Shares1 China Architectural Engineering, Inc. Common Stock UNDERWRITING AGREEMENT
______________
Shares1
Common
Stock
__________________,
▇▇▇▇
▇▇▇▇▇▇▇▇
Capital, Inc.
As
Representative of the several Underwriters
1900
Avenue of the Stars, ▇▇▇▇▇ ▇▇▇
▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies
and Gentlemen:
China
Architectural Engineering, Inc., a Delaware corporation (the “Company”),
proposes to sell to you and other firms and corporations named in Schedule
A
attached
hereto (the “Underwriters,”
which
term shall also include any underwriter substituted as provided in Section
9
hereof), for which you are acting as representative (“Representative”),
_______________ shares (the “Primary
Shares”)
of the
Company’s Common Stock, par value $.0001 per share (“Common
Stock”).
In
addition, the Company proposes to grant to the Underwriters an option to
purchase, solely for the purpose of covering over-allotments, up to an
additional __________ shares of the Common Stock (the “Over-Allotment
Shares”).
The
Primary Shares and the Over-Allotment Shares are collectively referred to below
as the “Shares.”
The
Company agrees with the several Underwriters as set forth below.
1. Representations,
Warranties and Certain Covenants of the Company.
The
Company represents and warrants to, and the Company also covenants and agrees
with, each of the Underwriters as follows:
(a) The
Company has filed with the Securities and Exchange Commission (the “Commission”)
a
registration statement on Form S-1 (No. 333-138603), including a preliminary
prospectus, relating to the Shares and such amendments to the registration
statement and prospectus included therein as may have been required to the
date
hereof. The Company will file with the Commission either: (i) prior to
effectiveness of such registration statement, a further amendment thereto,
including a form of prospectus, and if required after effectiveness of such
registration statement, a final prospectus in accordance with Rule 424(b) of
the
rules and regulations (“Rules
and Regulations”)
under
the Securities Act of 1933, as amended (the “Act”);
or
(ii) after effectiveness of such registration statement, a final prospectus
in accordance with Rules 430A and 424(b) of the Rules and Regulations. Any
such
preliminary prospectus and any prospectus included in the registration statement
at the time it becomes effective that omits information pursuant to
Rule 430A of the Rules and Regulations, is referred to herein as a
“preliminary
prospectus”;
such
registration statement, as it may have been amended at the time when it becomes
effective, including financial statements, exhibits and the information, if
any,
deemed to be a part of such registration statement by virtue of Rule 430A of
the
Rules and Regulations, is referred to herein as the “Registration
Statement”;
the
preliminary prospectus that was included in the Registration Statement
immediately prior to the time it became effective is referred to herein as
the
“Pricing
Prospectus”;
such
final form of prospectus, in the form in which it was first filed pursuant
to
Rule 424(b) of the Rules and Regulations or, if no filing pursuant to
Rule 424(b) of the Rules and Regulations is made, in the form included in
the Registration Statement at the time it becomes effective, is referred to
herein as the “Prospectus”;
and
any “issuer free writing prospectus” as defined in Rule 433 under the Act
relating to the Shares is hereinafter called an “Issuer
Free Writing Prospectus”.
If the
Company has filed an abbreviated registration statement to register additional
shares of Common Stock pursuant to Rule 462(b) under the 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
Plus an
option to purchase from the Company up to an aggregate of ____________
additional shares solely to cover over-allotments.
1.
(b) The
Commission has not issued an order preventing or suspending the use of any
preliminary prospectus or Issuer Free Writing Prospectus, and no proceedings
for
such purpose are pending before or, to the Company’s knowledge, threatened or
contemplated by the Commission, and the Company has complied in all material
respects with all requests by the Commission for additional information in
connection therewith. Each preliminary prospectus and the Prospectus delivered
to the Underwriters for use in connection with this offering will be
substantially identical to the electronically transmitted copies thereof filed
with the Commission pursuant to ▇▇▇▇▇, except to the extent permitted by
Regulation S-T. At the date of this Agreement and at the date the Registration
Statement becomes effective the Registration Statement, and the Pricing
Prospectus and Prospectus conform, and any amendments or supplements thereto
will conform, in all material respects to the requirements of the Act and the
Rules and Regulations. At the date of this Agreement, at the date the
Registration Statement becomes effective and at the Closing Date (as defined
below), the Registration Statement will not include any untrue statement of
a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading. . At the
date of this Agreement and at the date the Registration Statement becomes
effective the Prospectus, as amended or supplemented, if applicable, will not
include any untrue statement of a material fact and will not omit to state
any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading;. At the time that the Registration Statement became effective,
the Pricing Prospectus did not include any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Provided,
however,
that
the Company makes no representations, warranties or agreements as to information
contained in or omitted from the Registration Statement, each preliminary
prospectus or Prospectus or any such amendment or supplement in reliance upon,
and in conformity with, written information furnished to the Company by the
Underwriters expressly for use therein, it being understood and agreed that
the
only such information is that described as such in Section 7(c)
hereof.
(c) The
accountants who certified the financial statements and supporting schedules
included in the Registration Statement are independent public accountants as
required by the Act and the Rules and Regulations. The consolidated financial
statements of the Company set forth in the Registration Statement and
Prospectus, together with the related notes thereto, present fairly the
financial condition of the Company and its subsidiaries as of the dates
indicated and the results of operations and cash flows for the periods therein
specified in conformity with United States generally accepted accounting
principles (“GAAP”)
consistently applied throughout the periods involved (except as otherwise stated
therein). The selected financial data and the summary financial information
included in the Prospectus present fairly in all material respects the
information shown therein and have been compiled on a basis consistent with
that
of the audited financial statements included in the Registration Statement.
The
schedules set forth in the Registration Statement present fairly the information
required to be stated therein in conformity with GAAP. All disclosures contained
in the Registration Statement or the Prospectus regarding “non-GAAP
financial measures”
(as
such term is defined by rules and regulations of the Commission) comply in
all
material respects with Regulation G of the Securities Exchange Act of 1934,
as
amended (the “Exchange
Act”)
and
Item 10 of Regulation S-K under the Act, to the extent applicable.
(d) There
are
no contracts or documents that are required to be filed as exhibits to the
Registration Statement by the Act or by the Rules and Regulations that have
not
been so filed.
(e) The
Company has been duly organized and is validly existing, in good standing,
under
the laws of the State of Delaware. The Company has all requisite corporate
power
and authority to own, lease and operate its properties and to conduct its
business as is described in each preliminary prospectus and the Prospectus.
The
Company is duly qualified to do business as a foreign corporation and is in
good
standing in each jurisdiction in which such qualification is required, except
where the failure to so qualify or be in good standing would not result in
a
material adverse effect on the condition (financial or otherwise), business,
prospects or results of operations of the Company and its subsidiaries taken
as
a whole (a “Material
Adverse Effect”).
2.
(f) Each
of
the subsidiaries of the Company listed in Exhibit 21.1 to the Registration
Statement (the “Subsidiaries”)
has
been duly organized and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has corporate power
and
authority to own, lease and operate its properties and to conduct its business
as described in each preliminary prospectus and the Prospectus and is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction in which such qualification is required, except where the
failure so to qualify or to be in good standing would not result in a Material
Adverse Effect. Except as set forth in the Registration Statement, the Company
does not own any shares of capital stock or any other securities of any
corporation, nor does it have any equity interest, direct or indirect, in any
firm, partnership, association or other entity or subsidiary.
(g) The
authorized, issued and outstanding capital stock of the Company conforms to
the
description thereof contained in the Pricing Prospectus and the Prospectus.
