3,750,000 Ordinary Shares FUWEI FILMS (HOLDINGS) CO., LTD. UNDERWRITING AGREEMENT December __ , 2006
3,750,000
Ordinary Shares
FUWEI
FILMS (HOLDINGS) CO., LTD.
December
__ , 2006
MAXIM
GROUP LLC
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇ ▇▇▇▇▇
Ladies
and Gentlemen:
Fuwei
Films (Holdings) Co., Ltd., a company organized and existing under the laws
of
the Cayman Islands (the “Company”),
confirms its agreement, subject to the terms and conditions set forth herein,
with each of the underwriters listed on Schedule
A
hereto
(collectively, the “Underwriters”),
for
whom Maxim Group LLC (“Maxim
Group”)
is
acting as the sole representative (the “Representative”)
to
sell and issue to the Underwriters an aggregate of 3,750,000of its ordinary
shares (the “Firm
Shares”),
par
value $0.129752 US per share (the “Ordinary Shares”).
In
addition, the Company hereby grants to the Underwriters, upon the terms and
conditions set forth in Section 3 hereof, an option to purchase an aggregate
additional amount of 562,500 Ordinary Shares (the “Additional
Shares”).
The
Firm Shares and any Additional Shares purchased by the Underwriters are referred
to herein as the “Shares.”
The
Shares are more fully described in the Registration Statement and Prospectus
referred to below. The offering and sale of the Shares contemplated by this
underwriting agreement (this “Agreement”)
is
referred to herein as the “Offering.”
Unless
otherwise indicated, all references to dollar amounts and the symbol “$” are in
U.S. Dollars.
1. Representations
and Warranties of the Company.
The
Company represents, warrants and covenants to, and agrees with, each of the
Underwriters that, as of the date hereof and as of the Closing Date and each
Additional Closing Date:
Maxim
Group LLC
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], 2006
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(a) The
Company has filed with the Securities and Exchange Commission (the “Commission”)
a
registration statement on Form F-1 (Registration No. 333-138948), and amendments
thereto, and related preliminary prospectuses for the registration under the
Securities Act of 1933, as amended (the “Securities
Act”),
of
the Shares which registration statement, as so amended (including post-effective
amendments, if any), has been declared effective by the Commission and copies
of
which have heretofore been delivered to the Underwriters. The registration
statement, as amended at the time it became effective, including the prospectus,
financial statements, schedules, exhibits and other information (if any) deemed
to be part of the registration statement at the time of effectiveness pursuant
to Rule 430A under the Securities Act, is hereinafter referred to as the
“Registration
Statement.”
If
the
Company has filed or is required pursuant to the terms hereof to file a
registration statement pursuant to Rule 462(b) under the Securities Act
registering additional Ordinary Shares (a “Rule
462(b) Registration Statement”),
then,
unless otherwise specified, any reference herein to the term “Registration
Statement” shall be deemed to include such Rule 462(b) Registration Statement.
All of the Shares have been registered under the Securities Act pursuant to
the
Registration Statement or, if any Rule 462(b) Registration Statement is filed,
will be duly registered under the Securities Act with the filing of such Rule
462(b) Registration Statement. Based on communications from the Commission,
no
stop order suspending the effectiveness of either the Registration Statement
or
the Rule 462(b) Registration Statement, if any, has been issued and no
proceeding for that purpose has been initiated or threatened by the Commission.
The Company, if required by the Securities Act and the rules and regulations
of
the Commission (the “Rules
and Regulations”),
proposes to file the Prospectus with the Commission pursuant to Rule 424(b)
under the Securities Act (“Rule
424(b)”).
The
prospectus, in the form in which it is to be filed with the Commission pursuant
to Rule 424(b), or, if the prospectus is not to be filed with the Commission
pursuant to Rule 424(b), the prospectus in the form included as part of the
Registration Statement at the time the Registration Statement became effective,
is hereinafter referred to as the “Prospectus,”
except
that if any revised prospectus or prospectus supplement shall be provided to
the
Underwriters by the Company for use in connection with the Offering that differs
from the Prospectus (whether or not such revised prospectus or prospectus
supplement is required to be filed by the Company pursuant to Rule 424(b)),
the
term “Prospectus” shall also refer to such revised prospectus or prospectus
supplement, as the case may be, from and after the time it is first provided
to
the Underwriters for such use. Any preliminary prospectus or prospectus subject
to completion included in the Registration Statement or filed with the
Commission pursuant to Rule 424 under the Securities Act is hereafter called
a
“Preliminary
Prospectus.”
Any
reference herein to the Registration Statement shall be deemed to refer to
and
include the exhibits filed therewith pursuant to the Rules and Regulations
on or
before the effective date of the Registration Statement or the date of the
Prospectus, as the case may be.
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Group LLC
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], 2006
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(b) At
the
time of the effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement or the effectiveness of any post-effective amendment
to
the Registration Statement, when the Prospectus is first filed with the
Commission pursuant to Rule 424(b), when any supplement to or amendment of
the
Prospectus is filed with the Commission, and at the Closing Date and the
Additional Closing Date (as hereinafter respectively defined), if any, the
Registration Statement and the Prospectus and any amendments thereof and
supplements or exhibits thereto complied or will comply in all material respects
with the applicable provisions of the Securities Act and the Rules and
Regulations (as the case may be), and did not and will not contain an untrue
statement of a material fact and did not and will not omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein: (i) in the case of the Registration Statement, not misleading, and
(ii)
in the case of the Prospectus, in light of the circumstances under which they
were made, not misleading. When any Preliminary Prospectus was first filed
with
the Commission (whether filed as part of the registration statement for the
registration of the Shares or any amendment thereto or pursuant to Rule 424(a)
under the Securities Act) and when any amendment thereof or supplement thereto
was first filed with the Commission, such Preliminary Prospectus and any
amendments thereof and supplements thereto complied in all material respects
with the applicable provisions of the Securities Act and the Rules and
Regulations. No representation and warranty is made in this Section 1(b),
however, with respect to any information contained in or omitted from the
Registration Statement or the Prospectus or any related Preliminary Prospectus
or any amendment thereof or supplement thereto in reliance upon and in
conformity with information furnished in writing to the Company by or on behalf
any Underwriter through the Representative specifically for use therein (it
being acknowledged and agreed by the parties that such information provided
by
or on behalf of any Underwriter consists solely of the subsections of the
“Underwriting” section of the Prospectus captioned “Nature of Underwriting
Commitment,” “Pricing of Securities,” “Stabilization” and “Foreign Regulatory
Restrictions on Purchase of Ordinary Shares”).
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Group LLC
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], 2006
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(c) The
Company has filed with the Commission a Form 8-A (File Number 000-33176 (the
“Form
8-A”)
providing for the registration under the Securities Exchange Act of 1934, as
amended (together
with the Rules and Regulations promulgated thereunder, the “Exchange
Act”),
of the
Ordinary Shares. The Form 8-A has been declared effective by the Commission
and
such effectiveness remains as of the date hereof.
(d)
KPMG,
Hong Kong, (“KPMG”),
whose
reports relating to the Company are included in the Registration Statement,
are
independent registered public accountants as required by the Securities Act,
the
Rules and Regulations and the Public Company Accounting Oversight Board (the
“PCAOB”),
including the rules and regulations promulgated by the PCAOB. KPMG is duly
registered and in good standing with the PCAOB. KPMG has not, during the periods
covered by the financial statements included in the Prospectus, provided to
the
Company any non-audit services, as such term is used in Section 10A(g) of the
Exchange Act.
(e)
The
Company’s subsidiaries within the meaning of Rule 405 under the Securities Act
are Fuwei Films (Shandong) Co., Ltd. which was incorporated as a sino-foreign
joint venture on January 28, 2003 and Fuwei
Films (BVI) Co., Ltd. (the
“Subsidiaries”).
The
Company has no other subsidiaries within the meaning of Rule 405 under the
Securities Act and the Company holds no ownership or other interest, nominal
or
beneficial, direct or indirect, exceeding 5% in any corporation, partnership,
limited liability company, joint venture or other foreign or domestic business
entity.
(f) Subsequent
to the respective dates as of which information is presented in the Registration
Statement and the Prospectus, and except as disclosed in the Registration
Statement and the Prospectus: (i) neither the Company nor any Subsidiaries
has
declared, paid or made any dividends or other distributions of any kind on
or in
respect of its capital stock and (ii) there has been no material adverse change
(or, to the knowledge of the Company, any development that has a high
probability of involving a material adverse change in the future), whether
or
not arising from transactions in the ordinary course of business, in or
affecting: (A) the business, condition (financial or otherwise, including
financial reserves or accruals), results of operations, shareholders’ equity,
properties or prospects (as such prospects are described in the Prospectus)
of
the Company and its Subsidiaries taken as a whole; (B) the long-term debt or
capital stock of the Company and its Subsidiaries; or (C) the Offering or
consummation of any of the other agreements, covenants or commitments of the
Company or its Subsidiaries contemplated by this Agreement or disclosed in
the
Registration Statement or the Prospectus (a “Material
Adverse Change”).
Since
the date of the latest balance sheet presented in the Registration Statement
and
the Prospectus, neither the Company nor any Subsidiaries has incurred or
undertaken any liability or obligation, whether direct or indirect, liquidated
or contingent, matured or unmatured, or entered into any transactions, including
any acquisition or disposition of any business or asset, that is material to
the
Company or its Subsidiaries, except for liabilities, obligations and
transactions that are disclosed in or completed by the Registration Statement
and the Prospectus.
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Group LLC
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], 2006
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(g) As
of the
dates indicated in the Prospectus, the authorized, issued and outstanding shares
of capital stock of the Company were: (i) as set forth in the Prospectus in
the
column headed “Actual” under the section thereof captioned “Capitalization” and
(ii) after giving effect to the Offering and the other transactions contemplated
by this Agreement will be as set forth in the column headed “As Adjusted” in or
the section of the Prospectus captioned “Capitalization”.
(h) All
of
the issued and outstanding shares of capital stock of the Company (including,
without limitation, all Additional Shares that may be sold by hereunder and
all
Relevant Securities) are, or will be, as the case may be: (i) fully paid and
non-assessable and (ii) have been duly and validly authorized and issued, in
compliance with the
laws of
the Cayman Islands, as amended and corresponding rules thereunder (the
“Companies
Law”),
and
all
applicable state, federal, Cayman Islands and other foreign securities laws,
rules and regulations and not in violation of or subject to any preemptive
or
similar right that does or will entitle any foreign or domestic individual,
corporation, trust, partnership, joint venture, limited liability company or
other entity (each, a “Person”),
upon
the issuance or sale of any security, to acquire from the Company any Relevant
Security, except for such rights as may have been fully terminated, satisfied
or
waived prior to the effectiveness of the Registration Statement. As used herein,
the term “Relevant
Security”
means
any Ordinary Shares or other security of the Company (including any preferred
shares) that are convertible into, or exercisable or exchangeable for Ordinary
Shares or equity securities, or that holds the right to acquire any Ordinary
Shares or equity securities of the Company or any other such Relevant Security.
All of the issued and outstanding shares of capital stock of the Subsidiaries
are: (i) fully paid and non-assessable and (ii) have been duly and validly
authorized and issued, in compliance with the Companies Law,
as
amended and corresponding rules thereunder and
all
applicable state, federal, Companies Law and other foreign securities laws,
rules and regulations and not in violation of or subject to any preemptive
or
similar right that does or will entitle any foreign or domestic individual,
corporation, trust, partnership, joint venture, limited liability company or
other entity, upon the issuance or sale of any security, to acquire from the
Subsidiaries any capital stock, except for such rights as may have been fully
terminated, satisfied or waived prior to the effectiveness of the Registration
Statement.
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Group LLC
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], 2006
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(i) The
Shares to be issued and sold by the Company as contemplated by this Agreement
have been duly and validly authorized. When issued,
delivered
and
paid
for in
accordance with this Agreement
and as
described in the Prospectus on each of the Closing Date and the Additional
Closing Date, as applicable,
all such
Shares will
be
duly and validly issued, fully paid and non-assessable, will have been issued
in
compliance with the Companies Law and all applicable state, federal, Cayman
Islands and other foreign securities laws, rules and regulations and will not
have been issued in violation of or subject to any preemptive or similar right
that does or will entitle any Person to acquire any Relevant Security from
the
Company upon issuance or sale of Shares in the Offering, except for such rights
as may have been fully terminated, satisfied or waived prior to the
effectiveness of the Registration Statement.
(j) The
Ordinary Shares and the rights of the holders thereof under the Companies
Law or otherwise conform
in all material respects to the descriptions thereof contained in the
Registration Statement and the Prospectus.
(k) Except
as
disclosed in the Registration Statement and the Prospectus, the neither the
Company nor any Subsidiary has any outstanding warrants, options to purchase,
or
any preemptive rights or other rights to subscribe for or to purchase, or any
contracts or commitments to issue or sell, any Ordinary Shares or any Relevant
Security.
(l) The
Company has been duly incorporated and validly exists as a corporation under
the
Companies Law and other applicable laws of the Cayman Islands. The Company
has
all requisite power and authority to carry on its business as it is currently
being conducted and as described in the Prospectus, and to own, lease and
operate its respective properties. The Company is duly qualified to do business
and is in good standing in each jurisdiction in which the character or location
of its properties (owned, leased or licensed) or the nature or conduct of its
business makes such qualification necessary, except, in each case, for those
failures to be so qualified or in good standing which (individually and in
the
aggregate) could not reasonably be expected to have a Material Adverse Effect
on: (i) the business, condition (financial or otherwise), results of operations,
shareholders’ equity, properties or prospects (as such prospects are described
in the Prospectus) of the Company and the Subsidiaries, (ii) the long-term
debt
or capital stock of the Company or (iii) the Offering or consummation of any
of
the other agreements, covenants or commitments of the Company or the
Subsidiaries contemplated by this Agreement or disclosed in the Registration
Statement or the Prospectus (any such effect being a “Material
Adverse Effect”).
The
Subsidiaries have been duly incorporated and validly exists as a corporation
under the laws of their respective jurisdictions of organization. The
Subsidiaries have all requisite power and authority to carry on their respective
businesses as it currently being conducted and as described in the Prospectus,
and to own, lease and operate their respective properties. The Subsidiaries
are
duly qualified to do business and are in good standing in each jurisdiction
in
which the character or location of their properties (owned, leased or licensed)
or the nature or conduct of its business makes such qualification necessary,
except, in each case, for those failures to be so qualified or in good standing
which (individually and in the aggregate) could not reasonably be expected
to
have a Material Adverse Effect.
