EXECUTION COPY UNDERWRITING AGREEMENT Between HUIHENG MEDICAL, INC. And CHARDAN CAPITAL MARKETS, LLC Dated: _______ __, 2007
EXECUTION
COPY
Between
And
CHARDAN
CAPITAL MARKETS, LLC
Dated:
_______ __, 2007
INDEX
OF DEFINITIONS
Term
|
Section
|
|
Act
|
2.1.1
|
|
AMEX
|
2.21
|
|
Bridge
Notes
|
2.31
|
|
Closing
Date
|
1.1.2
|
|
Code
|
2.23.2
|
|
Commission
|
2.1.1
|
|
Common
Stock
|
1.1.1
|
|
Company
|
Introductory
Paragraph
|
|
XXXXX
|
2.1.1
|
|
Effective
Date
|
1.2.2
|
|
ERISA
|
2.23.2
|
|
ERISA
Plans
|
2.23.2
|
|
Exchange
Act
|
2.1.2
|
|
Filing
Date
|
2.19.2
|
|
Firm
Shares
|
1.1.1
|
|
Insiders
|
3.15
|
|
Intangibles
|
2.22
|
|
FINRA
|
2.19.1
|
|
Option
Closing Date
|
1.2.2
|
|
Option
Shares
|
1.2.1
|
|
Over-allotment
Option
|
1.2.1
|
|
Preliminary
Prospectus
|
2.1.1
|
|
Prospectus
|
2.1.1
|
Public
Shares
|
1.2.1
|
|
Registration
Statement
|
2.1.1
|
|
Regulations
|
2.1.1
|
|
Rule
424(b)
|
2.1.1
|
|
Rule
462(b) Registration Statement
|
2.1.1
|
|
Sarb-Ox
|
2.33
|
|
Secondary
Market Trading Memorandum
|
3.11.3
|
|
Shares
|
.1.3.1
|
|
Subsidiary(ies)
|
2.27
|
|
Transfer
Agent
|
3.21
|
|
Unaudited
Financials
|
4.8
|
|
Underwriters
|
Introductory
Paragraph
|
|
Underwriters’
Purchase Option
|
1.3.1
|
|
Representative’s
Shares
|
1.3.1
|
INSERT
SHARES OF COMMON STOCK
___________
, 2007
Chardan
Capital Markets, LLC
00
Xxxxx
Xxxxxx, Xxxxx 0000
Xxx
Xxxx,
Xxx Xxxx 00000
Ladies
and Gentlemen:
The
undersigned, Huiheng Medical, Inc., a Nevada corporation (“Company”),
hereby confirms its agreement with Chardan Capital Markets, LLC (being referred
to herein variously as “you,”
“Chardan”
or
the
“Representative”)
and
with the other underwriters named on Schedule I hereto for which Chardan is
acting as Representative (the Representative and the other Underwriters being
collectively called the “Underwriters”
or,
individually, an “Underwriter”)
as
follows:
1. Purchase
and Sale of Shares.
1.1 Firm
Shares.
1.1.1 Purchase
of Firm Shares.
On the
basis of the representations and warranties herein contained, but subject to
the
terms and conditions herein set forth, the Company agrees to issue and sell,
severally and not jointly, to the several Underwriters, an aggregate of INSERT
number shares of the Company’s common stock, par value $0.001 per share
(“Common
Stock”)
at a
purchase price (net of discounts and commissions) of $INSERT per
share. Such shares of Common Stock are referred to herein as the “Firm
Shares.”
The
Underwriters, severally and not jointly, agree to purchase from the Company
the
number of Firm Shares set forth opposite their respective names on Schedule
I
attached hereto and made a part hereof at such purchase price. The Firm Shares
are to be offered initially to the public (“Offering”)
at an
offering price of $_____ per Firm Share.
1.1.2 Delivery
and Payment.
Delivery and payment for the Firm Shares shall be made at 10:00 a.m., New York
time, on or before the third business day following the date that the Firm
Shares commence trading, at such earlier time as the Representative shall
determine, or at such other time as shall be agreed upon by the Representative
and the Company, at the offices of counsel to the Underwriters, or at such
other
place as shall be agreed upon by the Representative and the Company. The hour
and date of delivery and payment for the Firm Shares is called the “Closing
Date.”
Payment for the Firm Shares shall be made on the Closing Date at the
Representative’s election by wire transfer in Federal (same day) funds or by
certified or bank cashier’s check(s) in New York Clearing House funds, payable
to the order of the Company upon delivery to the Underwriters of certificates
(in form and substance satisfactory to the Representative) representing the
Firm
Shares, to be deposited to the respective accounts of the Underwriters. The
certificates representing the Firm Shares shall be registered in such name
or
names and in such denominations as the Representative may request in writing
at
least two full business days prior to the Closing Date. The certificates, if
any, will be made available to the Representative for inspection, checking
and
packaging at the office of the Company’s transfer agent or correspondent not
less than one full business day prior to the Closing Date. The Company shall
not
be obligated to sell or deliver the Firm Shares except upon tender of payment
by
the Representative for all the Firm Shares.
1
1.2 Over-Allotment
Option.
1.2.1 Option
Shares.
For the
purposes of covering any over-allotments in connection with the distribution
and
sale of the Firm Shares, the Underwriters are hereby granted an option to
purchase up to an additional INSERT shares of Common Stock from the Company
(“Over-allotment
Option”).
Such
additional INSERT shares of Common Stock are hereinafter referred to as the
“Option
Shares.”
The
Firm Shares and the Option Shares are hereinafter referred to collectively
as
the “Public
Shares.”
The
purchase price to be paid for the Option Shares will be the same price per
Option Shares as the price per Firm Share set forth in Section 1.1.1
hereof.
1.2.2 Exercise
of Option.
The
Over-allotment Option granted pursuant to Section 1.2.1 hereof may be exercised
by the Representative as to all or any part of the Option Shares at any time,
from time to time, within forty-five (45) days after the effective date
(“Effective
Date”)
of the
Registration Statement (as hereinafter defined). The Underwriters are not under
any obligation to exercise any portion of the Over-allotment Option or purchase
the Option Shares. The Over-allotment Option granted hereby may be exercised
by
the giving of oral notice to the Company from the Representative, which must
be
confirmed within one business day by overnight mail or facsimile transmission
setting forth the number of Option Shares to be purchased, the date and time
for
delivery of and payment for the Option Shares and stating that the Option Shares
referred to therein are to be used for the purpose of covering over-allotments
in connection with the distribution and sale of the Firm Shares. If such notice
is given at least two full business days prior to the Closing Date, the date
set
forth therein for such delivery and payment will be the Closing Date. If such
notice is given thereafter, the date set forth therein for such delivery and
payment will not be earlier than three full business days after the date of
the
notice, unless the Representative and the Company agree upon an earlier date.
If
such delivery and payment for the Option Shares does not occur on the Closing
Date, the date and time of the closing for such Option Shares will be as set
forth in the notice (hereinafter the “Option
Closing Date”).
Upon
exercise of the Over-allotment Option, the Company will become obligated to
convey to the Underwriters, and, subject to the terms and conditions set forth
herein, the Underwriters will become obligated to purchase, the number of Option
Shares specified in such notice.
1.2.3 Delivery
and Payment.
Payment
for the Option Shares will be at the Representative’s election by wire transfer
in Federal (same day) funds or by certified or bank cashier’s check(s) in New
York Clearing House funds, payable to the order of the Company at the offices
of
counsel to the Underwriters or at such other place as shall be agreed upon
by
the Underwriters and the Company upon delivery to the Representative of
certificates representing such securities for the Underwriters. The certificates
representing the Option Shares to be delivered will be in such denominations
and
registered in such names as the Representative requests not less than two full
business days prior to the Closing Date or the Option Closing Date, as the
case
may be. The certificates will be made available to the Representative for
inspection, checking and packaging at the office of the Company’s transfer agent
or correspondent not less than one full business day prior to such Closing
Date.
2
1.3 Representative’s
Purchase Option.
1.3.1 Purchase
Option.
The
Company hereby agrees to issue and sell to the Representatives (and/or their
designees) on the Closing Date for an aggregate purchase price of $100, an
option (“Representative’s
Purchase Option”)
for
the purchase of an aggregate of INSERT shares of Common Stock (“Representative’s
Shares”)
at an
initial exercise price of 125% of the initial offering price of a share of
common stock (i.e,
$INSERT
per share of Common Stock). The Representative’s Shares are identical to the
Firm Shares. The Representative’s Purchase Option will be exercisable for a
period commencing six months from the Closing Date and ending five years from
the Effective Date. The Representative’s Purchase Option and the
Representative’s Shares are hereinafter referred to collectively as the
“Representative’s
Securities.”
The
Public Shares and the Representative’s Shares are hereinafter referred to
collectively as the “Shares.”
1.3.2 Payment
and Delivery.
Delivery and payment for the Representative’s Purchase Option be made on the
Closing Date. The Company shall deliver to the Representative, upon payment
therefor, certificates for the Representative’s Purchase Option in the name or
names and in such authorized denominations as the Representative may
request.
2. Representations
and Warranties of the Company.
The
Company represents and warrants to the Underwriters as follows:
2.1 Filing
of Registration Statement.
2.1.1 Pursuant
to the Act.
The
Company has filed with the Securities and Exchange Commission (“Commission”)
a
registration statement on Form SB-2 (No. 333-146975), and amendments thereto,
and related preliminary prospectuses for the registration under the Securities
Act of 1933, as amended (“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 (as defined below), financial statements,
schedules, exhibits and other information (if any) deemed to be part of the
registration statement at the time of effectiveness pursuant to Rule 430A under
the Securities Act, is hereinafter referred to as the “Registration
Statement.”
If
the
Company has filed or is required pursuant to the terms hereof to file a
registration statement pursuant to Rule 462(b) under the Securities Act
registering additional shares of Common Stock (a “Rule 462(b) Registration
Statement”), then, unless otherwise specified, any reference herein to the term
“Registration Statement” shall be deemed to include such Rule 462(b)
Registration Statement. Other than a Rule 462(b) Registration Statement, which,
if filed, becomes effective upon filing, no other document with respect to
the
Registration Statement has been or will be filed with the Commission. 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 (“Regulations”),
will
file a prospectus with the Commission pursuant to Rule 424(b) under the
Securities Act (“Rule
424(b)”).
The
prospectus, in the form in which it is to be filed with the Commission pursuant
to Rule 424(b), or, if the prospectus is not to be filed with the Commission
pursuant to Rule 424(b), the prospectus in the form included as part of the
Registration Statement at the time the Registration Statement became effective,
is hereinafter referred to as the “Prospectus,”
except
that if any revised prospectus or prospectus supplement shall be provided to
the
Underwriters by the Company for use in connection with the offering which
differs from the Prospectus (whether or not such revised prospectus or
prospectus supplement is required to be filed by the Company pursuant to Rule
424(b)), the term “Prospectus” shall also refer to such revised prospectus or
prospectus supplement, as the case may be, from and after the time it is first
provided to the Underwriters for such use. Any preliminary prospectus or
prospectus subject to completion included in the Registration Statement
(including the Sale Preliminary Prospectus (as defined below)) or filed with
the
Commission pursuant to Rule 424 under the Securities Act is hereafter called
a
“Preliminary
Prospectus.”
The
Preliminary Prospectus dated __________ hereinafter referred to as the
“Sale
Preliminary Prospectus.”
Any
reference herein to the Registration Statement, any Preliminary Prospectus
or
the Prospectus shall be deemed to refer to and include the exhibits incorporated
by reference therein pursuant to the Regulations on or before the effective
date
of the Registration Statement, the date of such Preliminary Prospectus or the
date of the Prospectus, as the case may be. Any reference herein to the terms
“amend”, “amendment” or “supplement” with respect to the Registration Statement,
any Preliminary Prospectus or the Prospectus shall be deemed to refer to and
include: (i) the filing of any document under the Securities Exchange Act of
1934, as amended, and together with the Regulations promulgated thereunder
(“Exchange
Act”)
after
the effective date of the Registration Statement, the date of such Preliminary
Prospectus or the date of the Prospectus, as the case may be, which is
incorporated therein by reference, and (ii) any such document so filed. All
references in this Agreement to the Registration Statement, the Rule 462(b)
Registration Statement, a Preliminary Prospectus and the Prospectus, or any
amendments or supplements to any of the foregoing shall be deemed to include
any
copy thereof filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval System (“XXXXX”).