The
issued and outstanding shares of Common Stock have been duly authorized and
validly issued and are fully paid and nonassessable. The sale of the Shares
by
the Company has been duly authorized and after issuance of and payment for
such
Shares in accordance with this Agreement, such Shares will be validly issued,
fully paid and nonassessable. The Underwriters will acquire good and marketable
title to the Shares to be sold by the Company, free and clear of any
security
interest, mortgage, pledge, lien, encumbrance, or other claim,
and the
holders of the Common Stock are not entitled to any preemptive rights with
respect to the Shares to be sold by the Company. The issued and outstanding
shares of the capital stock of each of the Subsidiaries of the Company have
been
duly authorized and validly issued, are fully paid and nonassessable and are
owned beneficially and of record, directly or indirectly, by the Company free
and clear of all liens, claims or encumbrances whatsoever. None of the
outstanding shares of capital stock of the Company or any of its Subsidiaries
was issued in violation of the preemptive or similar rights of any
securityholder arising by operation of law, under the certificate of
incorporation or by-laws of the Company or its Subsidiaries or under any
agreement or obligation to which the Company or any of its Subsidiaries is
a
party or by which any of them are bound.
(h) Except
as
disclosed in each preliminary prospectus and the Prospectus and the financial
statements of the Company and the related notes thereto included in each
preliminary prospectus and the Prospectus, neither the Company nor any of its
Subsidiaries has outstanding any options or warrants to purchase, any preemptive
rights or other rights to subscribe for or to purchase, any securities or
obligations convertible into, or any contracts or commitments to issue or sell,
shares of its capital stock or any such options, warrants, rights, convertible
securities or obligations. Except as described in the Registration Statement,
each preliminary prospectus and Prospectus, there are no persons with
registration rights or other similar rights to have any securities registered
by
the Company pursuant to the Registration Statement or otherwise registered
by
the Company under the Act.
(i) Except
as
contemplated in each preliminary prospectus and the Prospectus, subsequent
to
the respective dates as of which information is given in the Registration
Statement, each preliminary prospectus and the Prospectus, neither the Company
nor any of its Subsidiaries has incurred any liabilities
or obligations, direct or contingent (including any off-balance sheet
obligations or any “variable
interest entities”
within
the meaning of Financial Accounting Standards Board Interpretation No.
46),
or
entered into any transactions, not in the ordinary course of business, that
are
material to the Company and its Subsidiaries taken as a whole, and there has
not
been any dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock, any material change in the capital
stock, short-term debt or long-term debt of the Company, or any Material Adverse
Effect.
(j) Except
as
set forth in each
preliminary prospectus and the
Prospectus, there are no pending actions, suits or proceedings against the
Company, any of its Subsidiaries or any of their respective properties that,
if
determined adversely to the Company or its Subsidiaries, would reasonably be
expected, individually or in the aggregate, to result in a Material Adverse
Effect, or would materially and adversely affect the ability of the Company
to
perform its obligations under this Agreement, or that are otherwise material
in
the context of the sale of the Shares by the Company; and no such actions,
suits
or proceedings are, to the Company’s knowledge, threatened or
contemplated.
3.
(k) Except
as
set forth in each preliminary prospectus and the Prospectus, the Company and
its
Subsidiaries own or have valid leasehold interests in all material properties
and assets required for the operation of their business as now conducted or
as
presently proposed to be conducted, including those described in the
Registration Statement, each preliminary prospectus and the Prospectus as being
owned by them; and each of the Company and its Subsidiaries has good and
marketable title to all properties and assets owned by it which are material
to
its business, in
each
case free from liens, encumbrances and defects that would materially affect
the
value thereof or materially interfere with the use made or to be made thereof
by
the Company or its subsidiaries.
All
real property leases to which the Company or any of its Subsidiaries is a party
are valid, subsisting and, to the knowledge of the Company, enforceable by
the
Company or such Subsidiary, in each case with
no
exceptions that would materially interfere with the use made or to be made
thereof by the Company or its Subsidiaries
and each
of the Company and its Subsidiaries enjoys peaceful and undisturbed possession
under all such leases to which it is a party as lessee.
(l) The
Company has the corporate power and authority to enter into this Agreement
and
to perform all of its obligations hereunder. This Agreement has been duly
authorized, executed and delivered by the Company and constitutes a valid and
binding obligation of the Company in accordance with its terms except
as
(i) rights to indemnification hereunder may be limited by applicable law and
(ii) the enforcement hereof may be limited by bankruptcy, insolvency,
reorganization, moratorium, or other similar laws relating to or affecting
the
rights and remedies of creditors or by general equitable principles.
(m) The
Company is not in, and the execution, delivery and performance of this Agreement
by the Company and the consummation of the transactions contemplated herein
and
in the Registration Statement (including the issuance and sale of the Shares
and
the use of the proceeds from the sale of the Shares as described in the Pricing
Prospectus and the Prospectus under the caption “Use of Proceeds”) and
compliance by the Company with its obligations hereunder do not and will not,
with or without the giving of notice or passage of time or both, result in
a
violation, breach or conflict with the charter or bylaws of the Company or
any
of its Subsidiaries or any agreement or instrument to which the Company or
any
of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound or as to which any of their respective properties is
subject or any statute, order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Company or any of its Subsidiaries
or any of their properties, except for any such violations, breaches or
conflicts that could not reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect; and no consent, approval,
authorization or order of, or filing with, any court or governmental agency
or
body is required in connection with the transactions contemplated hereby except
as have been obtained and made under the Act and such as may be required under
state securities or “Blue Sky” laws.
(n) The
Company, together with its Subsidiaries, owns or possesses all material
trademarks, trade names and other rights to inventions, know-how, patents,
copyrights, confidential information and other intellectual property
(collectively, “intellectual
property rights”)
necessary to conduct the business now operated by it, and, except as disclosed
in each
preliminary prospectus and the
Prospectus, neither the Company nor any of its subsidiaries has received any
notice or otherwise become aware of any infringement of or conflict with
asserted rights of others with respect to any intellectual property rights,
nor
of any facts or circumstances that would render any intellectual property rights
invalid or inadequate to protect the interest of the Company or any of its
subsidiaries therein, and which infringement or conflict, if determined
adversely to the Company or its subsidiaries, or invalidity or inadequacy could
reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect.
(o) Except
as
disclosed in each preliminary prospectus and the Prospectus, there are no
contracts, agreements or understandings between the Company or any of its
Subsidiaries and any person that would give rise to a valid claim against the
Company, any of its Subsidiaries or any Underwriter for a brokerage commission,
finder’s fee or other like payment in connection with this
offering.
4.
(p) The
Company and its Subsidiaries possess all material certificates, authorities
or
permits issued by appropriate governmental agencies or bodies and have made
all
material filings required under any federal, state, local or foreign law, rule
or regulation necessary to conduct the business now operated by them (the
“Permits”)
and
have not received any notice of proceedings relating to the revocation or
modification of any such Permit that, if determined adversely to the Company
or
its Subsidiaries, would reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect.
(q) No
labor
dispute with the employees of the Company or any Subsidiary exists or, to the
knowledge of the Company or its Subsidiaries, is imminent that would reasonably
be expected to result in a Material Adverse Effect.
(r) Except
as
disclosed in each
preliminary prospectus and the
Prospectus, neither the Company nor any Subsidiary is in violation of any
statute, rule, regulation, decision or order of any governmental agency or
body
or any court, domestic or foreign, relating to the use, disposal or release
of
hazardous or toxic substances or relating to the protection or restoration
of
the environment or human exposure to hazardous or toxic substances
(collectively, “environmental
laws”),
owns
or operates any real property contaminated with any substance that is subject
to
any environmental laws, is liable for any off-site disposal or contamination
pursuant to any environmental laws, or is subject to any claim relating to
any
environmental laws, which violation, contamination, liability or claim would
reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect; and neither the Company nor any Subsidiary is aware
of
any pending investigation that might lead to such a claim.
