PUBLIC OFFERING UNDERWRITING AGREEMENT CHINA AGRI-BUSINESS, INC.
Common stock and Warrants ($0.001 par value) ____________, 2007
, 2007 CONFIDENTIAL DRAFT NO. 1
FOR DISCUSSION PURPOSES ONLY
Xxxxxxx Xxxxxxx, Inc. [ = need information
0000 Xxxxx Xxxxxxxx Xxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Gentlemen:
CHINA AGRI-BUSINESS, INC., a Maryland corporation (the "Company") hereby
confirms its agreement with Xxxxxxx Xxxxxxx, Inc., a Colorado corporation (the
"Underwriter") regarding the participation by the Underwriter in the Public
Offering (hereinafter defined), and agrees, as follows:
SECTION 1 Description of Securities
1.01. Public Offering. The Company represents, covenants, warrants, and agrees
that its authorized, issued and outstanding capitalization, when the Public
Offering of the Common Stock (hereinafter defined) contemplated hereby is
permitted to commence and at the Closing Date (hereinafter defined), will be as
set forth in the Registration Statement (as such terms are hereinafter defined
or described). The Company proposes to issue, and engages Underwriter to offer
and sell by Public Offering pursuant to the registration provision of the
Securities Act of 1933, as amended (the "Act") provided by Form SB-2 thereunder,
Units consisting of duly authorized $0.001 par value Common stock of the Company
and warrants to purchase $0.001 par value Common stock of the Company on a "best
efforts" basis. Each Unit shall consist of (i) one share of $0.001 par value
Common stock of the Company, (ii) one warrant to purchase one share of the
Company's $0.001 par value Common Stock at an exercise price of $1.50 per share
(the "$1.50 Unit Warrants"), and (iii) one warrant to purchase one share of the
Company's $0.001 par value Common Stock at an exercise price of $2.00 per share
(the "$2.00 Unit Warrants"). The $1.50 Unit Warrants shall be exercisable for a
period of three years from the date of issuance. The $2.00 Unit Warrants shall
be exercisable only if the holder of such Warrant has exercised and paid to the
Company the exercise price of the $1.50 Warrants in full. If they become
exercisable, the $2.00 Unit Warrants will remain exercisable for a period of
three years from the date of issuance. The warrants contain a call provision, as
described in the Registration Statement, which will require, upon 30 days notice
to the record holder of the Unit Warrants, that the holder exercise the Unit
Warrants or forfeit the right to exercise them at the end of the 30-day period.
The maximum Units offered pursuant to this offering is 1,000,000 Units for a
total sales price of $1,000,000. The minimum Units offered pursuant to this
offering is 300,000 Units for a total sales price of $300,000.
The Units to be authorized, issued, offered and sold pursuant to the Public
Offering contemplated by this Agreement shall be offered and sold at a price of
$1.00 per Unit on the terms hereinafter set forth.
SECTION 2
Representations and Warranties of the Company
In order to induce the Underwriter to enter into this Agreement, the Company
hereby represents, warrants, and covenants to and agrees with the Underwriter as
follows:
2.01. Registration Statement. The Company has prepared and filed with the
Securities and Exchange Commission (the "Commission") in accordance with the
provisions of the Securities Act of 1933, as amended, and the rules and
regulations of the Commission thereunder (collectively, the "Securities Act"), a
registration statement on Form SB-2 (File No. 333- ______), including a
preliminary prospectus, relating to the Shares to be sold in the Public
Offering. Such registration statement, as amended at the time that it becomes
effective, is referred to
1 collectively in this Agreement as the "Registration Statement," and the
prospectus in the form filed with the Commission as part of the Registration
Statement or pursuant to its Rule 424(b) filing, if any, after the Registration
Statement becomes effective is referred to collectively as the "Prospectus." As
used in this Agreement, the term "Registration Statement" refers to and means
said Registration Statement and all amendments thereto, including all exhibits
and financial statements, when it becomes final (the "Offering Commencement
Date"). The term "Registration Statement" refers to and means the Registration
Statement on the Offering Commencement Date; and the term "Preliminary
Registration Statement" refers to and means any preliminary Registration
Statement before it becomes final.
2.02. Preliminary Prospectus. Each preliminary Prospectus that is filed as part
of the Registration Statement as originally filed or as part of any amendment or
supplement thereto and distributed by the Underwriter or a selected dealer to
potential purchasers complied, when so filed, in all material respects with the
provisions of the Securities Act, except that this representation and warranty
does not apply to statements in or omissions from information relating to the
Underwriter in the last paragraph on the front cover of the Prospectus and in
the section of the Prospectus entitled "Plan of Distribution" that were made in
reliance upon and conformity with information furnished to the Company by the
Underwriter expressly for use therein.
2.03. Accuracy of the Registration Statement. The Registration Statement in the
form in which it becomes effective and also in such form as it may be when any
post-effective amendment thereto shall become effective, and the Prospectus
filed as part of such Registration Statement and in the form first filed with
the Commission under its Rule 424(b) filing, if any, and when any supplement
thereto is filed with the Commission, will comply in all material respects with
the provisions of the Securities Act and will not contain at any such times an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading,
except that this representation and warranty does not apply to statements in or
omissions from information relating to the Underwriter in the last paragraph on
the front cover of the Prospectus and in the section of the Prospectus entitled
"Plan of Distribution" that were made in reliance upon and conformity with
information furnished to the Company by the Underwriter expressly for use
therein.
2.04. Financial Statements. The Company's financial statements, together with
related schedules and notes, forming part of the Registration Statement and the
Prospectus, present fairly the financial position and the results of operations
of the Company at the respective dates or for the respective periods to which
they apply; such statements and related notes have been prepared in accordance
with generally accepted accounting principles consistently applied throughout
the periods involved, except as disclosed therein; and the financial and
statistical information and data set forth in the Registration Statement and the
Prospectus is fairly presented and prepared on a basis consistent with such
financial statements and the books and records of the Company; provided,
however, that any interim unaudited financial statements of the Company included
in the Registration Statement and the Prospectus are subject to normal year-end
adjustments and lack footnotes and other presentation items. The Company has no
material contingent obligations that are not disclosed in the Registration
Statement and the Prospectus (or any amendment or supplement thereto).
2.05. No Material Adverse Change. Except as may be reflected in or contemplated
by the Registration Statement and the Prospectus, subsequent to the dates as of
which information is given in the Registration Statement and the Prospectus, and
prior to the Closing Date, (i) there shall not be any material adverse change in
the condition, financial or otherwise, of the Company or in its business taken
as a whole; (ii) there shall not have been any material transaction entered into
by the Company other than transactions in the ordinary course of business; (iii)
the Company shall not have incurred any material obligation, contingent or
otherwise, which are not disclosed in the Registration Statement and the
Prospectus; (iv) there shall not have been nor will there be any change in the
capital stock or long-term debt (except current payments) of the Company; and
(v) the Company has not and will not have paid or declared any dividends or
other distributions on its capital stock.