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Group LLC
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], 2006
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(m) Neither
the Company nor any Subsidiary is: (i) in violation of their memorandum of
association or articles of association, including any and all amendments
thereto, (ii) in breach of, or default under, and no event has occurred that,
with notice or lapse of time or both, would constitute a breach or default
under, or result in the creation or imposition of any lien,
charge,
pledge, option, right, security interest or other encumbrance (“Lien”)
upon
any of its property or assets pursuant to, any indenture, mortgage, lease,
deed
of trust, loan agreement or other agreement or instrument to which it is a
party
or by which it is bound or to which any of its property or assets is subject
or
(iii) in violation in any respect of any law, rule, regulation, ordinance,
directive, judgment, decree or order of any judicial, regulatory or other legal
or governmental agency or body, foreign or domestic, except: (A) in the case
of
clause (ii) above, for any Lien disclosed in the Registration Statement and
the
Prospectus and (B) in the case of clauses (ii) and (iii) above, for those
defaults or Liens that are disclosed in the Registration Statement or, either
individually or in the aggregate, would not have a Material Adverse Effect.
(n) The
Company has full right, power and authority to execute and deliver this
Agreement and the Representative Purchase Option (as hereinafter defined),
to
perform its obligations hereunder and thereunder and to consummate each of
the
transactions contemplated by this Agreement. The Company has duly and validly
authorized this Agreement and the Representative Purchase Option and each of
the
transactions contemplated by this Agreement and the Representative Purchase
Option. All corporate action required by the laws of the Cayman Islands and
the
articles of association of the Company to be taken by the Company for the due
and proper authorization and issuance of the Firm Shares and the offering,
sale
and delivery of the Firm Shares, has been validly and sufficiently taken. This
Agreement and the Representative Purchase Option have been or will be duly
and
validly executed and delivered by the Company and constitute or will constitute
the legal, valid and binding obligation of the Company, enforceable against
the
Company in accordance with its terms, except as enforceability may be limited
by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors’ rights generally and except as enforceability may be
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(o) The
Representative Purchase Option, when delivered at the Closing, will conform
to
the description thereof in the Registration Statement and in the Prospectus.
The
Ordinary Shares issuable upon exercise of the Representative Purchase Option
have been duly authorized and reserved for issuance upon exercise of the
Representative Purchase Option by all necessary corporate action on the part
of
the Company and, when issued and delivered and paid for upon such exercise
in
accordance with the terms of the Representative Purchase Option, will be validly
issued, fully paid, nonassessable and free of preemptive rights and will conform
to the description thereof in the Prospectus.
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Group LLC
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], 2006
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(p) The
execution, delivery, and performance of this Agreement and the Representative
Purchase Option and consummation of the transactions contemplated by this
Agreement and the Representative Purchase Option do not and, to the knowledge
of
the Company, will not: (i) conflict with, require consent under or result in
a
breach of any of the terms and provisions of, or constitute a default (or an
event which with notice or lapse of time, or both, would constitute a default)
under, or result in the creation or imposition of any Lien upon any property
or
assets of the Company pursuant to, any indenture, mortgage, deed of trust,
loan
agreement or other agreement, instrument, franchise, license or permit to which
the Company is a party or by which the Company or its properties, operations
or
assets may be bound or (ii) violate or conflict with any provision of the
memorandum of association, articles of association, or other organizational
documents of the Company, or (iii) violate or conflict with any law, rule,
regulation, ordinance, directive, judgment, decree or order of any judicial,
regulatory or other legal or governmental agency or body, domestic or foreign
except, in the case of clauses (i) and (iii) above, for those violations or
conflicts that, either individually or in the aggregate, would not have a
Material Adverse Effect.
(q) The
Company has all consents, approvals, authorizations, orders, registrations,
qualifications, licenses, filings and permits of, with and from all judicial,
regulatory and other legal or governmental agencies and bodies and all third
parties, foreign and domestic (collectively, the “Consents”),
to
own, lease and operate its properties and conduct its business as disclosed
or
described in the Registration Statement and the Prospectus, except for such
Consents, the absence of which, either individually or in the aggregate, would
not have a Material Adverse Effect. Each such Consent is valid and in full
force
and effect.
To
the
Company’s knowledge, the Company has not received notice of any investigation or
proceedings that, if decided adversely to the Company, could reasonably be
expected to result in, the revocation of, or imposition of a materially
burdensome restriction on, any Consent. No
Consent contains a materially burdensome restriction not adequately disclosed
in
the Registration Statement and the Prospectus.
(r) Each
of
the Company and the Subsidiaries are in compliance with all applicable Cayman
Islands, People’s Republic of China (“PRC”) and the laws of the British Virgin
Islands (“BVI”) and other foreign and U.S. laws, rules, regulations, ordinances,
directives, judgments, decrees and orders (including, without limitation, all
securities and tax laws, rules and regulations of the Cayman Islands, BVI and
PRC), except for such non-compliance as would not have a Material Adverse
Effect. As of the date hereof and as of the Closing Date and the Additional
Closing Date, and except as contemplated by this Agreement, neither the Company
nor any Subsidiary operates within the jurisdiction of United States or any
state or territory thereof in such a manner so as to subject the Company or
any
Subsidiary or their respective operations or businesses to registration as
a
foreign company doing business in any state within the United States or to
any
of the following laws in any material respect: (i) the Bank Secrecy Act, as
amended, (ii) the Uniting and Strengthening of America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism Act of 2001, as amended,
(iii) t the Currency and Foreign Transactions Reporting Act of 1970, as amended,
(v) the Employee Retirement Income Security Act of 1974, as amended, (vi) the
rules and regulations promulgated under any such law, or any successor law,
or
any judgment, decree or order of any applicable administrative or judicial
body
relating to such law and (vii) any corresponding law, rule, regulation,
ordinance, judgment, decree or order of any state or territory of the United
States or any administrative or judicial body thereof.
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Group LLC
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], 2006
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(s) No
Consent of, with or from any judicial, regulatory or other legal or governmental
agency or body or any third party, foreign or domestic, is required for the
execution, delivery and performance of this Agreement or consummation of each
of
the transactions contemplated by this Agreement, including the issuance, sale
and delivery of the Shares to be issued, sold and delivered hereunder, except
the registration under the Securities Act of the Shares, and such Consents
as
may be required under state securities or blue sky laws or the by-laws and
rules
of The Nasdaq Stock Market, LLC, including the Nasdaq Global Market
(“NASDAQ”),
the
National Association of Securities Dealers, Inc. (the “NASD”)
or
NASD Regulation, Inc. in connection with the purchase and distribution of the
Shares by the Underwriters, each of which has been obtained and is in full
force
and effect.
(t) Except
as
disclosed in the Registration Statement and the Prospectus, there is no
judicial, regulatory, arbitral or other legal or governmental proceeding or
other litigation or arbitration, domestic or foreign, pending to which the
Company or any Subsidiary or their respective officers, directors or employees
is a party or of which any property, operations or assets of the Company or
any
Subsidiary is the subject which, individually or in the aggregate, if determined
adversely to the Company or such individuals, could reasonably be expected
to
have a Material Adverse Effect. Except as disclosed in the Registration
Statement and the Prospectus, no such proceeding, litigation or arbitration
is,
to the Company’s knowledge, threatened or contemplated.
(u) Under
the
Regulations on the Acquisitions by Foreign Investors of Domestic Enterprises
jointly promulgated by the PRC Ministry of Commerce (“MOFCOM”), the China
Securities Regulatory Commission (“CSRC”), the State Owned Assets Supervision
and Management Commission, the General Administration of Taxation and the State
Administration of Foreign Exchange effective September 8, 2006, neither the
Company nor Shandong Fuwei is required to obtain any approvals of the CSRC
in
connection with the Offering, or to the extent that such approvals are required,
they have been duly obtained and are in full effect.
(v) The
acquisition by Shandong Fuwei of substantially all of the Company’s operating
assets through auction and bankruptcy proceedings in the PRC including the
acquisition of the ▇▇▇▇▇▇▇▇ production line in 2003 and the DMT production
line
in 2004 complied with all applicable PRC laws and regulations, including all
applicable auction and bankruptcy laws and regulations. Neither the Company
nor
Shandong Fuwei nor any of their directors or officers have knowledge of any
facts relating to such acquisitions, which would be deemed to constitute a
material breach of any applicable PRC laws or regulations, or would have a
Material Adverse Effect.
(w) The
consolidated financial statements, including the notes thereto, and the
supporting schedules included in, the Registration Statement and the Prospectus
present fairly the financial position as of the dates indicated and the cash
flows and results of operations for the periods specified of the Company and
the
Subsidiaries. Except as otherwise stated in the Registration Statement and
the
Prospectus, said financial statements have been prepared in conformity with
United States generally accepted accounting principles applied on a consistent
basis throughout the periods involved. No other financial statements or
supporting schedules or financial footnotes are required to be included in
the
Registration Statement. The other financial and statistical information included
in the Registration Statement and the Prospectus (including, without limitation,
that presented in the section of the Prospectus captioned “Management’s
Discussion and Analysis of Financial Condition and Results of Operations”)
presents fairly the information included therein and have been prepared on
a
basis consistent with that of the financial statements that are included in
the
Registration Statement and the Prospectus and the books and records of the
respective entities presented therein.
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Group LLC
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], 2006
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(x) There
are
no pro forma or as adjusted financial statements that are required to be
included in
the
Registration Statement and
the
Prospectus in accordance with Form
F-1
and the Rules and Regulations which have not been included as so required.
The
pro forma financial information included in the Registration Statement and
the
Prospectus include all adjustments necessary to present fairly, in accordance
with generally accepted accounting principles of the United States, consistently
applied, the pro forma financial position of the Company as presented.
(y) The
statistical, industry-related and market-related data included in the
Registration Statement and the Prospectus are based on or derived from sources
that the Company reasonably and in good faith believes are reliable and
accurate, and such data agree with the sources from which they are derived
in
all material respects.
(z) The
Company maintains a system of internal accounting and other controls sufficient
to provide reasonable assurances 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 United States generally accepted accounting
principles and to maintain accountability for assets, (iii) access to assets
is
permitted only in accordance with management’s general or specific
authorization, and (iv) the recorded accounting for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences. Since the date of the most recent balance sheet
included in the Prospectus, there have been no significant changes in internal
controls or in other factors that could significantly affect internal controls,
including any corrective actions with regard to significant deficiencies and
material weaknesses.
(aa) Other
than as described in the F-1, neither the Company nor its executive officers
have been advised by KPMG or any prior auditor of the Company of: (i) any
significant deficiency in the design or operation of the Company’s internal
controls over financial reporting (whether or not remediated) that could
adversely affect the Company’s ability to record, process, summarize and report
financial data, (ii) any material weakness in such internal controls or
(iii) any fraud, whether or not material, that involves management or other
employees who have a significant role in the Company’s internal controls.
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], 2006
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(bb) The
section entitled “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” in the Prospectus accurately and fully describes (i)
accounting policies that the Company considers to be the most important in
the
portrayal of the Company’s financial condition and results of operations
(“Critical
Accounting Policies”),
(ii)
judgments and uncertainties affecting the application of the Critical Accounting
Policies and (iii) the likelihood that materially different amounts would be
reported under different conditions or using different assumptions and an
explanation thereof. The Company’s management has reviewed and agreed with the
selection, application and disclosure of the Critical Accounting Policies and
has consulted with the Company’s independent auditors with regards to such
disclosure.
(cc) The
operations of the Company and the Subsidiaries are and have been conducted
at
all times in compliance with applicable financial record keeping and reporting
requirements and money laundering statutes of the Cayman Islands, BVI and the
PRC, as applicable and, to the Company’s knowledge, all other jurisdictions to
which the Company or the Subsidiaries are subject, the rules and regulations
thereunder and any related or similar rules, regulations or guidelines, issued,
administered or enforced by any applicable governmental agency (collectively,
the “Money
Laundering Laws”)
and no
action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company or any Subsidiary
with
respect to the Money Laundering Laws is pending or, to the best knowledge of
the
Company, threatened.
(dd) Neither
the Company nor, to the knowledge of the Company, any director, officer, agent,
employee or affiliate (as such term is defined under Rule 144 under the
Securities Act, an “Affiliate”)
of the
Company or any Subsidiary is currently subject to any U.S. sanctions
administered by the Office of Foreign Assets Control of the U.S. Treasury
Department (“OFAC”);
and
the Company will not directly or indirectly use the proceeds of the offering,
or
lend, contribute or otherwise make available such proceeds to any joint venture
partner or other person or entity, for the purpose of financing the activities
of any person currently subject to any U.S. sanctions administered by
OFAC.
(ee) Neither
the Company nor any Subsidiary nor, to the knowledge of the Company, any of
their respective directors, officers, Affiliates or controlling persons has
taken, directly or indirectly, any action designed, or which has constituted
or
would reasonably be expected to cause or result in, under the Exchange Act
or
otherwise, the stabilization or manipulation of the price of any security of
the
Company to facilitate the sale or resale of the Shares.
(ff) The
Company has validly appointed CT Corporation System, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, as its authorized agent for service of process pursuant
to
this Agreement and in connection with the Registration Statement.
Maxim
Group LLC
[
], 2006
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of
44
(gg) Neither
the Company nor any of its Affiliates has, prior to the date hereof, made any
offer or sale of any securities that are required to be “integrated” pursuant to
the Securities Act or the Rules and Regulations with the offer and sale of
the
Shares pursuant to the Registration Statement. Except as disclosed in the
Registration Statement or the Prospectus, neither the Company nor any of its
Affiliates has sold or issued any Relevant Security during the six-month period
preceding the date of the Prospectus, other than Ordinary Shares issued pursuant
to employee benefit plans, stock option plans or the employee compensation
plans
or pursuant to the Relevant Securities described in the Registration Statement
and the Prospectus.
(hh) Except
as
disclosed in the Registration Statement and the Prospectus, no holder of any
Relevant Security has any rights to require registration of any Relevant
Security as part or on account of, or otherwise in connection with, the offer
and sale of the Shares contemplated hereby. Any such rights so disclosed have
either been fully complied with by the Company or effectively terminated or
waived by the holders thereof or by the Company. Any such waivers or
terminations remain in full force and effect.
(ii) The
conditions for use of Form F-1 to register the Offering under the Securities
Act, as set forth in the General Instructions to such Form, have been
satisfied.
(jj) The
Company is not and, at all times up to and including consummation of the
transactions contemplated by this Agreement, and after giving effect to
application of the net proceeds of the Offering, will not be, subject to
registration as an “investment company” under the Investment Company Act of
1940, as amended, and is not and will not be an entity “controlled” by an
“investment company” within the meaning of such act.