(s) The
Company and its Subsidiaries maintain systems 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 GAAP 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.
The
Company and its Subsidiaries maintain disclosure controls and procedures (as
such term is defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act)
that are designed to ensure that information required to be disclosed by the
Company in the reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported, within the time periods specified
in the rules and forms of the Commission, including, without limitation,
controls and procedures designed to ensure that information required to be
disclosed by the Company in the reports that it files or submits under the
Exchange Act is accumulated and communicated to the Company’s management,
including its principal executive officer or officers and its principal
financial officer or officers, as appropriate to allow timely decisions
regarding required disclosure. The Company is otherwise in compliance in all
materials respects with all applicable effective provisions of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the rules and regulations issued thereunder
by
the Commission.
(t) The
Company and 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 business in which they are engaged; and the Company has
no
reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business, or that the
cost
of renewing existing coverage or obtaining similar coverage could
reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect.
(u) No
relationship, direct or indirect, exists among the Company or any of its
Subsidiaries, on the one hand, and the directors, officers, customers, suppliers
or, to the Company’s knowledge, stockholders of the Company or its Subsidiaries,
on the other, that is required by the Act to be described in the Registration
Statement and Prospectus and that is not so described.
5.
(v) Nothing
has come to the attention of the Company that has caused the Company to believe
that the statistical and market-related data included in the Registration
Statement, each preliminary prospectus and the Prospectus is not based on or
derived from sources that are reliable and accurate (in accordance with the
methodologies used to derive such statistical and market-related data set forth
in the underlying source material) in all material respects.
(w) The
Common Stock has been approved for listing on the American Stock Exchange,
subject to official notice of issuance.
(x) 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 each
preliminary prospectus and the
Prospectus, will not be an “investment
company”
as
defined in the Investment Company Act of 1940.
(y) The
Company has not made any offer relating to the Shares that would constitute
a
“free writing prospectus” as defined in Rule 405 under the Act.
(z) The
Company has the corporate power and authority to enter into the Warrant
Agreement (as defined in Section 6.1(n) below) and to perform all of its
obligations thereunder. The warrants (the “Warrants”)
represented by the Warrant Agreement have been duly authorized and after
issuance of and payment for such Warrants in accordance with the Warrant
Agreement, such Warrants will constitute a valid and binding obligation of
the
Company in accordance with their terms except
as
(i) rights to indemnification hereunder may be limited by applicable law and
(ii) the enforcement hereof may be limited by bankruptcy, insolvency,
reorganization, moratorium, or other similar laws relating to or affecting
the
rights and remedies of creditors or by general equitable principles.
The
shares of Common Stock (the “Warrant
Shares”)
to be
issued upon exercise of the Warrants have been duly authorized and after
issuance of and payment for such Warrant Shares in accordance with the Warrants,
such Warrant Shares will be validly issued, fully paid and nonassessable. The
holders of the Common Stock are not entitled to any preemptive rights with
respect to the Warrant Shares.
2. Sale
and Purchase of the Shares.
(a) The
Company hereby agrees to sell the Primary Shares, to the several Underwriters
as
set forth in Schedule A attached hereto, and the several Underwriters, in
reliance upon the representations, warranties and agreements herein contained,
but subject to the conditions hereinafter stated, agree, severally and not
jointly, to purchase from the Company, at the place and the time specified
below, the respective aggregate numbers of Primary Shares set forth in Schedule
A opposite their respective names, plus any additional Shares which such
Underwriters may become obligated to purchase pursuant to the provisions of
Section 2(b) hereof, at a price of $_____ per Share.
(b) In
addition, on the basis of the representations and warranties herein contained,
from time to time upon not less than two days’ and not more than ten days’
notice from the Representative to the Company, or its counsel, the Company
agrees to sell to the Underwriters (but only for the purpose of covering
over-allotments in the sale of the Primary Shares), all or any portion of the
Over-Allotment Shares, as specified by the Representative in such notice, at
the
purchase price stated in Section 2(a) hereof and
the
Underwriters agree, severally and not jointly, to purchase such Over-Allotment
Shares.
The
Over-Allotment Shares may be purchased on the Closing Date or at any time or
times thereafter so long as the notice to purchase is given not later than
60
days following the date of the Prospectus. Over-Allotment Shares shall be
purchased by each Underwriter in the proportion that the number of Primary
Shares set opposite the name of each Underwriter in Schedule A hereto bears
to
the total number of Primary Shares. No Over-Allotment Shares shall be delivered
to or for the accounts of the Underwriters unless the Primary Shares shall
be
simultaneously delivered and paid for or shall theretofore have been delivered
and paid for as herein provided.
(c) The
respective purchase obligation of each Underwriter shall be subject to such
adjustments as the Representative may make in its absolute
discretion.
6.
3. Terms
of Offering and Authority to Use Prospectus.
The
terms of the public offering by the Underwriters of the Shares to be purchased
by them shall be as set forth in the Registration Statement, each preliminary
prospectus and the Prospectus. The Company has authorized the Representative
to
use preliminary prospectuses and to make them available for use by prospective
Underwriters and dealers and authorize the Underwriters and all dealers
acquiring Shares from an Underwriter to use the Prospectus (as amended or
supplemented, if the Company shall have furnished any amendments or supplements
thereto) in connection with the sale of the Shares until the earlier of the
completion of the public offering or the period as, in the opinion of counsel
for the Underwriters, the Prospectus is required by law to be delivered in
connection with sales by an Underwriter or dealer.
4. Payment
and Delivery.
(a) Payment
for the Primary Shares that the Underwriters agree to purchase hereunder shall
be made to the Company by wire transfer of immediately available funds to the
bank account designated by the Company at 7:00 a.m., Pacific Time, on September
__, 2007(unless postponed in accordance with the provisions of Section 9
hereof), or at the time, date (not later than seven full business days
thereafter) and place agreed upon by the Representative and the Company, against
delivery to the Representative for the respective accounts of the several
Underwriters of the Primary Shares in the form of certificates for the
securities comprising the Primary Shares. The date and time of this payment
and
delivery (which may be postponed as provided in Section 9 hereof) are sometimes
referred to below as the “First
Closing Date.”
(b) Payment
for the Over-Allotment Shares that the Underwriters have the right to purchase
hereunder shall be made to the Company by wire transfer of immediately available
funds to the bank account designated by the Company at the time or times and
on
the date or dates specified in the notice or notices delivered by the
Representative against delivery to the Representative for the respective
accounts of the several Underwriters of the Over-Allotment Shares in the form
of
certificates for the securities comprising the Over-Allotment Shares. The dates
and times of these payments and deliveries are herein singularly or collectively
sometimes referred to as “Additional
Closing Date.”
The
term “Closing
Date”
refers
to both the First Closing Date and the Additional Closing Date.
(c) You,
individually and not as Representative of the Underwriters, may (but shall
not
be obligated to) make payment to the Company for Shares to be purchased by
any
Underwriter whose funds shall not have been received by you at the date of
payment therefor for the account of that Underwriter. Any payment by the
Representative shall not relieve that Underwriter from any of its obligations
hereunder.
(d) The
certificates for the Shares shall be registered in the name or names and shall
be in the denominations you, as Representative, designate at least one full
business day prior to the First Closing Date, in the case of the Primary Shares,
and at least one full business day prior to any Additional Closing Date, in
the
case of the Over-Allotment Shares. The Company agrees to cause certificates
for
the Shares to be delivered pursuant to this Agreement at your offices, at the
offices of The Depository Trust Company, New York, New York, or at such other
places as may be designated by you as Representative, and to be made available
for checking and packaging at one of the above offices or such other places
as
may be designated by you as the Representative at least one full business day
prior to the First Closing Date in the case of the Primary Shares, and at least
one full business day prior to any Additional Closing Date, in the case of
the
Over-Allotment Shares.