2.06. No Defaults. The Company is not in default in the performance of any
obligation, agreement, or condition contained in any debenture, note or other
evidence of indebtedness, or any indenture or loan agreement of the Company,
other than as set forth in the Registration Statement and the Prospectus. The
execution and delivery of this Agreement and the consummation of the
transactions herein contemplated, and compliance with the terms of this
Agreement, will not conflict with or result in a breach of any of the terms,
conditions or provisions of, or constitute a default under, the articles of
incorporation, as amended, or bylaws of the Company, or any note,
2 indenture, mortgage, deed of trust, or other agreement or instrument to
which the Company is a party or by which the Company or any of its property is
bound, or any existing law, order, rule, regulation, writ, injunction, or decree
of any government, governmental instrumentality, agency or body, arbitration
tribunal or court, domestic or foreign, having jurisdiction over the Company or
its property. The consent, approval, authorization, or order of any court or
governmental instrumentality, agency, or body is not required for the
consummation of the transactions herein contemplated except such as may be
required under Form SB-2 or under the blue sky or securities laws of any state
or jurisdiction.
2.07. Incorporation and Standing. The Company is, and at the Closing Date will
be, duly incorporated and validly existing in good standing as a corporation
under the laws of its jurisdiction of incorporation, with an authorized and
outstanding capital stock as set forth in the Registration Statement and the
Prospectus, and with full power and authority (corporate and other) to own its
property and conduct its business, present and proposed, as described in the
Registration Statement and the Prospectus; the Company has full power and
authority to enter into this Agreement; the Company owns, free and clear of any
lien, charge, or encumbrance, all of the property and rights to property as set
forth in the Registration Statement and the Prospectus; and the Company is duly
qualified and in good standing as a foreign corporation in each jurisdiction in
which it owns or leases real property or transacts business requiring such
qualification.
2.08. Legality of Outstanding Stock. The outstanding common stock of the Company
has been duly and validly authorized and issued, is fully paid and
non-assessable, and will conform to all statements with regard thereto contained
in the Registration Statement and the Prospectus. Except as set forth in the
Registration Statement and the Prospectus, there are no outstanding options,
warrants, or other rights to subscribe for, purchase, or receive shares of the
Company's common stock or any other security convertible into common stock.
2.09. Legality of Units. The common shares and warrants included in the Units
have been duly and validly authorized and when issued, are fully paid and
non-assessable. The securities constituting the Units, upon issuance, will not
be subject to the preemptive rights of any shareholders of the Company. A
sufficient number of shares of stock have been reserved for issuance upon
exercise of the warrants with regard thereto in the Registration Statement and
the Prospectus.
2.10. Prior Sales. No securities of the Company have been sold by the Company or
by, or on behalf of, or for the benefit of, any person or persons controlling,
controlled by, or under common control with the Company within three years prior
to the date hereof, except as set out in the Registration Statement and the
Prospectus.
2.11. Litigation. Except as set forth in the Registration Statement and the
Prospectus, there is, and at the Closing Date there will be, no action, writ, or
proceeding before any court or governmental agency, authority or body pending or
to the knowledge of the Company, threatened, which might result in judgments
against the Company not adequately covered by insurance or which collectively
might result in any material adverse change in the condition (financial or
otherwise), the business or the prospects of the Company, or would materially
affect the properties or assets of the Company.
2.12. Common Stock. Upon delivery of and payment for the Units to be sold by the
Company as set forth in Section 1.01 of this Agreement, the purchasers will
receive good and marketable title thereto, free and clear of all liens,
encumbrances, charges, and claims whatsoever; and the Company will have on the
Offering Commencement Date and at the time of delivery of such Units, full legal
right and power and all authorization and approval required by law to sell,
transfer, and deliver such Units, including the Company's common stock and
warrants in the manner provided hereunder.
2.13. Finder. The Company and the Underwriter represent to each other that no
person has acted as a finder in connection with the transactions contemplated
herein and each will indemnify the other party with respect to any claim for
finder's fees in connection herewith.
2.14. Exhibits. There are no contracts or other documents which are required to
be included as exhibits to the Registration Statement and the Prospectus by Form
SB-2 or by the Rules and Regulations which have not been so included and each
contract to which the Company is a party and to which reference is made in the
Registration Statement and the Prospectus has been duly and validly executed,
and is in full force and effect in all material
3 respects in accordance with its terms, and none of such contracts has
been assigned by the Company; and the Company knows of no present situation or
condition of fact which would prevent compliance with the terms of such
contracts, as amended to date. Except for amendments or modifications of such
contracts in the ordinary course of business, the Company has no intention of
exercising any right which it may have to cancel any of its obligations under
any of such contracts, and has no knowledge that any other party to any of such
contracts has any intention not to render full performance under such contracts.
2.15. Tax Returns. The Company has filed all federal and state tax returns which
are to be filed, and has paid all taxes shown on such returns and on all
assessments received by it to the extent such taxes have become due. All taxes
with respect to which the Company is obligated have been paid or adequate
accruals have been set up to cover any such unpaid taxes.
2.16. Property. Except as otherwise set forth in or contemplated by the
Registration Statement and the Prospectus, the Company has good title, free and
clear of all liens, encumbrances, and defects, except liens for current taxes
not due and payable, to all property and assets which are described in the
Registration Statement and the Prospectus as being owned by the Company, subject
only to such exceptions as are not material and do not adversely affect the
present or prospective business of the Company.
2.17. Licenses and Permits. The Company holds all material licenses,
certificates and permits from governmental authorities that are necessary to the
conduct of their businesses; and the Company has not infringed any patents,
patent rights, trade names, trademarks or copyrights in any manner material to
the business of the Company taken as a whole.
2.18. Internal Accounting Controls. The Company 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.
2.19. Price of any Security. The Company has not taken, directly or indirectly,
any action designed to or that would constitute or that might reasonably be
expected to cause or result in, under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or otherwise, stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Shares.
2.20. Related Parties. No relationship, direct or indirect, exists between or
among the Company on the one hand, and the directors, officers, stockholders,
customers or suppliers of the Company on the other hand, that is required to be
described in the Prospectus and the Registration Statement that is not so fully
and accurately described.
2.21. Investment Company. The Company is not and, after giving effect to the
offer and sale of the Shares, will not be an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended.
2.22. Accuracy of Statistical and Market-Related Data. Any statistical and
market-related data included in the Prospectus and the Registration Statement
are based on or derived from sources that the Company believes to be reliable
and accurate, and the Company has obtained the written consent to the use of
such data from such sources to the extent required
2.23. Authority. The execution and delivery by the Company of this Agreement has
been duly authorized by all necessary corporate action and this contract is the
valid, binding, and legally enforceable obligation of the Company.