(kk) There
are
no contracts or other documents (including, without limitation, any voting
or
employment agreement) that are required to be described in the Registration
Statement and the Prospectus or filed as exhibits to the Registration Statement
by the Securities Act or the Rules and Regulations and which have not been
so
described and/or filed. Other than as disclosed thereunder, the Company and,
to
the best of the Company’s knowledge, no other party is in breach of or default
under any of contracts or agreements described in or filed as exhibits to the
registration statement, which breach or default would cause a Material Adverse
Effect.
(ll) No
relationship, direct or indirect, exists between or among any of the Company
or
any Affiliate of the Company, on the one hand, and any director, officer,
shareholder, customer or supplier of the Company or any Affiliate of the
Company, on the other hand, that is required by the Securities Act or the Rules
and Regulations to be described in the Registration Statement or the Prospectus
and that is not so described as required. There are no outstanding loans,
advances (except normal advances for business expenses in the ordinary course
of
business) or guarantees of indebtedness by the Company to or for the benefit
of
any of the officers or directors of the Company or any of their respective
family members, except as disclosed in the Registration Statement and the
Prospectus. The Company does not directly or indirectly, (other than as
permitted under the Sarb-Ox for depositary institutions), extend or maintain
credit, arranged for the extension of credit, or renew an extension of credit,
in the form of a personal loan to or for any director or executive officer
of
the Company in a manner that would violate ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002
(“Sarb-Ox”).
Maxim
Group LLC
[
], 2006
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44
(mm) Except
as
disclosed in the Registration Statement and the Prospectus, there are no oral
or
written agreements, commitments or understandings between the Company and any
Person that would give rise to a valid claim against the Company or any
Underwriter for a brokerage commission, finder’s fee or other like payment in
connection with the transactions contemplated by this Agreement or, to the
Company’s knowledge, any arrangements, agreements, understandings, payments or
issuances of securities of or with respect to the Company or any of its
officers, directors, shareholders, partners, employees or Affiliates that may
affect the Underwriters’ compensation as determined by the NASD.
(nn) Except
as
disclosed in the Registration Statement and the Prospectus, neither the Company
nor any Subsidiary, directly or indirectly, owns any real property. The Company
and the Subsidiaries lease or hold land use rights with respect to all such
properties as are necessary to the conduct of its business as presently operated
and as proposed to be operated as described in the Registration Statement and
the Prospectus. The Company and the Subsidiaries own all personal property
owned
by them free and clear of all Liens except such as are described in the
Registration Statement and the Prospectus or such as do not or will not, with
the passage of time (individually or in the aggregate), have a Material Adverse
Effect. Any real property and buildings held under lease or sublease by the
Company or the Subsidiaries are held by it under valid, subsisting and
enforceable leases with such exceptions as are not material to, and do not
interfere with, the use made and proposed to be made of such property and
buildings by the Company or the Subsidiaries. Neither the Company nor the
Subsidiaries have received any notice of any claim adverse to its ownership
of
any real or personal property or of any claim against the continued possession
of any real property, whether owned or held under lease or sublease by the
Company or the Subsidiaries.
(oo) Intellectual
Property Matters.
(i) As
used
in this Agreement, the term “Intellectual
Property”
shall
mean all: (A) patents, trademarks, trade names, service marks, trade dress,
copyrights and any renewal rights therefor, domain names, mask works, net lists,
schematics, technology, trade secrets, know-how, moral rights, computer software
programs or applications (in both source and object code form), applications
and
registrations for any of the foregoing owned by the Company and the
Subsidiaries, specifically including but not limited to the proprietary
processes embodied in the Company’s pending patents; (B) goodwill associated
with trademarks, trade names, service marks and trade dress owned by the Company
and the Subsidiaries; (C) software, firmware listings, updated software source
code, and complete system build software and instructions related to all
software owned by the Company; (D) documents, records and files relating to
design, end user documentation, manufacturing, quality control, sales, marketing
or customer support for all intellectual property described in the Registration
Statement and Prospectus as being owned by the Company and the Subsidiaries;
(E)
other tangible or intangible proprietary information and materials owned by
the
Company and the Subsidiaries; and (F) license and other rights in any third
party product, intellectual property, proprietary or personal rights,
documentation, or tangible or intangible property, including without limitation
the types of intellectual property and tangible and intangible proprietary
information described in (A) through (E) above (other than license agreements
for standard “shrink wrapped, off the shelf,” commercially available, third
party products used by the Company and the Subsidiaries) that are owned or
held
by or on behalf of the Company and the Subsidiaries or that are being, and/or
have been, used, or are currently under development for use, in the business
of
the Company and the Subsidiaries as the same is described in the Registration
Statement and the Prospectus. The Intellectual Property belonging or inuring
to
the benefit of the Company and the Subsidiaries or in which the Company and
the
Subsidiaries, directly or indirectly, own any rights is referred to herein
as
“Company
Intellectual Property” and
Intellectual Property described in clause (F) above is referred to herein as
“Company
Licensed Intellectual Property.” Unless
otherwise specifically noted, the term “Intellectual
Property”
shall
refer collectively to both the Company Intellectual Property and the Company
Licensed Intellectual Property.
(ii) Each
of
the Company and the Subsidiaries own, possess, license or have other rights
to
use, as the case may be, on reasonable terms, all Intellectual Property
necessary for the conduct of the Company’s and the Subsidiaries’ business as the
same is described in the Registration Statement and the Prospectus, including,
without limitation, and if necessary to carry out such activities, rights to
make, use, exclude others from using, reproduce, modify, adapt, create
derivative works based on, translate, distribute (directly and indirectly),
transmit, display and perform publicly, license, rent, lease, assign, and sell
the Intellectual Property in all geographic locations and fields of use, and
to
sublicense any or all such rights to third parties, including the right to
grant
further sublicenses.
(iii) Except
as
set forth in the Prospectus or the Registration Statement, neither the Company
nor any Subsidiary is currently, nor, as a result of the execution or delivery
of this Agreement, or performance of the Company’s obligations hereunder, will
be, in violation of any license, sublicense or other agreement relating to
the
Intellectual Property to which the Company and the Subsidiaries are a party
or
otherwise bound other than violations that would not result in a Material
Adverse Effect. Except as set forth in the Prospectus, the Registration
Statement or the exhibits thereto, neither the Company nor the Subsidiaries
are
obligated to provide any consideration (whether financial or otherwise) to
any
third party, nor is any third party otherwise entitled to any consideration,
with respect to any exercise of rights by the Company and the Subsidiaries
or
their respective successors in the Intellectual Property.
Maxim
Group LLC
[
], 2006
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44
(iv) Except
as
set forth in the Prospectus, the Registration Statement or the exhibits thereto,
the use, reproduction, modification, distribution, licensing, sublicensing,
sale, or any other exercise of rights in any Intellectual Property or any other
authorized exercise of rights in or to any Intellectual Property by the Company
and the Subsidiaries or their respective licensees does not and, to the
knowledge of the Company, will not infringe any copyright, patent, trade secret,
trademark, service ▇▇▇▇, trade name, firm name, domain name, logo, trade dress,
mask work, moral right, other intellectual property right, right of privacy,
right of publicity or right in personal or other data of any Person other than
violations that would not result in a Material Adverse Effect. No claims: (A)
challenging the validity or ownership by the Company or the Subsidiaries of
any
of Company Intellectual Property, or (B) to the effect that the use,
reproduction, modification, manufacturing, distribution, licensing,
sublicensing, sale or any other exercise of rights in any Company Intellectual
Property by the Company and the Subsidiaries or their respective licensees
infringes or will infringe on any intellectual property or other proprietary
or
personal right of any Person have been asserted or, to the Company’s knowledge,
are threatened by any Person. Except as set forth in the Prospectus, all granted
or issued patents and mask works and all registered trademarks included in
the
Intellectual Property and all copyright registrations held by the Company and
the Subsidiaries are valid, enforceable and subsisting. To the Company’s
knowledge, there is and has been no unauthorized use, infringement or
misappropriation of any of any Intellectual Property by any Person (including,
without limitation, any employee or former employee of the Company or the
Subsidiaries).
(v) Except
as
set forth in the Prospectus, the Registration Statement or the exhibits thereto,
there is no Person who has created any material portion of, or otherwise have
any rights in or to, any Intellectual Property (other than employees of the
Company and the Subsidiaries whose work product was created by them entirely
within the scope of their employment by the Company and the Subsidiaries and
constitutes works made for hire owned by the Company and the Subsidiaries).
Each
of the Company and the Subsidiaries have secured from all parties who have
created any material portion of, or otherwise have any rights in or to, any
Intellectual Property valid and enforceable written assignments or licenses
of
any such work or other rights to the Company and the Subsidiaries as
applicable.
(vi)
The
Company has obtained legally binding written agreements from all senior
employees of the Company and the Subsidiaries and third parties with whom the
Company and the Subsidiaries have shared confidential proprietary information:
(A) of the Company and the Subsidiaries, or (B) received from others that the
Company is obligated to treat as confidential, which agreements require such
employees and third parties to keep such information confidential.
Maxim
Group LLC
[
], 2006
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(pp) The
Company and
the
Subsidiaries
each
maintain insurance of the types and in the amounts which are customary
for companies engaged in similar businesses in the PRC,
including, but not limited to: (A) directors’ and officers’ insurance
and
(B)
insurance covering real and personal property owned or leased by the Company
and
the
Subsidiaries
against
theft, damage, destruction, and all other risks customarily insured against
in
the Cayman Islands and the PRC, as applicable. There
are
no claims by the Company or the Subsidiaries under any policy or instrument
described in this subparagraph as to which any insurance company is denying
liability or defending under a reservation of rights clause. All
of the
insurance policies described in this Section 1(nn) are in full force and
effect.
Neither
the
Company
nor any
Subsidiary
has been
refused any insurance coverage sought or applied for. Neither
the
Company
nor any
Subsidiary
has a
reason to believe that it will not be able to renew its existing material
insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its business
at a
cost that would not cause a Material Adverse Effect.
(qq) The
Company has accurately prepared and timely filed all Cayman Islands and other
tax returns that are required to be filed by it and has paid or made provision
for the payment of all taxes, assessments, governmental or other similar
charges, including without limitation, all sales and use taxes and all taxes
that the Company is obligated to withhold from amounts owing to employees,
creditors and third parties, with respect to the periods covered by such tax
returns (whether or not such amounts are shown as due on any tax return), except
for such tax filings that would not, either individually or in the aggregate,
cause a Material Adverse Effect. No deficiency assessment with respect to a
proposed adjustment of the Company’s foreign or other taxes is pending or, to
the Company’s knowledge, threatened. The accruals and reserves on the books and
records of the Company in respect of tax liabilities for any taxable period
not
finally determined are adequate to meet any assessments and related liabilities
for any such period and, since the date of the Company’s most recent audited
financial statements, the Company has not incurred any liability for taxes
other
than in the ordinary course of its business. There is no material tax lien,
whether imposed by any federal, state, foreign or other taxing authority,
outstanding against the assets, properties or business of the Company. The
Subsidiaries have accurately prepared and timely filed all PRC and other tax
returns that are required to be filed by them and have paid or made provision
for the payment of all taxes, assessments, governmental or other similar
charges, including without limitation, all sales and use taxes and all taxes
that the Subsidiaries are obligated to withhold from amounts owing to employees,
creditors and third parties, with respect to the periods covered by such tax
returns (whether or not such amounts are shown as due on any tax return), except
for such tax filings or payments that would not, either individually or in
the
aggregate, cause a Material Adverse Effect. The accruals and reserves on the
books and records of the Subsidiaries in respect of tax liabilities for any
taxable period not finally determined are adequate to meet any assessments
and
related liabilities for any such period and, since the date of the most recent
audited financial statements, the Subsidiaries have not incurred any liability
for taxes other than in the ordinary course of its business.
Maxim
Group LLC
[
], 2006
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(rr) Each
of
the Company and the Subsidiaries have at all times operated their business
in
material compliance with all Environmental Laws, and no material expenditures
are or will be required in order to comply therewith. The Company has not
received any notice or communication that relates to or alleges any actual
or
potential violation or failure to comply with any Environmental Laws that will
result in a Material Adverse Effect. As used herein, the term “Environmental
Laws”
means
all applicable Cayman Islands, PRC and other applicable laws and regulations,
including any licensing, permits or reporting requirements, and any action
by a
government entity pertaining to the protection of the environment, protection
of
public health, protection of worker health and safety, or the handling of
hazardous materials.
(ss) Each
of
the Company and the Subsidiaries are in compliance with all applicable labor
and
employment laws, rules and regulations applicable to their employees (including,
without limitation, the laws of the Cayman Islands and the PRC and other laws,
rules and regulations relating to discrimination in the hiring, promotion or
pay
of employees and any wage or hour laws), except for matters that would not,
individually or in the aggregate, have a Material Adverse Effect. Neither the
Company nor the Subsidiaries and their respective operations are not subject
to
any collective bargaining agreements in the United States, BVI or PRC. There
is
not presently, nor has there been, any strike, labor dispute, slowdown or
stoppage pending or, to the Company’s knowledge, threatened against the Company
or the Subsidiaries. To the Company’s knowledge, no union organizing activities
are currently taking place concerning the employees of the Company or the
Subsidiaries.
(tt) The
Registration Statement and the Prospectus disclose, describe or have filed
as
exhibits all Benefit Arrangements (as defined below) of the Company required
to
be so disclosed, described or filed under the Securities Act and the Rules
and
Regulations (including Form F-1). Each Benefit Arrangement of the Company
described in the Registration Statement or the Prospectus or which the Company
is required by law, rule or regulation to maintain or be a party to is in full
force and effect and has been maintained in substantial compliance with its
terms and with requirements prescribed by any and all applicable statutes,
orders, rules and regulations that are applicable to the Company or such Benefit
Arrangement. Except as set forth in the Registration Statement or the
Prospectus, there is no liability of the Company in respect of any severance
or
post-retirement health and medical benefits for retired employees of the Company
or any of its Affiliates. The execution of this Agreement and the consummation
of the Offering does not constitute a triggering event under any Company Benefit
Arrangement that (either alone or upon the occurrence of any additional or
subsequent event) will or may result in any payment (of severance pay or
otherwise), acceleration, increase in vesting, or increase in benefits to
Person. As used in this Agreement, the term “Benefit
Arrangement”
means
any employment, employment-related, severance, pension or other similar
agreement, arrangement, policy or plan or any agreement, plan or arrangement
providing for insurance coverage for any purpose relating to the foregoing
(including any self-insured arrangements), workers’ compensation, disability
benefits, severance benefits, supplemental unemployment benefits, vacation
benefits, retirement or other pension benefits or for deferred compensation,
profit-sharing, bonuses, stock options, stock appreciation or other forms of
incentive compensation, or post-retirement insurance, compensation or benefits
to which the Company is party. The term “Benefit Arrangement” shall include,
without limitation, those undertaken voluntarily by the Company and the
Subsidiaries, and those required by Cayman Islands, PRC or other applicable
law,
rule or regulation.