3
2.1.2 Pursuant
to the Exchange Act.
The
Company has filed with the Commission a registration statement on Form 8-A
(No.
001-INSERT) providing for the registration of shares of Common Stock of the
Company under the Exchange Act (“8-A
Registration Statement”).
Such
registration was declared effective by the Commission on ______________. No
stop
order suspending the effectiveness of such registration statement has been
issued and no proceeding for that purpose has been initiated or, threatened
by
the Commission. The Form 8-A Registration Statement when it became effective
conformed, and any further amendments thereto will conform, in all material
respects to the requirements of the Exchange Act and the rules and regulations
of the Commission thereunder, and did not and will not, as of the applicable
effective date, contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading.
2.2 Prospectus
No Stop Orders, Etc.
Neither
the Commission nor, to the Company’s knowledge, any state regulatory authority
has issued any order or threatened to issue any order preventing or suspending
the use of any Preliminary Prospectus or has instituted or, to the Company’s
knowledge, threatened to institute any proceedings with respect to such an
order.
4
2.3 Disclosures
in Registration Statement.
2.3.1 Securities
Act Representation.
At the
respective times the Registration Statement and any post effective amendments
thereto become effective and at all times subsequent thereto up to the
Applicable Time (as hereunder defined), Closing Date and the Option, Closing
Date, if any, the Registration Statement, the Sale Preliminary Prospectus and
the Prospectus contained and will contain all material statements that are
required to be stated therein in accordance with the Act and the Regulations,
and conformed and will conform in all material respects to the requirements
of
the Act and the Regulations; neither the Registration Statement nor any
Preliminary Prospectus (with respect to each Preliminary Prospectus, as of
its
respective date) nor any amendment or supplement thereto, on such dates, nor
the
Sale Preliminary Prospectus did or will contain any untrue statement of a
material fact or omitted or will omit to state any material fact required to
be
stated therein or necessary to make the statements therein, 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 Public Securities or any
amendment thereto or pursuant to Rule 424(a) of the Regulations) 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 (or have been or will be corrected in the Sale Preliminary Prospectus
and the Prospectus to comply) in all material respects with the applicable
provisions of the Act and the Regulations and did not and will not contain
an
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein,
in
light of the circumstances under which they were made, not misleading as of
the
date hereof and the Closing Date. The representation and warranty made in this
Section 2.3.1 does not apply to statements made or statements omitted in
reliance upon and in conformity with written information furnished to the
Company with respect to the Underwriters by the Representative expressly for
use
in the Registration Statement or Prospectus or any amendment thereof or
supplement thereto. As used herein, “Applicable
Time”
means
the time of sale with respect to each applicable investor at or prior to the
Closing Date.
2.3.2 Disclosure
of Contracts.
The
description in the Registration Statement and the Sale Preliminary Prospectus
of
contracts and other documents is accurate in all material respects and presents
fairly the information required to be disclosed and there are no contracts
or
other documents required to be described in the Registration Statement and
the
Sale Preliminary Prospectus or to be filed with the Commission as exhibits
to
the Registration Statement that have not been so described or filed. Each
contract or other instrument (however characterized or described) to which
the
Company or its Subsidiaries (as hereinafter defined) is a party or by which
their property or business is or may be bound or affected and that is (i)
referred to in the Prospectus, or (ii) material to the business, has been duly
and validly executed, is in full force and effect and is enforceable against
the
Company or the Subsidiaries, as the case may be, and, to the Company’s
knowledge, the other parties thereto in accordance with its terms, except (x)
as
such enforceability may be limited by bankruptcy, insolvency, reorganization
or
similar laws affecting creditors’ rights generally, (y) as enforceability of any
indemnification or contribution provision may be limited under the federal
and
state securities laws, and (z) that the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to the equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought, and none of such contracts or instruments has been assigned
by
the Company or its Subsidiaries, and neither the Company or its Subsidiaries
nor, to the Company’s knowledge, any other party is in breach or default
thereunder and, to the Company’s knowledge, no event has occurred that, with the
lapse of time or the giving of notice, or both, would constitute a breach or
default thereunder. None of the Company nor any of its Subsidiaries has sent
or
received any communication regarding termination of, or intent not to renew,
any
of the contracts or agreements referred to in clause (ii) above or referred
to
or described in the Prospectus, or referred to or described in, or filed as
an
exhibit to, the Registration Statement, and no such termination or non-renewal
has been threatened by the Company or any of its Subsidiaries or, to the
Company’s knowledge after due inquiry, any other party to any such contract or
agreement. None of the material provisions of such contracts or instruments
violates or will result in a violation of any existing applicable law, rule,
regulation, judgment, order or decree of any governmental agency or court,
domestic or foreign, having jurisdiction over the Company or its Subsidiaries
or
any of their assets or businesses, including, without limitation, those relating
to environmental laws and regulations.
5
2.3.3 Prior
Securities Transactions.
No
securities of the Company have been sold by the Company or by or on behalf
of,
or for the benefit of, any person or persons controlling, controlled by, or
under common control with the Company within the three years prior to the date
hereof, except as disclosed in the Registration Statement.
2.3.4 U.S.
Regulations.
The
disclosures in the Registration Statement concerning the effects of Federal,
State and local regulation on the Company’s business purpose as currently
contemplated are correct in all material respects and do not omit to state
a
material fact necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading.
2.4 Changes
After Dates in Registration Statement.
2.4.1 No
Material Adverse Change.
Since
the respective dates as of which information is given in the Registration
Statement and the Sale Preliminary Prospectus, except as otherwise specifically
stated therein, (i) there has not been any material change in the share capital,
short-term debt or long-term debt of the Company or any of its Subsidiaries
(as
defined in Section 2.7 hereof) or any other material adverse change, or any
development involving a prospective material adverse change, in or affecting
the
general affairs, management, financial position, business prospects,
shareholders’ equity, or results of operations of the Company and its
Subsidiaries, individually or in the aggregate taken as a whole (a “Material
Adverse Effect”), including, but not limited to, a material loss or interference
with its business from fire, storm, explosion, flood or other casualty, whether
or not covered by insurance, or from any labor dispute or court or governmental
action, order or decree, whether or not arising in the ordinary course of
business, and (ii) there have been no transactions entered into by the Company
or its Subsidiaries, other than those in the ordinary course of business, that
are material with respect to the condition, financial or otherwise, or to the
results of operations, business or business prospects of the Company or its
Subsidiaries.
2.4.2 Recent
Securities Transactions, Etc.
Since
the respective dates as of which information is given in the Registration
Statement and the Sale Preliminary Prospectus, and except as may otherwise
be
indicated or contemplated herein or therein, the Company has not (i) issued
any
securities or incurred any liability or obligation, direct or contingent, for
borrowed money; or (ii) declared or paid any dividend or made any other
distribution on or in respect to its capital stock.
6
2.5 Independent
Accountants.
UHY
ZTHZ HK CPA Limited (“UHY”) whose report is filed with the Commission as part of
the Registration Statement, are independent accountants as required by the
Act
and the Regulations.
2.6 Financial
Statements.
The
financial statements, including the notes thereto and supporting schedules
included in the Registration Statement and the Sale Preliminary Prospectus,
fairly present the financial position, the results of operations and the cash
flows of the Company at the dates and for the periods to which they apply;
and
such financial statements have been prepared in conformity with generally
accepted accounting principles, consistently applied throughout the periods
involved; and the supporting schedules included in the Registration Statement
present fairly the information required to be stated therein. The Registration
Statement discloses all material off-balance sheet transactions, arrangements,
obligations (including contingent obligations), and other relationships of
the
Company with unconsolidated entities or other persons that may have a material
current or future effect on the Company’s financial condition, changes in
financial condition, results of operations, liquidity, capital expenditures,
capital resources, or significant components of revenues or
expenses.
2.7 Authorized
Capital; Options; Etc.
The
Company had, at the date or dates indicated in the Prospectus, duly authorized,
issued and outstanding capitalization as set forth in the Registration Statement
and the Sale Preliminary Prospectus. All of the issued shares conform in all
material respects to the description of the Shares contained in the Registration
Statement and the Sale Preliminary Prospectus. Based on the assumptions and
adjustments stated in the Registration Statement and the Sale Preliminary
Prospectus, the Company will have on the Closing Date the adjusted stock
capitalization set forth therein. Except as set forth in the Registration
Statement, Sale Preliminary Prospectus and the Prospectus, on the Effective
Date
and on the Closing Date there will be no outstanding or authorized
subscriptions, options, warrants or other rights to purchase or otherwise
acquire, or preemptive rights with respect to the issuance or sale of any Common
Stock of the Company, including any obligations to issue any shares pursuant
to
anti-dilution provisions, or any security convertible into shares of Common
Stock of the Company, or any contracts or commitments to issue or sell shares
of
Common Stock or any such options, warrants, rights or convertible securities.
All of the issued share capital of Allied Moral Holdings, Ltd. (“Allied
Moral”)
is
owned by the Company and have been duly and validly authorized and issued,
and
are fully paid and non-assessable. Other than Allied Moral, the Company does
not
own, directly or indirectly, any shares of stock or any other equity interests
or long-term debt securities of any corporation or other entity. Allied Moral
owns all of the issued share capital of Changdu Huiheng Development Co., Ltd.
(“Changdu
Huiheng”),
which
shares have been duly and validly authorized and issued, and are fully paid
and
non-assessable. Other than Changdu Huiheng, Allied Moral does not own, directly
or indirectly, any shares of stock or any other equity interests or long-term
debt securities of any corporation or other entity. All of issued share capital
of Wuhan Kanqiao Medical New Technology Co., Ltd. (“Wuhan
Kanqiao”)
are
owned by Changdu Huiheng and each such shares been duly and validly authorized
and issued, and are fully paid and non-assessable. Changdu Huiheng duly and
validly owns the equity interest of Shenzhen Hyper Technology Co., Ltd.
(“Shenzhen
Hyper”)
and
Beijing Yuankang Kbeta Nuclear Technology Co., Ltd. (“Beijing
Kbeta”)
in the
percentages set forth in the Prospectus under the caption “Business-Huiheng’s
Background,” free and clear of all liens, encumbrances, equities or claims.
Other than Shenzhen Hyper and Beijing Kbeta, Changdu Huiheng does not own,
directly or indirectly, any shares of stock or any other equity interests or
long-term debt securities of any corporation or other entity. Allied Moral,
Changdu Huiheng, Wuhan Kanqiao, Shenzhen Hyper and Beijing Kbeta are referred
to
herein as the “Subsidiaries”
and
each individually as a “Subsidiary.”
7
2.8 Valid
Issuance of Securities; Etc.
2.8.1 Outstanding
Securities.
All
issued and outstanding securities of the Company have been duly authorized
and
validly issued and are fully paid and non-assessable; the holders thereof have
no rights of rescission with respect thereto, and are not subject to personal
liability by reason of being such holders; and none of such securities were
issued in violation of the preemptive rights of any holders of any security
of
the Company or similar contractual rights granted by the Company. The
outstanding options and warrants to purchase shares of Common Stock constitute
valid and binding obligations of the Company, enforceable in accordance with
their terms. The authorized Common Stock and outstanding options and warrants
to
purchase shares of Common Stock conform to all statements relating thereto
contained in the Registration Statement and the Sale Preliminary Prospectus.
The
offers and sales by the Company of the outstanding Common Stock, options and
warrants to purchase shares of Common Stock, and securities convertible into
shares of Common Stock, were at all relevant times registered under the Act
and
registered or qualified under the applicable state securities or Blue Sky laws
or exempt from such registration or qualification requirements.
2.8.2 Securities
Sold Pursuant to this Agreement.
The
Shares have been duly authorized and, when issued and paid for, will be validly
issued, fully paid and non-assessable; the holders thereof are not and will
not
be subject to personal liability by reason of being such holders; the Shares
are
not and will not be subject to the preemptive rights of any holders of any
security of the Company or similar contractual rights granted by the Company;
and all corporate action required to be taken for the authorization, issuance
and sale of the Shares has been duly and validly taken. When issued, the
Representative’s Purchase Option will constitute a valid and binding obligation
of the Company to issue and sell, upon exercise thereof and payment therefor,
the number and type of securities of the Company called for thereby and will
be
enforceable against the Company in accordance with its terms, except (i) as
such
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors’ rights generally, (ii) as enforceability of
any indemnification or contribution provision may be limited under the federal
and state securities laws, and (iii) that the remedy of specific performance
and
injunctive and other forms of equitable relief may be subject to the equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
2.9 Registration
Rights of Third Parties.