SECTION 3
Issue, Sale and Delivery of the Units; Post Closing Agreements
4
3.01.01. The Company hereby appoints the Underwriter as its exclusive agent from
the Offering
Commencement Date for a period of ninety days from the date of the Registration
Statement, which period may be extended for not more than an additional sixty
days upon the mutual agreement of the Underwriter and the Company. The
Underwriter, on the basis of the representations and warranties herein
contained, and subject to the terms and conditions herein set forth, accepts
such appointment and agrees to use its best efforts to find purchasers for the
Units. "Best efforts" as used in this Agreement in connection with the
Underwriter shall mean that effort which would be employed by a reasonably
diligent broker-dealer in the position of the Underwriter. The price at which
the Underwriter shall sell the Units in public offering transactions, as agent
for the Company, shall be $1.00 per Unit, and the Company shall pay the
Underwriter a commission of eight percent (8%) of the offering price for each
share and other compensation as described in this Underwriting Agreement.
3.01.02. Upon completion of the Public Offering, the Company will issue to
the Underwriter warrants to purchase common shares of the Company equal to ten
percent (10%) of the common shares sold in the Public Offering at a strike price
of $1.00 per share. Such warrants will not be exercised before one year from the
date of their issuance and not after five years from the date of their issuance.
The Company will, on a single occasion upon the request of the Underwriter,
after the expiration of the one-year holding period, take all steps necessary
(or as reasonably requested by the Underwriter) to permit the registration and
sale of the Underwriter's shares. All costs and expenses in connection therewith
will be paid by the Company. In addition and not in lieu of the foregoing right,
the Company, from time to time, will notify all holders of the Underwriter's
shares of the Company's intention to take steps necessary for a registration of
its securities (whether by the Company or by any security holder of the Company)
and, if required by law or deemed necessary by the Underwriter to enable or
permit a registration thereof, will provide, at the Company's cost and expense,
piggy-back registration and/or sale rights to the holders of the Underwriter's
shares. Notwithstanding the foregoing, all expenses of selling the Underwriter's
shares, including but not limited to brokerage commissions and transfer fees,
shall be borne by the holders of the Underwriter's shares.
3.01.03. Engraved certificates in such form that they can be negotiated by the
purchasers thereof (issued in such denominations and in such names as the
Underwriter may direct the transfer agent to issue) for the common stock and
warrants to purchase common stock shall be made available by the Company to the
Underwriter for checking and packaging at the offices of the transfer agent at
least two full business days prior to the initial Closing Date; it being
understood that the directions from the Underwriter to the transfer agent shall
be given at least three full business days prior to the initial Closing Date.
3.01.04. An Escrow Account shall be established at Corporate Clearing Trust,
Xxxxx Fargo Bank, N.A 0000 Xxxxxxxx, XXX X0000-000, Xxxxxx, XX 00000 (the Escrow
agent). During the period of the offering contemplated hereby, payment for Units
shall be in clearing house funds, and the Underwriter and selected dealers shall
request that all checks and other orders in payment for the Units be made
payable to the order of CHINA AGRI-BUSINESS, INC., Escrow Account, Corporate
Clearing Trust, Xxxxx Fargo Bank, N.A. Such checks and orders shall be
transmitted by the Underwriter and selected dealers to the Escrow Account at
Xxxxx Fargo Bank, N.A. Corporate Trust Clearing by noon of the next business day
following receipt. Funds may be wired to the Escrow Account via Xxxxx Fargo
Bank, N.A. Corporate Trust Clearing ABA 000000000 at the Account Number issued
by Xxxxx Fargo Bank for the Escrow for further credit to CHINA AGRI-BUSINESS,
INC. Interim closings may be held weekly during the term of the offering or
otherwise as fixed by notice in writing to be given by the Underwriter to the
Company and the Escrow agent.
3.01.05. The time and date of delivery and payment hereunder are herein called
the "Closing Date" and shall take place at the office of the Company on each
Friday and on such other dates and after such times as will be fixed by notice
in writing to be given by the Underwriter to the Company and the Escrow agent.
The Closing Dates and places may be changed by the agreement of the Underwriter
and the Company.
3.01.06. The certificates so delivered for the Units shall be registered in the
names of the purchasers thereof for the number of shares purchased by each, as
may be required by the Underwriter in the notice.
3.02. The Company shall reimburse the Underwriter for its expenses and
overhead in the form of a nonaccountable expense allowance in an amount equal to
three percent (3%) of the total proceeds realized from the sale of the Units in
the offering, but shall not include the following, all of which will be paid by
the Company: all
5 costs and expenses incident to the issuance, offer, sale and delivery of
the Units including all expenses and fees incident to the Registration Statement
and the "COBRA" filing of the Public Offering with NASD Corporate Finance; the
costs and counsel fees of qualification under state securities laws; fees and
disbursements of counsel and accountants for the Company; costs of preparing,
printing and mailing as many copies of the Registration Statement and/or
Prospectus, related exhibits, blue sky memoranda, underwriting agreements,
selected dealer agreements and other underwriting documents, as the Underwriter
may deem necessary, including all amendments and supplements of the Registration
Statement; for any disbursements made on behalf of the Company, on a
pre-approved budget basis, for the travel, meal and hotel costs of any of the
Underwriter's personnel to attend meetings with or on behalf of the Company. The
Underwriter shall have the option and the Company hereby consents to the
Underwriter deducting the above reimbursements from proceeds payable to the
Company from any escrow account maintained with respect to an offering by the
Company. The Company shall also bear the expenses of due diligence meetings, at
which time potential investors or broker dealer group members will be introduced
to the Company, and any and all other expenses customarily paid by the Company
in a Public Offering, all of which will be paid directly by the Company or if
advanced by the Underwriter, reimbursed directly to the Underwriter by the
Company or reimbursed to the Underwriter from the Company's escrow distributions
and deducted from any escrowed amount payable to the Company at the time of each
Closing Date. In addition, the Company shall pay all of the following costs: (i)
during the period specified in Section 6.05 below but not exceeding nine months
after the date on which the Units are first offered to the public, cost of
delivery to the Underwriter and dealers through whom Shares may be sold
(including postage, air freight and the expenses of counting and packaging) of
such copies of the Registration Statement, the Prospectus, each preliminary
Prospectus and amendments or supplements to the Registration Statement and the
Prospectus as may be requested for use by the Underwriter or by dealers through
whom Shares may be sold in connection with the offering and sale of the Shares
and during such period of time thereafter as the Prospectus is required, in the
judgment of the Company or in the opinion of counsel for the Underwriter, to be
delivered in connection with the offer and sale of the Shares by the Underwriter
and by dealers, (ii) filing fees and costs associated with the inclusion of the
shares for trading on the NASDAQ SmallCap Market; (iii) the costs of all
informational and/or investor due diligence meetings and (iv) the performance by
the Company of its other obligations under this Agreement. The Underwriter shall
pay its own costs and expenses except as otherwise provided in this Agreement.