Maxim
Group LLC
[
], 2006
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(uu) The
Company has not offered, or caused the Underwriters to offer, the Firm Shares
to
any Person or entity with the intention of unlawfully influencing: (i) a
customer or supplier of the Company to alter the customer’s or supplier’s level
or type of business with the Company or (ii) a journalist or publication to
write or publish favorable information about the Company or its products or
services.
(vv) Neither
the Company, its Subsidiaries, nor any of their respective properties or assets
has any immunity from the jurisdiction of any court or from any legal process
(whether through service or notice, attachment prior to judgment, attachment
in
aid of execution or otherwise) under the laws of the Cayman Islands or the
PRC.
(ww) The
Company is not a Passive Foreign Investment Company (“PFIC”)
within
the meaning of Section 1297 of the United States Internal Revenue Code of 1986,
as amended, and does not reasonably expect to become a PFIC in the
future.
(xx) All
dividend and other distributions declared and payable on the Ordinary Shares
of
the Company may under the current laws and regulations of the Cayman Islands
be
paid to the holders of the Ordinary Shares in U.S. dollars or any other currency
that may be converted into foreign currency, which may be freely transferred
out
of the Cayman Islands, and all such dividends and other distributions will
not
be subject to withholding or other taxes under the laws and regulations of
the
Cayman Islands and are otherwise free and clear of any other tax, withholding
or
deduction in the Cayman Islands and without necessity of obtaining any consents,
approvals, authorizations, permissions, orders, registrations, filings,
exemptions, waivers, endorsements, license, annual inspections, clearances
and
qualifications of a Governmental Agency having jurisdiction over the Company
or
its Subsidiaries or any of their properties or any stock exchange authorities
(hereinafter referred to as “Governmental Authorizations”) in the Cayman
Islands.
(yy) Assuming
the Underwriters are not otherwise subject to Cayman Islands or PRC taxation
by
the conduct of their general business activities: (i) the sale and delivery
to
the Underwriters of the Shares as contemplated in this Agreement and the sale
and delivery of the Shares by the Underwriters to subsequent purchasers as
contemplated by this Agreement, are not subject to any tax imposed by the Cayman
Islands, the PRC or any political subdivision or taxing authority thereof,
except for any Cayman Islands stamp taxes applicable to this Agreement (which
will be paid by the Company on a timely basis after the time for payment, to
the
extent required by, and in accordance with, Cayman Islands law) and to the
issuance of the Shares to be sold by the Company under this Agreement (which
will be paid by the Company at the time for payment, or promptly and on a timely
basis after the time for payment, to the extent required by, and in accordance
with, Cayman Islands law) and (ii) except as disclosed in the Registration
Statement or Prospectus: (A) payments with respect to the Shares will not be
subject to withholding taxes imposed under the laws of the Cayman Islands,
the
PRC or any political subdivision or taxing authority thereof or therein and
(B)
the proceeds from any sale or other disposition of securities will not be
subject to any capital gains, withholding or other taxes imposed by the Cayman
Islands, the PRC or any political subdivision or taxing authority thereof or
therein.
Maxim
Group LLC
[
], 2006
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of
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(zz) Except
as
disclosed in the Prospectus, under the laws of the Cayman Islands, the courts
of
the Cayman Islands recognize and give effect to the choice of law provisions
set
forth in Section 15 hereof and will enforce judgments of U.S. courts obtained
against the Company in connection with this Agreement; except as disclosed
in
the Prospectus, under the laws of the PRC, the choice of law provisions set
forth in Section 15 hereof will be recognized by the courts of the PRC and
any
judgment obtained in a New York court arising out of or in relation to the
obligations of the Company under this Agreement will be recognized in PRC courts
subject to the applicable provisions of the Civil Procedure Law of the PRC
relating to the enforceability of foreign judgments.
(aaa) All
of
the information provided by or on behalf of the Company in writing to the
Underwriters or to Underwriters’ Counsel (as defined below) specifically for use
by Underwriters’ Counsel in connection with its COBRADesk filings (and related
disclosures) made to the NASD pursuant to NASD Rule 2710 or 2720 is true,
complete and correct in all material respects.
(bbb) (i)
At
the time of filing the Registration Statement and (ii) at the date hereof,
the Company was not and is not an “ineligible issuer,” as defined in
Rule 405 under the Securities Act.
(ccc) Neither:
(i) the Issuer-Represented General Free Writing Prospectus(es) (as defined
below) and the Prospectus, all considered together (collectively, the
“General
Disclosure Package”),
nor
(ii) any individual Issuer-Represented Limited-Use Free
Writing Prospectus, when considered together with the General Disclosure
Package, included any untrue statement of a material fact or omitted to state
any material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. The
preceding sentence does not apply to statements in or omissions from the
Prospectus or any Issuer-Represented Free
Writing Prospectus based
upon and in conformity with written information furnished to the Company by
the
Representative specifically for use therein.
(ddd) Each
Issuer-Represented Free
Writing Prospectus, as of its issue date and at all subsequent times through
each Closing Date did not, does not and will not include any information that
conflicted, conflicts or will conflict with the information contained in the
Registration Statement or the Prospectus. If at any time following issuance
of
an Issuer-Represented Free
Writing Prospectus there occurred or occurs an event or development as a result
of which such Issuer-Represented Free
Writing Prospectus included or would include an untrue statement of a material
fact or omitted or would omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances, not misleading,
the Company has notified or will notify promptly the Representative so that
any
use of such Issuer-Represented Free
Writing Prospectus may cease until it is amended or supplemented. The
foregoing two sentences do not apply to statements in or omissions from any
Issuer-Represented Free
Writing Prospectus based upon and in conformity with written information
furnished to the Company by the Representative specifically for use therein.
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Group LLC
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], 2006
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(eee) Unless
the Company obtains the prior consent of the Representative, it has not made
and
will not make any offer relating to the Shares that would constitute an “issuer
free writing prospectus,” as defined in Rule 433 under the Securities Act, or
that would otherwise constitute a “free writing prospectus,”
as
defined in Rule 405 under the Securities Act, required to be filed with the
Commission. The Company has complied and will comply with the requirements
of
Rule 433 under the Securities Act applicable to any Issuer-Represented Free
Writing Prospectus,
including timely filing with the Commission where required, legending and record
keeping. The Company has, to the best of its knowledge, satisfied and will
satisfy the conditions in Rule 433 under the Securities Act to avoid a
requirement to file with the Commission any electronic road show.
(fff) Neither
the Company, the Subsidiary, nor any of their respective officers, directors
or
affiliates, or any other person, employee or agent associated therewith, or
acting on behalf of such persons, has directly or indirectly (i) used any
corporate funds for any unlawful contribution, gift, entertainment or other
unlawful expenses; (ii) made any direct or indirect unlawful payment to nay
foreign or domestic government official or employee from corporate funds; (iii)
violated any provision of the United States Foreign Corrupt Practices Act of
1977; or (iv) made any bribe, rebate, payoff, influence payment, kickback or
other unlawful payment.
(ggg) As
used
in this Agreement, the terms:
(i) “Issuer-Represented
Free
Writing Prospectus”
means
any “issuer free
writing prospectus”
or
any
“issuer-information” as defined in and filed or required to be filed pursuant to
Rule 433 under
the
Securities Act relating to the Shares that: (A) is required to be filed
with the Commission by the Company, (ii) is a “road show that is a written
communication” within the meaning of Rule 433(d)(8)(i) under the Securities
Act, whether or not required to be filed with the Commission, or (iii) is
exempt from filing pursuant to Rule 433(d)(5)(i) under the Securities Act
because it contains a description of the Shares or of the offering of Shares
pursuant to this Agreement.
(ii) “Issuer-Represented
General Free
Writing Prospectus”
means
any Issuer-Represented Free
Writing Prospectus
that is
intended for general distribution to prospective investors, as evidenced by
its
being specified on Annex
V
to this
Underwriting Agreement.
Maxim
Group LLC
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], 2006
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(iii) “Issuer-Represented
Limited-Use Free
Writing Prospectus”
means
any “Issuer-Represented Free
Writing Prospectus”
that is
not an Issuer-Represented General Free
Writing Prospectus.
(hhh) As
used
in this Agreement, references to matters being “material”
with
respect to the Company shall mean a material event, change, condition, status
or
effect related to the condition (financial or otherwise), properties, assets
(including intangible assets), liabilities, business, prospects (as such
Prospects are disclosed in the Prospectus), operations or results of operations
of the Company.
(iii) As
used
in this Agreement, the term “knowledge
of the Company”
(or
similar language) shall mean the knowledge of the officers and directors of
the
Company who are named in the Prospectus, with the assumption that such officers
and directors shall have made reasonable and diligent inquiry of the matters
presented (with reference to what is customary and prudent for the applicable
individuals in connection with the discharge by the applicable individuals
of
their duties as officers, directors or managers of the Company).
Any
certificate signed by or on behalf of the Company and delivered to the
Representative or to ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, counsel for the Representative
(“Underwriters’
Counsel”)
shall
be deemed to be a representation and warranty by the Company to each Underwriter
listed on Schedule
A
hereto
as to the matters covered thereby.
2. INTENTIONALLY
OMITTED.
3. Purchase,
Sale and Delivery of the Shares and the Representative Purchase
Option.
(a) On
the
basis of the representations, warranties, covenants and agreements herein
contained, but subject to the terms and conditions herein set forth, the Company
agrees to sell to each Underwriter and each Underwriter, severally and not
jointly, agrees to purchase from the Company, at a purchase price per share
of
$[ ], the number of Firm Shares set forth opposite their respective names on
Schedule
A
hereto
together with any additional number of Shares which such Underwriter may become
obligated to purchase pursuant to the provisions of Section 10 hereof.
(b) Payment
of the purchase price for, and delivery of certificates representing, the Firm
Shares shall be made at the offices of the Underwriters’ Counsel, ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, or at such other place as shall be agreed upon by
the
Representative and the Company, at 10:00 A.M., New York City time, on the third
(3rd) or, as permitted under Rule 15c6-1 under the Exchange Act, fourth (4th)
business day (unless postponed in accordance with the provisions of Section
10
hereof) following the date of the effectiveness of the Registration Statement,
or such other time not later than ten (10) business days after such date as
shall be agreed upon by the Representative and the Company as permitted under
Rule 15c6-1 under the Exchange Act (such time and date of payment and delivery
being herein called the “Closing
Date”).
The
closing of the payment of the purchase price for, and delivery of certificates
representing, the Firm Shares is referred to herein as the “Closing.”
Maxim
Group LLC
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], 2006
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(c) Payment
of the purchase price for the Firm Shares shall be made by wire transfer in
immediately available funds to or as directed by the Company upon delivery
of
certificates for the Firm Shares to the Representative through the facilities
of
The Depository Trust Company for the respective accounts of the several
Underwriters. Certificates for the Firm Shares shall be registered in such
name
or names and shall be in such denominations as the Representative may request
at
least two (2) business days before the Closing Date. The Company will permit
the
Representative to examine and package such certificates for delivery at least
one (1) full business day prior to the Closing Date.
(d) In
addition, subject to the terms and conditions herein set forth, the Company
hereby grants to the Underwriters an option to purchase up to an aggregate
of
562,500
Additional Shares at the same purchase price per share to be paid by the
Underwriters for the Firm Shares as set forth in Section 3(a) above, for the
sole purpose of covering over-allotments in the sale of Firm Shares by the
Underwriters. This option may be exercised at any time and from time to time
on
or before the forty-fifth (45th) day
following the final date of the Prospectus, by written notice from the
Representative to the Company. Such notice shall set forth the aggregate number
of Additional Shares as to which the option is being exercised and the date
and
time, as reasonably determined by the Representative, when the Additional Shares
are to be delivered (any such date and time being herein sometimes referred
to
as the “Additional
Closing Date”).
Upon
any exercise of the option as to all or any portion of the Additional Shares,
each Underwriter, acting severally and not jointly, agrees to purchase from
the
Company, the number of Additional Shares that bears the same proportion of
the
total number of Additional Shares then being purchased as the number of Firm
Shares set forth opposite the name of such Underwriter on Schedule
A
hereto
(or such number increased as set forth in Section 10 hereof) bears to the total
number of Firm Shares that the Underwriters have agreed to purchased hereunder,
subject, however, to such adjustments to eliminate fractional shares as the
Representative in their sole discretion shall make.
(e) Payment
of the purchase price for, and delivery of certificates representing, the
Additional Shares shall be made at the office of Underwriters’ Counsel, or at
such other place as shall be agreed upon by the Representative and the Company,
at 10:00 A.M., New York City time, on the Additional Closing Date (unless
postponed in accordance with the provisions of Section 10 hereof), or such
other
time as shall be agreed upon by the Representative and the Company.
(f) Payment
of the purchase price for the Additional Shares shall be made by wire transfer
in immediately available funds to or as directed by the Company upon delivery
of
certificates for the Additional Shares to the Representative through the
facilities of The Depository Trust Company for the respective accounts of the
several Underwriters. Certificates for the Additional Shares shall be registered
in such name or names and shall be in such denominations as the Representative
may request at least two (2) business days before the Additional Closing Date.
The Company will permit the Representative to examine and package such
certificates for delivery at least one full business day prior to the Additional
Closing Date.
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Group LLC
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], 2006
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(g) On
the
Closing Date, the Company will issue and sell to the Representative or, at
the
direction of the Representative, to other Underwriters or selling group members
or bona fide officers of the Underwriters or selling group members, for an
aggregate purchase price of $100, a purchase option (the “Representative
Purchase Option”)
entitling the holders thereof to purchase an aggregate of 187,500 Ordinary
Shares for a period of four and one half years (or fifty-four months), such
period to commence six (6) months year following the Closing Date. The
Representative Purchase Option shall not be redeemable. The Representative
Purchase Option shall be exercisable at a price equal to 115% of the initial
public offering price of the Shares and shall contain terms and provisions
more
fully described herein below and as set forth more particularly in the
Representative Purchase Option to be executed by the Company and delivered
to
the Representative on the Closing Date, including, but not limited to: (i)
cashless exercise, (ii) customary anti-dilution provisions (to the extent
permitted by NASD Rule 2710(f)(2)(H)(vi)) and (iii) prohibitions of mergers,
consolidations or other reorganizations of or by the Company or the taking
by
the Company of other action during the five-year period following the effective
date of the Registration Statement unless adequate provision is made to
preserve, in substance, the rights and powers incidental to the Representative
Purchase Option. Pursuant to NASD Rule 2710(g)(1) (and except as provided for
in
NASD Rule 2710(g)(2)), the Representative Purchase Option (including the
securities thereunder) shall not be sold during the offering contemplated
hereby, nor sold, transferred, assigned, pledged, or hypothecated, or be the
subject of any hedging, short sale, derivative, put, or call transaction that
would result in the effective economic disposition thereof by any person for
a
period of one (1) year immediately following the Closing Date.
