cash or otherwise or (3) file any
registration statement with the Commission relating to the offering of any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock.
25
The
restrictions contained in the preceding paragraph shall not apply to (a) the
Shares to be sold hereunder, or (b) the issuance by the Company of shares of
Common Stock upon the exercise of an option or warrant or the conversion of a
security outstanding on the date hereof of which the Underwriters have been
advised in writing. Notwithstanding the foregoing, if (1) during
the last 17 days of the 90-day restricted period the Company issues an earnings
release or material news or a material event relating to the Company occurs; or
(2) prior to the expiration of the 90-day restricted period, the Company
announces that it will release earnings results during the 16-day period
beginning on the last day of the 90-day period, the restrictions imposed by this
agreement shall continue to apply until the expiration of the 18-day period
beginning on the issuance of the earnings release or the occurrence of the
material news or material event. The Company shall promptly notify
the Representative of any earnings release, news or event that may give
rise to an extension of the initial 90-day restricted period.
26
(b) Each
Underwriter agrees, severally and not jointly, to indemnify and hold harmless
the Company, the Controlling Shareholder, the Company’s directors, officers who
sign the Registration Statement and each person, if any, who controls the
Company within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim) caused by any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or any amendment
thereof, any preliminary prospectus, the Time of Sale Prospectus, any issuer
free writing prospectus as defined in Rule 433(h) under the Securities Act, any
Company information that the Company has filed, or is required to file, pursuant
to Rule 433(d) under the Securities Act, or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but only with reference to information relating to such
Underwriter furnished to the Company in writing by such Underwriter through the
Representative expressly for use in the Registration Statement, any preliminary
prospectus, the Time of Sale Prospectus, any free writing prospectus or the
Prospectus or any amendment or supplement thereto.
(c) In
case any proceeding (including any governmental investigation) shall be
instituted involving any person in respect of which indemnity may be sought
pursuant to Section 8(a) or 8(b), such person (the “indemnified party”) shall
promptly notify the person against whom such indemnity may be sought (the “indemnifying party”) in
writing and the indemnifying party, upon request of the indemnified party, shall
retain counsel reasonably satisfactory to the indemnified party to represent the
indemnified party and any others the indemnifying party may designate in such
proceeding and shall pay the fees and disbursements of such counsel related to
such proceeding. In any such proceeding, any indemnified party shall
have the right to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such indemnified party unless 8. the
indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel or 9. the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between
them. It is understood that the indemnifying party shall not, in
respect of the legal expenses of any indemnified party in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for the
fees and expenses of more than one separate firm (in addition to any local
counsel) for all such indemnified parties and that all such fees and expenses
shall be reimbursed as they are incurred. Such firm shall be
designated in writing by the Representative, in the case of parties indemnified
pursuant to Section 8(a), and by the Company, in the case of parties
indemnified pursuant to Section 8(b). The indemnifying party
shall not be liable for any settlement of any proceeding effected without its
written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at
any time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel as contemplated
by the second and third sentences of this paragraph, the indemnifying party
agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than 30
days after receipt by such indemnifying party of the aforesaid request and (ii)
such indemnifying party shall not have reimbursed the indemnified party in
accordance with such request prior to the date of such settlement. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in respect
of which any indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party, unless such settlement
includes an unconditional release of such indemnified party from all liability
on claims that are the subject matter of such proceeding.
27
(d) To
the extent the indemnification provided for in Section 8(a) or 8(b) is
unavailable to an indemnified party or insufficient in respect of any losses,
claims, damages or liabilities referred to therein, then each indemnifying party
under such paragraph, in lieu of indemnifying such indemnified party thereunder,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities 10. in such proportion as
is appropriate to reflect the relative benefits received by the Company on the
one hand and the Underwriters on the other hand from the offering of the Shares
or 11. if the allocation provided by clause 8(d)(i) above is not permitted
by applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause 8(d)(i) above but also the relative
fault of the Company on the one hand and of the Underwriters on the other hand
in connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the
one hand and the Underwriters on the other hand in connection with the offering
of the Shares shall be deemed to be in the same respective proportions as the
net proceeds from the offering of the Shares (before deducting expenses)
received by the Company and the total underwriting discounts and commissions
received by the Underwriters, in each case as set forth in the table on the
cover of the Prospectus, bear to the aggregate Public Offering Price of the
Shares. The relative fault of the Company on the one hand and the
Underwriters on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Underwriters and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Underwriters’ respective obligations to
contribute pursuant to this Section 8 are several in proportion to the
respective number of Shares they have purchased hereunder, and not
joint.
28
(e) The
Company and the Underwriters agree that it would not be just or 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 that does not take account of the equitable considerations
referred to in Section 8(d). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages and liabilities
referred to in Section 8(d) shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this
Section 8, no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Shares underwritten
by it and distributed to the public were offered to the public exceeds the
amount of any damages that such Underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 8
are not exclusive and shall not limit any rights or remedies which may otherwise
be available to any indemnified party at law or in equity.