3.03. The parties hereto respectively covenant that as of the Closing Date the
representations and warranties herein contained and the statements contained in
all the certificates theretofore or simultaneously delivered by any party to
another, pursuant to this Agreement, shall in all respects be true and correct.
3.04. The Underwriter covenants that, reasonably promptly after the Closing
Date, it will supply the Company with all information required from the
Underwriter as the Company may reasonably request to be supplied to the
securities commissions of such states in which the Units have been qualified for
sale or such other regulatory or reporting agencies as may be required.
3.05. The Company agrees that Underwriter has the right to place tombstone
advertisements describing its services to the Company under this agreement in
its website as well as in financial and other newspapers and journals at its own
expense following the date on which the Public Offering closes. Notwithstanding
the foregoing, the Placement Agent shall provide the Company with a copy of any
such advertisement for its approval (which shall not be unreasonably withheld or
delayed) no less than three (3) business days before the public release of the
advertisement.
SECTION 4
Offering of the Units on Behalf of the Company
4.01. In offering the Units for sale, the Underwriter shall offer the Units
solely as an agent for the Company, and such offer shall be made upon the terms
and subject to the conditions set forth in the Registration Statement and the
Prospectus. The Underwriter shall commence making such offer as an agent for the
Company as soon after the Offering Commencement Date as it may deem advisable.
4.02. The Underwriter may invite registered dealers selected by it
("Participating Dealers") to offer and sell the shares for the account of the
Company pursuant to a form of Selected Dealers Agreement, pursuant to which the
Underwriter may allow such concession (out of its underwriting commission and
Underwriter Warrants) as it may
6 determine, within the limits set forth in the Registration Statement and
the Prospectus, and all such sales by Participating Dealers shall be as agents
for the accounts of their customers.
4.03. On each sale by the Underwriter of any of the Units by Participating
Dealers, the Underwriter shall require the Participating Dealer offering any
Units to agree to offer the shares on the terms and conditions of the offering
set forth in the Registration Statement and the Prospectus.
SECTION 5 Registration Statement
5.01. Prior to commencement of this Offering, the Company shall deliver to the
Underwriter, without charge, two copies of the Registration Statement, including
all financial statements and exhibits included therewith, any documents,
contracts or other agreements referenced in the Registration Statement and any
amendments or supplements thereto. The Company shall deliver to the Underwriter,
without charge, as many copies of the Registration Statement and any amendment
or supplement thereto, including such financial statements, exhibits, and any
documents, contracts or other agreements referenced in the Registration
Statement as may be requested by the Underwriter for Underwriter's selling group
due diligence requests.
5.02. The Company will deliver to the Underwriter, without charge, prior to the
Offering Commencement Date, as many copies of each Preliminary Registration
Statement as may be reasonably required by the Underwriter. The Company consents
to the use of such documents by the Underwriter and by dealers prior to the
Offering Commencement Date.
5.03. The Company will procure, at its expense, as many printed copies of the
Registration Statement as the Underwriter may reasonably require for the
purposes contemplated by this Agreement and shall deliver said printed copies of
the Registration Statement to the Underwriter as soon as practical after the
Offering Commencement Date.
5.04. If during such period of time as in the opinion of the Underwriter or its
counsel a Registration Statement relating to this Public Offering is required to
be delivered under Form SB-2, or any event occurs or any event known to the
Company relating to or affecting the Company shall occur as a result of which
the Registration Statement as then amended or supplemented would include an
untrue statement of a material fact, or omit to state any material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, or if it is necessary at any time after
the Offering Commencement Date of the Registration Statement to amend or
supplement the Registration Statement to comply with Form SB-2, the Company will
forthwith notify the Underwriter thereof and prepare and file with the
securities commissions of such states in which the offering is qualified for
sale such further amendment to the Registration Statement or supplemented or
amended Registration Statement as may be required and furnish and deliver to the
Underwriter and to others whose names and addresses are designated by the
Underwriter, all at the cost of the Company, a reasonable number of copies of
the amended or supplemented Registration Statement which as so amended or
supplemented will not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the Registration Statement
not misleading in the light of the circumstances when it is delivered to a
purchaser or prospective purchaser, and which will comply in all respects with
Form SB-2 and the Act.
5.05. The Company authorizes the Underwriter and the Participating Dealers, if
any, in connection with the distribution of the Units and all dealers to whom
any of the Units may be sold by the Underwriter or by any Participating Dealer,
to use the Registration Statement, as from time to time amended or supplemented,
in connection with the offering and sale of the Units and in accordance with the
applicable provisions of Form SB-2, the applicable Rules and Regulations and
applicable state blue sky or securities laws.
SECTION 6 Covenants of the Company
The Company covenants and agrees with the Underwriter that:
6.01. The Company will endeavor to cause the Registration Statement to become
effective and will advise
7 the Underwriter promptly and, if requested by the Underwriter, will
confirm such advice in writing (i) when the Registration Statement has become
effective and when any amendment thereto thereafter becomes effective, (ii) of
any request by the Commission for amendments or supplements to the Registration
Statement or the Prospectus or for additional information, (iii) of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of the suspension of qualification of the Shares for
offering or sale in any state or jurisdiction, or the initiation or
contemplation of any proceeding for such purposes and (iv) within the period of
time referred to in Section 6.05 below, of the happening of any event that makes
any statement made in the Registration Statement or the Prospectus (as then
amended or supplemented) untrue in any material respect or that requires the
making of any addition to or change in the Registration Statement or the
Prospectus (as then amended or supplemented) to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
or of the necessity to amend or supplement the Prospectus (as then amended or
supplemented) to comply with the Securities Act or any other law. If at any time
the Commission shall issue any stop order suspending the effectiveness of the
Registration Statement, the Company will make every reasonable effort to obtain
the withdrawal of such order at the earliest possible time.
6.02. The Company will furnish the Underwriter, without charge, two signed
copies of the Registration Statement as originally filed with the Commission and
of each amendment to it, including financial statements and all exhibits
thereto, and will also furnish to the Underwriter, such number of conformed
copies of the Registration Statement (without exhibits) as originally filed and
of each amendment thereto as the Underwriter may reasonably request.
6.03. The Company will not file any amendment to the Registration Statement or
make any amendment or supplement to the Prospectus of which the Underwriter
shall not have been advised previously or to which the Underwriter shall
reasonably object in writing promptly after being so advised.
6.04. Prior to the effective date of the Registration Statement, the Company has
delivered or will deliver to the Underwriter, without charge, in such quantities
as the Underwriter have requested or may hereafter reasonably request, copies of
each form of preliminary Prospectus. The Company consents to the use, in
accordance with the provisions of the Securities Act and with the securities or
blue sky laws of the jurisdictions in which the Shares are offered by the
Underwriter and by dealers to whom Shares may be sold, prior to the effective
date of the Registration Statement, of each preliminary Prospectus so furnished
by the Company.