The
Representative Purchase Option shall provide for (i) one demand registration
right of the sale of the underlying Ordinary Shares for a period of five (5)
years after the Closing at the Company’s expense provided that the holders of
not less than 51% of the securities entitled to such demand have exercised
their
rights thereto and provided that the shares are not otherwise eligible for
resale pursuant to Rule 144(k), (ii) an additional demand registration right
at
the Representative expense provided that the holders of not less than 51% of
the
securities entitled to such demand have exercised their rights thereto and
provided that the shares are not otherwise eligible for resale pursuant to
Rule
144(k), and (iii) “piggyback” registration rights for a period of five (5) years
after the Closing at the Company’s expense; provided that the shares are not
otherwise eligible for resale pursuant to Rule 144(k). The Representative shall
furnish to the Company all information with respect to the Representative
required under applicable securities regulations to accurately complete the
registration statements contemplated herein. The Representative agrees that
it
shall only use the prospectuses provided to the Company to sell the shares
covered by such registration statements and will immediately cease to use any
prospectus furnished by the Company if the Company advises the Representative
that such prospectus may no longer be used due to a material misstatement or
omission.
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Group LLC
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], 2006
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(h) A
corporate finance fee of 1.5% of the gross proceeds from the offer and sale
of
the Firm Shares shall be paid by the Company to Maxim Group at the Closing
Date,
and a corporate finance fee of 1.5% of the gross proceeds from the offer and
sale of the Additional Shares, if any, shall be paid by the Company to Maxim
Group at the Additional Closing Date.
(i) Each
Underwriter agrees that, unless it obtains the prior written consent of the
Company, it will not make any offer relating to the Shares that would constitute
an Issuer-Represented
Free
Writing Prospectus or that would otherwise (without taking into account any
approval, authorization, use or reference thereto by the Company) constitute
a
“free writing prospectus” required to be filed by the Company with the
Commission or retained by the Company under Rule 433 of the Securities Act;
provided that the prior written consent of the Company hereto shall be deemed
to
have been given in respect of any Issuer-Represented
General Free
Writing Prospectuses referenced on Annex
V
hereto.
4. Offering.
Upon
authorization of the release of the Firm Shares by the Representative, the
Underwriters propose to offer the Shares for sale to the public upon the terms
and conditions set forth in the Prospectus.
5. Covenants
of the Company.
The
Company acknowledges, covenants and agrees with the Underwriters
that:
(a) The
Registration Statement and any amendments thereto have been declared effective,
and if Rule 430A is used or the filing of the Prospectus is otherwise required
under Rule 424(b), the Company will file the Prospectus (properly completed
if
Rule 430A has been used) pursuant to Rule 424(b) within the prescribed time
period and will provide evidence satisfactory to the Representative of such
timely filing. The Company will notify the Representative immediately (and,
if
requested by the Representative, will confirm such notice in writing): (i)
when
the Registration Statement and any amendments thereto become effective, (ii)
of
any request by the Commission for any amendment of or supplement to the
Registration Statement or the Prospectus or for any additional information,
(iii) of the Company’s intention to file or prepare any supplement or amendment
to the Registration Statement or the Prospectus, (iv) of the mailing or the
delivery to the Commission for filing of any amendment of or supplement to
the
Registration Statement or the Prospectus, including but not limited to Rule
462(b) under the Securities Act, (v) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or any
post-effective amendment thereto or of the initiation, or the threatening,
of
any proceedings therefor, it being understood that the Company shall make every
effort to avoid the issuance of any such stop order, (vi) of the receipt of
any
comments from the Commission, and (vii) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the Shares
for sale in any jurisdiction or the initiation or threatening of any proceeding
for that purpose. If the Commission shall propose or enter a stop order at
any
time, the Company will make every reasonable effort to prevent the issuance
of
any such stop order and, if issued, to obtain the lifting of such order as
soon
as possible. The Company will not file any amendment to the Registration
Statement or any amendment of or supplement to the Prospectus (including the
prospectus required to be filed pursuant to Rule 424(b)) that differs from
the
prospectus on file at the time of the effectiveness of the Registration
Statement which the Representative shall reasonably and timely object in writing
after being timely furnished in advance a copy thereof. The Company will provide
the Representative with copies of all such amendments, filings and other
documents a sufficient time prior to any filing or other publication thereof
to
permit the Representative a reasonable opportunity to review and comment
thereon.
Maxim
Group LLC
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], 2006
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(b) The
Company shall comply with the Securities Act, the Exchange Act and all
applicable Rules and Regulations to permit completion of the distribution as
contemplated in this Agreement, the Registration Statement and the Prospectus.
If, at any time when a prospectus relating to the Shares is required to be
delivered under the Securities Act, the Exchange Act and all applicable Rules
and Regulations in connection with the sales of Shares, any event shall have
occurred as a result of which the Prospectus as then amended or supplemented
would, in the judgment of the Underwriters or the Company, include an 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, in the light of
the
circumstances existing at the time of delivery to the purchaser, not misleading,
or if, to comply with the Securities Act or the Rules and Regulations, it shall
be necessary at any time to amend or supplement the Prospectus or Registration
Statement, or to file any document which is an exhibit to the Registration
Statement or the Prospectus or in any amendment thereof or supplement thereto,
the Company will notify the Representative promptly and prepare and file with
the Commission, subject to Section 5(a) hereof, an appropriate amendment or
supplement (in form and substance satisfactory to the Representative) that
will
correct such statement or omission or which will effect such compliance and
will
use its commercially reasonable best efforts to have any amendment to the
Registration Statement declared effective as soon as possible.
(c) The
Company will comply with the Securities Act, the Exchange Act, the Rules and
Regulations thereunder and all other applicable federal, foreign and state
securities local laws, rules, regulations, orders, decrees and judgments.
(d) The
Company will promptly deliver to the Underwriters and Underwriters’ Counsel a
signed copy of the Registration Statement, as initially filed and all amendments
thereto, including all consents and exhibits filed therewith, and will maintain
in the Company’s files manually signed copies of such documents for at least
five (5) years after the date of filing thereof or such lesser time as it is
required under the Rules and Regulations. The Company will promptly deliver
to
each of the Underwriters such number of copies of any Preliminary Prospectus,
the Prospectus, the Registration Statement, and all amendments of and
supplements to such documents, if any, and all documents which are exhibits
to
the Registration Statement and Prospectus or any amendment thereof or supplement
thereto, as the Underwriters may reasonably request. Prior to 10:00 A.M., New
York time, on the business day next succeeding the date of this Agreement and
from time to time thereafter, the Company will furnish the Underwriters with
copies of the Prospectus in New York City in such quantities as the Underwriters
may reasonably request.
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Group LLC
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], 2006
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(e) The
Company consents to the use and delivery of the Preliminary Prospectus by the
Underwriters in accordance with Rule 430 and Section 5(b) of the Securities
Act.
(f) If
the
Company elects to rely on Rule 462(b) under the Securities Act, the Company
shall both file a Rule 462(b) Registration Statement with the Commission in
compliance with Rule 462(b) and pay the applicable fees (or give irrevocable
instructions for the payment of such fees) in accordance with Rule 111 of the
Act by the earlier of: (i) 10:00 p.m., New York City time, on the date of this
Agreement, and (ii) the time that confirmations are given or sent, as specified
by Rule 462(b)(2).
(g) The
Company will use its best efforts, in cooperation with the Representative,
at or
prior to the time of effectiveness of the Registration Statement, to qualify
the
Shares for offering and sale under the securities laws relating to the offering
or sale of the Shares of such jurisdictions, domestic or foreign, as the
Representative may designate and to maintain such qualification in effect for
so
long as required for the distribution thereof; except that in no event shall
the
Company be obligated in connection therewith to qualify as a foreign corporation
or to execute a general consent to service of process.
(h) The
Company will make generally available to its security holders and to the
Underwriters as soon as practicable, but in any event not later than twelve
(12)
months after the effective date of the Registration Statement (as defined in
Rule 158(c) under the Securities Act), an audited earnings statement of the
Company complying with Section 11(a) of the Securities Act and the Rules and
Regulations (including, at the option of the Company, Rule 158).
(i) For
so
long as the Shares are registered under the Exchange Act, the Company shall
timely file with the Commission via the Electronic Data Gathering, Analysis
and
Retrieval System (“▇▇▇▇▇”) such statements and reports as are required to be
filed by a company registered under Section 12(b) of the Exchange Act, as if
the
Company were a company incorporated in the United States.
(j) The
Company will, for so long as the Shares are registered under the Exchange Act,
hold an annual meeting of shareholders for the election of directors within
180
days after the end of each of the Company’s fiscal years, and within 150 days
after the end of each of the Company’s fiscal years will provide the Company’s
shareholders with the audited financial statements of the Company as of the
end
of the fiscal year just completed prior thereto. Such financial statements
shall
be those required by Rule 14a 3 under the Exchange Act and shall be included
in
an annual report pursuant to the requirements of such rule.
(k) During
the
six (6) months following the Closing Date, without the consent of the
Representative, which shall not be unreasonably withheld, the Company will
not
file any registration statement relating to the offer or sale of any of the
Company’s securities, including any Registration Statement on Form S-8, except
Form S-8 filed with the Commission in connection with the Company’s stock option
plans.
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Group LLC
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], 2006
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(l) For
a
period of eighteen twelve (12) months following the Closing, the Company shall
not offer, sell or distribute any of its securities, other than pursuant to
the
Company’s employee stock option plans at the then Fair Market Value, or pursuant
to the terms of any securities exercisable or convertible into shares of the
Company’s capital stock that are outstanding at the Closing, without the prior
written consent of Maxim Group. In addition, during such period, the Company
hereby grants to Maxim Group an irrevocable preferential right for such eighteen
(18) month period to purchase for its account or to sell for the account of
the
Company or any Subsidiary of, or successor to, the Company, or any of the
Company’s senior executives, officers and shareholders owning at least two
percent (2%) of the capital stock of the Company (the “Principal
Shareholders”),
any
securities of the Company or any such Subsidiary or successor which the Company,
any such Subsidiary or successor or any of the Company’s Principal Shareholders
may seek to sell (other than sales of less than $10,000 worth of Common Stock
by
Principal Shareholders through brokers in open market transactions during any
consecutive three (3) month period), whether pursuant to registration under
the
Act or otherwise. The Company, any such Subsidiary or successor and the
Company’s Principal Shareholders agree to consult with Maxim Group with regard
to any such offering and will offer Maxim Group the opportunity to purchase
or
sell any such securities on terms not more favorable to the seller of such
securities than it or he can secure elsewhere. If Maxim Group fails to accept
in
writing such offer within ten (10) business days after the receipt of a notice
containing such offer by overnight mail addressed to Maxim Group, then Maxim
Group shall have no further claim or right with respect to the proposal
contained in such notice. If, however, the terms of such proposal are
subsequently modified in any material respect, the preferential right referred
to herein shall apply to such modified proposal as if the original proposal
had
not been made. Maxim Group’s failure to exercise its preferential right with
respect to any particular proposal shall not affect its preferential rights
relative to future proposals.
(m) During
the twelve (12) months following the Closing, the Company shall not offer,
sell
or distribute any convertible securities convertible at a price that may, at
the
time of conversion, be less than the Fair Market Value of the Ordinary Shares
on
the date of the original sale, without the prior written consent of the
Representative. For purposes of this Section 5, the term “Fair
Market Value”
shall
mean the greater of: (i) the average of the volume weighted average price of
the
Ordinary Shares for each of the 10 trading days prior to the date of the
original sale; and (ii) the last sale price of the Ordinary Shares, during
normal operating hours, as reported on the
NASDAQ,
or any
other exchange or electronic quotation system on which the Ordinary Shares
are
then listed.
(n) The
Company shall, subject to applicable phase-in provisions, use its best efforts
to comply in all material respects with the applicable provisions of Sarb-Ox
and
the Rules and Regulations promulgated thereunder and related or similar rules,
regulations and listing requirements promulgated by NASDAQ or any other
applicable governmental or self regulatory entity or agency. Without limiting
the generality of the foregoing: (i) the
Company’s Board of Directors (the “Board
of Directors”)
shall,
when required, appoint an audit committee whose composition satisfies the
requirements of Rule 4350(d)(2) of the Rules of the NASD (the “NASD
Rules”),
(ii)
the Board of Directors and/or the audit committee thereof shall adopt a charter
that satisfies the requirements of Rule 4350(d)(1) of the NASD Rules, (iii)
all
members of the Board of Directors who are required to be “independent” (as that
term is defined under applicable laws, rules and regulations), including,
without limitation, all members of the audit committee of the Board of
Directors, shall meet the qualifications of independence as set forth under
applicable laws, rules and regulations (including the NASD Rules), and (iv)
the
audit committee of the Board of Directors shall have at least one member who
is
an “audit committee financial expert” (as that term is defined under applicable
laws, rules and regulations).
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Group LLC
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], 2006
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(o) For
a
period of three (3) years from the effective date of the Registration Statement,
the Company, at its expense, shall obtain
and keep current a listing in the Standard & Poor’s Corporation Record
Service.
(p) The
Company will not issue press releases or engage in any other publicity, without
the Representative prior written consent, which shall not be unreasonably or
untimely withheld, for a period ending at 5:00 p.m. Eastern time on the first
business day following the twenty fifth (25th)
day
following the Closing Date, other than normal and customary releases issued
in
the ordinary course of the Company’s business.
(q) The
Company has obtained and will use its good faith best efforts to maintain its
key person life insurance in the amount of $2,000,000 on the life of Xiaoan
He
in full force and effect for a period of three (3) years from the Closing
Date.”
The
Company is and shall be the sole beneficiary of such policy.
(r) Upon
conclusion of the Offering, the Company will engage (for no less than two (2)
years from the date of the Closing Date, subject to the Company’s satisfaction
with the services provided) a financial public relations firm (the “PR
Firm”)
mutually acceptable to the Company and the Representative.
(s) The
Company has or will retain a transfer agent reasonably acceptable to the
Representative for the Shares and shall continue to retain such transfer agent
for a period of three (3) years following the Closing Date,
subject
to the Company’s satisfaction with the services provided.
