EXHIBIT 1.1
INTRA-ASIA ENTERTAINMENT CORPORATION
UNDERWRITING AGREEMENT
November __, 2002
I-Bankers Securities, Inc.
Westpark Capital, Inc.
As Representatives of the
Several Underwriters
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▇▇▇▇ Avenue of the Stars, ▇▇▇▇▇ ▇▇▇
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Ladies and Gentlemen:
Intra-Asia Entertainment Corporation, a Delaware corporation (the
"Company"), proposes to issue and sell to the Underwriters named in Section 2(a)
hereof (the "Underwriters"), an aggregate of 1,000,000 shares (the "Firm
Shares") of its authorized but unissued Common Stock, par value $0.001 per share
(the "Common Stock"). The Company proposes to grant to the Underwriters the
option to purchase up to 150,000 additional shares of Common Stock (the "Option
Shares") for the sole purpose of covering over-allotments, if any, in connection
with the sale of the Firm Shares. The Firm Shares and any Option Shares
purchased pursuant to this Agreement are referred to in this Agreement as the
"Shares." The Company also proposes to sell to you each individually, and not in
your capacity as Representatives, five-year warrants (the "Representatives'
Warrants") to purchase up to an aggregate of 100,000 shares of Common Stock (the
"Representatives' Warrant Stock"). The sale of the Representatives' Warrants
will be consummated in accordance with the terms and conditions of the form of
the Representatives' Warrant filed as an Exhibit to Amendment No.6 to the
Company's Registration Statement on Form S-1 (the "Registration Statement").
Westpark Capital, Inc. and I-Bankers Securities, Inc. are acting as
representatives of the several Underwriters, and in that capacity are referred
to in this Agreement as the "Representatives."
The Company hereby confirms its agreement with the Underwriters as
follows:
1. Representations and Warranties of the Company.
(a) The Company represents and warrants to, and agrees with, the
Underwriters as follows:
(i) A registration statement on Form S-1 under the Securities
Act of 1933, as amended (the "Securities Act"), relating to the Shares, the
Representatives' Warrants and the Representatives' Warrant Stock, including such
amendments to such registration statement as may have been required to the date
of this Agreement, has been prepared by the Company under and in
conformity with the provisions of the Securities Act, and the rules and
regulations (the "Rules and Regulations") of the Securities and Exchange
Commission (the "Commission") thereunder, and has been filed with the
Commission. If such registration statement has not become effective upon
execution of this Agreement, a further amendment to such registration statement,
including a form of final prospectus, necessary to permit such registration
statement to become effective will promptly be filed by the Company with the
Commission. If such registration statement has become effective, a final
prospectus containing information permitted to be omitted at the time of
effectiveness by Rule 430A of the Rules and Regulations will promptly be filed
by the Company with the Commission in accordance with Rule 424 of the Rules and
Regulations (and in form and substance reasonably satisfactory to the counsel
for the Underwriters). The term "Registration Statement" as used in this
Agreement shall mean such registration statement, including financial
statements, schedules and exhibits, in the form in which it became or becomes,
as the case may be, effective (including, if the Company omitted information
from the Registration Statement pursuant to Rule 430A(a) of the Rules and
Regulations, the information deemed to be a part of the Registration Statement
at the time it became effective pursuant to Rule 430A(b) of the Rules and
Regulations) and, in the event of any amendment thereto after the effective date
of the Registration Statement, shall also mean (from and after the effectiveness
of such amendment) the Registration Statement as so amended. Any registration
statement filed pursuant to Rule 462(b) under the Rules and Regulations is
herein called the "462(b) Registration Statement," and after such filing the
term "Registration Statement" shall include the Rule 462(b) Registration
Statement. The term "Prospectus" as used in this Agreement shall mean the form
of prospectus first filed with the Commission pursuant to Rule 424(b) or, if no
such filing is required under Rule 424(b), as included in the Registration
Statement on the date that it became effective. Each preliminary prospectus
included in the Registration Statement prior to the time it becomes effective is
herein referred to as a "Preliminary Prospectus." Any reference herein to the
Registration Statement, any Preliminary Prospectus or to the Prospectus shall be
deemed to refer to and include any supplements or amendments thereto, filed with
the Commission after the date of filing of the Prospectus under Rule 424(b) and
prior to the termination of the offering of the Shares by the Underwriters.