6.05. On the effective date of the Registration Statement and thereafter from
time to time, for such period as in the opinion of counsel for the Underwriter a
Prospectus is required by law to be delivered in connection with sales by an
Underwriter or a dealer, the Company will deliver to the Underwriter and each
dealer through whom Shares may be sold, without charge (except as provided
below), as many copies of the Prospectus (and of any amendment or supplement
thereto) as they may reasonably request. The Company consents to the use of such
Prospectus (and of any amendment or supplement thereto) in accordance with the
provisions of the Securities Act and with the securities or blue sky laws of the
jurisdictions in which the Shares are offered by the Underwriter and by dealers
through whom Shares may be sold, both in connection with the offering or sale of
the Shares and for such period of time thereafter as the Prospectus is required
by law to be delivered in connection therewith. If during such period of time
any event shall occur that in the judgment of the Company, or in the opinion of
counsel for the Underwriter, requires that a material fact be stated in the
Prospectus (as then amended or supplemented) in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, or if it is necessary to amend or supplement the Prospectus to
comply with the Securities Act or any other law, the Company, at its own expense
(except as provided below), will forthwith prepare and file with the Commission
an appropriate amendment or supplement thereto, and will furnish to the
Underwriter and each dealer through whom Shares may be sold, without charge
(except as provided below), a reasonable number of copies thereof.
6.06. The Company will cooperate with the Underwriter and the Underwriter's
counsel in connection with the registration or qualification of the Shares for
offer and sale by the Underwriter and by dealers through whom Shares may be sold
under the securities or blue sky laws of such jurisdictions as the Underwriter
may reasonably designate and will file such consents to service of process or
other documents as may be necessary in order to effect such registration or
qualification; provided that in no event shall the Company be obligated to
qualify to do business in any jurisdiction where it is not now so qualified or
to take any action that would subject it to the service of process in suits,
other than those arising out of the offer and sale of the Shares, in any
jurisdiction where it is not
8 now so subject. At the cost of the Company, the attorneys for the
Company shall prepare for and deliver to the Underwriter a "Blue Sky Memorandum"
describing and opining upon the states in which qualification for sale or
exemption from registration or qualification has taken place.
6.07. The Company will file all reports and other information that it is
required to file after the Closing Date pursuant to Section 13 or Section 15(d),
as the case may be, of the Exchange Act as necessary to permit the Underwriter
to serve, in its sole discretion, as a market maker with respect to the Common
Stock.
6.08. The Company will make generally available to its security holders an
earnings statement, which need not be audited, covering a 12-month period
commencing after the effective date of the Registration Statement and ending no
later than 15 months thereafter, as soon as practicable after the end of such
period, which earnings statement shall satisfy the provisions of Section 11(a)
of the Securities Act and any applicable regulation.
6.09. During the period of five years hereafter, the Company will furnish to the
Underwriter, without charge, as soon as available, a copy of each report of the
Company mailed to shareholders or filed with the Commission and from time to
time such other proper information concerning the business and financial
condition of the Company as the Underwriter may reasonably request.
SECTION 7 Effectiveness of Agreement
7.01. This Agreement shall become effective at 7:00 A.M., Denver time, on the
first business day the Public Offering is determined to be final and available
for sale by mutual agreement of the Company and the Underwriter (the "Offering
Commencement Date" for purposes of this agreement). Such Offering Commencement
Date shall be printed on the front cover of the Registration Statement.
SECTION 8
Conditions of the Underwriter's Obligations
The Underwriter's obligations to act as agent of the Company hereunder and to
find purchasers for the Units and to make payment to the Company hereunder on
the Closing Date shall be subject to the accuracy, as of the Closing Date, of
the representations and warranties on the part of the Company herein contained,
to the fulfillment of or compliance by the Company with all covenants and
conditions hereof, and to the following additional conditions:
8.01. On or prior to the Closing Date, no order suspending offers or sales
pursuant to the Registration Statement shall have been issued and no proceedings
for that purpose shall have been initiated or threatened by the Commission or
any state regulatory agency and no statements in the Registration Statement nor
any amendment thereto shall have been included to which counsel to the
Underwriter shall have not given their consent.
8.02. The Underwriter shall not have disclosed in writing to the Company that
the Registration Statement or any amendment thereof or supplement thereto
contains an untrue statement of a fact which, in the opinion of counsel to the
Underwriter, is material, or omits to state a fact which, in the opinion of such
counsel, is material and is required to be stated therein, or is necessary to
make the statements therein not misleading.
8.03. Between the date hereof and the Closing Date, the Company shall not have
sustained any loss on account of terrorist activity, fire, explosion, flood,
accident, calamity or any other cause, of such character as it materially
adversely affects its business or property considered as an entity, whether or
not such loss is covered by insurance.
8.04. Between the date hereof and the Closing Date, there shall be no litigation
instituted or threatened against the Company and there shall be no proceeding
instituted or threatened against the Company before or by any federal or state
commission, regulatory body or administrative agency or other governmental body,
domestic or foreign, wherein an unfavorable ruling, decision or finding would
materially adversely affect the business, franchises, licenses, operations,
financial condition or income of the Company considered as a whole.
9
8.05. Except as contemplated herein or as set forth in the Registration
Statement, during the period subsequent to the date of the last audited balance
sheet included in the Registration Statement and prior to the Closing Date, the
Company (i) shall have conducted its business in the usual and ordinary manner
as the same was being conducted on the date of the most recent balance sheet
included in the Registration Statement, and (ii) except in the ordinary course
of its business, shall not have incurred any liabilities or obligations (direct
or contingent), disposed of any of its assets, or entered into any material
transaction or suffered or experienced any substantially adverse change in its
condition, financial or otherwise. At the Closing Date, the capital stock and
surplus accounts of the Company shall be substantially the same as at the date
of the most recent balance sheet included in the Registration Statement, without
considering the proceeds from the sale of the Units, other than as may be set
forth in the Registration Statement. The shares underlying the Units offered and
sold in Public Offering transactions shall represent approximately [26%] of the
total shares of the Company's outstanding stock if the maximum number of Units
are sold.
8.06. The authorization of the stock, the Registration Statement and all
corporate proceedings and other legal matters incident thereto and to this
Agreement shall be reasonably satisfactory in all respects to counsel to the
Underwriter, and the Company shall have furnished such counsel such documents as
they may have requested to enable them to pass upon the matter referred to in
this subparagraph.
8.07. The Company shall have furnished to the Underwriter the opinion, dated the
Closing Date, addressed to the Underwriter, of counsel to the Company, to the
effect that:
(i) The Company has been duly incorporated and is a validly existing corporation
in good standing under the laws of the State of Maryland, with full corporate
power and authority to own and operate its properties and to carry on its
business as set forth in the Registration Statement.