5. Conditions
of the Underwriters’ Obligations.
The
several obligations of the Underwriters hereunder are subject to the following
conditions:
(a) The
Registration Statement shall have become effective under the Act and, at the
Closing Date, no stop order suspending the effectiveness of the Registration
Statement or the qualifications of the Shares shall have been issued and no
proceedings for that purpose shall have been instituted before or, to the
knowledge of the Company or the Representative, shall be contemplated by the
Commission or any state securities or “Blue Sky” commissioner or
authority.
7.
(b) At
each
Closing Date, (i) the representations and warranties of the Company
contained in this Agreement shall be true and correct with the same effect
as if
made on and as of such Closing Date and the Company shall have performed all
of
the obligations and complied with all of the conditions hereunder on its part
to
be performed or complied with on or prior to the Closing Date; (ii) the
Registration Statement, each preliminary prospectus and the Prospectus and
any
amendments or supplements thereto shall in all material respects conform to
the
requirements of the Act and the Rules and Regulations, and neither the
Registration Statement, any preliminary prospectus or the Prospectus, or any
amendment or supplement thereto, shall contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading; (iii) there
shall have been, since the respective dates as of which information is given,
no
material adverse change in the condition (financial or otherwise), business,
prospects or results of operations of the Company and its subsidiaries, taken
as
a whole, from that set forth in the Registration Statement, each preliminary
prospectus and the Prospectus, except changes that the Registration Statement
indicates might occur after the effective date of the Registration Statement,
and neither the Company nor any of its Subsidiaries shall have incurred any
material liabilities or material obligations, direct or contingent, or entered
into any material transaction, contract or agreement not in the ordinary course
of business other than as referred to or contemplated in the Registration
Statement; and (iv) except as set forth in each preliminary prospectus and
the Prospectus, no action, suit or proceeding at law or in equity shall be
pending or, to the Company’ knowledge, threatened against the Company or any of
its Subsidiaries that would be required to be set forth in the Registration
Statement, and no proceedings shall be pending or, to the Company’ knowledge,
threatened against the Company or any of its Subsidiaries before or by any
commission, board or administrative agency in the United States or elsewhere,
wherein an unfavorable decision, ruling or finding could reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect; and
you shall have received at each Closing Date, a certificate of the principal
executive officer and the principal financial or accounting officer of the
Company, dated as of such Closing Date, evidencing compliance with the
provisions of this Subsection 5(b), and confirming the accuracy of the
representations of the Company set forth in Section 1 hereof and confirming
that
all conditions set forth herein to be met by the Company have been met as of
such date.
(c) No
Underwriter shall have discovered and disclosed to the Company prior to any
Closing Date that the Registration Statement, any preliminary prospectus or
the
Prospectus or any amendment or supplement thereto, contains an untrue statement
of a fact that in the reasonable opinion of counsel to the Representative is
material, or omits to state any material fact required to be stated therein
or
necessary in order to make the statements therein not misleading.
(d) On
each
Closing Date you shall have received a signed opinion, dated as of such date,
of
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Markiles LLP, counsel to the several Underwriters, with
respect to the sufficiency of all corporate proceedings and other legal matters
relating to this Agreement and the transactions contemplated hereby, and the
Company shall have furnished to such counsel such documents as they may have
reasonably requested for the purpose of enabling them to pass upon such
matters.
(e) On
each
Closing Date you shall have received the signed opinion, dated as of such date,
of ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ LLP, counsel to the Company,
in form reasonably satisfactory to counsel for the Underwriters, together with
signed or photostatic copies thereof for each of the other
Underwriters.
(f) At
the
time of the signing of this Agreement and on each Closing Date, you shall have
received a signed letter, dated, respectively, as of each such date, from ▇▇▇▇▇▇
▇. ▇▇▇▇ & Co., LLP, Certified Public Accountants, addressed to the
Underwriters (with executed copies for each of the Underwriters) in the form
heretofore approved by counsel for the Underwriters.
(g) As
of the
effective date of the Registration Statement, the Common Stock shall be listed
on the American Stock Exchange, subject to official notice of
issuance.
(h) The
NASD
shall have confirmed that it has not raised any objection with respect to the
fairness and reasonableness of the underwriting terms and arrangements for
this
offering.
8.
(i) At
the
date of this Agreement, the Representative shall have received an agreement
substantially in the form of Annex A hereto signed by the persons listed on
Schedule B hereto, and such agreements shall be in full force and effect on
the
Closing Date.
(j) All
proceedings taken at or prior to each Closing Date in connection with the sale
of the Shares shall be reasonably satisfactory in form and substance to you
and
counsel to the several Underwriters, and at the time of signing this Agreement
and on the Closing Date, you and such counsel shall have received each and
every
additional document, letter, opinion, certificate or other item dated and
executed in a manner reasonably satisfactory to you and such counsel, as you
or
such counsel may reasonably request in connection with each preliminary
prospectus, the Prospectus, the Registration Statement, the offer and sale
of
the Shares hereunder, or proceedings at the Closing Date.
If
any of
the conditions herein provided for in this Section shall not have been fulfilled
as of the date indicated, all obligations of the several Underwriters under
this
Agreement may be cancelled by the Representative by notifying the Company of
such cancellation on or prior to the applicable Closing Date. The Representative
may in its sole discretion waive on behalf of the Underwriters compliance with
any conditions to the obligations of the Underwriters hereunder, whether in
respect of the First Closing Date, an Additional Closing Date or
otherwise.
6. Covenants
of the Company.
6.1 The
Company covenants and agrees as follows:
(a) To
use
all reasonable efforts to bring about the effectiveness of the Registration
Statement and not, at any time, whether before or after the effective date,
to
file any amendment to the Registration Statement or Prospectus or supplement
thereto of which you shall not previously have been advised and furnished with
a
copy or to which you or your counsel shall have objected or which is not in
compliance in all material respects with the Act and the Rules and Regulations,
and as soon as the Company is advised thereof, to advise the Representative
and
confirm this advice in writing (i) when the Registration Statement has
become effective and (ii) of the issuance by the Commission or any state
securities or “Blue Sky” commissioner or authority of any order suspending the
effectiveness of the Registration Statement or any qualification of the Shares
or prohibiting the sale of the Shares or the initiation or threatening of any
proceedings for any such purpose.
(b) To
deliver, on or before the effective date of the Registration Statement and
from
time to time thereafter until the earlier of the completion of the public
offering or the period as, in the opinion of counsel for the Underwriters,
the
Prospectus is required by law to be delivered in connection with sales by an
Underwriter or dealer, without charge, to the Representative and to send to
the
several Underwriters, at such office or offices as the Representative may
designate, as many copies of the preliminary prospectus and Prospectus as the
Representative may reasonably request. The copies of the Registration Statement
and each amendment thereto furnished to the Underwriters will be substantially
identical to the electronically transmitted copies thereof filed with the
Commission pursuant to ▇▇▇▇▇, except to the extent permitted by Regulation
S-T.
(c) To
furnish the Representative, without charge, one executed copy of the
Registration Statement (including exhibits) and of any amendments thereto and
to
furnish the Representative, without charge, a reasonable number of conformed
copies of the Registration Statement (excluding exhibits) and of any amendments
thereto.
(d) To
furnish the Representative with a copy of each proposed amendment or supplement
before amending or supplementing the Registration Statement or the
Prospectus.