(ii) No stop order suspending the effectiveness of the
Registration Statement or preventing or suspending the use of the Prospectus has
been issued and to the knowledge of the Company, no proceedings for that purpose
are pending or threatened or contemplated by the Commission; no stop order
suspending the sale of the Shares in any jurisdiction has been issued and to the
knowledge of the Company, no proceedings for that purposed are pending or
threatened or are contemplated; and any request of the Commission for additional
information (to be included in the Registration Statement or the Prospectus or
otherwise) has been complied with in all material respects.
(iii) The Company and each of its subsidiaries have been duly
organized and are validly existing in good standing under the laws of their
respective jurisdiction of organization, have full power and authority to own or
lease their respective properties and conduct business as described in the
Registration Statement and the Prospectus and as they are currently conducting
such business, and are duly qualified as a foreign organization and in good
standing in all jurisdictions in which the character of the property owned or
leased or the nature of the business transacted by it makes qualification
necessary (except where the failure to be so qualified would not have a material
adverse effect on the business, properties, condition (financial or otherwise),
prospects or results of
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operations of the Company and its subsidiaries, taken as a whole, a "Material
Adverse Effect"). Except as disclosed in the Registration Statement, the Company
and each of its subsidiaries have obtained, are in possession of, and operating
in compliance with, all authorizations, licenses, certificates, consents, orders
and permits from state, federal and other regulatory authorities (including
foreign governments) that are material to the conduct of their respective
business, all of which are valid and in full force and effect. The Company has
an 85% ownership interest in Weifang Fuhua Amusement Park Co., Ltd. ("Fuhua")
and has a wholly-owned subsidiary in the British Virgin Islands which has not
conducted any business operations and has no assets. The Company holds such
outstanding capital stock of each of its subsidiaries free and clear of any
pledge, lien, security interest, encumbrance, claim or equitable interest of any
type, kind or nature. All issued and outstanding shares of capital stock or
other equity interest of each such subsidiary of the Company have been duly
authorized and validly issued and are fully paid and nonassessable, and were not
issued in violation of or subject to any preemptive right, or other rights to
subscribe for or purchase shares or other equity interest.
(iv) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus, there has not been any
material loss or interference with the Company's business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from any court
or governmental action, order or decree, or any changes in the capital stock or
long-term debt of the Company or any of its subsidiaries, or any dividend or
distribution of any kind declared, paid or made on the capital stock of the
Company, or any material adverse change, or a development known to the Company
that might cause or result in a material adverse change, in or affecting the
general affairs, management, business, properties, condition (financial or
otherwise), prospects or results of operations of the Company and its
subsidiaries, taken as a whole, whether or not arising from transactions in the
ordinary course of business, other than as set forth in the Registration
Statement and the Prospectus, and since such dates, except in the ordinary
course of business, neither the Company nor any of its subsidiaries has entered
into any material transaction not described in the Registration Statement and
the Prospectus.
(v) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus, and each Preliminary
Prospectus, at the time of filing thereof, conformed in all material respects to
the requirements of the Securities Act and the Rules and Regulations; when the
Registration Statement became or becomes, as the case may be, effective (the
"Effective Date"), when any 462(b) Registration Statement became or becomes
effective, and when the Prospectus is first filed (if required) in accordance
with Rule 424(b), and at all times subsequent thereto up to and at the "Closing
Date" (as hereinafter defined) and through any later date on which Option Shares
are to be purchased, as the case may be, the Registration Statement, the Rule
462(b) Registration Statement and the Prospectus, and any amendments or
supplements thereto, will in all material respects conform to the requirements
of the Securities Act and the Rules and Regulations, and the Securities Exchange
Act of 1934, as amended, (the "Exchange Act"), and the rules and regulations of
the Commission thereunder; on the Effective Date, the Registration Statement,
and any 462(b) Registration Statement, on the date it became or becomes
effective, did not or will not contain any untrue statement of a material fact
and did not or will not omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not misleading; and
neither the Registration Statement, any 462(b) Registration Statement, nor the
Prospectus, nor any amendment or supplement thereto, will include any untrue
statement of a material fact or omit to
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state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided, however, that none of the representations and warranties in this
Section 1(a)(v) shall apply to statements in, or omissions from, the
Registration Statement, and any 462(b) Registration Statement or the Prospectus
made in reliance upon and in conformity with information furnished in writing to
the Company by or on behalf of the Underwriters specifically for use in the
Registration Statement or the Prospectus. There is no agreement, contract,
license, lease or other document required to be described in the Registration
Statement or the Prospectus or to be filed as an exhibit to the Registration
Statement which is not described or filed as required. The contracts so
described in the Prospectus are in full force and effect on the date hereof, and
neither the Company nor any of its subsidiaries, nor to the best knowledge of
the Company, any other party, is in material breach of or material default under
any such contracts, except for such breaches and defaults that do not and will
not in the aggregate have a Material Adverse Effect.