(ii) The Company is duly qualified and licensed to transact business in each
state or other jurisdiction in which the Company transacts business and by each
governmental authority by which the Company is required to be licensed.
(iii) The Company has an authorized and outstanding capitalization as set forth
in the Registration Statement; the Units and underlying securities, and the
outstanding common stock of the Company conform to the statements concerning
them in the Registration Statement; the outstanding common stock of the Company
has been duly and validly issued and is fully paid and non-assessable and
contains no preemptive rights; there are no outstanding options, warrants, or
other rights to subscribe for purchase, or receive shares of the Company's
common stock or securities convertible into common stock except as described in
the Registration Statement; the stock and warrants making up the Units has been
duly and validly authorized and, upon issuance thereof and payment therefore in
accordance with this Agreement, will be duly and validly issued, fully paid and
non-assessable, free and clear of all liens, encumbrances, equities and claims
whatsoever and will not be subject to the preemptive rights of any shareholder
of the Company.
(iv) The certificates for the Shares are in proper legal form.
(v) Except for the order of the Commission making the Registration Statement
effective and any permits and similar authorizations required under other
securities or blue sky laws, no consent, approval, authorization or other order
of any court, regulatory body, administrative agency or other governmental body
is required for the consummation of the sale of the Shares to the purchasers
through the Underwriter as contemplated by this Agreement.
(vi) The issuance and sale of the Units and the consummation of the transactions
herein contemplated and compliance with the terms of this Agreement will not
conflict with or result in a breach of any of the terms, conditions, or
provisions of, or constitute a default under, the articles of incorporation, or
bylaws of the Company, or any note, indenture, mortgage, deed of trust, or other
agreement or instrument known to such counsel to which the Company is a party or
by which the Company or any of its property is bound or any existing law, order,
rule, regulation, writ, injunction, or decree known to such counsel of any
government, governmental instrumentality, agency, body, arbitration tribunal, or
court, domestic or foreign, having jurisdiction over the Company or its
property.
(vii) The Registration has been declared effective by the Commission under the
Securities Act and, to the best of the knowledge of such counsel, no order
suspending the effectiveness of the Registration Statement has been issued and
no proceedings for that purpose have been instituted or are pending or
contemplated by the Commission or any state regulatory agency, and the
Registration Statement and each amendment and supplement thereto, comply as to
form in all material respects with the requirement of Form SB-2 and the Rules
and Regulations thereunder (except that no opinion need be expressed as to
financial statements and financial data contained in the Registration
Statement), and such counsel have no reason to believe that either the
Registration Statement or any such amendment or supplement contains any untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
such counsel is familiar with all contracts referred to in the Registration
Statement and such contracts are sufficiently summarized or disclosed therein or
included therewith, and such counsel does not know of any legal or governmental
proceedings pending or threatened to which the Company is subject of such a
character required to be disclosed in the Registration Statement which are not
disclosed and properly described therein.
(viii) This Agreement has been duly authorized, executed and delivered by the
Company and (assuming due authorization, execution and delivery by the
Underwriter) is a valid and binding agreement of the Company enforceable in
accordance with its terms, except in all cases as rights of indemnity or
contribution hereunder may be limited under applicable law and except as the
enforceability hereof may be limited by bankruptcy, receivership, moratorium,
conservatorship, reorganization or other laws of general application affecting
the rights of creditors generally or general equitable principles.
(ix) The Company has good and valid title to all of the real property described
in the Registration Statement as owned by the Company, free and clear of all
security interests, mortgages, liens, and encumbrances, except as may be
specifically described.
(x) To the knowledge of such counsel, there are no pending or threatened legal
or governmental proceedings to which the Company is a party or of which any
property of the Company is the subject, which, if determined adversely to the
Company or the Bank, would individually or in the aggregate have a material
adverse effect on the financial position or results of operations of the
Company.
(xi) Any opinions of counsel for the Company previously furnished to the
Underwriter remain valid, true, correct and in full force and effect.
8.08. The Company shall have furnished to the Underwriter a certificate of the
President and the Treasurer of the Company, dated as of the Closing Date, to the
effect that:
(i) The representations and warranties of the Company in this Agreement are true
and correct at and as of the Closing Date, and the Company has complied with all
the agreements and has satisfied all the conditions on its part to be performed
or satisfied at or prior to the Closing Date.
(ii) The Registration Statement has become effective and no order suspending the
effectiveness of the Registration Statement has been issued and to the best of
the knowledge of the respective signers, no proceeding for that purpose has been
initiated or is threatened by the Commission.
(iii) The respective signers have each carefully examined the Registration
Statement and any amendments and supplements thereto and to the best of their
knowledge the Registration Statement and any amendments and supplements thereto
contain all statements required to be stated and correct, and neither the
Registration Statement nor any amendment or supplement thereto includes any
untrue statement of a material fact or omits to state any material fact required
to be stated therein or necessary to make the statements therein not misleading
and, since the Offering Commencement Date of the Registration Statement, there
has occurred no event required to be set forth in an amended or a supplemented
Registration Statement which has not been so set forth.
11
(iv) Except as set forth in the Registration Statement, since the respective
dates as of which information is given in the Registration Statement and prior
to the date of such certificate, (i) there has not been any substantially
adverse change, financial or otherwise, in the affairs or condition of the
Company, and (ii) the Company has not incurred any liabilities, direct or
contingent, or entered into any transaction, other than in the ordinary course
of business.
(v) Subsequent to the respective dates as of which information is given in the
Registration Statement, no dividends or distributions whatsoever have been
declared and/or paid on or with respect to the common stock of the Company.
8.09. All of the Units being offered by the Company shall be tendered for
delivery in accordance with the terms and provisions of this Agreement.
8.10. The Units shall be qualified and the Blue Sky Memorandum and opinion
provided as provided in Section 6.06 of this Agreement, and each qualification
shall be in effect and not subject to any stop order or other proceeding on the
Closing Date.
8.11. All opinions, letters, certificates, and evidence mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions thereof only if they are in form and substance satisfactory to
counsel to the Underwriter, whose approval shall not be unreasonably withheld.
8.12. The Company shall also supply such other good standing, tax, incumbency
and other certificates, as the Underwriter shall reasonably request.
8.13. Any certificate signed by an officer of the Company and delivered to the
Underwriter or to counsel for the Underwriter will be deemed a representation
and warranty by the Company to the Underwriter as to the statements made
therein.
SECTION 9 Termination
9.01. This Agreement may be terminated by the Underwriter by notice to the
Company in the event that the Company shall have failed or been unable to comply
with any of the terms, conditions, or provisions of this Agreement on the part
of the Company to be performed, complied with or fulfilled (including but not
limited to those specified in Sections 2, 3, 5, 6 and 9 hereof) within the
respective times herein provided, unless compliance therewith or performance or
satisfaction thereof shall have been expressly waived by the Underwriter in
writing.