(e) Until
the
earlier of the completion of the public offering or the period as, in the
opinion of counsel for the Underwriters, the Prospectus is required by law
to be
delivered in connection with sales by an Underwriter or dealer, if any event
shall occur as a result of which it shall be necessary to amend or supplement
the Prospectus in order to comply with applicable law or to make the statements
therein, in light of the circumstances when the Prospectus is delivered to
a
purchaser, not misleading, forthwith to prepare and furnish, at its own expense,
to the Underwriters and to dealers (whose names and addresses the Representative
will furnish to the Company) to whom Shares may have been sold by the
Representative and to any other dealers upon request, either amendments or
supplements to the Prospectus to effect such compliance or so that the
statements in the Prospectus, as so amended or supplemented, will not, in light
of the circumstances when the Prospectus is delivered to a purchaser, be
misleading. Neither
the Representative’s consent to, nor the Underwriters’ delivery of, any such
amendment or supplement shall constitute a waiver of any of the conditions
set
forth in Section 5.
9.
(f) To
make
generally available to the Company’s security holders, as soon as practicable,
but not later than fifteen months after the end of the Company’s current fiscal
quarter, an earnings statement (which need not be audited) covering a period
of
twelve months beginning after the effective date of the Registration Statement,
which earnings statement shall satisfy the provisions of the last paragraph
of
Section 11(a) of the Act and Rule 158.
(g) For
a
period of three years following the date of this Agreement, to supply to the
Representative, and to each other Underwriter who may so request in writing,
copies of such financial statements and other periodic and special reports
as
the Company may from time to time furnish generally to holders of any class
of
its securities, and to furnish the Representative a copy of each annual report
on Form 10-K which it files with the Commission.
(h) To
cooperate with the Representative in an endeavor to qualify the Shares for
offer
and sale under the “blue sky” laws of such jurisdictions (domestic or foreign)
as the Representative may request, and to pay, or reimburse if paid by the
Representative, reasonable fees and disbursements of counsel for the
Underwriters and all other expenses and filing fees in connection therewith;
provided, however, that the Company shall not be required to file any general
consent to service of process or to qualify as a foreign corporation or as
a
dealer in securities in any jurisdiction in which it is not so qualified or
to
subject itself to taxation as doing business in any jurisdiction.
(i) To
apply
the net proceeds from the sale of the Shares in accordance with the statement
made under “Use of Proceeds” in the Prospectus.
(j) To
supply
the Representative with copies of all correspondence to and from and all
documents issued to and by the Commission in connection with the registration
of
the Shares under the Act.
(k) To
obtain
the prior written consent of the Representative before making an offer related
to the Shares that would constitute a “free writing prospectus” as defined in
Rule 405 under the Act.
(l) To
comply
with the requirements of Rule 433 under the Act applicable to any Issuer Free
Writing Prospectus, including timely filing with the Commission or retention
where required and legending, and to satisfy all conditions of
Rule
433 under the Act
necessary to avoid a requirement of filing with the Commission any electronic
road show.
(m) To
give
prompt notice to the Representative and, if requested by the Representative,
to
prepare and furnish to each Underwriter a corrective Issuer Free Writing
Prospectus if at any time following the issuance of a Free Writing Prospectus
any event occurs as a result of which such Issuer Free Writing Prospectus
conflicts with the information in the Registration Statement, the preliminary
prospectus or the Prospectus.
(n) On
the
Closing Date, the Company shall execute and deliver to WestPark Capital, Inc,
the warrant agreement in the form attached hereto as Annex B (the “Warrant
Agreement”),
evidencing Warrants representing the right to purchase 60,000 shares of Common
Stock (10% of the Primary Shares), at a price equal to 120% of the initial
offering price per share to the public as set forth on the cover page of the
Prospectus, for a period of five years from the effective date of the
Registration Statement.
10.
6.2 Payment
of Expenses. The Company will pay, or reimburse if paid by the Representative,
whether or not the transactions contemplated hereunder are consummated or this
Agreement is terminated, all costs and expenses incident to the entry into
and
performance under this Agreement by the Company, and without limiting the
generality of the foregoing, all costs and expenses incident to (i) the
issuance, purchase, sale and delivery of the Shares to the Underwriters,
(ii) the registration of the Shares and preparing, printing and shipping
the Registration Statement and the underwriting documents, (iii) the filing
fees of the Commission, the National Association of Securities Dealers, Inc.
(including fees for American Stock Exchange) and state securities and “Blue Sky”
commissioners and authorities in connection with the Registration Statement
and
this Agreement, and the reasonable fees, disbursements and expenses of counsel
for the Underwriters in connection with state securities or “Blue Sky” matters
and review by the National Association of Securities Dealers, Inc.,
(iv) the fees and disbursements of counsel and accountants for the Company,
(e) the furnishing to the Representative and, to the extent requested, the
other Underwriters of copies of the Registration Statement, any preliminary
prospectus, any Issuer Free Writing Prospectus, the Prospectus, this Agreement,
the Blue Sky survey (preliminary and final), and of the documents required
by
paragraphs (b), (c), (d) and (e) of Section 6.1, to be so furnished, including
costs of preparing, printing and shipment, (v) the preparation, printing,
mailing, delivery, filing and distribution by the Company of all supplements
and
amendments to the Prospectus required by paragraph (e) of Section 6.1,
(vi) the furnishing to the Representative and the other Underwriters of all
reports and financial statements required by paragraphs (f) and (g) of Section
6.1, (vii) the holding of informational meetings related to the offer and
sale of the Shares and all other road show expenses, and (viii) all advertising
costs and expenses related to the offer and sale of the Shares, including
publishing a “tombstone” advertisement in the national edition of the Wall
Street Journal. In addition to the foregoing expenses, the Company shall at
the
Initial Closing Date pay to the Representative a non-accountable expense
allowance equal to 3% of the gross proceeds from the sale of the Primary Shares.
If the sale of the Shares to the several Underwriters pursuant to this Agreement
is not consummated for any reason, other than as specified in Section 9, the
Company will reimburse the several Underwriters for all of their out-of-pocket
expenses (including reasonable fees and expenses of counsel) incurred by the
Underwriters in connection with this Agreement or in investigating, preparing
to
market or marketing the Shares.
6.3 The
Company covenants and agrees that except as expressly contemplated hereby,
it
will not, directly or indirectly, (a) offer, pledge, sell, offer to 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 any of the shares of Common Stock or any
securities convertible into, or exercisable or exchangeable for, shares of
Common Stock, or (b) enter into any swap or other agreement that transfers,
in
whole or in part, any of the economic consequences of ownership of the shares
of
Common Stock or such other securities convertible into, or exercisable or
exchangeable for, shares of Common Stock (whether any such transaction described
in clause (a) or (b) above is to be settled by delivery of the shares of Common
Stock or such other securities, in cash or otherwise), other than repurchases
at
cost or without cost pursuant to the terms of the Company’s option and
restricted stock purchase agreements, in each case, beneficially owned (within
the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended)
or otherwise controlled by the Company on the date hereof or hereafter acquired
or otherwise controlled, for a period beginning from the date hereof and
continuing to and including the date 12 months after the date of the Prospectus,
without the prior written consent of the Representative; provided,
however, that
the
Company may, without the prior written consent of the Representative, on behalf
of the Underwriters, (i) issue stock options pursuant to equity incentive plans
described in the Registration Statement and the Prospectus to employees of
the
Company (provided that such grants do not exceed 6% of the outstanding shares,
which includes the issuance of the Shares) and (ii) issue shares upon the
exercise of options and warrants and the conversion of preferred stock and
convertible debentures, in each case as described in the Registration Statement
and the Prospectus.
7. Indemnification
and Contribution.