(vi) All of the outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid and
nonassessable, have been issued in compliance in all material respects with all
applicable securities laws (including any applicable United States and state
securities laws), were not issued in violation of or subject to any preemptive
rights or other rights to subscribe for or purchase securities, and the
authorized and outstanding capital stock of the Company conforms in all material
respects to the statements relating thereto contained in the Registration
Statement and the Prospectus (and such statements correctly state the substance
of the instruments defining the capitalization of the Company). The description
of the Company's stock option, stock bonus and other stock plans or
arrangements, and the options or other rights granted or exercised thereunder,
set forth in the Prospectus accurately and fairly present the information shown
therein with respect to such plans, arrangements, options and rights. The Common
Stock to be sold by the Company hereunder has been duly authorized for issuance
and sale to the Underwriters pursuant to this Agreement and, when issued and
delivered by the Company against payment therefor in accordance with the terms
of this Agreement, will be duly and validly issued and fully paid and
nonassessable. Other than this Agreement, the Representatives' Warrant Stock and
the options and warrants to purchase the Common Stock described in the
Prospectus, there are no options, warrants or other rights outstanding to
subscribe for or purchase any shares of the Company's capital stock. There are
no preemptive rights or any restrictions upon the voting or transfer of any of
the Shares pursuant to the Company's Certificate of Incorporation or any other
governing document or agreement to which the Company or any of its subsidiaries
is a party or by which any of them may be bound. Neither the filing of the
Registration Statement nor the offering or sale of the Shares as contemplated by
this Agreement gives rise to any rights, other than those which have been waived
or satisfied, for or relating to the registration of any of the Shares or any
other capital stock of the Company.
(vii) The Company has full right, power and authority to enter
into and perform its obligations under this Agreement and the Representatives'
Warrants, and to issue, sell and deliver the Firm Shares and the Option Shares.
This Agreement and the Representatives' Warrants have each been duly authorized,
executed and delivered by the Company and constitute valid and binding
agreements of the Company and each is enforceable against the Company in
accordance with their respective terms, except as rights to indemnity and
contribution hereunder or thereunder may be limited by Federal or state
securities laws or principles of public policy and as such enforcement is
4
limited by bankruptcy, insolvency and other similar laws affecting the
enforcement of creditors' rights generally and by equitable principles of
general application.
(viii) Except for any existing breaches or defaults under
agreements that do not and will not have a Material Adverse Effect, neither the
Company nor any of its subsidiaries is, or with the giving of notice or lapse of
time or both would be, in violation of or in default under, nor will the
execution or delivery of this Agreement or the Representatives' Warrants, or the
consummation of the transactions contemplated by such agreements result in a
violation of or constitute a default (with the giving of notice, passage of time
or otherwise) under the Certificate of Incorporation or other charter or
governing documents of the Company or any of its subsidiaries, or any
obligation, agreement, covenant or condition contained in any bond, debenture,
note or other evidence of indebtedness or in any contract, indenture, mortgage,
deed of trust, loan agreement, lease, license, joint venture or other agreement
or instrument to which the Company or any of its subsidiaries is a party or by
which it or any of their properties may be bound or affected, nor will the
performance by the Company of its obligations under this Agreement or the
Representatives' Warrants violate any law, rule, administrative regulation or
decree of any court or any governmental agency or body having jurisdiction over
the Company, its subsidiaries or any of their respective properties, or result
in the creation or imposition of any lien, charge, claim or encumbrance upon any
property or asset of the Company or any of its subsidiaries, provided that the
representations and warranties in this sentence are subject to the exceptions
described in the following sentence. Except for permits and similar
authorizations required under the Securities Act or the Exchange Act or under
state, Blue Sky or foreign securities laws and regulations, and for such permits
and authorizations that have been obtained, no consent, approval, authorization
or order of any court, governmental agency or body or financial institution is
required in connection with the consummation of the transactions contemplated by
this Agreement or the Representatives' Warrants.