9.02. This Agreement may be terminated by the Underwriter by notice to the
Company at any time if, in the sole judgment of the Underwriter, solicitation
for sale of, payment for and/or delivery of the Units is rendered impracticable
or inadvisable because (i) additional material governmental restrictions not in
force and effect on the date hereof shall have been imposed upon the trading in
securities generally, or trading in securities generally on any established
stock exchange or over the counter markets shall have been suspended, or a
general moratorium shall have been established by federal or state authorities,
or (ii) any material adverse change in market conditions, including but not
limited to terrorist activities, war or other national calamity, shall have
occurred, or (iii) the condition of the market (either generally or with
reference to the sale of the Units to be offered hereby) or the condition of any
matter affecting the Company or any other circumstance is such that it would be
undesirable, impracticable, or inadvisable, in the sole judgment of the
Underwriter, to proceed with this Agreement or with the Public Offering.
9.03. Except as to the reimbursement of actual out of pocket expenses incurred
by the Underwriter pursuant to Paragraph 3.02 hereof, any termination of this
Agreement pursuant to this Section 9 shall be without liability of any character
(including, but not limited to, loss of anticipated profits or consequential
damages) on the part of any party thereto. No party shall be liable under this
Agreement or for any matter related to the Public Offering for loss of
anticipated profits or consequential damages.
12
SECTION 10
Underwriter's Representations and Warranties
The Underwriter represents and warrants to and agrees with the Company that:
10.01. Registered Broker-Dealer. The Underwriter is registered as a
broker-dealer with the Securities and Exchange Commission and is registered as a
broker-dealer in the State of Colorado and is a member in good standing of the
National Association of Securities Dealers, Inc.
10.02. Anti-Money Laundering Compliance Programs. The Underwriter represents to
the Company that the Underwriter has established and implemented anti-money
laundering compliance programs in accordance with NASD Rule 3011 and Section 352
of the Money Laundering Abatement Act, which among other things, are reasonably
expected to detect and cause the reporting of suspicious transactions in
connection with the sale of the Units.
10.03. Customer Identification Program ("CIP"). The Underwriter represents to
the Company that the Underwriter has established and implemented a customer
identification program meeting the requirements of the PATRIOT Act and the CIP
Rule.
10.04. Limitation of Offer. The Underwriter will offer the Units only to persons
who meet the financial qualifications set forth in the applicable Registration
Statement or in any suitability letter or memorandum sent to it by the Company
and will only make offers to persons in the states in which it is advised in
writing that the Units are qualified for sale or that such qualification is not
required.
10.05. Privacy Laws. The Underwriter agrees to abide by and comply with (i) the
privacy standards and requirements of the Xxxxx-Xxxxx-Xxxxxx Act of 1999 ("GLB
Act"), (ii) the privacy standards and requirements of any other applicable
federal or state law, and (iii) its own internal privacy policies and
procedures, each as may be amended from time to time. The Underwriter agrees to
refrain from the use or disclosure of nonpublic personal information (as defined
under the GLB Act) of all customers who have opted out of such disclosures
except as necessary to service the customers or as otherwise necessary or
required by applicable law.
SECTION 11
Indemnification and Contribution; Third Party Beneficiary.
All agreements, indemnities, representations, warranties and covenants of the
Company contained herein relating to the Offering of Units, which agreements,
indemnities, representations, warranties and covenants, by their terms, run to
Agents other than the Underwriter, may be relied upon and enforced by such
Agents as third party beneficiaries hereunder and thereunder.
11.01. The Company agrees to indemnify and hold the Underwriter and each of the
Participating Dealers ("other Agents") and any shareholders, officers, directors
and employees of the Underwriter and such other Agents including, any
controlling person (as defined in either Section 15 of the Securities Act, or in
Section 20 of the Exchange Act) ("Controlling Person") of the Underwriter and
such other Agents, harmless against any and all losses, claims, damages or
liabilities or expense whatsoever (including legal fees and expenses and court
costs) to which they may become subject in connection with any action, suit,
proceeding or claim, public or private, caused by any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement and the Prospectus, or caused by any omission or alleged omission to
state therein a material fact required to be stated therein to make the
statements therein not misleading, except insofar as such losses, claims,
damages or liabilities or expenses are caused by any untrue statement or
omission or alleged untrue statement or omission based upon information relating
to any Agent where such information is furnished to the Company specifically for
inclusion in such Registration Statement and the Prospectus by or on behalf of
the party to which the information relates.
11.02. Each Agent (including the Underwriter) severally agrees as to itself to
indemnify and hold the Company or any shareholders, officers, directors or
employees of the Company or any Controlling Person of the Company harmless
against any and all losses, claims, damages, liabilities or expenses whatsoever
(including legal fees and expenses and court costs) to which the Company may
become subject in connection with any action, suit,
13 proceeding or claim, public or private, to the same extent as the
foregoing indemnity from the Company to the Agents, but only with reference to
information relating to any Agent furnished to the Company by or on behalf of
such Agent specifically for inclusion in the Registration Statement and the
Prospectus.
11.03. Each Agent (including the Underwriter) severally agrees as to itself to
indemnify and hold the Company or any shareholders, officers, directors or
employees of the Company or any Controlling Person of the Company harmless
against any losses, claims, damages or liabilities or expense whatsoever
(including legal fees and expenses and court costs) to which the Company may
become subject in connection with any action, suit, proceeding or claim, public
or private, arising out of, relating to or in connection with (i) any actual or
alleged breach or violation by the Agent or the Underwriter of any of its
representations, warranties, covenants or agreements contained in this Agreement
or the Escrow Agreement or (ii) any actual breach by the Agent or the
Underwriter of any applicable federal or state law, rule or regulation, or the
requirements of any securities self-regulatory organizations of which the Agent
or the Underwriter is a member.
11.04. Promptly after receipt by an indemnified party under subsection 11.01,
11.02, or 11.03 above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party, provided, however, that an indemnifying party shall be
relieved from liability under any subsection of this Section 11 to the extent
that it has been prejudiced by such omission. In case any such action shall be
brought against any indemnified party, it shall notify the indemnifying party of
the commencement thereof, and the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party. After notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party shall not be liable to such indemnified
party under such subsection for any legal expenses of other counsel or any other
expenses, in each case subsequently incurred by such indemnified party, in
connection with the defense thereof other than reasonable costs of
investigation; provided, however, that the indemnified party shall have the
right to employ one separate counsel (and local counsel as necessary) if the
named parties to such proceeding include both the indemnifying party and the
indemnified party and, in the reasonable judgment of the indemnified party,
representation of both parties by such counsel would be inappropriate due to
actual or potential differing interests between them, and in that event the
reasonable fees and expenses of such separate counsel shall be paid by the
indemnifying party. No indemnifying party shall be liable for any settlement
effected without its prior written consent, which consent shall not be
unreasonably withheld. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any proceeding unless
such settlement includes an unconditional release of such indemnified party from
all liability on claims that are the subject matter of such proceeding.