(f) The
indemnity and contribution provisions contained in this Section 8 and the
representations, warranties and other statements of the Company and the
Controlling Shareholder contained in this Agreement shall remain operative and
in full force and effect regardless of 12. any termination of this Agreement,
13. any investigation made by or on behalf of any Underwriter, any person
controlling any Underwriter or any affiliate of any Underwriter or by or on
behalf of the Company, its officers or directors or any person controlling the
Company and 14. acceptance of and payment for any of the Shares.
29
If, on
the Closing Date or an Option Closing Date, as the case may be, any one or more
of the Underwriters shall fail or refuse to purchase Shares that it has or they
have agreed to purchase hereunder on such date, and the aggregate number of
Shares which such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase is not more than one-tenth of the aggregate number of the
Shares to be purchased on such date, the other Underwriters shall be obligated
severally in the proportions that the number of Firm Shares set forth opposite
their respective names in Schedule I bears to the aggregate number of Firm
Shares set forth opposite the names of all such non-defaulting Underwriters, or
in such other proportions as the Representative may specify, to purchase the
Shares which such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase on such date; provided that in no event
shall the number of Shares that any Underwriter has agreed to purchase pursuant
to this Agreement be increased pursuant to this Section 10 by an amount in
excess of one-ninth of such number of Shares without the written consent of such
Underwriter. If, on the Closing Date, any Underwriter or Underwriters
shall fail or refuse to purchase Firm Shares and the aggregate number of Firm
Shares with respect to which such default occurs is more than one-tenth of the
aggregate number of Firm Shares to be purchased on such date, and arrangements
satisfactory to the Representative and the Company for the purchase of such Firm
Shares are not made within 36 hours after such default, this Agreement shall
terminate without liability on the part of any non-defaulting Underwriter or the
Company. In any such case either the Representative or the Company
shall have the right to postpone the Closing Date, but in no event for longer
than seven days, in order that the required changes, if any, in the Registration
Statement, in the Time of Sale Prospectus, in the Prospectus or in any other
documents or arrangements may be effected. If, on an Option Closing
Date, any Underwriter or Underwriters shall fail or refuse to purchase
Additional Shares and the aggregate number of Additional Shares with respect to
which such default occurs is more than one-tenth of the aggregate number of
Additional Shares to be purchased on such Option Closing Date, the
non-defaulting Underwriters shall have the option to (vi) terminate their
obligation hereunder to purchase the Additional Shares to be sold on such Option
Closing Date or (vii) purchase not less than the number of Additional Shares
that such non-defaulting Underwriters would have been obligated to purchase in
the absence of such default. Any action taken under this paragraph
shall not relieve any defaulting Underwriter from liability in respect of any
default of such Underwriter under this Agreement.
30
If this
Agreement shall be terminated by the Underwriters, or any of them, because of
any failure or refusal on the part of the Company to comply with the terms or to
fulfill any of the conditions of this Agreement, or if for any reason the
Company shall be unable to perform its obligations under this Agreement, the
Company will reimburse the Underwriters or such Underwriters as have so
terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering contemplated hereunder.
(b) The
Company acknowledges that in connection with the offering of the Shares: 16. the
Underwriters have acted at arms length, are not agents of, and owe no fiduciary
duties to, the Company or any other person, 17. the Underwriters owe the Company
only those duties and obligations set forth in this Agreement and prior written
agreements (to the extent not superseded by this Agreement), if any, and 18. the
Underwriters may have interests that differ from those of the
Company. The Company waives to the full extent permitted by
applicable law any claims it may have against the Underwriters arising from an
alleged breach of fiduciary duty in connection with the offering of the
Shares.
31
32
|
Very
truly yours,
|
||
|
By:
|
||
|
Name:
|
||
|
Title:
|
||
|
By:
|
||
|
Name:
|
||
|
Title:
|
The
Controlling Shareholder
|
|
33
|
Accepted
as of the date hereof
Xxxxxx
Xxxxxxx & Co. International plc
|
||
|
Acting
on behalf of itself and as the Representative of the several Underwriters
named in Schedule I hereto.
|
||
|
By:
|
Xxxxxx
Xxxxxxx & Co. International plc
|
|
|
By:
|
||
|
Name:
|
||
|
Title:
|
||
34
SCHEDULE I
|
Underwriter
|
Number
of Firm Shares To Be Purchased
|
Number
of Additional Shares To Be Purchased
|
||
|
Xxxxxx
Xxxxxxx & Co. International plc
|
||||
|
Xxxxxxxxxxx
& Co. Inc.
|
||||
|
Xxxxxxx
Xxxxx & Company, L.L.C.
|
||||
|
Total:
|
I-1
SCHEDULE
II
Time
of Sale Prospectus
|
1.
|
Preliminary
Prospectus issued [date]
|
|
2.