(a) The
Company will indemnify and hold harmless each Underwriter (including
specifically each person who may be substituted for an Underwriter as provided
in Section 9 hereof), its partners, members, directors, officers and employees
and each person, if any, who controls any Underwriter within the meaning of
Section 15 of the Act, from and against any and all losses, claims, damages,
expenses or liabilities, joint or several, to which they or any of them may
become subject under the Act or otherwise, and except as provided below, will
reimburse each of the Underwriters and each such controlling person, if any,
for
any reasonable legal or other expenses as incurred by them or any of them in
connection with investigating or defending any actions whether or not resulting
in any liability, insofar as such losses, claims, damages, expenses, liabilities
or actions arise out of or are based upon (i) any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, (ii) any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus, the Prospectus, any
Issuer Free Writing Prospectus or any “issuer information” filed or required to
be filed pursuant to Rule 433(d) under the Act, or the omission or alleged
omission to state therein a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, or (iii) any untrue statement or alleged untrue statement of
any
material fact contained in any written or electronic materials, if any, used
in
connection with the marketing of the Shares, including, without limitation,
slides, videos, films and tape recordings that are provided by the Company
or
based upon information furnished by or on behalf of the Company, unless the
untrue statement or omission or alleged untrue statement or omission was made
in
such Registration Statement, preliminary prospectus, Prospectus, Issuer Free
Writing Prospectus, “issuer information” filed or required to be filed pursuant
to Rule 433(d) under the Act, or other materials in reliance upon and in
conformity with information furnished in writing to the Company by you or any
Underwriter through you expressly for use therein. Promptly after receipt by
any
Underwriter, any partner, member, director, officer or employee of any
Underwriter, or any person controlling the Underwriter of notice of the
commencement of any action in respect of which indemnity may be sought against
the Company under this Section 7, the Underwriter will notify the Company in
writing of the commencement thereof, and, subject to the provisions stated
below, the Company shall assume the defense of the action (including the
employment of counsel, who shall be counsel reasonably satisfactory to such
Underwriter or such person, as the case may be, and the payment of expenses)
insofar as such action shall relate to any alleged liability in respect of
which
indemnity may be sought against it; provided
that
the
failure to notify the Company shall not relieve the Company from any liability
that it may have under this Section 7(a) except to the extent that the Company
has been materially prejudiced (through the forfeiture of substantive rights
or
defenses) by such failure; and provided
further
that the
failure to notify the Company shall not relieve the Company from any liability
that it may have to an indemnified party otherwise than under this Section
7(a).
Any
Underwriter or any controlling person shall have the right to employ separate
counsel in the action and to participate in the defense thereof, but the fees
and expenses of its counsel shall not be at the expense of the Company unless
the employment of that counsel has been specifically authorized by the Company
or the Company shall not, within a reasonable time period, employ counsel or
such Underwriter shall have reasonably concluded that there may be defenses
available to it that are different from, additional to or in conflict with
those
available to the Company (in which case the Company shall not have the right
to
direct the defense on behalf of the Underwriters), in any of which events such
fees and expenses shall be borne by the Company, it being understood, however,
that the Company shall not be liable for the expenses of more than one separate
counsel (in addition to any local counsel) in any one proceeding or series
of
related proceedings. The Company shall not be liable to indemnify any person
for
any settlement of any action effected without the Company’s consent,
unless
such settlement (i) includes
an unconditional release of the Company from all liability on any claims that
are the subject matter of such action and (ii) does
not
include a statement as to, or an admission of, fault, culpability or a failure
to act by or on behalf of the Company.
11.
(b) Each
Underwriter severally and not jointly, will indemnify and hold harmless the
Company, each of its directors, each of its officers who has signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the Act from and against any and all losses,
claims, damages, expenses or liabilities, joint or several, to which they or
any
of them may become subject under the Act or otherwise, and, except as provided
below, will reimburse the Company and each such director, officer or controlling
person for any legal or other expenses as incurred by them or any of them in
connection with investigating or defending any actions whether or not resulting
in any liability, insofar as such losses, claims, damages, expenses, liabilities
or actions arise out of or are based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
or
the omission or alleged omission to state therein a material fact required
to be
stated therein or necessary to make the statements therein not misleading,
or
(ii) any untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus, the Prospectus or any Issuer Free
Writing Prospectus, or the omission or alleged omission to state therein a
material fact necessary in order to make the statements therein, in light of
the
circumstances under which they were made, not misleading, but only insofar
as
any such untrue statement or omission or alleged untrue statement or omission
was made in reliance upon and in conformity with information furnished in
writing to the Company by you or any Underwriter through you expressly for
use
therein. Promptly after receipt of notice of the commencement of any action
in
respect of which indemnity may be sought against one or more Underwriters under
this Section 7, the indemnified party will notify the Representative in writing
of the commencement thereof, and the Underwriter or Underwriters against whom
indemnity may be sought shall, subject to the provisions stated below, assume
the defense of the action (including the employment of counsel, who shall be
counsel reasonably satisfactory to the Company and the payment of expenses)
insofar as such action shall relate to any alleged liability in respect of
which
indemnity may be sought against the Underwriter or Underwriters; provided
that
the
failure to notify the Representative shall not relieve the Underwriter from
any
liability that it may have under this Section 7(b) except to the extent that
the
Underwriter has been materially prejudiced (through the forfeiture of
substantive rights or defenses) by such failure; and provided
further
that the
failure to notify the Representative shall not relieve the Underwriter from
any
liability that it may have to an indemnified party otherwise than under this
Section 7(b).
The
Company and each director, officer or controlling person shall have the right
to
employ separate counsel in any action and to participate in the defense thereof,
but the fees and expenses of their counsel shall not be at the expense of any
Underwriter unless the employment of that counsel has been specifically
authorized by the Underwriter or Underwriters obligated to defend the action
or
the Underwriter or Underwriters obligated to defend shall not, within a
reasonable time period, employ counsel or the Company, director, officer or
controlling person shall have reasonably concluded that there may be defenses
available to it that are different from, additional to or in conflict with
those
available to the Underwriter or Underwriters obligated to defend the action
(in
which case the Underwriter or Underwriters obligated to defend the action shall
not have the right to direct the defense on behalf of the Company, director,
officer or controlling person), in any of which events such fees and expenses
shall be borne by the Underwriter or Underwriters obligated to defend the
action, it being understood, however, that the Underwriter or Underwriters
obligated to defend the action shall not be liable for the expenses of more
than
one separate counsel (in addition to any local counsel) in any one proceeding
or
series of related proceedings. The Underwriter against whom indemnity may be
sought shall not be liable to indemnify any person for any settlement of any
action effected without the Underwriter’s consent unless
such settlement (i) includes
an unconditional release of such Underwriter from all liability on any claims
that are the subject matter of such action and (ii) does
not
include a statement as to, or an admission of, fault, culpability or a failure
to act by or on behalf of such Underwriter.
12.
(c) It
is
agreed that the only information supplied by the Underwriters in writing for
use
in the Registration Statement, the preliminary prospectus, the Prospectus or
any
Issuer Free Writing Prospectus is set forth in the second, eighth and ninth
paragraphs under the table under the heading “Underwriting” and that no
information has been omitted from the Registration Statement in reliance on
information supplied by the Underwriters in writing.