11.05. To the extent the indemnification provided in this Section 11 is
unavailable or insufficient to hold harmless an indemnified party under
subsection 11.01, 11.02, or 11.03 above in respect of any losses, claims,
damages or liabilities or expense whatsoever that are subject to such
indemnification, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities or expenses (including legal fees and expenses) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Agents on the other from the offering of the
Units to which such action, suit, proceeding or claim relates. If, however, the
allocation provided by the immediately preceding sentence is not permitted by
applicable law then each indemnifying party shall contribute to such amount paid
or payable by such indemnified party in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
Company on the one hand and the Agents on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities or expenses (including legal fees and expenses), as well as any
other relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Agents on the other shall be deemed to be in the
same proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company to the total discounts and commissions
received by the Agents. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Agents and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. The Company and each Agent agree that it
would not be just and equitable if contribution pursuant to this
14 subsection 11.05 were determined by pro rata allocation or by any other
method of allocation which does not take account of the equitable considerations
referred to above in this subsection 11.05. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages, liabilities and
expenses referred to above in this subsection 11.05 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. No person who has violated Rule 10b-5
under the Exchange Act shall be entitled to contribution from any person who has
not violated such Rule.
11.06. In addition to the indemnification and contribution provisions contained
in subsections 11.01 through 11.05 hereof, in the event any legal or
administrative proceedings or actions are instituted or are reasonably believed
by the Company to be threatened under the law of any jurisdiction which bring
into issue the ability of any Agent to make available Units to its customers in
such jurisdiction(s) (the "Affected Jurisdiction(s)"), then, in addition to any
other remedies available to the Company, upon written notice from the Company
following consultation with any applicable Agent, the applicable Agent or Agents
shall forthwith cease to make Units available to customers in the Affected
Jurisdiction(s).
11.07. The Company and each Agent agree to promptly notify the other parties
hereto of the threat or commencement of any action, suit, proceeding or claim by
or before any state or federal court or administrative agency, of which it
obtains knowledge, which may give rise to a claim of indemnification under this
Section 11, under the indemnity provisions of any applicable Participation
Agreement or the Escrow Agreement, or which would be reasonably likely to
preclude or restrict an Offering.
11.08. In any proceeding relating to the Registration Statement, any preliminary
Prospectus, the Prospectus or any supplement or amendment thereto, each party
against whom contribution may be sought under this Section 11 hereby consents to
the jurisdiction of any court having jurisdiction over any other contributing
party, agrees that process issuing from such court may be served upon him or it
by any other contributing party and consents to the service of such process and
agrees that any other contributing party may join him or it as an additional
defendant in any such proceeding in which such other contributing party is a
party.
11.09. The indemnity and contribution agreements contained in this Section 11
and the respective agreements, representations, warranties and other statements
of the Company or its officers and the Underwriter set forth in or made pursuant
to this Agreement shall remain operative and in full force and effect,
regardless of (i) any investigation made by or on behalf of the Underwriter or
the Company or any person controlling the Underwriter, the Company or its
directors, officers (or any person controlling the Company), (ii) acceptance of
any Shares and payment therefor hereunder and (iii) any termination of this
Agreement. A successor of the Underwriter or the Company or its directors or
officers referred to above (or of any person controlling the Underwriter or the
Company) shall be entitled to the benefits of the indemnity, contribution and
reimbursement agreements contained in this Section 11.
SECTION 12 Notice
Except as otherwise expressly provided in this Agreement:
12.01. Whenever Notice is required by the provisions of this Agreement to be
given to the Company, such notice shall be in writing and mailed, delivered or
telecopied and addressed to the Company as follows:
CHINA AGRI-BUSINESS, INC. 00 Xxxxxxxxx Xxxx Xxxxxxxxx, XX 00000
Copies of Communications to:
Xxxxxx Xxxxxx, Esq.
Guzov Ofsink, LLC
000 Xxxxxxx Xxxxxx, 00(xx) Xxxxx
Xxx Xxxx, XX 00000
12.02 Whenever notice is required by the provisions of this Agreement to be
given to the Underwriter, such notice shall be given in writing and mailed,
delivered or telecopied and addressed to the Underwriter as follows:
Xxxxxxx Xxxxxxx, Inc. 0000 Xxxxx Xxxxxxxx Xxx Xxxxx 000
Xxxxxxxxx Xxxxxxx, Xxxxxxxx 00000.
Copies of Communications to: Xxxxxxxxx Xxxxxxxx, Esq. Corporate Legal, LLC 0000
Xxxxx Xxxxxxxx Xxx Xxxxx 000 Xxxxxxxxx Xxxxxxx, Xxxxxxxx 00000
SECTION 13 Miscellaneous
13.01. Benefit. This Agreement is made solely for the benefit of the
Underwriter, the Company, their respective officers and directors and any
controlling person referred to in Section 15 of the Act, and their respective
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement. The term "successor" or the term
"successors and assigns" as used in this Agreement shall not include any
purchasers, as such, of any of the Units.
13.02. Survival. The respective indemnities, agreements, representations,
warranties, covenants and other statements of the Company or its officers as set
forth in or made pursuant to this Agreement and the indemnity agreements of the
Company and the Underwriter contained in Section 7 hereof shall survive and
remain in full force and effect, regardless of (i) any investigation made by or
on behalf of the Company or the Underwriter or any such officer or director
thereof or any controlling person of the Company or of the Underwriter, (ii)
delivery of or payment for Units, or (iii) the Closing, and any successor of the
Company and the Underwriter or any controlling person, officer or director
thereof, as the case may be, shall be entitled to the benefit thereof.
13.03. Governing Law and Venue. The validity, interpretation and construction of
this Agreement and of each part hereof will be governed by the laws of the State
of Colorado. Any action arising from or related to this Agreement or the Public
Offering of the Units shall be brought and shall have venue only in the District
Court in and for the County of Arapahoe, State of Colorado, or the United States
District Court for the District of Colorado.
13.04. Underwriter's Information. The statements with respect to the Public
Offering of the Units on the cover page of the Registration Statement and under
the caption "Underwriting" in the Registration Statement constitute the written
information furnished by or on behalf of the Underwriter referred to in
subsection 2.02 hereof.
13.05. Counterparts. This Agreement may be executed in any number of
counterparts, each of which may be deemed an original and all of which together
will constitute one and the same instrument.
Please confirm that the foregoing correctly sets forth the Agreement between
Xxxxxxx Xxxxxxx, Inc. and the Company.
Very truly yours,
CHINA AGRI-BUSINESS, INC.
----------------------------------
[First-Last Name, Title]
We hereby confirm, as of the date hereof, that the above letter sets forth the
agreement between the Company and Xxxxxxx Xxxxxxx, Inc.:
XXXXXXX XXXXXXX, INC.
By:_______________________________ Xxxxxx Xxxxx, President