|
[identify
all free writing prospectuses filed by the Company under Rule 433(d) of
the Securities Act]
|
|
3.
|
[orally
communicated pricing information to be included on Schedule II if a final
term sheet is not used]
|
II-1
EXHIBIT A
[FORM
OF OPINION OF COMPANY’S UNITED STATES COUNSEL]
A-1
EXHIBIT B
[FORM
OF OPINION OF COMPANY’S STATE OF NEVADA COUNSEL]
B-1
EXHIBIT C
[FORM
OF OPINION OF COMPANY’S BRITISH VIRGIN ISLANDS COUNSEL]
C-1
EXHIBIT D
[FORM
OF OPINION OF COMPANY’S PRC COUNSEL]
D-1
EXHIBIT
E
FORM
OF LOCK-UP LETTER
[●],
2010
Xxxxxx
Xxxxxxx & Co. International plc
00 Xxxxx
Xxxxxx, Xxxxxx Xxxxx
Xxxxxx,
X00 0XX
Xxxxxx
Xxxxxxx
As
representative of the several Underwriters
named in
the Underwriting Agreement
Ladies
and Gentlemen:
The
undersigned understands that you propose to enter into an Underwriting Agreement
(the “Underwriting
Agreement”) with ShengdaTech, Inc., a Nevada corporation (the “Company”), providing for the
public offering (the “Public
Offering”) by the several Underwriters, including you (the “Underwriters”), of [●] shares
(the “Shares”) of the
common stock, $0.00001 par value per share of the Company (the “Common Stock”).
To induce
the Underwriters that may participate in the Public Offering to continue their
efforts in connection with the Public Offering, the undersigned hereby agrees
that, without your prior written consent on behalf of the Underwriters, it will
not, during the period commencing on the date hereof and ending 90 days after
the date of the final prospectus relating to the Public Offering (the “Prospectus”), (1) offer,
pledge, 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, lend, or otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock or any other securities convertible into or exercisable
or exchangeable for Common Stock or (2) enter into any swap or other
arrangement that transfers to another, in whole or in part, any of the economic
consequences of ownership of the Common Stock, whether any such transaction
described in clause (1) or (2) above is to be settled by delivery of Common
Stock or such other securities, in cash or otherwise or (3) publicly
disclose the intention to make any such offer, pledge, sale or disposition, or
enter into any such transaction, swap, hedge or other
arrangement. The foregoing sentence shall not apply to (a)
transactions relating to shares of Common Stock or other securities acquired in
open market transactions after the completion of the Public Offering, provided that no filing under
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), shall
be required or shall be voluntarily made in connection with subsequent sales of
Common Stock or other securities acquired in such open market transactions, (b)
transfers of shares of Common Stock as a bona fide gift, or (c) distribution of
shares of Common Stock to limited partners or shareholders of the undersigned;
provided that in the
case of any transfer or distribution pursuant to clause (b) or (c), (i) each
donee or distributee shall sign and deliver a lock-up letter substantially in
the form of this letter and (ii) no filing under Section 16(a) of the Exchange
Act, reporting a reduction in beneficial ownership of the shares of Common
Stock, shall be required or shall be voluntarily made in respect of the transfer
or distribution during the restricted period referred to in the foregoing
sentence. In addition, the undersigned agrees that, without your
prior written consent on behalf of the Underwriters, it will not, during the
period commencing on the date hereof and ending 90 days after the date of the
Prospectus, make any demand for or exercise any right with respect to, the
registration of any shares of Common Stock or any security convertible into or
exercisable or exchangeable for Common Stock. The undersigned also
agrees and consents to the entry of stop transfer instructions with the
Company’s transfer agent and registrar against the transfer of the undersigned’s
shares of Common Stock except in compliance with the foregoing
restrictions.
E-1
If:
(1) during
the last 17 days of the restricted period the Company issues an earnings release
or material news or a material event relating to the Company occurs;
or
(2) prior
to the expiration of the restricted period, the Company announces that it will
release earnings results during the 16-day period beginning on the last day of
the restricted period;
the
restrictions imposed by this agreement shall continue to apply until the
expiration of the 18-day period beginning on the issuance of the earnings
release or the occurrence of the material news or material event.
The
undersigned shall not engage in any transaction that may be restricted by this
agreement during the 34-day period beginning on the last day of the initial
restricted period unless the undersigned requests and receives prior written
confirmation from the Company or you that the restrictions imposed by this
agreement have expired.
The
undersigned understands that the Company and the Underwriters are relying upon
this agreement in proceeding toward consummation of the Public
Offering. The undersigned further understands that this agreement is
irrevocable and shall be binding upon the undersigned’s heirs, legal
representatives, successors and assigns.
E-2
Whether
or not the Public Offering actually occurs depends on a number of factors,
including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Company and the Underwriters.
|
Very
truly yours,
|
|
(Name)
|
|
(Address)
|
E-3