(d) In
order
to provide for just and equitable contribution under the Act in any case in
which (i) any indemnified party makes claim for indemnification pursuant to
this Section 7, but it is insufficient to hold an indemnified party harmless
or
judicially determined (by the entry of a final judgment or decree by a court
of
competent jurisdiction and the expiration of time to appeal or the denial of
the
last right of appeal) that such indemnification may not be enforced in such
case
notwithstanding the fact that the express provisions of this Section 7 provide
for indemnification in such case, or (ii) contribution under the Act may be
required on the part of any indemnified party; then the Company and any such
Underwriter, as applicable, shall contribute to the aggregate losses, claims,
damages or liabilities to which they may be subject (which shall, for all
purposes of this Agreement, include, but not be limited to, all costs of defense
and investigation and all attorneys’ fees) in either such case (after
contribution from others) (A) in such proportions as is appropriate to
reflect the relative benefits received by the Company, on the one hand, and
the
Underwriter, on the other hand, from the offering of the Shares or (B) if
the allocation provided by clause (A) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (A) above but also the relative fault of the
Company, on the one hand, and of the Underwriter, 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 Underwriter, on the other hand, in connection with the offering of
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
Underwriter, 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 Underwriter, on the
other hand, shall be determined by reference to, among other things, whether
the
untrue or allegedly untrue statement of a material fact or the omission or
alleged omission to state a material fact related to information supplied by
the
Company or by the Underwriter and the parties’ relative intent, knowledge,
access to information and opportunity to correct or prevent such statement
or
omission. The amount paid or payable by a party as a result of the losses,
damages, expenses, liabilities and claims referred to in this subsection shall
be deemed to include any legal or other fees or expenses reasonably incurred
by
such party in connection with investigating, preparing to defend or defending
any action.
13.
(e) The
parties agree that it would not be just and equitable if contribution pursuant
to this Section 7 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 subsection (e) above. Notwithstanding the provisions of this
Section 7, the contribution of each contributing Underwriter shall not be in
excess of its proportionate share (based on the ratio of the number of Shares
purchased by such Underwriter to the number of Shares purchased by all
contributing Underwriters) of the portion of such losses, claims, damages or
liabilities for which the Underwriters are responsible. No person guilty of
a
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who is not guilty of such
fraudulent misrepresentation. The foregoing contribution agreement shall in
no
way affect the contribution liabilities of any person having liability under
Section 11 of the Act other than the Company and the Underwriters. If the full
amount of the contribution specified in this Section 7 is not permitted by
law,
then the Company and any Underwriter, as the case may be, shall be entitled
to
contribution from the Company or the Underwriters, as the case may be, to the
full extent permitted by law.
8. Effective
Date and Termination.
(a) This
Agreement shall become effective at 10:00 a.m., Pacific Time, on the first
full
business day following the day on which the Registration Statement becomes
effective or at the time of the initial public offering of any of the Shares
by
the Underwriters after the Registration Statement becomes effective, whichever
time shall first occur. The time of the initial public offering of Shares shall
mean the time of the release by you, for publication, of the first newspaper
advertisement, which is subsequently published, relating to the Shares, or
the
time at which the Shares are first generally offered by the Underwriters to
dealers by letter or telegram, whichever shall first occur. You may prevent
this
Agreement from becoming effective without liability of any party to any other
party, except as otherwise provided in Sections 8(b) and (c), by giving notice
as indicated below in Section 8(b) prior to the time when this Agreement would
otherwise become effective as herein provided.
(b) This
Agreement, except for Sections 6.2, 7, 8(c), 10, 11 and 12, may be terminated
by
the Representative by notifying the Company at any time prior to delivery of
and
payment for the Primary Shares, and the option referred to in Section 2(b)
hereof, if exercised, may be cancelled at any time prior to any Additional
Closing Date, if, in the Representative’s judgment, payment for and delivery of
the Shares is rendered impracticable or inadvisable by reason of (i) the
Company having sustained a material loss, whether or not insured, by reason
of
fire, earthquake, flood, accident or other calamity, or from any labor dispute
or court or government action, order or decree, (ii) trading
in securities generally on the New York Stock Exchange, the American Stock
Exchange or NASDAQ Global Market having been suspended or limited,
(iii) material
governmental restrictions having been imposed on trading in securities
generally, (iv) a
banking
moratorium having been declared by Federal or New York state authorities,
(v) any
material adverse change in the financial markets in the United States,
(vi) any major disruption of settlements of securities or clearance
services in the United States, (vii) any attack on, outbreak or escalation
of hostilities or act of terrorism involving the United States, any declaration
of war by Congress or any other national or international calamity or emergency
or any change or development in national or international political, financial
or economic conditions if, in the judgment of a majority in interest of the
Underwriters including the Representative, the effect of any such attack,
outbreak, escalation, act, declaration, calamity or emergency makes it
impractical or inadvisable to proceed with completion of the public offering
or
the sale of and payment for the Shares, (viii) the
passage by the Congress of the United States or by any state legislative body,
of any act or measure, or the adoption or proposed adoption of any orders,
rules, legislation or regulations by any governmental body or any authoritative
accounting institute or board, or any governmental executive, that the
Representative believe could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect or a material adverse impact
on the market for the Shares offered hereby, (ix) any
Material Adverse Effect having occurred, since the respective dates as of which
information is given in the Registration Statement, any preliminary prospectus
or the Prospectus that, in the Representative’s judgment, makes it impracticable
or inadvisable to offer or deliver the Shares on the terms contemplated by
the
Prospectus, or (x) any of the conditions specified in Section 5 hereof not
having been fulfilled or waived in writing by the Representative, at or prior
to
the Closing Date, when and as required by this Agreement to be
fulfilled.
14.
(c) If
this
Agreement shall be terminated pursuant to any of the provisions hereof, except
as provided in Sections 6.2
and 7,
the Company shall not be under any liability to any Underwriter and no
Underwriter be under any liability to the Company, except that no Underwriter
which shall have failed or refused to purchase the Shares agreed to be purchased
by it hereunder (other than for a reason sufficient to justify the termination
of this Agreement pursuant to Section 8(b)) shall be relieved of liability
to
the Company or to the other Underwriters for damages occasioned by its
default.
9. Default
of Underwriters.
If one
or more of the Underwriters shall fail or refuse (other than for a reason
sufficient to justify the termination of this Agreement pursuant to Section
8(b)) to purchase on the First Closing Date or any Additional Closing Date
the
aggregate number of Primary Shares or Over-Allotment Shares agreed to be
purchased by such Underwriter or Underwriters and the aggregate number of
Primary Shares or Over-Allotment Shares agreed to be purchased by the
Underwriter or Underwriters shall not exceed 10% of the total number of Primary
Shares or Over-Allotment Shares (as the case may be) to be sold hereunder to
the
Underwriters, then each of the non-defaulting Underwriters shall be obligated
to
purchase these Primary Shares or Over-Allotment Shares on the terms herein
set
forth in proportion to their respective obligations hereunder. In that case,
the
Representative and the Company shall have the right to postpone the First
Closing Date or any Additional Closing Date (as the case may be) for a period
of
not more than seven days in order that necessary changes and arrangements may
be
effected.
If
one or
more of the Underwriters shall fail or refuse (other than for a reason
sufficient to justify the termination of this Agreement pursuant to Section
8(b)) to purchase on the First Closing Date or any Additional Closing Date
the
aggregate number of Primary Shares or Over-Allotment Shares agreed to be
purchased by such Underwriter or Underwriters and the aggregate number of
Primary Shares or Over-Allotment Shares agreed to be purchased by such
Underwriter or Underwriters shall exceed 10% of the total number of Primary
Shares or Over-Allotment Shares (as the case may be) to be sold hereunder to
the
Underwriters, then the non-defaulting Underwriters shall have the right to
purchase, or procure one or more Underwriters reasonably acceptable to the
Company, to purchase, in such proportions as they may agree upon and upon the
terms herein set forth, the Primary Shares or Over-Allotment Shares that such
defaulting Underwriter or Underwriters agreed to purchase, and this Agreement
shall be carried out accordingly. If such other Underwriters do not exercise
this right within 36 hours after receiving notice of the default, then the
Company shall be entitled to an additional period of 24 hours within which
to
procure another party or parties reasonably satisfactory to the Representative
to purchase or agree to purchase these Primary Shares or Over-Allotment Shares
on the terms herein set forth. In any such case, the Representative and the
Company shall have the right to postpone the First Closing Date or any
Additional Closing Date (as the case may be) for a period of not more than
seven
days in order that necessary changes and arrangements may be effected. If this
paragraph becomes applicable and neither the non-defaulting Underwriters nor
the
Company shall make arrangements within the period stated for the purchase of
the
Primary Shares or Over-Allotment Shares that the defaulting Underwriter or
Underwriters agreed to purchase, this Agreement shall terminate without
liability on the part of any non-defaulting Underwriter to the Company and
without liability on the part of the Company except as provided in
Section 7.