Except
as set forth in the Registration Statement and the Sale Preliminary Prospectus,
no holders of any securities of the Company or of any options or warrants of
the
Company or other rights exercisable for or convertible or exchangeable into
securities of the Company have the right to require the Company to register
any
such securities of the Company under the Act or to include any such securities
in a registration statement to be filed by the Company.
2.10 Validity
and Binding Effect of Agreements.
This
Agreement has been duly and validly authorized by the Company and constitutes,
and the Representative’s Purchase Option has been duly and validly authorized by
the Company and, when executed and delivered, will constitute, the valid and
binding agreements of the Company, enforceable against the Company in accordance
with their respective terms, except (i) as such enforceability may be limited
by
bankruptcy, insolvency, reorganization or similar laws affecting creditors’
rights generally, (ii) as enforceability of any indemnification or contribution
provision may be limited under the federal and state securities laws, and (iii)
that the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to the equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought.
8
2.11 No
Conflicts, Etc.
The
execution, delivery, and performance by the Company of this Agreement and the
Representative’s Purchase Option, the consummation by the Company of the
transactions contemplated herein and the compliance by the Company with the
terms hereof do not and will not, with or without the giving of notice or the
lapse of time or both, (i) result in a breach of, or conflict with any of the
terms and provisions of, or constitute a default under, or result in the
creation, modification, termination or imposition of any lien, charge or
encumbrance upon any property or assets of the Company and its Subsidiaries
pursuant to the terms of any indenture, mortgage, deed of trust, note, loan
or
credit agreement or any other agreement or instrument evidencing an obligation
for borrowed money, or any other agreement or instrument to which the Company
or
any of its Subsidiaries is a party or by which the Company may be bound or
to
which any of the property or assets of the Company or any of its Subsidiaries
is
subject; (ii) result in any violation of the provisions of the Certificate
of
Incorporation or the Bylaws of the Company or any of its Subsidiaries; (iii)
violate any existing applicable law, rule, regulation, judgment, order or decree
of any governmental agency or court, domestic or foreign, having jurisdiction
over the Company or any of its Subsidiaries or any of their properties or
businesses; or (iv) have a material adverse effect on any permit, license,
certificate, registration, approval, consent, license or franchise of or
concerning the Company or any of its Subsidiaries.
2.12 No
Defaults.
2.12.1 No
Contractual Defaults; Violations.
No
material default exists in the due performance and observance of any term,
covenant or condition of any material license, contract, indenture, mortgage,
deed of trust, note, loan or credit agreement, or any other agreement or
instrument evidencing an obligation for borrowed money, or any other material
agreement or instrument to which the Company is a party or by which the Company
may be bound or to which any of the properties or assets of the Company is
subject. The Company is not in violation of any term or provision of its
Certificate of Incorporation or By-Laws or in violation of any material
franchise, license, permit, applicable law, rule, regulation, judgment or decree
of any governmental agency or court, domestic or foreign, having jurisdiction
over the Company or any of its properties or businesses.
2.12.2 No
Default Under Laws.
Neither
the Company nor any of its Subsidiaries is (i) in breach of or in default under
any laws, regulations, rules, orders, decrees, guidelines or notices of the
PRC,
Tibet, Nevada or any other jurisdiction where it was incorporated or operates,
(ii) in breach of or in default under any approval, consent, waiver,
authorization, exemption, permission, endorsement or license granted by any
court or governmental agency or body or any stock exchange authorities
(“Governmental
Agency”)
in the
PRC, Tibet, Nevada, or any other jurisdiction where it was incorporated or
operates, or (iii) in violation of its constituent documents.
2.13 Corporate
Power; Licenses; Consents.
9
2.13.1 Conduct
of Business.
Each of
the Company and its Subsidiaries has all requisite corporate power and
authority, and has all necessary authorizations, approvals, orders, licenses,
certificates and permits of and from, and has made all declarations and filings
with, all governmental regulatory officials and bodies to own, lease, license
and use its properties and assets and conduct its business as described in
the
Registration Statement and the Sale Preliminary Prospectus, except where the
lack of which would not have a Material Adverse Effect, and such authorizations,
approvals, orders, licenses, certificates and permits contain no material
restrictions or conditions not described in the Registration Statement or the
Sale Preliminary Prospectus. Neither the Company nor any of its Subsidiaries
has
a reasonable basis to believe that any regulatory body is considering modifying,
suspending or revoking any such licenses, consents, authorizations, approvals,
orders, certificates or permits, and the Company and its Subsidiaries are in
compliance with the provisions of all such licenses, consents, authorizations,
approvals, orders, certificates or permits, except where the lack of which
would
not, individually or in the aggregate, have a Material Adverse
Effect.
2.13.2 Transactions
Contemplated Herein.
The
Company has all corporate power and authority to enter into this Agreement
and
to carry out the provisions and conditions hereof, and all consents,
authorizations, approvals and orders required in connection therewith have
been
obtained. No consent, approval, authorization or order of, and no filing with,
any court, Government Agency or other body is required for the valid
authorization, issuance, sale and delivery of the Shares and the consummation
of
the transactions and agreements contemplated by this Agreement, the
Representative’s Purchase Option, the Registration Statement and the Sale
Preliminary Prospectus, except with respect to applicable federal and state
securities laws.
2.14 Title
to Property.
Each of
the Company and its Subsidiaries has good and marketable title to all personal
property owned by it and has good and valid title to all real property or the
beneficial interests in and the right to transfer, lease and mortgage the land
use rights and building ownership rights over all of the real properties as
owned by it, in each case free and clear of all liens, encumbrances, claims,
security interests, defects and restrictions of any material nature whatsoever,
other than those referred to in the Registration Statement and the Sale
Preliminary Prospectus (including the financial statements and notes thereto)
and liens for taxes not yet due and payable. Each lease to which any of the
Company or its Subsidiaries is a party, is legal, valid, binding and enforceable
in accordance with its terms and, to the best of its knowledge, against the
other parties thereto, and no material default (or event which with notice
or
lapse of time, or both, would constitute a default) by the Company or any of
its
Subsidiaries has occurred and is continuing under any such lease; the use of
any
premises occupied by the Company or any of its Subsidiaries is in accordance
with that provided for the lease, land use rights, tenancy, license, concession
or agreement of whatsoever nature relating to such occupation and the relevant
above entity has observed and performed the terms and conditions thereof on
the
part of the tenant to be observed and performed; and neither the Company nor
any
of its Subsidiaries has received any claim for liabilities in respect of any
properties previously occupied by it or in which it owned or held any interests,
including without limitation, leasehold premises assigned, surrendered or
otherwise disposed of.
2.15 Insurance.
Except
as described in the Registration Statement and the Sale Prospectus, the Company
and its Subsidiaries maintain insurance covering their respective properties
and
product liabilities as the Company and its Subsidiaries reasonably deem adequate
in accordance with customary industry practice; such insurance insures against
such losses and risks to an extent which is adequate to protect the Company
and
its Subsidiaries and their respective businesses; all such insurance is fully
in
force on the date hereof and will be fully in force at the time of purchase
and
each additional time of purchase, if any; neither the Company nor any of its
Subsidiaries has reason to believe that it will not be able to renew any such
insurance as and when such insurance expires; and there is no material insurance
claim made by or against the Company or any of its Subsidiaries, pending, to
the
knowledge of the Company after due inquiry, threatened or outstanding and no
facts or circumstances exist which would reasonably be expected to give rise
to
any such claim and all due premiums in respect thereof have been
paid.
10
2.16 Litigation;
Governmental Proceedings.
There
is no action, suit, proceeding, inquiry, arbitration, investigation, litigation
or governmental proceeding pending or, to the Company’s knowledge, threatened
against, or involving the properties or business of, the Company or its
Subsidiaries that might materially and adversely affect the financial position,
prospects, value or the operation of the properties or the business of the
Company and its Subsidiaries, or that questions the validity of the capital
stock of the Company or this Agreement or of any action taken or to be taken
by
the Company pursuant to, or in connection with, this Agreement. There are no
outstanding orders, judgments or decrees of any court, governmental agency
or
other tribunal, domestic or foreign, naming the Company and enjoining the
Company or its Subsidiaries from taking, or requiring the Company or its
Subsidiaries to take, any action, or to which the Company, its properties or
business is bound or subject.
2.17 Subsidiaries.
Except
as described in Section 2.7, the Company does not own an interest in any
corporation, partnership, limited liability company, joint venture, trust or
other business entity. The Company owns all of the capital stock of the
Subsidiaries free and clear of all liens, security interests and other
encumbrances of any nature whatsoever, except as set forth in the Sale
Preliminary Prospectus and the Prospectus.
To
the
extent not specifically delineated in this Agreement, the
representations and warranties made by the Company in this Agreement shall
also
apply and be true with respect to each Subsidiary, individually or in the
aggregate taken as a whole with the Company and all other Subsidiaries, as
if
each representation and warranty contained herein made specific reference to
the
Subsidiaries each time the term “Company” was used.
2.18 Good
Standing.
The
Company has been duly organized and is validly existing as a corporation and
is
in good standing under the laws of the state of Nevada with power and authority
to own, lease and operate its properties and conduct its business as described
in the Sale Preliminary Prospectus and the Prospectus, and has been duly
qualified and licensed and in good standing as a foreign corporation in each
jurisdiction in which ownership or leasing of any properties or the character
of
its operations requires such qualification or licensing, except where the
failure to qualify would not have a Material Adverse Effect. Each of the
Subsidiaries has been duly incorporated and is validly existing as a corporation
and in good standing under the laws of each of their respective jurisdictions
of
organization, with power and authority (corporate or other) to own, lease and
operate its properties and conduct its business as described in the Registration
Statement and the Sale Preliminary Prospectus, and has been duly qualified
as a
foreign corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases properties
or conducts any business so as to require such qualification, or is subject
to
no liability or disability by reason of the failure to be so qualified in any
such jurisdiction that would not reasonably be expected to have a Material
Adverse Effect.
11
2.19 Taxes.
Each of
the Company and its Subsidiaries has filed all returns (as hereinafter defined)
required to be filed with taxing authorities prior to the date hereof or has
duly obtained extensions of time for the filing thereof. Each of the Company
and
its Subsidiaries has paid all taxes (as hereinafter defined) shown as due on
such returns that were filed and has paid all taxes imposed on or assessed
against the Company or such respective Subsidiary. The provisions for taxes
payable, if any, shown on the financial statements filed with or as part of
the
Registration Statement are sufficient for all accrued and unpaid taxes, whether
or not disputed, and for all periods to and including the dates of such
consolidated financial statements. Except as disclosed in writing to the
Representative, (i) no issues have been raised (and are currently pending)
by
any taxing authority in connection with any of the returns or taxes asserted
as
due from the Company or its Subsidiaries, and (ii) no waivers of statutes of
limitation with respect to the returns or collection of taxes have been given
by
or requested from the Company or its Subsidiaries. The term “taxes”
mean
all federal, state, local, foreign, and other net income, gross income, gross
receipts, sales, use, ad valorem, transfer, franchise, profits, license, lease,
service, service use, withholding, payroll, employment, excise, severance,
stamp, occupation, premium, property, windfall profits, customs, duties or
other
taxes, fees, assessments, or charges of any kind whatever, together with any
interest and any penalties, additions to tax, or additional amounts with respect
thereto. The term “returns”
means
all returns, declarations, reports, statements, and other documents required
to
be filed in respect to taxes.
2.20 Reliability
of Industry and Market Data.
The
statistical, industry-related and market-related data included in the
Registration Statement and the Sale Preliminary Prospectus are based on or
derived from sources which the Company reasonably and in good faith believes
are
reliable and accurate, and such data agree with the sources from which they
are
derived. The Company has obtained the written consent for the use of such data
from such sources to the extent referred.
2.21 Transactions
Affecting Disclosure to FINRA.
2.21.1 Finder’s
Fees.