(t) The
Company will apply the net proceeds from the sale of the Shares as set forth
under the caption “Use of Proceeds” in the Prospectus. Without
the prior written consent of the Representative, no proceeds of the Offering
will be used to pay outstanding loans from officers, directors or
shareholders.
(u) The
Company will use its best efforts to effect and maintain the listing of the
Shares on the
NASDAQ and
will
use its commercially reasonable efforts to maintain such listing for a period
of
at least three (3) years after the Closing.
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Group LLC
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], 2006
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(v) The
Company, during the period when the Prospectus is required to be delivered
under
the Securities Act or the Exchange Act, will file all documents required to
be
filed with the Commission pursuant to the Securities Act, the Exchange Act
and
the Rules and Regulations within the time periods required thereby.
(w) The
Company will use its best efforts to do and perform all things required to
be
done or performed under this Agreement by the Company prior to the Closing
Date
or the Additional Closing Date, as the case may be, and to satisfy all
conditions precedent to the delivery of the Firm Shares and the Additional
Shares.
(x) The
Company will not take, and will cause its Affiliates not to take, directly
or
indirectly, any action which constitutes or is designed to cause or result
in,
or which could reasonably be expected to constitute, cause or result in, the
stabilization or manipulation of the price of any security to facilitate the
sale or resale of the Shares.
(y) The
Company shall cause to be prepared and delivered to the Representative, at
its
expense, within one (1) business day from the effective date of this Agreement,
an Electronic Prospectus
to be used by the Underwriters in connection with the Offering. As used herein,
the term “Electronic
Prospectus”
means
a
form of prospectus, and any amendment or supplement thereto, that meets each
of
the following conditions: (i) it shall be encoded in an electronic format,
satisfactory to the Representative, that may be transmitted electronically
by
the other Underwriters to offerees and purchasers of the Shares for at least
the
period during which a Prospectus relating to the Shares is required to be
delivered under the Securities Act; (ii) it shall disclose the same information
as the paper prospectus and prospectus filed pursuant to ▇▇▇▇▇, except to the
extent that graphic and image material cannot be disseminated electronically,
in
which case such graphic and image material shall be replaced in the electronic
prospectus with a fair and accurate narrative description or tabular
representation of such material, as appropriate; and (iii) it shall be in or
convertible into a paper format or an electronic format, satisfactory to the
Representative, that will allow recipients thereof to store and have
continuously ready access to the prospectus at any future time, without charge
to such recipients (other than any fee charged for subscription to the Internet
as a whole and for on-line time). The Company hereby confirms that it has
included or will include in the Prospectus filed pursuant to ▇▇▇▇▇ or otherwise
with the Commission and in the Registration Statement at the time it was
declared effective an undertaking that, upon receipt
of a request by an investor or his or her representative within the period
when
a prospectus relating to the Shares is required to be delivered under the
Securities Act, the Company shall transmit or cause to be transmitted promptly,
without charge, a paper copy of the Prospectus.
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Group LLC
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], 2006
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Maxim
Group LLC
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], 2006
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(aa)The
Company agrees that its Board of Directors shall comply with NASDAQ’s
“independent” director (as that term is defined in the NASD rules) requirements
as applicable to the Company, for a period of three (3) years from the date
of
this Agreement, and at all such times as the Company’s securities are listed on
NASDAQ.
(bb)The
Company shall supply the Representative and its counsel, at the Company’s cost,
with three (3) copies of bound volumes of the legal and offering materials
completed in connection with the Offering within a reasonable time after the
Closing, as well as a reasonable number of commemorative lucite tombstones
as
requested by the Representative.
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Group LLC
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], 2006
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(cc)The
Company shall retain a nationally recognized firm of independent certified
public accountants acceptable to the Representative, including KPMG, for a
period of at least three (3) years after the Closing.
(dd)For
a
period of five years from the Closing Date, the Company agrees to hold all
special and annual meetings of its stockholders in the United States.
6. Consideration;
Payment of Expenses.
(a) In
addition to selling the Shares to the Underwriters at the price per Share set
forth in Section 3(a) hereof, in consideration of the services to be provided
for hereunder, the Company shall pay to the Underwriters or their respective
designees their pro rata portion (based on the Shares purchased) of a
non-accountable expense allowance equal to one percent (1.0%) of the gross
proceeds of the Offering (excluding proceeds from the sale of Additional
Shares). The Company has heretofore paid advances of $100,000 in the aggregate
which are creditable towards such non-accountable expense allowance.
(b) Whether
or not the transactions contemplated by this Agreement, the Registration
Statement and the Prospectus are consummated or this Agreement is terminated,
the Company hereby agrees to pay all costs and expenses incident to the offering
of the Shares contemplated hereby and the performance of its obligations
hereunder, including the following:
(i) all
expenses in connection with the preparation, printing, “edgarization” and filing
of the Registration Statement, any Preliminary Prospectus and the Prospectus
and
any and all amendments and supplements thereto including, but not limited to,
the SEC filing fees, and the mailing and delivering of copies thereof to the
Underwriters and dealers;
(ii) the
cost
of producing this Agreement and any agreement among Underwriters, blue sky
survey, closing documents and other instruments, agreements or documents
(including any compilations thereof) in connection with the Offering and the
cost of three (3) bound volumes of such documents for the
Representative;
(iii) all
expenses in connection with the qualification of the Shares for offering and
sale under state or foreign securities or blue sky laws, including (subject
to
the provisions of Section 6(d) hereof) the fees and disbursements of counsel
for
the Underwriters in connection with such qualification and in connection with
any blue sky survey undertaken by such counsel;
(iv) the
filing fees incident to securing any required review by the NASD of the terms
of
the Offering;
(v) all
fees
and expenses in connection with listing the Shares on the NASDAQ;
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(vi) all
travel expenses of the Company’s officers and employees and any other expense of
the Company incurred in connection with attending or hosting meetings with
prospective purchasers of the Shares;
(vii) any
stock
transfer taxes incurred in connection with this Agreement or the
Offering
(viii) the
cost
for the preparation, printing, authentication, issuance and delivery of the
stock certificates representing the Shares, including, but not limited to,
any
stamp or transfer tax;
(ix) the
cost
and charges of any transfer agent or registrar for the Shares;
(x) the
fees
and expenses of the PR Firm; and
(xi) the
fees
and expenses of the Company’s accountants, auditors and legal
counsel.
(c) In
addition to the costs and expenses set forth in Section 6(b) hereof, the Company
will be responsible for the
cost
of up to two “tombstone” advertisements
to be
placed in appropriate, national editions of daily or weekly periodicals
of
the
Representative’s choice (i.e., The Wall Street Journal and The New York
Times).
(d) The
Company shall pay a one-time fee in the amount of $10,000 payable to ▇▇▇▇▇▇▇▇▇▇
& ▇▇▇▇▇ LLP for the preparation of a “Blue Sky” survey.
(e) It
is
understood and agreed that, except as provided for in this Section 6, and
Sections 8 and 11 hereof, the Underwriters will pay all of their own costs
and
expenses, including the fees of their counsel. Notwithstanding anything to
the
contrary in this Section 6, in the event that this Agreement is terminated
pursuant to Section 6 or 12(b) hereof, or subsequent to a Material Adverse
Change, the Company will pay all accountable expenses of the Underwriters
(including but not limited to fees and disbursements of counsel to the
Underwriters) actually incurred in connection herewith (less any advances
previously paid).
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7. Conditions
of Underwriters’ Obligations.
The
obligations of the Underwriters to purchase and pay for the Firm Shares and
the
Additional Shares as provided herein shall be subject to: (i) the accuracy
of
the representations and warranties of the Company herein contained, as of the
date hereof and as of the Closing Date (ii) the absence from any certificates,
opinions, written statements or letters furnished to the Representative or
to
Underwriters’ Counsel pursuant to this Section 7 of any misstatement or omission
(iii) the performance by the Company of its obligations hereunder, and (iv)
each
of the following additional conditions. For purposes of this Section 7, the
terms “Closing Date” and “Closing” shall refer to the Closing Date for the Firm
Shares and any Additional Closing Date, if different, for the Additional Shares,
and each of the foregoing and following conditions must be satisfied as of
each
Closing.
(a) The
Registration Statement shall have become effective and all necessary regulatory
or listing approvals shall have been received not later than 5:30 P.M., New
York
time, on the date of this Agreement, or at such later time and date as shall
have been consented to in writing by the Representative. If the Company shall
have elected to rely upon Rule 430A under the Securities Act, the Prospectus
shall have been filed with the Commission in a timely fashion in accordance
with
the terms hereof and a form of the Prospectus containing information relating
to
the description of the Shares and the method of distribution and similar matters
shall have been filed with the Commission pursuant to Rule 424(b) within the
applicable time period; and, at or prior to the Closing Date or the actual
time
of the Closing, no stop order suspending the effectiveness of the Registration
Statement or any post-effective amendment thereof shall have been issued and
no
proceedings therefor shall have been initiated or threatened by the Commission.
(b) The
Representative shall have received, as of the effective date of the Registration
Statement, a “lock-up” agreement from each officer, director and shareholder of
the Company of
Ordinary Shares
prior to
the consummation of the Offering (each, a “Lock-Up
Party”),
duly
executed by the applicable Lock-Up Party, in each case substantially in the
form
attached hereto as Annex
I.
(c) The
Representative shall have received the favorable written opinion of Loeb &
Loeb LLP, United States legal counsel for the Company, dated as of the Closing
Date addressed to the Underwriters in the form attached hereto as Annex
II.
(d) The
Representative shall have received the favorable written opinion of ▇▇▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇▇, Cayman Islands legal counsel for the Company, dated as of the Closing
Date addressed to the Underwriters in the form attached hereto as Annex
III.
(e) The
Representative shall have received the favorable written opinion of Concord
& Partners, PRC legal counsel for the Company and the Subsidiaries, dated as
of the Closing Date addressed to the Underwriters in the form attached hereto
as
Annex
IV.
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(f) All
proceedings taken in connection with the sale of the Firm Shares and the
Additional Shares as herein contemplated shall be satisfactory in form and
substance to the Representative and to Underwriters’ Counsel.
(g) The
Representative shall have received a certificate of the Chief Executive Officer
and Chief Financial Officer of the Company, dated as of the Closing Date to
the
effect that: (i) the condition set forth in subsection (a) of this Section
7 has
been satisfied, (ii) as of the date hereof and as of the applicable Closing
Date, the representations and warranties of the Company set forth in Section
1
hereof are true and correct in all material respects, (iii) as of the applicable
Closing Date, all agreements, conditions and obligations of the Company to
be
performed or complied with hereunder on or prior thereto have been duly
performed or complied with in all material respects, (iv) the Company has not
sustained any material loss or interference with their respective businesses,
whether or not covered by insurance, or from any labor dispute or any legal
or
governmental proceeding, (v) no stop order suspending the effectiveness of
the
Registration Statement or any post-effective amendment thereof has been issued
and no proceedings therefor have been initiated or threatened by the Commission
and (vi) subsequent to the respective dates as of which information is given
in
the Registration Statement and the Prospectus, there has not been any Material
Adverse Change, whether or not arising from transactions in the ordinary course
of business.
(h) On
the
date of this Agreement, on the Closing Date and, as the case may be, on each
Additional Closing Date, the Representative shall have received a “cold comfort”
letter from KPMG,
dated, respectively, as of the date of the date of delivery and addressed to
the
Underwriters and in form and substance satisfactory to the Representative and
Underwriters’ Counsel,
confirming that they are registered independent certified public accountants
with respect to the Company under the PCAOB and within the meaning of the
Securities Act and the Rules and Regulations, and stating, as of the date of
delivery (or, with respect to matters involving changes or developments since
the respective dates as of which specified financial information is given in
the
Prospectus,
as of a date not more than five (5) days prior to the date of such letter),
the
conclusions and findings of such firm with respect to the financial information
and other matters relating to the Registration Statement covered by such letter
and, with respect to letters issued as of Additional Closing Dates, confirming
the conclusions and findings set forth in such prior letter.
(i) Subsequent
to the execution and delivery of this Agreement or, if earlier, the dates as
of
which information is given in the Registration Statement (exclusive of any
amendment thereof) and the Prospectus (exclusive of any supplement thereto),
there shall not have been any change in the capital stock or long-term debt
of
the Company or any change or development involving a change, whether or not
arising from transactions in the ordinary course of business, in the business,
condition (financial or otherwise), results of operations, shareholders’ equity,
properties or prospects of the Company, taken as a whole, including but not
limited to the occurrence of any fire, flood, storm, explosion, accident, act
of
war or terrorism or other calamity, the effect of which, in any such case
described above, is, in the sole judgment of the Representative, so material
and
adverse as to make it impracticable or inadvisable to proceed with the Offering
on the terms and in the manner contemplated in the Prospectus (exclusive of
any
supplement).
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(j) The
Company shall have obtained insurance on the life of Xiaoan He as provided
for
in Section 5(q) hereof.
(k) The
Shares shall have been approved for quotation on NASDAQ.
(l) 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.
(m) No
action
shall have been taken and no statute, rule, regulation or order shall have
been
enacted, adopted or issued by any federal, state or foreign governmental or
regulatory authority that would, as of the Closing Date, prevent the issuance
or
sale of the Shares; and no injunction or order of any federal, state or foreign
court shall have been issued that would, as of the Closing Date, prevent the
issuance or sale of the Shares.
(n) The
Company shall have delivered the certificate of the Secretary of the Company
and
the Subsidiaries certifying as to (i) the By-Laws of the Company and the
Subsidiaries, (ii) the resolutions and actions of the Board of Directors of
the
Company concerning the approval and issuance of the Shares, the filing of the
Registration Statement and Prospectus, and the execution and delivery of this
Agreement, and such other matters related thereto as the Representative may
require, (iii) the Memorandum and Articles of Association (or similar governing
documents) of the Company and the Subsidiary, and (iv) the incumbency and
authority of the officers of the Company to execute and deliver this
Agreement.
(o) The
Company shall have filed with the Commission all Issuer-Represented
Free
Writing Prospectuses or other information required to be filed by the Company
under the Securities Act and the Rules and Regulations.
(p) The
Company shall have furnished the Representative and Underwriters’ Counsel with
such other certificates, opinions or other documents as they may have reasonably
requested.