The
provisions of this Section 9 shall not in any way affect the liability of any
defaulting Underwriter to the Company arising out of the default.
15.
10. Representations
and Agreement to Remain in Effect.
The
expense, reimbursement and indemnification agreements contained in Sections
6, 7
and 8 shall survive any termination of this Agreement; and the representations,
warranties and covenants of the Company set forth in this Agreement shall remain
operative and in full force and effect regardless of (i) any
investigation made by or on behalf of any of the Underwriters, the Company
or
any controlling person, director or officer of the Company or the Underwriters,
and (ii) delivery,
acceptance of and payment for the Shares under this Agreement.
11. Parties
in Interest.
This
Agreement has been and is made solely for the benefit of the Underwriters and
the Company, and their respective successors and assigns, and to the extent
expressed herein, for the benefit of persons controlling the Company or any
of
the Underwriters, and their respective directors and officers, and no other
person, partnership, association or corporation shall acquire or have any right
under or by virtue of this Agreement. The term “successors
and assigns”
shall
not include any purchaser of Shares from any Underwriter merely because of
such
purchase.
12. Notices,
Headings, Applicable Law, Etc.
Except
as otherwise provided in this Agreement, all statements, requests, notices
and
other communications hereunder shall be in writing and shall be mailed,
delivered, telegraphed or sent by facsimile transmission and confirmed to the
Representative at the address set forth above, attention: Corporate Finance
(facsimile number: (___) __________); and if to the Company ______________
_________________________ attn: Chief Financial Officer (facsimile number:
(___)
______________. Notices shall be effective upon receipt. Any party may change
the address at which it is to receive communications hereunder upon notice
to
the other parties as provided above. This
Agreement will inure to the benefit of and be binding upon the parties hereto
and their respective successors and the officers and directors and controlling
persons referred to in Section 7, and no other person will have any right
or obligation hereunder. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
The
headings in this Agreement have been inserted as a matter of convenience and
reference and are not a part of this Agreement. The Agreement shall be construed
in accordance with the internal laws, and not the laws pertaining to choice
or
conflict of laws, of the State of California.
[Signature
page follows]
16.
Please
confirm that the foregoing correctly sets forth the agreement among
us.
Sincerely
yours,
By
Title:
Confirmed
and Accepted as of the
date
first above written.
WestPark
Capital, Inc.
By
Title:
For
itself and as the Representative
of
the
several Underwriters.
Signature
Page to Underwriting Agreement
SCHEDULE
A
UNDERWRITERS
|
Underwriter
|
Number
of
Shares
|
|
WestPark
Capital, Inc.
|
000
|
|
__________________________
|
000
|
|
Total
|
000
|
SCHEDULE
B
PERSONS
SUBJECT TO LOCK-UP
ANNEX
A
FORM
OF LOCK-UP AGREEMENT
_______________,
▇▇▇▇
▇▇▇▇▇▇▇▇
CAPITAL, INC.
As
representative of the several Underwriters
▇▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Proposed
Offering of Common Stock
Dear
Ladies and Gentlemen:
This
letter is being delivered to you in accordance with the proposed Underwriting
Agreement (the “Underwriting Agreement”) between China Architectural
Engineering, Inc. (the “Company’) and WestPark Capital, Inc. (“WestPark”), as
representative of the several Underwriters named in Schedule A thereto (the
“Underwriters”), relating to an underwritten public offering of common stock of
the Company, par value $0.001 per share, (the “Common Stock”). The undersigned,
the beneficial owner of shares of the Company’s Common Stock, understands that
the Company intends to sell shares of Common Stock of the Company and to grant
to the Underwriters an over-allotment option to purchase additional shares
of
Common Stock (the “Offering”). All capitalized terms used but not otherwise
defined herein shall have the meanings ascribed to such terms in the
Underwriting Agreement.
In
order
to induce the Company and the Underwriters to enter into the Underwriting
Agreement and to proceed with the Offering, and in recognition of the benefit
that such Offering will confer upon the undersigned as a stockholder of the
Company, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned irrevocably
agrees, with each Underwriter to be named in the Underwriting Agreement, for
the
benefit of the Company, you and the other Underwriters, that the undersigned
will not publicly announce any intention to, will not allow any affiliate or
subsidiary, if applicable, to, and will not itself, without the prior written
consent of WestPark on behalf of the Underwriters, directly or indirectly,
(i)
offer, pledge, sell, offer to 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 any
of
the shares of Common Stock or any securities convertible into, or exercisable
or
exchangeable for, shares of Common Stock, or (ii) enter into any swap or other
agreement that transfers, in whole or in part, any of the economic consequences
of ownership of the shares of Common Stock or such other securities convertible
into, or exercisable or exchangeable for, shares of Common Stock (whether any
such transaction described in clause (i) or (ii) above is to be settled by
delivery of the shares of Common Stock or such other securities, in cash or
otherwise), in each case, beneficially owned (within the meaning of Rule 13d-3
under the Securities Exchange Act of 1934, as amended) or otherwise controlled
by the undersigned on the date hereof or hereafter acquired or otherwise
controlled, for a period beginning from the date hereof and continuing to and
including the date 12 months after the date of the Prospectus (as such term
is
defined in the Underwriting Agreement); provided, however, that, if the
undersigned is an individual, the undersigned may, without the prior written
consent of WestPark on behalf of the Underwriters, (i) transfer shares of
Common Stock or any securities convertible into, or exercisable or exchangeable
for, Common Stock either during his or her lifetime or, on death, by bona fide
gifts, will or intestacy to members of the undersigned’s immediate family or to
trusts exclusively for the benefit of members of the undersigned’s immediate
family, provided that, prior to any such transfer, such transferee executes
an
agreement, satisfactory to WestPark, pursuant to which such transferee agrees
to
receive and hold such shares subject to the provisions hereof and that there
shall be no further transfer except in accordance with the provisions hereof,
and (ii) exercise options held in the undersigned's name to purchase shares
of Common Stock provided that, any securities obtained upon the exercise of
such
option will be held subject to the provisions hereof and that there shall be
no
further transfer of any such securities except in accordance with the provisions
hereof. For purposes of this paragraph, “immediate family” shall mean the
undersigned’s spouse, lineal descendents, father, mother, brothers or sisters
(including any such relatives by adoption).
The
restriction on transfers described in the immediately preceding paragraph shall
not apply to the sale of any shares of Common Stock to the Underwriters pursuant
to the Underwriting Agreement.
The
undersigned confirms that he, she or it understands that the Underwriters and
the Company will rely upon the representations set forth in this agreement
in
proceeding with the Offering. The undersigned agrees and consents to the entry
of stop transfer instructions with the Company’s transfer agent against the
transfer of Common Stock except in compliance with this agreement. This
agreement shall be binding on the undersigned and his, her or its respective
successors, heirs, personal representatives and assigns. If for any reason
the
Underwriting Agreement shall be terminated prior to the Closing Date (as such
term is defined in the Underwriting Agreement), the agreement set forth above
shall likewise be terminated.
Sincerely,
Signature
Name
Title
2