Except
as described in the Registration Statement and the Sale Preliminary Prospectus,
there are no claims, payments, issuances, arrangements or understandings for
services in the nature of a finder’s, consulting or origination fee with respect
to the introduction of the Company to the Underwriters or the sale of the Shares
hereunder or any other arrangements, agreements, understandings, payments or
issuances with respect to the Company that may affect the Underwriters’
compensation, as determined by the Financial Industry Regulatory Authority
(“FINRA”).
2.21.2 Payments
Within Twelve Months.
The
Company has not made any direct or indirect payments (in cash, securities or
otherwise) to (i) any person, as a finder’s fee, investing fee or otherwise, in
consideration of such person raising capital for the Company or introducing
to
the Company persons who provided capital to the Company, (ii) any FINRA member,
or (iii) any person or entity that has any direct or indirect affiliation or
association with any FINRA member within the 12-month period prior to the date
on which the Registration Statement was filed with the Commission (“Filing
Date”)
or
thereafter.
2.21.3 Use
of
Proceeds.
None of
the net proceeds of the offering will be paid by the Company to any
participating FINRA member or any affiliate or associate of any participating
FINRA member, except as specifically authorized herein.
12
2.21.4 Insiders’
FINRA Affiliation.
To the
Company’s knowledge, no (i) officer or director of the Company or its
Subsidiaries, (ii) owner of 5% or more of the Company’s unregistered securities
or that of its Subsidiaries or (iii) owner of any amount of the Company’s
unregistered securities acquired within the 180-day period prior to the Filing
Date, has any direct or indirect affiliation or association with any FINRA
member. The Company will advise the Representative and its counsel if any
officer, director or stockholder of the Company or its Subsidiaries is or
becomes an affiliate or associated person of a FINRA member participating in
the
offering.
2.21.5 Contractual
Obligations.
Except
as set forth in the Registration Statement and the Sale Preliminary Prospectus,
no person has the right to act as an underwriter or as a financial advisor
to
the Company in connection with the Offering.
2.22 Foreign
Corrupt Practices Act.
Neither
the Company nor any of its Subsidiaries or any of their respective officers,
directors, employees, agents or any other person acting on behalf of the Company
or its Subsidiaries has, directly or indirectly, given or agreed to give any
money, gift or similar benefit (other than legal price concessions to customers
in the ordinary course of business) to any customer, supplier, employee or
agent
of a customer or supplier, or official or employee of any governmental agency
or
instrumentality of any government (domestic or foreign) or any political party
or candidate for office (domestic or foreign) or any political party or
candidate for office (domestic or foreign) or other person who was, is, or
may
be in a position to help or hinder the business of the Company (or assist it
in
connection with any actual or proposed transaction) that (i) might subject
the
Company or its Subsidiaries to any damage or penalty in any civil, criminal
or
governmental litigation or proceeding, (ii) if not given in the past, might
have
had a material adverse effect on the assets, business or operations of the
Company and its Subsidiaries as reflected in any of the financial statements
contained in the Registration Statement and the Sale Preliminary Prospectus
or
(iii) if not continued in the future, might adversely affect the assets,
business, operations or prospects of the Company and its Subsidiaries. The
Company’s internal accounting controls and procedures are sufficient to cause
the Company to comply with the Foreign Corrupt Practices Act of 1977, as
amended.
2.23 FINRA
Market Eligibility.
As of
the Effective Date, the Public Shares have been approved for listing on the
FINRA Global Market or FINRA Capital Market (“FINRA Market”).
2.24 Intangibles.
Each of
the Company and its Subsidiaries owns or possesses the requisite licenses or
rights to use all trademarks, service marks, service names, trade names, patents
and patent applications, copyrights and other rights (collectively,
“Intangibles”) described as being licensed to or owned by it in the Registration
Statement. The Intangibles have been registered in the patent and trademark
office jurisdictions set forth on Schedule 2.24 attached hereto and have been
fully maintained and are in full force and effect. Except as described in the
Registration Statement and the Sale Preliminary Prospectus and the Prospectus,
there is no claim or action by any person pertaining to, or proceeding pending
or, to the Company’s knowledge, threatened relating to, and the Company has not
received any notice of conflict with the asserted rights of others, that
challenges the exclusive right of the Company or its Subsidiaries with respect
to, any Intangibles used in the conduct of the their business. To the Company’s
knowledge, the Intangibles and the products, services and processes of the
Company or the Subsidiaries do not infringe on any Intangibles held by any
third
party. To the Company’s knowledge, no others have infringed upon the Intangibles
of the Company or its Subsidiaries.
13
2.25 Relations
With Employees.
2.25.1 Employee
Matters.
Each of
the Company and its Subsidiaries has generally enjoyed a satisfactory
employer-employee relationship with its employees and is in compliance in all
material respects with all federal, state and local laws and regulations
respecting the employment of its employees and employment practices, terms
and
conditions of employment and wages and hours relating thereto. There are no
pending investigations involving the Company by the U.S. Department of Labor,
or
any other U.S. or foreign governmental agency responsible for the enforcement
of
such federal, state and local laws and regulations. There is no unfair labor
practice charge or complaint against the Company pending before the National
Labor Relations Board or any strike, picketing, boycott, dispute, slowdown
or
stoppage pending or threatened against or involving the Company, its
Subsidiaries or any predecessor entity, and none has ever occurred. No question
concerning representation exists respecting the employees of the Company and
its
Subsidiaries and no collective bargaining agreement or modification thereof
is
currently being negotiated by the Company and its Subsidiaries. No grievance
or
arbitration proceeding is pending under any expired or existing collective
bargaining agreements of the Company and its Subsidiaries, if any.
2.25.2 Employee
Benefit Plans.
Other
than as set forth in the Registration Statement, neither the Company nor any
of
its Subsidiaries maintain, sponsor or contribute to, or is required to
contribute to, any program or arrangement that is an “employee pension benefit
plan,” an “employee welfare benefit plan,” or a, “multi-employer plan” as such
terms are defined in Sections 3(2), 3(1) and 3(37), respectively, of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”) (“ERISA
Plans”). Neither the Company nor its Subsidiaries maintain or contribute to, and
has ever maintained or contributed to, a defined benefit plan, as defined in
Section 3(35) of ERISA. If the Company or its Subsidiaries maintain or
contribute to a defined benefit plan, any termination of the plan on the date
hereof would not give rise to liability under Title IV of ERISA. No ERISA Plan
(or any trust created thereunder) has engaged in a “prohibited transaction”
within the meaning of Section 406 of ERISA or Section 4975 of the Internal
Revenue Code of 1986, as amended (“Code”), that could subject the Company to any
tax penalty for prohibited transactions and that has not adequately been
corrected. Each ERISA Plan is in compliance with all material reporting,
disclosure and other requirements of the Code and ERISA as they relate to any
such ERISA Plan. Determination letters have been received from the Internal
Revenue Service with respect to each ERISA Plan that is intended to comply
with
Code Section 401(a), stating that such ERISA Plan and the attendant trust are
qualified thereunder. The Company has never completely or partially withdrawn
from a “multi-employer plan.”
2.26 Officers’
Certificate.
Any
certificate signed by any duly authorized officer of the Company and delivered
to the Representative or to its counsel shall be deemed a representation and
warranty by the Company to the Representative as to the matters covered
thereby.
2.27 No
Integration.
Neither
the Company nor any of its affiliates has, prior to the date hereof, made any
offer or sale of any securities which are required to be “integrated” pursuant
to the Act or the Regulations with the offer and sale of the Shares pursuant
to
the Registration Statement. Except as disclosed in the Registration Statement
and, the Sale Preliminary Prospectus or in any public filings relating to the
Company filed with the Commission, neither Company nor any of its affiliates
has
sold or issued any Common Stock, options or warrants to purchase shares of
Common Stock, or securities convertible into shares of Common Stock, during
the
six-month period preceding the date of the Prospectus, including but not limited
to any sales pursuant to Rule 144A or Regulation D or S under the Act, other
than shares of Common Stock issued pursuant to employee benefit plans, qualified
stock option plans or employee compensation plans or pursuant to outstanding
options, rights or warrants as described in the Registration Statement and
the
Prospectus.
14
2.28 Lock-Up
Agreements.
The
Company has caused to be duly executed legally binding and enforceable
agreements pursuant to which the persons set forth on Schedule
2.28,
constituting all of the officers and directors of the Company (including their
family members and affiliates) and certain holders of shares of Common Stock
and
all of the holders of Series A Preferred Stock agree not to sell any shares
of
Common Stock or warrants or options to purchase, or other securities convertible
into Common Stock owned by them (either pursuant to Rule 144 of the Regulations
or otherwise) for a period of 90 days following the Effective Date except with
the prior written consent of the Representative.
2.29 Environmental
Matters.
The
Company and its Subsidiaries and their respective properties, assets and
operations are in compliance with, and the Company and each of its Subsidiaries
hold all permits, authorizations and approvals required under Environmental
Law
(as defined below) except where the lack of which, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.
There are no past, present or reasonably anticipated future events, conditions,
circumstances, activities, practices, actions, omissions or plans that could
reasonably be expected to give rise to any material costs or liabilities to
the
Company or any of its Subsidiaries under, or to interfere with or prevent
compliance by the Company or any Subsidiary with, Environmental Law except
as
would not, individually or in the aggregate, reasonably be expected to have
a
Material Adverse Effect. Neither the Company nor any of its Subsidiaries (i)
is
the subject of any investigation, (ii) has received any notice or claim, (iii)
is a party to or affected by any pending or, to the Company's knowledge after
due inquiry, threatened action, suit or proceeding, (iv) is bound by any
judgment, decree or order or (v) has entered into any agreement, in each case
relating to any alleged violation of any Environmental Law or any actual or
alleged release or, to the Company's knowledge after due inquiry, threatened
release or cleanup at any location of any Hazardous Materials (as defined
below). As used herein, "Environmental
Law"
means
any national, provincial, municipal or other local or foreign law, statute,
ordinance, rule, regulation, order, notice, directive, decree, judgment,
injunction, permit, license, authorization or other binding requirement, or
common law, relating to health, safety or the protection, cleanup or restoration
of the environment or natural resources, including those relating to the
distribution, processing, generation, treatment, storage, disposal,
transportation, other handling or release or threatened release of Hazardous
Materials, and "Hazardous
Materials"
means
any material (including, without limitation, pollutants, contaminants, hazardous
or toxic substances or wastes) that is regulated by or may give rise to
liability under any Environmental
2.30 Related
Party Transactions.
There
are no business relationships or related party transactions involving the
Company, its Subsidiaries or any other person required to be described in the
Registration Statement or Sale Preliminary Prospectus that have not been
described as required.
15
2.31 Relationships
with Insiders.
No
relationship, direct or indirect, exists between or among any of the Company
or
any affiliate of the Company, on the one hand, and any director, officer,
shareholder, customer or supplier of the Company or any affiliate of the
Company, on the other hand, which is required by the Act, the Exchange Act
or
the Regulations to be described in the Registration Statement or the Sale
Preliminary Prospectus which is not so described and 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 person connected with such officer or director (including his/her
spouse, infant children, any company or undertaking in which he/she holds a
controlling interest), except as disclosed in the Registration Statement and
the
Sale Preliminary Prospectus. The Company has not, in violation of the
Xxxxxxxx-Xxxxx Act, directly or indirectly, including through a Subsidiary
(other than as permitted under the Xxxxxxxx-Xxxxx Act for depositary
institutions), extended or maintained credit, arranged for the extension of
credit, or renewed an extension of credit, in the form of a personal loan to
or
for any director or executive officer of the Company.
2.32 Compliance
with Xxxxxxxx-Xxxxx Act.
The
Company has taken all necessary actions to ensure that, upon and at all times
after the filing of the Registration Statement, the Company and its Subsidiaries
and their respective officers and directors, in their capacities as such, will
be in compliance in all material respects with the applicable provisions of
the
Xxxxxxxx-Xxxxx Act of 2002 (“Xxxxxxxx-Xxxxx Act”) and the rules and regulations
promulgated thereunder and related or similar rules and regulations promulgated
by FINRA Market or any other governmental or self regulatory entity or agency,
except for such violations which, singly or in the aggregate, would not have
a
Material Adverse Effect. Without limiting the generality of the foregoing:
(i)
all members of the Company’s board of directors who are required to be
“independent” (as that term is defined under applicable laws, rules and
regulations), including, without limitation, all members of the audit committee
of the Company’s board of directors, meet the qualifications of independence as
set forth under applicable laws, rules and regulations and (ii) the audit
committee of the Company’s board of directors has at least one member who is an
“audit committee financial expert” (as that term is defined under applicable
laws, rules and regulations).