If
any of
the conditions specified in this Section 7 shall not have been fulfilled when
and as required by this Agreement, or if any of the certificates, opinions,
written statements or letters furnished to the Representative or to
Underwriters’ Counsel pursuant to this Section 7 shall not be reasonably
satisfactory in form and substance to the Representative and to Underwriters’
Counsel, all obligations of the Underwriters hereunder may be cancelled by
the
Representative at, or at any time prior to, the consummation of the Closing,
and
the obligations of the Underwriters to purchase the Additional Shares may be
cancelled by the Representative at, or at any time prior to, the Additional
Closing Date. Notice of such cancellation shall be given to the Company in
writing, or by telephone. Any such telephone notice shall be confirmed promptly
thereafter in writing.
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8. Indemnification.
(a) The
Company shall indemnify and hold harmless each Underwriter and each Person,
if
any, who controls each Underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, against any and all losses,
liabilities, claims, damages and expenses whatsoever as incurred (including,
but
not limited to, reasonable attorneys’ fees and any and all expenses whatsoever
incurred in investigating, preparing or defending against any litigation,
commenced or threatened, or any claim whatsoever, and any and all amounts paid
in settlement of any claim or litigation), joint or several, to which they
or
any of them may become subject under the Securities Act, the Exchange Act or
otherwise, insofar as such losses, liabilities, claims, damages or expenses
(or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact made by such party contained
in
the Registration Statement, as originally filed or any amendment thereof, or
any
related Preliminary Prospectus, the Prospectus or in any Issuer-Represented
Free
Writing Prospectus, Issuer-Represented
General Free
Writing Prospectus, Issuer-Represented
Limited-Use Free
Writing Prospectus and/or Blue Sky application or other information or other
documents executed by the Company filed in any state or other jurisdiction
to
qualify any or all of the Shares under the securities laws thereof (any such
application, document or information being hereinafter referred to as a
“Blue
Sky Application”),
or in
any supplement thereto or amendment thereof, or arise out of or are based upon
the omission or alleged omission made by such party to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading; provided,
however,
that the
Company will not be liable in any such case to the extent (but only to the
extent) that: (x) any such loss, liability, claim, damage or expense arises
out
of or is based upon any such untrue statement or alleged untrue statement or
omission or alleged omission made therein in reliance upon and in conformity
with written information furnished to the Company by or on behalf of any
Underwriter through the Representative expressly for use therein, which written
information, it is agreed, shall consist solely of the subsections of the
“Underwriting” section of the Prospectus captioned “Nature of Underwriting
Commitment,” “Pricing of Securities,” “Stabilization” and “Foreign Regulatory
Restrictions on Purchase of Ordinary Shares” (the “Underwriter
Information”)
or (y)
such statement or omission was contained or made in any Preliminary Prospectus
and corrected
in
the
Prospectus in conformity with the requirements of the Securities Act and the
Rules and Regulations.
This
indemnity agreement will be in addition to any liability, which the Company
may
otherwise have, including but not limited to other liability under this
Agreement.
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(b) Each
Underwriter, severally and not jointly, shall indemnify and hold harmless the
Company, each of the directors of the Company, each of the officers of the
Company who shall have signed the Registration Statement, and each other Person,
if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, against any losses,
liabilities, claims, damages and expenses whatsoever as incurred (including,
but
not limited to, reasonable attorneys’ fees and any and all expenses whatsoever
incurred in investigating, preparing or defending against any litigation,
commenced or threatened, or any claim whatsoever, and any and all amounts paid
in settlement of any claim or litigation), joint or several, to which they
or
any of them may become subject under the Securities Act, the Exchange Act or
otherwise, insofar as such losses, liabilities, claims, damages or expenses
(or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement, as originally filed or any amendment thereof, or any related
Preliminary Prospectus or the Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that any such loss, liability, claim, damage
or
expense arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance upon
and in conformity with the Underwriter Information; provided,
however,
that in
no case shall any Underwriter be liable or responsible for any amount in excess
of the underwriting discount applicable to the Shares to be purchased by such
Underwriter hereunder. The parties agree that such information provided by
or on
behalf of any Underwriter through the Representative consists solely of the
material referred to in the last sentence of Section 1(a) hereof.
(c) Promptly
after receipt by an indemnified party under subsection (a) or (b) above of
notice of any claims or the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify each party against whom indemnification
is
to be sought in writing of the claim or the commencement thereof (but the
failure so to notify an indemnifying party shall not relieve the indemnifying
party from any liability which it may have under this Section 8 to the extent
that it is not materially prejudiced as a result thereof and in any event shall
not relieve it from any liability that such indemnifying party may have
otherwise than on account of the indemnity agreement hereunder). In case any
such claim or action is brought against any indemnified party, and it notifies
an indemnifying party of the commencement thereof, the indemnifying party will
be entitled to participate, at its own expense in the defense of such action,
and to the extent it may elect by written notice delivered to the indemnified
party promptly after receiving the aforesaid notice from such indemnified party,
to assume the defense thereof with counsel satisfactory to such indemnified
party; provided however, that counsel to the indemnifying party shall not
(except with the written consent of the indemnified party) also be counsel
to
the indemnified party. Notwithstanding the foregoing, the indemnified party
or
parties shall have the right to employ its or their own counsel in any such
case, but the fees and expenses of such counsel shall be at the expense of
such
indemnified party or parties unless: (i) the employment of such counsel shall
have been authorized in writing by one of the indemnifying parties in connection
with the defense of such action, (ii) the indemnifying parties shall not have
employed counsel to have charge of the defense of such action within a
reasonable time after notice of commencement of the action, (iii) the
indemnifying party does not diligently defend the action after assumption of
the
defense, or (iv) such indemnified party or parties shall have reasonably
concluded that there may be defenses available to it or them which are different
from or additional to those available to one or all of the indemnifying parties
(in which case the indemnifying parties shall not have the right to direct
the
defense of such action on behalf of the indemnified party or parties), in any
of
which events such fees and expenses shall be borne by the indemnifying parties.
No indemnifying party shall, without the prior written consent of the
indemnified parties, effect any settlement or compromise of, or consent to
the
entry of judgment with respect to, any pending or threatened claim,
investigation, action or proceeding in respect of which indemnity or
contribution may be or could have been sought by an indemnified party under
this
Section 8 or Section 9 hereof (whether or not the indemnified party is an actual
or potential party thereto), unless (x) such settlement, compromise or judgment
(i) includes an unconditional release of the indemnified party from all
liability arising out of such claim, investigation, action or proceeding and
(ii) does not include a statement as to or an admission of fault, culpability
or
any failure to act, by or on behalf of the indemnified party, and (y) the
indemnifying party confirms in writing its indemnification obligations hereunder
with respect to such settlement, compromise or judgment.
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9. Contribution.
In
order to provide for contribution in circumstances in which the indemnification
provided for in Section 8 hereof is for any reason held to be unavailable from
any indemnifying party or is insufficient to hold harmless a party indemnified
thereunder, the Company
and the
Underwriters shall contribute to the aggregate losses, claims, damages,
liabilities and expenses of the nature contemplated by such indemnification
provision (including any reasonable investigation, legal and other expenses
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claims asserted, but after deducting in the case
of
losses, claims, damages, liabilities and expenses suffered by the Company,
any
contribution received by the Company from Persons, other than the Underwriters,
who may also be liable for contribution, including Persons who control the
Company within the meaning of Section 15 of the Securities Act or Section 20
of
the Exchange Act, officers of the Company who signed the Registration Statement
and directors of the Company) as incurred to which the Company and one or more
of the Underwriters may be subject, in such proportions as is appropriate to
reflect the relative benefits received by the Company
and the
Underwriters from the Offering or, if such allocation is not permitted by
applicable law, in such proportions as are appropriate to reflect not only
the
relative benefits referred to above but also the relative fault of the
Company
and the
Underwriters in connection with the statements or omissions which resulted
in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative benefits received by the
Company
and the
Underwriters shall be deemed to be in the same proportion as (x) the total
proceeds from the Offering (net of underwriting discounts and commissions but
before deducting expenses) received by the Company bears
to
(y) the underwriting discount or commissions received by the Underwriters,
in
each case as set forth in the table on the cover page of the Prospectus. The
relative fault of each of the Company
and of
the Underwriters shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company
or the
Underwriters and the parties’ relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The
Company
and the
Underwriters agree that it would not be just and equitable if contribution
pursuant to this Section 9 were determined by pro rata allocation (even if
the
Underwriters were treated as one entity for such purpose) or by any other method
of allocation which does not take account of the equitable considerations
referred to above in this Section. The aggregate amount of losses, liabilities,
claims, damages and expenses incurred by an indemnified party and referred
to
above in this Section 9 shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in investigating, preparing or
defending against any litigation, or any investigation or proceeding by any
judicial, regulatory or other legal or governmental agency or body, commenced
or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission. Notwithstanding the provisions of
this Section 9: (i) no Underwriter shall be required to contribute any amount
in
excess of the amount by which the underwriting discount applicable to total
price of the Shares underwritten by it and distributed to the public exceeds
the
amount of any damages which such Underwriter has otherwise been required to
pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission and (ii) no Person guilty of fraudulent misrepresentation (within
the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 9, each Person, if any, who
controls an Underwriter within the meaning of Section 15 of the Securities
Act
or Section 20 of the Exchange Act shall have the same rights to contribution
as
such Underwriter, and each Person, if any, who controls the Company within
the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
each officer of the Company who shall have signed the Registration Statement
and
each director of the Company shall have the same rights to contribution as
the
Company, subject in each case to clauses (i) and (ii) of the immediately
preceding sentence. Any party entitled to contribution will, promptly after
receipt of notice of commencement of any action, suit or proceeding against
such
party in respect of which a claim for contribution may be made against another
party or parties, notify each party or parties from whom contribution may be
sought, but the omission to so notify such party or parties shall not relieve
the party or parties from whom contribution may be sought from any obligation
it
or they may have under this Section 9 or otherwise. The obligations of the
Underwriters to contribute pursuant to this Section 9 are several in proportion
to the respective number of Shares to be purchased by each of the Underwriters
hereunder and not joint.
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10. Underwriter
Default.
(a) If
any
Underwriter or Underwriters shall default in its or their obligation to purchase
Firm Shares or Additional Shares hereunder, and if the Firm Shares or Additional
Shares with respect to which such default relates (the “Default
Shares”)
do not
(after giving effect to arrangements, if any, made by the Representative
pursuant to subsection (b) below) exceed in the aggregate 10% of the number
of
Firm Shares or Additional Shares, each non-defaulting Underwriter, acting
severally and not jointly, agrees to purchase from the Company that number
of
Default Shares that bears the same proportion of the total number of Default
Shares then being purchased as the number of Firm Shares set forth opposite
the
name of such Underwriter on Schedule
A
hereto
bears to the aggregate number of Firm Shares set forth opposite the names of
the
non-defaulting Underwriters, subject, however, to such adjustments to eliminate
fractional shares as the Representative in their sole discretion shall make.
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(b) In
the
event that the aggregate number of Default Shares exceeds 10% of the number
of
Firm Shares or Additional Shares, as the case may be, the Representative may
in
its discretion arrange for themselves or for another party or parties (including
any non-defaulting Underwriter or Underwriters who so agree) to purchase the
Default Shares on the terms contained herein. In the event that within five
calendar days after such a default the Representative does not arrange for
the
purchase of the Default Shares as provided in this Section 10, this Agreement
or, in the case of a default with respect to the Additional Shares, the
obligations of the Underwriters to purchase and of the Company to sell the
Additional Shares shall thereupon terminate, without liability on the part
of
the Company with respect thereto (except in each case as provided in Sections
5,
7, 8, 10 and 11(d)) or the Underwriters, but nothing in this Agreement shall
relieve a defaulting Underwriter or Underwriters of its or their liability,
if
any, to the other Underwriters and the Company for damages occasioned by its
or
their default hereunder.
(c) In
the
event that any Default Shares are to be purchased by the non-defaulting
Underwriters, or are to be purchased by another party or parties as aforesaid,
the Representative or the Company shall have the right to postpone the Closing
Date or Additional Closing Date, as the case may be for a period, not exceeding
five (5) business days, in order to effect whatever changes may thereby be
made
necessary in the Registration Statement or the Prospectus or in any other
documents and arrangements, and the Company agrees to file promptly any
amendment or supplement to the Registration Statement or the Prospectus which,
in the reasonable opinion of Underwriters’ Counsel, may thereby be made
necessary or advisable. The term “Underwriter” as used in this Agreement shall
include any party substituted under this Section 10 with like effect as if
it
had originally been a party to this Agreement with
respect
to such Firm Shares and Additional Shares.
11. Survival
of Representations and Agreements.
All
representations and warranties, covenants and agreements of the Company and
the
Underwriters contained in this Agreement or in certificates of officers of
the
Company submitted pursuant hereto, including the agreements contained in Section
6, the indemnity agreements contained in Section 8 and the contribution
agreements contained in Section 9 hereof, shall remain operative and in full
force and effect regardless of any investigation made by or on behalf of any
Underwriter or any controlling Person thereof or by or on behalf of the Company,
any of its officers and directors or any controlling Person thereof, and shall
survive delivery of and payment for the Shares to and by the Underwriters.
The
representations contained in Section 1 and 2 hereof and the covenants and
agreements contained in Sections 6(b), 6(d), 6(e), 8, 9, this Section 11 and
Sections 13 through 23 inclusive hereof shall survive any termination of this
Agreement, including termination pursuant to Section 10 or 12 hereof.
12. Effective
Date of Agreement; Termination.
(a) This
Agreement shall become effective upon the later of: (i) receipt by the
Representative and the Company of notification of the effectiveness of the
Registration Statement or (ii) the execution of this Agreement.
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(b) The
Representative shall have the right to terminate this Agreement at any time
prior to the consummation
of the Closing
or
to
terminate the obligations of the Underwriters to purchase the Additional Shares
at any time prior to the
consummation of any closing to occur on an Additional
Closing Date, as the case may be, (i)
any
domestic or international event or act or occurrence has materially disrupted,
or in the Representative’s opinion will in the immediate future materially
disrupt, general securities markets in the United States; or (ii) if trading
on
the New York Stock Exchange, the American Stock Exchange, the Boston Stock
Exchange, NASDAQ, or on the NASD OTC Bulletin Board (or successor trading
market) shall have been suspended, or minimum or maximum prices for trading
shall have been fixed, or maximum ranges for prices for securities shall have
been fixed, or maximum ranges for prices for securities shall have been required
on the NASD OTC Bulletin Board or by order of the Commission or any other
government authority having jurisdiction, or (iii) if the United States, PRC
or
Cayman Islands shall have become involved in a war or an increase in major
hostilities which, in the Representative’s opinion, make it inadvisable to
proceed with the delivery of the securities in the Offering, or (iv) if a
banking moratorium has been declared by a New York or federal authority, the
PRC
or the Cayman Islands, or (v) if a moratorium on foreign exchange trading has
been declared which materially adversely impacts the United States securities
market, or (vi) if the Company shall have sustained a material loss by fire,
flood, accident, hurricane, earthquake, theft, sabotage or other calamity or
malicious act which, whether or not such loss shall have been insured, will,
in
the Representative’s opinion, make it inadvisable to proceed with the delivery
of the securities in the Offering, or (vii) if any of the Company’s
representations, warranties or covenants pursuant to this Agreement are
breached, or (viii) if the Representative shall have become aware after the
date
of the execution of this Agreement of such a Material Adverse Change in the
conditions or prospects of the Company, or such adverse material change in
general market conditions, including, without limitation, as a result of
terrorist activities after the date hereof, as in the Representative’s judgment
would make it impracticable to proceed with the offering, sale and/or delivery
of the securities or to enforce contracts made by the Underwriters for the
sale
of the Shares .