2.33 Internal
Accounting Controls.
2.33.1 Maintenance
of System of Internal Controls.
The
Company and its Subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that: (i) transactions are executed
in accordance with management’s general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation of financial
statements of the Company and its Subsidiaries in conformity with generally
accepted accounting principles in the United States (“US GAAP”); (iii) access to
assets is permitted only in accordance with management’s general or specific
authorization; (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate actions are taken with
respect to any differences; and (v) the Company and its Subsidiaries have made
and kept books, records and accounts which, in reasonable detail, accurately
and
fairly reflect the transactions and dispositions of assets of such
entity.
2.33.2 Compliance
with Exchange Act; Reportable Conditions.
Except
as described in the Registration Statement and the Sale Preliminary Prospectus,
the Company has established and maintains and evaluates a system of internal
control over financial reporting (as such term is defined in Rule 13a-15(f)
of
the Exchange Act) that complies with the requirements of the Exchange Act and
has been designed by the Company’s principal executive officer and principal
financial officer, or under their supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with US GAAP. All
material weaknesses, if any, in internal controls have been identified to the
Company’s independent auditors. Since the date of the latest audited financial
statements included in the Prospectus, there has been no change in the Company’s
internal control over financial reporting or in other factors that could
significantly affect internal controls, including any corrective actions with
regard to significant deficiencies and material weaknesses, and, except as
described in the Prospectus, the Company’s independent accountants have not
notified the Company of any “reportable conditions” (as that term is defined
under standards established by the American Institute of Certified Public
Accountants) in the Company’s internal accounting controls, or other weaknesses
or deficiencies in the design or operation of the Company’s internal accounting
controls, that have materially affected, or are reasonably likely to materially
affect, the Company’s internal control over financial reporting, or could
adversely affect the Company’s ability to record, process, summarize and report
financial data consistent with the assertions of the Company’s management in the
financial statements. The Company has established and maintains and evaluates
disclosure controls and procedures (as such term is defined in Rule 13a-15(e)
of
the Exchange Act) that comply with the requirements of the Exchange Act, such
disclosure controls and procedures have been designed to ensure that material
information relating to the Company and its Subsidiaries is made known to the
Company’s principal executive officer and principal financial officer by others
within those entities; and such disclosure controls and procedures are effective
to perform the functions for which they were established.
16
2.33.3 Disclosure
in Registration Statement.
The
statements set forth in the Sale Preliminary Prospectus and the Prospectus
under
the caption “Management’s Discussion and Analysis of Financial Condition and
Results of Operation” insofar as they purport to describe the internal controls
of the Company and its Subsidiaries are true, accurate, complete and fair
summaries in all material respects.
2.34 Significant
Accounting Policies.
The
section entitled "Management's Discussion and Analysis of Financial Condition
and Results of Operations - Significant Accounting Policies" in the Sale
Preliminary Prospectus truly, accurately and completely in all material respects
describes: (i) accounting policies which the Company believes are the most
important in the portrayal of the Company and its Subsidiaries financial
condition and results of operations and which require management's most
difficult, subjective or complex judgments ("Critical Accounting Policies");
(ii) judgments and uncertainties affecting the application of Critical
Accounting Policies; and (iii) the likelihood that materially different amounts
would be reported under different conditions or using different assumptions;
and
the Company's Board of Directors and management have reviewed and agreed with
the selection, application and disclosure of Critical Accounting Policies and
have consulted with its legal counsel and independent accountants with regard
to
such disclosure.
2.35 Dividends.
None of
Shenzhen Hyper, Beijing Kbeta or Wuhan Kanqiao is currently prohibited directly
or indirectly, from paying any dividends or other distributions to Changdu
Huiheng, except as disclosed in the Registration Statement and the Sale
Preliminary Prospectus; other than as set forth in the Registration Statement
and the Sale Preliminary Prospectus, dividends declared with respect to
after-tax retained earnings on the equity interests of Shenzhen Hyper, Beijing
Kbeta or Wuhan Kanqiao may under the current laws and regulations of the PRC
be
paid to the Company in U.S. dollars, and all such dividends and other
distributions will not be subject to withholding or other taxes under the laws
and regulations of the PRC and are otherwise free and clear of any other tax,
withholding or deduction in the PRC, and without the necessity of obtaining
any
authorization from a Governmental Agency in the PRC. Changdu Huiheng is
currently not prohibited directly or indirectly, from paying any dividends
or
other distributions to Allied Moral, except as disclosed in the Prospectus;
other than as set forth in the Registration Statement and the Sale Preliminary
Prospectus, dividends declared with respect to after-tax retained earnings
on
the equity interests of Changdu Huiheng may under the current laws and
regulations of Tibet be paid to the Company in U.S. dollars, and all such
dividends and other distributions will not be subject to withholding or other
taxes under the laws and regulations of Tibet and are otherwise free and clear
of any other tax, withholding or deduction in Tibet, and without the necessity
of obtaining any authorization from a Governmental Agency in Tibet.
17
2.36 Subsidiary
Restructuring.
The
events and transactions described in the Registration Statement and the Sale
Preliminary Prospectus regarding the restructuring of ownership interests of
Shenzhen Hyper, Beijing Kbeta and Wuhan Kbeta do not (i) contravene any
provision of applicable law or statute, rule on regulation of any Governmental
Agency having jurisdiction over the Company or its Subsidiaries (including
but
not limited to the Ministry of Commerce, the China Securities Regulatory
Commission, the State Administration of Industry and Commence, the National
Development and Reform Commission, the State-owned Asset Administration
Commission and the State Tax Bureau); (ii) contravene the articles of
association, business license or other constituent documents of the Company
or
its Subsidiaries; (iii) conflict with or result in a breach or violation of
the
terms of any agreement or instrument to which the Company or its Subsidiaries
is
a party.
3. Covenants
of the Company.
The
Company covenants and agrees as follows:
3.1 Amendments
to Registration Statement.
The
Company will deliver to the Representative, prior to filing, any amendment
or
supplement to the Registration Statement or Prospectus proposed to be filed
after the Effective Date and not file any such amendment or supplement to which
the Representative shall reasonably object.
3.2 Federal
Securities Laws.
3.2.1 Compliance.
During
the time when a Prospectus is required to be delivered under the Act, the
Company will use all reasonable efforts to comply with all requirements imposed
upon it by the Act, the Regulations and the Exchange Act and by the regulations
under the Exchange Act, as from time to time in force, so far as necessary
to
permit the continuance of sales of or dealings in the Public Shares in
accordance with the provisions hereof, and the Prospectus. If at any time when
a
Prospectus relating to the Public Shares is required to be delivered under
the
Act, any event shall have occurred as a result of which, in the opinion of
counsel for the Company or counsel for the Underwriters, the Prospectus, as
then
amended or supplemented, includes an untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary
to
make the statements therein, in light of the circumstances under which they
were
made, not misleading, or if it is necessary at any time to amend the Prospectus
to comply with the Act, the Company will notify the Representative promptly
and
prepare and file with the Commission, subject to Section 3.1 hereof, an
appropriate amendment or supplement in accordance with Section 10 of the
Act.
18
3.2.2 Filing
of Final Prospectus.
If Rule
430A is used or the filing of the Prospectus is otherwise required under Rule
424(b), the Company will file the Prospectus (in form and substance satisfactory
to the Representative) with the Commission pursuant to the requirements of
Rule
424(b) of the Regulations within the prescribed time period and will provide
evidence satisfactory to the Representative of such timely filing.
3.2.3 Exchange
Act Registration.
For a
period of three years from the Effective Date, the Company will use its best
efforts to maintain the registration of the Shares under the provisions of
Section 12 of the Exchange Act.
3.3 Blue
Sky Filings.
The
Company will endeavor in good faith, in cooperation with the Representative,
at
or prior to the time the Registration Statement becomes effective, to qualify
the Public Shares for offering and sale under the securities laws of such
jurisdictions as the Representative may reasonably designate, provided that
no
such qualification shall be required in any jurisdiction where, as a result
thereof, the Company would be subject to service of general process or to
taxation as a foreign corporation doing business in such jurisdiction. In each
jurisdiction where such qualification shall be effected, the Company will,
unless the Representative agrees that such action is not at the time necessary
or advisable, use all reasonable efforts to file and make such statements or
reports at such times as are or may be required by the laws of such
jurisdiction.
3.4 Delivery
to the Underwriters of Prospectuses.
The
Company will deliver to the Underwriters, without charge, from time to time
during the period when the Sale Preliminary Prospectus or Prospectus is required
to be delivered under the Act or the Exchange Act such number of copies of
each
Sale Preliminary Prospectus and the Prospectus as the Underwriters may
reasonably request and, as soon as the Registration Statement or any amendment
or supplement thereto becomes effective, deliver to the Underwriters one
original executed Registration Statement, including exhibits, and all
post-effective amendments thereto and copies of all exhibits filed therewith
or
incorporated therein by reference and all original executed consents of
certified experts. 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 Act.
3.5 Events
Requiring Notice to the Representative.
The
Company will notify the Representative immediately and confirm the notice in
writing (i) of the effectiveness of the Registration Statement and any amendment
thereto, (ii) of the issuance by the Commission of any stop order or of the
initiation, or the threatening, of any proceeding for that purpose, (iii) if
it
becomes aware of the issuance by any state securities commission of any
proceedings for the suspension of the qualification of the Shares for offering
or sale in any jurisdiction or of the initiation, or the threatening, of any
proceeding for that purpose, (iv) of the mailing and delivery to the Commission
for filing of any amendment or supplement to the Registration Statement or
Prospectus, including but not limited to Rule 462(b) under the Act, (v) of
the
receipt of any comments or request for any additional information from the
Commission, and (vi) of the happening of any event during the period described
in Section 3.4 hereof that, in the judgment of the Company, makes any statement
of a material fact made in the Registration Statement or the Prospectus untrue
or that requires the making of any changes in the Registration Statement or
the
Prospectus in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. If the Commission
or
any state securities commission shall enter a stop order or suspend such
qualification at any time, the Company will make every reasonable effort to
obtain promptly the lifting of such order. 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 or file any document under the
Exchange Act if such document would be deemed to be incorporated by reference
into the Prospectus to which the Underwriters shall object in writing after
being timely furnished in advance a copy thereof. The Company will provide
the
Underwriters with copies of all such amendments, filings and other documents
a
sufficient time prior to any filing or other publication thereof to permit
the
Representatives a reasonable opportunity to review and comment
thereon.
19
3.6 Review
of Financial Statements.
For a
period of three years from the Effective Date, the Company, at its expense,
shall cause its regularly engaged independent certified public accountants
to
participate to review (as described in Statement on Audited Standards No.
71-Interim Financial Information) (but not audit) the Company’s financial
statements for each of the first three fiscal quarters prior to the announcement
of quarterly financial information, the filing of the Company’s Form 10-Q or
Form 10-QSB quarterly reports and the mailing of any quarterly financial
information to stockholders.
3.7 Secondary
Market Trading and Standard & Poor’s.
The
Company will take all necessary and appropriate actions to register with
Corporation Records Service (including annual report information) published
by
Standard and Poor’s Corporation and to maintain such publication with updated
quarterly information for a period of three years from the Effective Date,
including the payment of any necessary fees and expenses. The Company shall
take
such action as may be requested by the Representative to obtain a secondary
market trading exemption in such states as may be requested by the
Representative, including the payment of any necessary fees and expenses and
the
filing of requisite forms (e.g., Form 25101(b) for secondary market trading
in
the State of California) on the Effective Date.
3.8 FINRA
Maintenance.
For a
period of three years from the date hereof, the Company will use its best
efforts to maintain the listing on the FINRA Market of the Shares.
3.9 Rule
462(b) Compliance.
If the
Company elects to rely on Rule 462(b) under the Act, the Company shall both
file
a Rule 462(b) Registration Statement with the Commission in compliance with
Rule
462(b) and pay the applicable fees in accordance with Rule 111 of the Act by
the
earlier of: (i) 10:00 p.m., New York City time, on the date of this Agreement,
and (ii) the time that confirmations are given or sent, as specified by Rule
462(b)(2).
3.10 Public
Relations Firm.
The
Company shall retain a public relations firm acceptable to the Representative
for a period of three years from the Effective Date.
3.11 Reports
to the Representative and Others.
3.11.1 Periodic
Reports, Etc.
For a
period of three years from the Effective Date, the Company will promptly furnish
to the Representative (Attn: Xxxxxx Xxxxxxx) and its counsel copies of such
financial statements and other periodic and special reports as the Company
from
time to time files with any governmental authority or furnishes generally to
holders of any class of its securities, and promptly furnish to the
Representative (i) a copy of each periodic report the Company shall be required
to file with the Commission, (ii) a copy of every press release and every news
item and article with respect to the Company or its affairs that was released
by
the Company, (iii) a copy of each Form 8-K or Schedules 13D, 13G, 14D-1 or
13E-4
received or prepared by the Company, and (iv) such additional documents and
information regarding the Company and the affairs of any future subsidiaries
of
the Company as the Representative may from time to time reasonably
request.
20
3.11.2 Transfer
Sheets and Weekly Position Listings.
For a
period of three years following the Effective Date, the Company shall retain
a
transfer agent acceptable to the Representative (“Transfer
Agent”)
and
will furnish to the Underwriters at the Company’s sole expense such transfer
sheets and position listings of the Company’s securities as the Representative
may request, including the daily, weekly and monthly consolidated transfer
sheets of the transfer agent of the Company and the weekly position listings
of
the Depository Trust Company. _______________ Company is acceptable to the
Representative.
3.12 Representative’s
Purchase Option.
On the
Closing Date, the Company will execute and deliver the Representative’s Purchase
Option to the Representative or its designees in the form filed as an exhibit
to
the Registration Statement.
3.13 Disqualification
of Form SB-2 or Form S-1 (or other appropriate form).
For a
period equal to three (3) years from the date hereof, the Company will not
take
any action or actions that may prevent or disqualify the Company’s use of Form
SB-2 or Form S-1 (or other appropriate form) for the registration of the
Representative’s Shares under the Act.
3.14 Payment
of Expenses.
3.14.1 General
Expenses.
The
Company hereby agrees to pay on the Closing Date and, to the extent not paid
on
the Closing Date, on the Option Closing Date, all expenses incident to the
performance of the obligations of the Company under this Agreement, including
but not limited to (i) travel expenses incurred with the Company’s prior
approval relating to the registration of the Shares, (ii) the preparation,
printing, filing, delivery and mailing (including the payment of postage with
respect to such mailing) of the Registration Statement, the Sale Preliminary
Prospectus and Prospectus and the printing and mailing of this Agreement and
related documents, including the cost of all copies thereof and any amendments
thereof or supplements thereto supplied to the Underwriters in quantities as
may
be required by the Underwriters, (iii) all fees and expenses relating to the
listing of the Shares on the FINRA Market, (iv) the printing, engraving,
issuance and delivery of the Shares of the Representative’s Purchase Option,
including any transfer or other taxes payable thereon, (v) the qualification,
if
necessary, of the Public Shares under state or foreign securities or Blue Sky
laws, including the filing fees under such Blue Sky laws, the costs of printing
and mailing the “Preliminary Blue Sky Memorandum,” and all amendments and
supplements thereto, the fees ($_________), and disbursements for counsel to
the
Underwriters, and fees and disbursements of local counsel, if any, retained
for
such purpose; provided
that if the offering is commenced on the FINRA Market, the Company shall make
a
one time payment of $5,000 payable to Underwriters’ counsel, (vi)
filing fees, costs and expenses (including fees and disbursements for the
Underwriters’ counsel) incurred in registering the offering with FINRA, (vii)
costs of placing “tombstone” advertisements in publications to be selected by
the Representative, (viii) fees and disbursements of the transfer agent, (viii)
the Company’s expenses associated with “due diligence” meetings arranged by the
Representative, (ix) the preparation, binding and delivery of customary leather
bound transaction “bibles,” in quantity, form and style satisfactory to the
Representative and transaction lucite cubes or similar commemorative items
in a
style and quantity as requested by the Representative, (x) all fees, expenses
and disbursements relating to background checks of the Company’s officers and
directors, (xi) costs and expenses of the public relations firm referred to
in
Section 3.10 hereof, (xii) all other costs and expenses incident to the
performance of its obligations hereunder that are not otherwise specifically
provided for in this Section 3.14.1. The Representative may deduct from the
net
proceeds of the offering payable to the Company on the Closing Date, or the
Option Closing Date, if any, the expenses set forth in this Agreement to be
paid
by the Company to the Representative and/or to third parties.
21
3.14.2 Non-Accountable
Expenses.
The
Company further agrees that, in addition to the expenses payable pursuant to
Section 3.14.1, it will pay to the Representative a non-accountable expense
allowance equal to one percent (1%) of the gross proceeds received by the
Company from the sale of the Firm Shares, $25,000 of which has been paid to
date, and the Company will pay the balance on the Closing Date by certified
or
bank cashier’s check or, at the election of the Representative, by deduction
from the proceeds of the offering contemplated herein. For the avoidance of
doubt, the Representative shall not be entitled to receive such non-accountable
allowance from the sale of any Option Shares. If the offering contemplated
by
this Agreement is not consummated for any reason whatsoever then the following
provisions shall apply: The Company’s liability for payment to the
Representative of the non-accountable expense allowance shall be equal to the
sum of the Representative’s actual out-of-pocket expenses (including, but not
limited to, counsel fees, “road-show” and due diligence expenses). The
Representative shall retain such part of the non-accountable expense allowance
previously paid as shall equal such actual out-of-pocket expenses. If the amount
previously paid is insufficient to cover such actual out-of-pocket expenses,
the
Company shall remain liable for and promptly pay any other actual out-of-pocket
expenses. If the amount previously paid exceeds the amount of actual
out-of-pocket expenses, the Representative shall promptly remit to the Company
any such excess.
3.15 Application
of Net Proceeds.
The
Company will apply the net proceeds from the offering received by it in a manner
consistent with the application described under the caption “Use of Proceeds” in
the Prospectus. The Company hereby agrees that, except as so described, without
the express prior written consent of the Representative, the Company will not
apply any net proceeds from the offering to pay (i) any debt for borrowed funds
or (ii) any debt or obligation owed to any of the Company’s officers, directors
or any stockholder owning one percent or more of the outstanding shares of
the
Company’s Common Stock or any family member or affiliate of any of the foregoing
persons (“Insiders”) (excluding salaries or fees payable on a current basis to
officers and directors in the ordinary course of the Company’s
business).
3.16 Delivery
of Earnings Statements to Security Holders.
The
Company will make generally available to its security holders as soon as
practicable, but not later than the first day of the fifteenth full calendar
month following the Effective Date, an earnings statement (which need not be
certified by independent certified public accountants unless required by the
Act
or the Regulations, but which shall satisfy the provisions of Rule 158(a) under
Section 11(a) of the Act) covering a period of at least twelve consecutive
months beginning after the Effective Date.
22
3.17 Key
Person Life Insurance.
The
Company will maintain key person life insurance in an amount not less than
$[3,000,000] on the life of Xxx Xxxxxxxx, to be in effect as of the Effective
Date, and pay the annual premiums therefor and name the Company as the sole
beneficiary thereof.
3.18 Stabilization.
Neither
the Company, nor, any of its Subsidiaries or any of their employees, directors
or stockholders has taken or will take, directly or indirectly, any action
designed to or that has constituted or that might reasonably be expected to
cause or result in, under the Exchange Act, or otherwise, stabilization or
manipulation of the price of any security of the Company to facilitate the
sale
or resale of the Public Shares.
3.19 Internal
Controls.
The
Company will continue to maintain a system of internal accounting controls
that
comply with the requirements of Xxxxxxxx-Xxxxx Act (and the rules promulgated
thereunder) and which are sufficient to provide reasonable assurances that
the
representations set forth in Section 2.35.1 continue to remain
accurate.
3.20 Accountants.
For a
period of three years from the Effective Date, the Company shall retain
independent public accountants acceptable to the Representative.
3.21 Corporate
Proceedings.
All
corporate proceedings and other legal matters necessary to carry out the
provisions of this Agreement and the transactions contemplated hereby shall
have
been done to the reasonable satisfaction to counsel for the
Underwriters.
4. Conditions
of the Underwriters’ Obligations.
The
obligations of the several Underwriters to purchase and pay for the Shares,
as
provided herein, shall be subject to the continuing accuracy of the
representations and warranties of the Company as of the date hereof and as
of
each of the Closing Date and the Option Closing Date, if any, to the accuracy
of
the statements of officers of the Company made pursuant to the provisions hereof
and to the performance by the Company of its obligations hereunder and to the
following conditions:
4.1 Regulatory
Matters.
4.1.1 Effectiveness
of Registration Statement.
The
Registration Statement has been declared effective on the date of this Agreement
and, at each of the Closing Date and the Option Closing Date, no stop order
suspending the effectiveness of the Registration Statement shall have been
issued and no proceedings for such purpose shall have been instituted or shall
be pending or contemplated by the Commission and any request on the part of
the
Commission for additional information shall have been complied with to the
reasonable satisfaction of Loeb & Loeb LLP, counsel to the Underwriters
(“Loeb”).
4.1.2 FINRA
Clearance.
By the
Effective Date, the Underwriters shall have received clearance from the FINRA
as
to the amount of compensation allowable or payable to the Underwriters as
described in the Registration Statement.
4.1.3 No
Blue Sky Stop Orders.
No
order suspending the sale of the Shares in any jurisdiction designated by the
Underwriters pursuant to Section 3.3 hereof shall have been issued on or before
either the Closing Date or the Option Closing Date, and no proceedings for
that
purpose shall have been instituted or shall be contemplated.
4.2 Company
Counsel Matters.
4.2.1 Effective
Date Opinion of Counsel.
On the
Effective Date, the Underwriters shall have received the opinion of DLA Piper
US
LLP (“DLA Piper”), counsel to the Company, dated the Effective Date, addressed
to the Underwriters and in form and substance satisfactory to Loeb as set forth
on Exhibit A attached hereto. DLA Piper may rely on the opinion of _____________
with respect to matters of Nevada law.
23
4.2.2 Closing
Date and Option Closing Date Opinion of Counsel.
On each
of the Closing Date and the Option Closing Date, if any, the Underwriters shall
have received the opinion of DLA Piper, dated the Closing Date or the Option
Closing Date, as the case may be, addressed to the Underwriters which confirms
as of the Closing Date and, if applicable, the Option Closing Date, the
statements made by DLA Piper in their opinion delivered on the Effective
Date.
4.2.3 Reliance.
In
rendering such opinion, such counsel may rely (i) as to matters involving the
application of laws other than the laws of the United States and jurisdictions
in which they are admitted, to the extent such counsel deems proper and to
the
extent specified in such opinion, if at all, upon an opinion or opinions (in
form and substance reasonably satisfactory to the Underwriters’ counsel) of
other counsel reasonably acceptable to the Underwriters’ counsel, familiar with
the applicable laws, and (ii) as to matters of fact, to the extent they deem
proper, on certificates or other written statements of officers of departments
of various jurisdiction having custody of documents respecting the corporate
existence or good standing of the Company, provided that copies of any such
statements or certificates shall be delivered to the Underwriters’ counsel if
requested. The opinion of counsel for the Company shall include a statement
to
the effect that it may be relied upon by counsel for the Underwriters in its
opinion delivered to the Underwriters.
4.3 Cold
Comfort Letter.