(c) Any
notice of termination pursuant to this Section 12 shall be in
writing.
(d) If
this
Agreement shall be terminated pursuant to any of the provisions hereof (other
than pursuant to Section 10(b) hereof), or if the sale of the Shares provided
for herein is not consummated because any condition to the obligations of the
Underwriters set forth herein is not satisfied or because of any refusal,
inability or failure on the part of the Company to perform any agreement herein
or comply with any provision hereof, the Company will, subject to demand by
the
Representative, reimburse the Underwriters for all out-of-pocket expenses
(including the fees and expenses of their counsel) actually incurred by the
Underwriters in connection herewith (less any advances previously
paid).
Notwithstanding
any provision of this Agreement to the contrary, in the event this Agreement
is
terminated by the Company for a reason other than the lack of good faith
performance by the Representative or the Underwriter’s hereunder, provided the
Representative were prepared to proceed with the Offering, the provisions of
Section 5(l) of this Agreement shall survive and shall continue to be an
enforceable contractual obligation of the Company in accordance with the
provisions of Section 5(l).
Maxim
Group LLC
[
], 2006
Page
42
of
44
13. Notices.
All
communications hereunder, except as may be otherwise specifically provided
herein, shall be in writing, and:
(a) if
sent
to the Representative or any Underwriter, shall be mailed, delivered, or faxed
and confirmed in writing, to Maxim Group LLC, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Managing
Director, ▇▇ ▇▇▇▇▇▇▇▇▇ & Co. LLC, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇, Senior
Vice
President and General Counsel, in each case, with a copy to Underwriters’
Counsel at ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇ , Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇, Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Esq.; and
(b) if
sent
to the Company , shall be mailed, delivered, or faxed and confirmed in writing
to the Company and its counsel at the addresses set forth in the Registration
Statement or their last known fax numbers, in each case, with a copy to Loeb
& Loeb LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇,
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
provided,
however,
that any
notice to an Underwriter pursuant to Section 8 shall be delivered or sent by
mail or facsimile transmission to such Underwriter at its address set forth
in
its acceptance facsimile to the Representative, which address will be supplied
to any other party hereto by the Representative upon request. Any such notices
and other communications shall take effect at the time of receipt thereof.
14. Parties.
This
Agreement shall inure solely to the benefit of, and shall be binding upon,
the
Underwriters, the Company and the controlling Persons, directors, officers,
employees and agents referred to in Sections 8 and 9 hereof, and their
respective successors and assigns, and no other Person shall have or be
construed to have any legal or equitable right, remedy or claim under or in
respect of or by virtue of this Agreement or any provision herein contained.
This Agreement and all conditions and provisions hereof are intended to be
for
the sole and exclusive benefit of the parties hereto and said controlling
Persons and their respective successors, officers, directors, heirs and legal
representative, and it is not for the benefit of any other Person. The term
“successors and assigns” shall not include a purchaser, in its capacity as such,
of Shares from any of the Underwriters.
Maxim
Group LLC
[
], 2006
Page
43
of
44
15. Governing
Law.
This
Agreement shall be deemed to have been executed and delivered in New York and
both this Agreement and the transactions contemplated hereby shall be governed
as to validity, interpretation, construction, effect, and in all other respects
by the laws of the State of New York pursuant to Section 5-1401 of the New
York
General Obligations Law, without regard to the conflicts of laws principals
thereof (other than The New York General Obligations Law). Each of the
Underwriters and the Company: (a) agree that any legal suit, action or
proceeding arising out of or relating to this Agreement and/or the transactions
contemplated hereby shall be instituted exclusively in the Supreme Court of
the
State of New York, New York County, or in the United States District Court
for
the Southern District of New York, (b) waives any objection which it may have
or
hereafter to the venue of any such suit, action or proceeding, and (c)
irrevocably consents to the jurisdiction of Supreme Court of the State of New
York, New York County, or in the United States District Court for the Southern
District of New York in any such suit, action or proceeding. The Company has
appointed CT Corporation Systems as its authorized agent (the “Authorized
Agent”)
upon
whom process may be served in any suit, action or proceeding arising out of
or
based upon this Agreement or the transactions contemplated herein which may
be
instituted in any New York Court, by any Underwriter, the directors, officers,
employees and agents of any Underwriter, or by any person who controls any
Underwriter, and expressly accepts the exclusive jurisdiction of any such court
in respect of any such suit, action or proceeding. The Company hereby represents
and warrants that the Authorized Agent has accepted such appointment and has
agreed to act as said agent for service of process, and the Company agrees
to
take any and all action, including the filing of any and all documents that
may
be necessary to continue such appointment in full force and effect as aforesaid.
Service of process upon the Authorized Agent shall be deemed, in every respect,
effective service of process upon the Company. Notwithstanding the foregoing,
the Company hereby agrees to the exclusive jurisdiction of the Supreme Court
of
the State of New York, New York County, or in the United States District Court
for the Southern District of New York in connection with any action brought
by
them arising out of or based upon this Agreement or the sale of the Shares.
Each
of the Underwriters and the Company further agrees to accept and acknowledge
service of any and all process which may be served in any such suit, action
or
proceeding in the Supreme Court of the State of New York, New York County,
or in
the United States District Court for the Southern District of New York and
agrees that service of process upon the Company mailed by certified mail to
the
Company’s address or delivered by Federal Express via overnight delivery shall
be deemed in every respect effective service of process upon the Company, in
any
such suit, action or proceeding, and service of process upon the Underwriters
mailed by certified mail to the Underwriters’ address or delivered by Federal
Express via overnight delivery shall be deemed in every respect effective
service process upon the Underwriter, in any such suit, action or proceeding.
THE COMPANY (ON BEHALF OF ITSELF AND, TO THE FULLEST EXTENT PERMITTED BY LAW,
ON
BEHALF OF ITS RESPECTIVE EQUITY HOLDERS AND CREDITORS) HEREBY WAIVES ANY RIGHT
THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED UPON, ARISING
OUT
OF OR IN CONNECTION WITH THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT, THE REGISTRATION STATEMENT AND THE PROSPECTUS.
16. Currency.
Each
reference in this Agreement to U.S. Dollar or “$” (the “Relevant
Currency”)
is of
the essence. To the fullest extent permitted by law, the obligations of the
Company in respect of any amount due under this Agreement will, notwithstanding
any payment in any other currency (whether pursuant to a judgment or otherwise),
be discharged only to the extent of the amount in the Relevant Currency that
the
party entitled to receive such payment may, in accordance with its normal
procedures, purchase with the sum paid in such other currency (after any premium
and costs of exchange) on the business day immediately following the day on
which such party receives such payment. If the amount in the Relevant Currency
that may be so purchased for any reason falls short of the amount originally
due, the party making such payment will pay such additional amounts, in the
Relevant Currency, as may be necessary to compensate for the shortfall. Any
obligation of any of the Company not discharged by such payment will, to the
fullest extent permitted by applicable law, be due as a separate and independent
obligation and, until discharged as provided herein, will continue in full
force
and effect.
Maxim
Group LLC
[
], 2006
Page
44
of
44
17. Waiver
Of Immunity.
To the
extent that any of the Company has or hereafter may acquire any immunity
(sovereign or otherwise) from any legal action, suit or proceeding, from
jurisdiction of any court or from set-off or any legal process (whether service
or notice, attachment in aid or otherwise) with respect to itself or any of
its
property, the Company hereby irrevocably waives and agrees not to plead or
claim
such immunity in respect of its obligations under this Agreement.
18. Entire
Agreement.
This
Agreement, together with the schedules and exhibits attached hereto and as
the
same may be amended from time to time in accordance with the terms hereof,
contains the entire agreement among the parties hereto relating to the subject
matter hereof and there are no other or further agreements outstanding not
specifically mentioned herein.
19. Severability.
If any
term or provision of this Agreement or the performance thereof shall be invalid
or unenforceable to any extent, such invalidity or unenforceability shall not
affect or render invalid or unenforceable any other provision of this Agreement
and this Agreement shall be valid and enforced to the fullest extent permitted
by law.
20. Counterparts.
This
Agreement may be executed in any number of counterparts, each of which shall
be
deemed to be an original, but all such counterparts shall together constitute
one and the same instrument. Delivery of a signed counterpart of this Agreement
by facsimile transmission shall constitute valid and sufficient delivery
thereof.
21. Headings.
The
headings herein are inserted for convenience of reference only and are not
intended to be part of, or to affect the meaning or interpretation of, this
Agreement.
22. Time
is of the Essence.
Time
shall be of the essence of this Agreement. As used herein, the term “business
day” shall mean any day when the Commission’s office in Washington, D.C. is open
for business.
23. Amendment.
This
Agreement may only be amended by a written instrument executed by each of the
parties hereto.
If
the
foregoing correctly sets forth your understanding, please so indicate in the
space provided below for that purpose, whereupon this letter shall constitute
a
binding agreement among us.
| Very truly yours, | |||
| FUWEI FILMS (HOLDINGS) CO., LTD. | |||
|
By:
|
|||
|
Name: |
|||
| Title: |
Accepted
by the Representative, acting for itself and as
Representative
of the Underwriters named on Schedule
A
attached hereto,
as
of the date first written above:
| MAXIM GROUP LLC | |||
| By: |
|
||
|
|
|||
| Title: Director of Investment Banking |
[End
of
Signature Pages to Underwriting Agreement]
SCHEDULE
A
Underwriters
|
Underwriter
|
Total
Number of Firm Shares to be Purchased
|
Number
of Additional Shares to be Purchased if Option is Fully
Exercised
|
|
Maxim
Group LLC
|
||
|
▇▇
▇▇▇▇▇▇▇▇▇ & Co. LLC
|
||
|
Chardan
Capital Markets, LLC
|
SCHEDULE
B
ANNEX
I
Form
of Lock-Up Agreement
Lock-Up
Agreement
[Date]
MAXIM
GROUP LLC
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇ ▇▇▇▇▇
Re:
Fuwei
Films (Holdings) Co., Ltd., Lock-Up Agreement
Ladies
and Gentlemen:
This
letter agreement (this “Agreement”)
relates to the public offering (the “Offering”)
by
Fuwei
Films (Holdings) Co., Ltd.,
a
company organized and existing under the laws of the Cayman Islands (the
“Company”),
of an
aggregate of
[
] of its ordinary shares, par value $0.129752 US per share (the “Ordinary Shares”).
The
Offering is governed by the certain Underwriting Agreement, dated as of
[
] (the “Underwriting
Agreement”),
by
and between the Company and Maxim Group LLC (the “Representative”),
as
representative of the several underwriters named therein.
In
order
to induce the Representative to underwrite the Offering, the undersigned hereby
agrees that, without the prior written consent of the Representative, which
consent shall not be unreasonably withheld, during the period from the date
hereof until and through the nine (9) month anniversary of the closing of the
offering contemplated by the Underwriting Agreement (the “Lock-Up
Period”),
the
undersigned: (a) will not, directly or indirectly, offer, sell, agree to offer
or sell, solicit offers to purchase, grant any call option or purchase any
put
option with respect to, pledge, borrow or otherwise dispose of any Relevant
Security (as defined below), and (b) will not establish or increase any “put
equivalent position” or liquidate or decrease any “call equivalent position”
with respect to any Relevant Security (in each case within the meaning of
Section 16 of the Securities Exchange Act of 1934, as amended, and the rules
and
regulations promulgated thereunder), or otherwise enter into any swap,
derivative or other transaction or arrangement that transfers to another, in
whole or in part, any economic consequence of ownership of a Relevant Security,
whether or not such transaction is to be settled by delivery of Relevant
Securities, other securities, cash or other consideration.
As
used
herein, the term “Relevant
Security”
means
any Ordinary Shares or other security of the Company thereof that is convertible
into, or exercisable or exchangeable for Ordinary Shares or equity securities
of
the Company or that holds the right to acquire any Ordinary Shares or equity
securities of the Company or any other such Relevant Security.
The
undersigned hereby authorizes the Company during the Lock-Up Period to cause
any
transfer agent for the Relevant Securities to decline to transfer, and to note
stop transfer restrictions on the stock register and other records relating
to,
Relevant Securities for which the undersigned is the record holder and, in
the
case of Relevant Securities for which the undersigned is the beneficial but
not
the record holder, agrees during the Lock-Up Period to cause the record holder
to cause the relevant transfer agent to decline to transfer, and to note stop
transfer restrictions on the stock register and other records relating to,
such
Relevant Securities.
The
undersigned hereby further agrees that, without the prior written consent of
the
Representative, which consent shall not be unreasonably withheld, during the
Lock-Up Period the undersigned will not: (x) file or participate in the filing
with the Securities and Exchange Commission of any registration statement,
or
circulate or participate in the circulation of any preliminary or final
prospectus or other disclosure document with respect to any proposed offering
or
sale of a Relevant Security and (y) exercise any rights the undersigned may
have
to require registration with the Securities and Exchange Commission of any
proposed offering or sale of a Relevant Security.
The
undersigned hereby represents and warrants to the Representative and the Company
that the undersigned has full power and authority to enter into this Agreement
and that this Agreement constitutes the legal, valid and binding obligation
of
the undersigned, enforceable in accordance with its terms. Upon request, the
undersigned will execute any additional documents necessary in connection with
enforcement hereof. Any obligations of the undersigned shall be binding upon
the
successors and assigns of the undersigned from the date first above written.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of New York, without regard to the conflicts of laws principles thereof.
Delivery of a signed copy of this letter by facsimile transmission shall be
effective as delivery of the original hereof.
| Very truly yours, | |||
|
|
|||
ANNEX
II
Opinion
of Loeb & Loeb LLP
Opinion
of ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
Opinion
of Concord & Partners
ANNEX
V
ISSUER-REPRESENTED
FREE
WRITING PROSPECTUSES
[to
be
completed]