At the
time this Agreement is executed, and at each of the Closing Date and the Option
Closing Date, if any, you shall have received a letter, addressed to the
Representatives and in form and substance satisfactory in all respects
(including the non-material nature of the changes or decreases, if any, referred
to in clause (iii) below) to you and to Loeb, from UHY dated, respectively,
as
of the date of this Agreement and as of the Closing Date and the Option Closing
Date, if any:
(i) confirming
that they are independent accountants with respect to the Company within the
meaning of the Act and the applicable Regulations and that they have 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;
(ii) stating
that in their opinion the financial statements and the financial statement
schedules of the Company included in the Registration Statement and Prospectus
comply as to form in all material respects with the applicable accounting
requirements of the Act and the published Regulations thereunder;
(iii) stating
that, based on the performance of procedures specified by the American Institute
of Certified Public Accountants for a review of the latest available unaudited
interim financial statements of the Company (as described in Statement on
Auditing Standards (“SAS”) No. 71 - “Interim Financial Information”), with an
indication of the date of the latest available unaudited interim financial
statements, a reading of the latest available minutes of the stockholders and
board of directors and the various committees of the board of directors,
consultations with officers and other employees of the Company responsible
for
financial and accounting matters and other specified procedures and inquiries,
nothing has come to their attention that would lead them to believe that (a)
the
unaudited financial statements of the Company included in the Registration
Statement and the Sale Preliminary Prospectus do not comply as to form in all
material respects with the applicable accounting requirements of the Act and
the
Regulations or any material modification should be made to the unaudited interim
financial statements included in the Registration Statement for them to be
in
conformity with generally accepted accounting principles applied on a basis
substantially consistent with that of the audited financial statements of the
Company included in the Registration Statement, the Sale Preliminary Prospectus
and the Prospectus, (b) at a date not later than five days prior to the
Effective Date, Closing Date or Option Closing Date, as the case may be, there
was any change in the capital stock or long-term debt of the Company, or any
decrease in the stockholders’ equity of the Company as compared with amounts
shown in the ____________ balance sheet included in the Registration Statement
and the Sale Preliminary Prospectus, other than as set forth in or contemplated
by the Registration Statement, or, if there was any decrease, setting forth
the
amount of such decrease, and (c) during the period from _____________ to a
specified date not later than five days prior to the Effective Date, Closing
Date or Option Closing Date, as the case may be, there was any decrease in
revenues, net earnings or net earnings per share of Common Stock or increase
in
net loss or net loss per share of Common Stock, in each case as compared with
the corresponding period in the preceding year and as compared with the
corresponding period in the preceding quarter, other than as set forth in or
contemplated by the Registration Statement, the Sale Preliminary Prospectus
and
the Prospectus, or, if there was any such decrease, setting forth the amount
of
such decrease;
24
(iv) stating
that they have compared specific dollar amounts, numbers of shares, percentages
of revenues and earnings, statements and other financial information pertaining
to the Company set forth in the Prospectus in each case to the extent that
such
amounts, numbers, percentages, statements and information may be derived from
the general accounting records, and work sheets, of the Company with the results
obtained from the application of specified readings, inquiries and other
appropriate procedures (which procedures do not constitute an examination in
accordance with generally accepted auditing standards) set forth in the letter
and found them to be in agreement;
(v) statements
as to such other matters incident to the transaction contemplated hereby as
you
may reasonably request.
(vi) Stating
that they have not during the immediately preceding five year period brought
to
the attention of the Company’s management any reportable condition related to
internal structure, design or operation as defined in the Statement on Auditing
Standards No. 60 “Communication of Internal Control Structure Related Matters
Noted in an Audit,” in the Company’s internal controls.
4.4 Officers’
Certificates.
4.4.1 Officers’
Certificate.
At each
of the Closing Date and the Option Closing Date, if any, the Representative
shall have received a certificate of the Company signed by the Chairman of
the
Board or the President and the Secretary of the Company, dated the Closing
Date
or the Option Closing Date, as the case may be, respectively, to the effect
that
the Company has performed all covenants and complied with all conditions
required by this Agreement to be performed or complied with by the Company
prior
to and as of the Closing Date, or the Option Closing Date, as the case may
be,
and that the conditions set forth in Section 4.5 hereof have been satisfied
as
of such date and that, as of Closing Date and the Option Closing Date, as the
case may be, the representations and warranties of the Company set forth in
Section 2 hereof are true and correct. In addition, the Representative will
have
received such other and further certificates of officers of the Company as
the
Representative may reasonably request.
25
4.4.2 Secretary’s
Certificate.
At each
of the Closing Date and the Option Closing Date, if any, the Representative
shall have received a certificate of the Company signed by the Secretary of
the
Company, dated the Closing Date or the Option Date, as the case may be,
respectively, certifying (i) that the By-Laws and Certificate of Incorporation,
as amended, of the Company are true and complete, have not been modified and
are
in full force and effect, (ii) that the resolutions relating to the public
offering contemplated by this Agreement are in full force and effect and have
not been modified, (iii) all correspondence between the Company or its counsel
and the Commission, (iv) all correspondence between the Company or its counsel
and FINRA concerning listing of the Shares on the FINRA Market and (vi) as
to
the incumbency of the officers of the Company. The documents referred to in
such
certificate shall be attached to such certificate.
4.5 No
Material Changes.
Prior
to and on each of the Closing Date and the Option Closing Date, if any, (i)
there shall have been no material adverse change or development involving a
prospective material change in the condition or prospects or the business
activities, financial or otherwise, of the Company from the latest dates as
of
which such condition is set forth in the Registration Statement and Prospectus,
(ii) there shall have been no transaction, not in the ordinary course of
business, entered into by the Company from the latest date as of which the
financial condition of the Company is set forth in the Registration Statement
and Prospectus which is materially adverse to the Company, taken as a whole,
(iii) the Company shall not be in default under any provision of any instrument
relating to any outstanding indebtedness which default would have a material
adverse effect on the Company, (iv) no material amount of the assets of the
Company shall have been pledged or mortgaged, except as set forth in the
Registration Statement and Sale Preliminary Prospectus, (v) no action suit
or
proceeding, at law or in equity, shall have been pending or threatened against
the Company or affecting any of its property or business before or by any court
or federal or state commission, board or other administrative agency wherein
an
unfavorable decision, ruling or finding may materially adversely affect the
business, operations, prospects or financial condition or income of the Company,
except as set forth in the Registration Statement and the Sale Preliminary
Prospectus, (vi) no stop order shall have been issued under the Act and no
proceedings therefor shall have been initiated or threatened by the Commission,
and (vii) the Registration Statement and the Prospectus and any amendments
or
supplements thereto contain all material statements that are required to be
stated therein in accordance with the Act and the Regulations and conform in
all
material respects to the requirements of the Act and the Regulations, and
neither the Registration Statement, the Sale Preliminary Prospectus nor the
Prospectus nor any amendment or supplement thereto contains any untrue statement
of a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
4.6 Delivery
of Agreements.
The
Company has delivered to the Underwriters an executed copy of the
Representative’s Purchase Option.
26
4.7 Opinion
of Counsel for the Underwriters.
All
proceedings taken in connection with the authorization, issuance or sale of
the
Shares as herein contemplated shall be reasonably satisfactory in form and
substance to the Underwriters and to Loeb & Loeb LLP, counsel to the
Underwriters, and the Underwriters shall have received from such counsel a
favorable opinion, dated the Effective Date, Closing Date and the Option Closing
Date, if any, with respect to such of these proceedings as the Underwriters
may
reasonably require. On or prior to the Effective Date, the Closing Date and
the
Option Closing Date, as the case may be, counsel for the Underwriters shall
have
been furnished such documents, certificates and opinions as they may reasonably
require for the purpose of enabling them to review or pass upon the matters
referred to in this Section 4.7, or in order to evidence the accuracy,
completeness or satisfaction of any of the representations, warranties or
conditions herein contained.
4.8 Unaudited
Financials.
The
Company shall have furnished to the Underwriters a copy of the latest available
unaudited interim financial statements for the period ended _______________
(“Unaudited Financials”) of the Company which have been read by UHY, as stated
in their letter dated as of the Closing Date to be furnished pursuant to Section
4.3 hereof.
5. Indemnification.
5.1 Indemnification
of the Underwriters.
5.1.1 General.
Subject
to the conditions set forth below, the Company agrees to indemnify and hold
harmless each of the Underwriters, and each dealer selected by you that
participates in the offer and sale of the Public Securities (each a
“Selected
Dealer”)
and
each of their respective directors, officers, agents and employees and each
person, if any, who controls any such Underwriter (“controlling person”) within
the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act,
against any and all loss, liability, claim, damage and expense whatsoever
(including but not limited to any and all legal or other expenses reasonably
incurred in investigating, preparing or defending against any litigation,
commenced or threatened, or any claim whatsoever, whether arising out of any
action between any of the Underwriters and the Company or between any of the
Underwriters and any third-party or otherwise) to which they or any of them
may
become subject under the Act, the Exchange Act or any other statute or at common
law or otherwise or under the laws of foreign countries, arising out of or
based
upon any untrue statement or alleged untrue statement of a material fact
contained in (i) any Preliminary Prospectus or the Registration Statement (as
from time to time each may be amended and supplemented); (ii) any materials
or
information provided to investors by, or with the approval of, the Company
in
connection with the marketing of the offering of the Public Shares, including
any “road show” or investor presentations made to investors by the Company
(whether in person or electronically); (iii) in any post-effective amendment
or
amendments or any new registration statement and prospectus in which is included
securities of the Company issued or issuable upon exercise of the Underwriters’
Purchase Option; or (iv) any application or other document or written
communication (in this Section 5 collectively called “application”) executed by
the Company or based upon written information furnished by the Company in any
jurisdiction in order to qualify the Shares under the securities laws thereof
or
filed with the Commission, any state securities commission or agency, any
securities exchange; or the omission or alleged omission therefrom of a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
unless such statement or omission was made in reliance upon, and in strict
conformity with, written information furnished to the Company with respect
to an
Underwriter by or on behalf of such Underwriter expressly for use in any
Preliminary Prospectus or the Registration Statement, or any amendment or
supplement thereof, or in any application, as the case may be. The Company
agrees promptly to notify the Underwriters of the commencement of any litigation
or proceedings against the Company or any of its officers, directors or
controlling persons in connection with the issue and sale of the Shares or
in
connection with the Registration Statement or Sale Preliminary
Prospectus.
27
5.1.2 Procedure.
If any
action is brought against an Underwriter, a Selected Dealer or a controlling
person in respect of which indemnity may be sought against the Company pursuant
to Section 5.1.1, such Underwriter shall promptly notify the Company in writing
of the institution of such action and the Company shall assume the defense
of
such action, including the employment and fees of counsel (subject to the
approval of such counsel by the Underwriter or Selected Dealer, as the case
may
be) and payment of actual expenses. Such Underwriter, Selected Dealer or
controlling person 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 Underwriter, Selected Dealer or such controlling person unless (i)
the
employment of such counsel at the expense of the Company shall have been
authorized in writing by the Company in connection with the defense of such
action, or (ii) the Company shall not have employed counsel to have charge
of
the defense of such action, or (iii) 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 the Company (in
which case the Company 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
the fees and expenses of not more than one additional firm of attorneys selected
by the Underwriter or Underwriters and/or controlling person shall be borne
by
the Company.
5.2 Indemnification
of the Company.
Each
Underwriter, severally and not jointly, agrees to indemnify and hold harmless
the Company, its directors, each of its officers who signed the Registration
Statement, and each person, if any, who controls the Company within the meaning
of Section 15 of the Act, against any and all loss, liability, claim, damage
and
expense described in the foregoing indemnity from the Company to the several
Underwriters, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions directly relating to the
transactions effected by the Underwriters in connection with this offering
made
in any Preliminary Prospectus or the Registration Statement or any amendment
or
supplement thereto or in any application in reliance upon, and in strict
conformity with, written information furnished to the Company with respect
to
such Underwriter by or on behalf of the Underwriter expressly for use in such
Preliminary Prospectus or Registration Statement or any amendment or supplement
thereto or in any such application. In case any action shall be brought against
the Company based on any Preliminary Prospectus or the Registration Statement
or
any amendment or supplement thereto or any application, and in respect of which
indemnity may be sought against any Underwriter, such Underwriter shall have
the
rights and duties given to the Company, and the Company shall have the rights
and duties given to several Underwriters by the provisions of Section
5.1.2.
5.3 Contribution.
5.3.1 Contribution
Rights.
In
order to provide for just and equitable contribution under the Act in any case
in which (i) any person entitled to indemnification under this Section 5 makes
claim for indemnification pursuant hereto but it is judicially determined (by
the entry of a final judgment or decree by a court of competent jurisdiction
and
the expiration of time to appeal or the denial of the last right of appeal)
that
such indemnification may not be enforced in such case notwithstanding the fact
that this Section 5 provides for indemnification in such case, or (ii)
contribution under the Act, the Exchange Act or otherwise may be required on
the
part of any such person in circumstances for which indemnification is provided
under this Section 5, then, and in each such case, the Company and the
Underwriters shall contribute to the aggregate losses, liabilities, claims,
damages and expenses of the nature contemplated by said indemnity agreement
incurred by the Company and the Underwriters, as incurred, in such proportions
that the Underwriters are responsible for that portion represented by the
percentage that the underwriting discount appearing on the cover page of the
Prospectus bears to the initial offering price appearing thereon and the Company
is responsible for the balance; provided, that, no person guilty of a fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. Notwithstanding
the provisions of this Section 5.3, no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the Public Shares underwritten by it and distributed to the public were offered
to the public exceeds the amount of any damages that such Underwriter has
otherwise been required to pay in respect of such losses, liabilities, claims,
damages and expenses.
For
purposes of this Section, each director, officer and employee of an Underwriter,
and each person, if any, who controls an Underwriter within the meaning of
Section 15 of the Act, shall have the same rights to contribution as such
Underwriter.
28
5.3.2 Contribution
Procedure.
Within
fifteen days after receipt by any party to this Agreement (or its
representative) of notice of the commencement of any action, suit or proceeding,
such party will, if a claim for contribution in respect thereof is to be made
against another party (“contributing party”), notify the contributing party of
the commencement thereof, but the omission to so notify the contributing party
will not relieve it from any liability that it may have to any other party
other
than for contribution hereunder. In case any such action, suit or proceeding
is
brought against any party, and such party notifies a contributing party or
its
representative of the commencement thereof within the aforesaid fifteen days,
the contributing party will be entitled to participate therein with the
notifying party and any other contributing party similarly notified. Any such
contributing party shall not be liable to any party seeking contribution on
account of any settlement of any claim, action or proceeding that was effected
by the party seeking contribution without the written consent of such
contributing party. The contribution provisions contained in this Section are
intended to supersede, to the extent permitted by law, any right to contribution
under the Act, the Exchange Act or otherwise available.
29
6. Default
by an Underwriter.
If
either Underwriter shall default in its obligations to purchase Shares
hereunder, the non-defaulting Underwriter may, in its discretion, arrange for
itself or another party or parties to purchase such Shares on the terms
contained herein. In the event that within one business day after such default
the non-defaulting Underwriter does not arrange for the purchase of the Shares
as to which such default relates, this Agreement will thereupon terminate
automatically (but only with respect to the obligations relating to the Option
Shares if such default occurs after the Closing Date) without liability on
the
part of the Company (except as provided in Sections 3.14 and 5.1 hereof) or
the
non-defaulting Underwriter, but nothing herein shall relieve the defaulting
Underwriter of its liability, if any, to the non-defaulting Underwriter and
to
the Company for damages occasioned by its default.
7. Additional
Covenants.
7.1 Right
of First Refusal.
The
Company hereby grants the Representative the right of first refusal to manage
or
co-manage any public underwriting or private placement of debt or equity
securities (excluding (i) sales to employees under any compensation or stock
option plan approved by the Board of the Company, (ii) shares issued in payment
of the consideration for an acquisition and (iii) conventional banking
arrangements and commercial debt financing) of the Company or any of its
Subsidiaries or successor of the Company during the eighteen (18) month period
following the Closing Date. If Chardan fails to accept in writing any such
proposal for such public or private sale within 10 business days after receipt
of a written notice from the Company containing such proposal, then Chardan
will
have no claim or right with respect to any such sale contained in any such
notice. If, thereafter, such proposal is modified in any material respect,
the
Company will adopt the same procedure as with respect to the original proposed
public or private sale and Chardan shall have the right of first refusal with
respect to such revised proposal.
7.2 Financial
Advisory Agreement.
Upon
consummation of the Offering, the Company will enter into a non-exclusive
financial advisory agreement with Chardan for a period of twenty-four (24)
months from the Closing Date, whereby the Company shall retain Chardan as its
Investment Banker and Financial Advisor. The services Chardan shall provide
pursuant to such agreement include advising the Company with respect to its
strategic planning process and business plans including an analysis of markets,
products, positioning, organization and staffing, potential strategic alliances,
capital requirements, valuation, funding, and working closely with the Company’s
management team to develop a set of long and short-term goals with special
focus
on enhancing corporate and shareholder value, and reviewing the Company’s
presentation and marketing materials used to present the Company to the
investment community. Chardan will advise and assist the Company in identifying,
evaluating, negotiating and structuring acquisitions, or strategic investments
or partnerships which may be accomplished through a purchase or sale of all
or a
portion of the stock or assets, a merger, joint venture, licensing or marketing
agreement or arrangement or other business combination or arrangement with
any
entity. As will be more fully detailed in the mutually negotiated
financial advisory agreement, the Company will pay Chardan a $10,000 monthly
retainer for its advisory services. Moreover, the Company will pay any and
all mutually negotiated fees for any prospective capital raise that is
contemplated in said advisory agreement.
7.3 Press
Releases.
The
Company will not issue a press release or engage in any other publicity until
25
days after the Effective Date without the prior written consent of the
Representative.
30
8. Representations
and Agreements to Survive Delivery.
Except
as the context otherwise requires, all representations, warranties and
agreements contained in this Agreement shall be deemed to be representations,
warranties and agreements at the Closing Dates and such representations,
warranties and agreements of the Underwriters and Company, including the
indemnity agreements contained in Section 5 hereof, shall remain operative
and
in full force and effect regardless of any investigation made by or on behalf
of
any Underwriters, the Company or any controlling person, and shall survive
termination of this Agreement or the issuance and delivery of the Shares to
the
several Underwriters until the earlier of the expiration of any applicable
statute of limitations and the seventh anniversary of the later of the Closing
Date or the Option Closing Date, if any, at which time the representations,
warranties and agreements shall terminate and be of no further force and
effect.
9. Effective
Date of This Agreement and Termination Thereof.
9.1 Effective
Date.
This
Agreement shall become effective on the Effective Date at the time that the
Registration Statement is declared effective.
9.2 Termination.
The
Underwriters shall have the right to terminate this Agreement at any time prior
to any Closing Date, (i) if any domestic or international event or act or
occurrence has materially disrupted, or in the Underwriters’ 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 FINRA Market
or
in the over-the-counter 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 over-the-counter market by FINRA or by order
of
the Commission or any other government authority having jurisdiction, or (iii)
in the event of a material outbreak or escalation of hostilities involving
the
United States or the declaration by the United States of a national emergency
or
war (including without limitation as a result of an act of terrorism) if the
effect of any such event specified in this clause (iii) in the reasonable
judgment of the Underwriters makes it impracticable or inadvisable to proceed
with the offering or the delivery of the Shares being delivered on the Closing
Date on the terms and in the manner contemplated in the final prospectus, or
(iv) if a banking moratorium has been declared by a New York State or federal
authority, 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, explosion, flood,
accident, hurricane, earthquake, theft, sabotage or other calamity or malicious
act which, whether or not such loss shall have been insured, will, in your
opinion, make it inadvisable to proceed with the delivery of the Shares, or
(vii) if Xxx Xxxxxxxx shall no longer serve the Company in his present capacity,
or (viii) if the Company has breached any of its representations, warranties
or
obligations hereunder, or (ix) if the Representative shall have become aware
after the date hereof of such a material adverse change in the condition
(financial or otherwise), business, 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 Shares or to enforce contracts made by the Underwriters for
the
sale of the Shares.
9.3 Notice.
If the
Underwriters elect to prevent this Agreement from becoming effective or to
terminate this Agreement as provided in this Section 9, the Company shall be
notified on the same day as such election is made by the Underwriters by
telephone or telecopy, confirmed by letter.
31
9.4 Expenses.
If this
Agreement shall not be carried out for any reason whatsoever, within the time
specified herein or any extensions thereof pursuant to the terms hereof, the
obligations of the Company to pay the expenses related to the transactions
contemplated herein shall be governed by Section 3.14 hereof.
9.5 Indemnification.
Notwithstanding any contrary provision contained in this Agreement, any election
hereunder or any termination of this Agreement, and whether or not this
Agreement is otherwise carried out, the provisions of Section 5 shall not be
in
any way affected by, such election or termination or failure to carry out the
terms of this Agreement or any part hereof.
10. Miscellaneous.
10.1 Notices.
All
communications hereunder, except as herein otherwise specifically provided,
shall be in writing and shall be mailed, delivered or telecopied and
confirmed
If
to the
Underwriters:
Chardan
Capital Markets LLC
00
Xxxxx
Xxxxxx, Xxxxx 0000
Xxx
Xxxx,
Xxx Xxxx 00000
Attn:
Xxxxx Xxxxxxx, Chief Executive Officer
Copy
to:
Loeb
& Loeb LLP
000
Xxxx
Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attention:
Xxxxxxxx Xxxxxxxx, Esq.
If
to the
Company:
Xx.
000,
Xxxxx X, Xxxxxxxx Xxxxxxx Xxxx
Xxxxxxxx
Xxxx
Futian
Free Trade Zone
Shenzen,
P.R. china 518038
Copy
to:
DLA
Piper
US LLP
0000
Xxxxxxxxx Xxxxx, Xxxxx 0000
Xxx
Xxxxx, XX 00000
32
10.2 Headings.
The
headings contained herein are for the sole purpose of convenience of reference,
and shall not in any way limit or affect the meaning or interpretation of any
of
the terms or provisions of this Agreement.
10.3 Amendment.
This
Agreement may be amended only by a written instrument executed by each of the
parties hereto.
10.4 Entire
Agreement.
This
Agreement (together with the other agreements and documents being delivered
pursuant to or in connection with this Agreement) constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and understandings of the parties, oral and
written, with respect to the subject matter hereof.
10.5 Binding
Effect.
This
Agreement shall inure solely to the benefit of and shall be binding upon, the
Underwriters, the Company and the controlling persons, directors and officers
referred to in Section 5 hereof, and their respective successors, legal
representatives 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 provisions herein contained.
10.6 Governing
Law, Jurisdiction.
This
Agreement shall be governed by and construed and enforced in accordance with
the
law of the State of New York, without giving effect to conflicts of law. The
Company hereby agrees that any action, proceeding or claim against it arising
out of or relating in any way to this Agreement shall be brought and enforced
in
the courts of the State of New York or the United States District Court for
the
Southern District of New York, and irrevocably submits to such jurisdiction,
which jurisdiction shall be exclusive. The Company hereby waives any objection
to such exclusive jurisdiction and that such courts represent an inconvenient
forum. Any such process or summons to be served upon the Company may be served
by transmitting a copy thereof by registered or certified mail, return receipt
requested, postage prepaid, addressed to at the address set forth in Section
11.1 hereof. Such mailing shall be deemed personal service and shall be legal
and binding upon the Company in any action, proceeding or claim. The parties
agree that the prevailing party(ies) in any such action shall be entitled to
recover from the other party(ies) all of its reasonable attorneys’ fees and
expenses relating to such action or proceeding and/or incurred in connection
with the preparation therefor.
10.7 Execution
in Counterparts.
This
Agreement may be executed in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which shall be deemed to be
an
original, but all of which taken together shall constitute one and the same
agreement, and shall become effective when one or more counterparts has been
signed by each of the parties hereto and delivered to each of the other parties
hereto.
10.8 Waiver,
Etc.
The
failure of any of the parties hereto at any time to enforce any of the
provisions of this Agreement shall not be deemed or construed to be a waiver
of
any such provision, nor in any way to affect the validity of this Agreement
or
any provision hereof or the right of any of the parties hereto thereafter to
enforce each and every provision of this Agreement. No waiver of any breach,
non-compliance or non-fulfillment of any of the provisions of this Agreement
shall be effective unless set forth in a written instrument executed by the
party or parties against whom or which enforcement of such waiver is sought;
and
no waiver of any such breach, non-compliance or non-fulfillment shall be
construed or deemed to be a waiver of any other or subsequent breach,
non-compliance or non-fulfillment.
33
If
the
foregoing correctly sets forth the understanding between the Underwriters and
the Company, please so indicate in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement between
us.
Very
truly yours,
|
||
|
|
|
By: | ||
Name: Xxx
Xxxxxxxx
|
||
Title: Chief
Executive Officer
|
Accepted
as of the date first
above
written.
CHARDAN
CAPITAL MARKETS, LLC
New
York,
New York
By: | |||
Name: Xxxxx
Xxxxxxx
|
|||
Title: Managing
Director
|
34