(ix) The Company and each of its subsidiaries owns, or has valid
rights to use, all items of real and personal property which are material to the
business of the Company and its subsidiaries taken as a whole, free and clear of
all liens, encumbrances and claims that might materially interfere with the
business, properties, condition (financial or otherwise) or prospects of the
Company and its subsidiaries, taken as a whole.
(x) Except as described in the Prospectus, there is no
litigation or governmental proceeding to which the Company or any of its
subsidiaries is a party, or to which any property of the Company or any of its
subsidiaries is subject, which is pending, or to the best knowledge of the
Company, contemplated against the Company or any of its subsidiaries, that might
have a Material Adverse Effect or that might prevent consummation of the
transactions contemplated by this Agreement or the Representatives' Warrants or
that are required to be disclosed in the Registration Statement.
(xi) Neither the Company nor any of its subsidiaries is in
violation of any law, order, ordinance, rule, regulation, writ, injunction,
judgment or decree of any court or governmental agency or body to which it or
its properties (whether owned or leased) may be subject, which violation might
have a Material Adverse Effect.
5
(xii) Each of the Company and each of its subsidiaries owns or
possesses adequate rights to use all material patents, patent rights,
inventions, trade secrets, know-how, trademarks, service marks, trade names and
copyrights described or referred to in the Prospectus as owned by or used by any
of them, or which are necessary for the conduct of their business as described
in the Prospectus; and neither the Company nor any of its subsidiaries has
received any notice of infringement of or conflict with asserted rights of
others with respect to any patents, patent rights, inventions, trade secrets,
know-how, trademarks, service marks, trade names or copyrights which, singly or
in the aggregate, if the subject of an unfavorable decision, ruling or finding,
might have a Material Adverse Effect.
(xiii) The Company has not taken, and shall not take, directly
or indirectly, any action designed to cause or result in, or which has
constituted or which might reasonably be expected to cause or result in, under
the Exchange Act, the rules and regulations of the Commission under the Exchange
Act, or otherwise, the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Shares. No bid
or purchase by the Company, and, to the best knowledge of the Company, no bid or
purchase that could be attributed to the Company (as a result of bids or
purchases by an "affiliated purchaser" within the meaning of Regulation M under
the Exchange Act) for or of the Common Stock, any securities of the same class
or series as the Common Stock or any securities immediately convertible into or
exchangeable for or that represent any right to acquire the Common Stock, is now
pending or in progress or will have commenced at any time prior to the
completion of the distribution of the Shares.
(xiv) BDO International whose report appears in the Registration
Statement and Prospectus, are, and during the periods covered by their report in
the Registration Statement were, independent accountants as required by the
Securities Act and the Rules and Regulations. The financial statements included
in the Registration Statement, any Preliminary Prospectus or the Prospectus
present fairly the consolidated financial condition, results of operations, cash
flow and changes in stockholders' equity of the Company and its subsidiaries at
the dates and for the periods indicated, and the financial statements included
in the Registration Statement present fairly in all material respects the
information required to be stated therein. Such financial statements have been
prepared in accordance with generally accepted accounting principles in the
United States of America, applied on a consistent basis throughout the periods
presented, except as stated therein. The selected and summary financial and
statistical data included in the Registration Statement and the Prospectus
present fairly in all material respects the information shown therein and have
been compiled on a basis consistent with the audited financial statements
presented therein. No other financial statements and no schedules are required
to be included in the Registration Statement.
(xv) The books, records and accounts of the Company and each of
its subsidiaries accurately and fairly reflect, in all material respects and in
reasonable detail, the transactions in and dispositions of the assets of the
Company and each of its subsidiaries. The systems of internal accounting
controls maintained by the Company and each of its subsidiaries are sufficient
to provide reasonable assurances that (i) transactions are executed in
accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary (A) to permit preparation of financial
statements in conformity with generally accepted accounting principles and (B)
to maintain accountability for assets; (iii) access to assets is permitted only
in accordance with management's
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general or specific authorization; and (iv) the recorded accountability for
assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(xvi) The Company has delivered to the Representatives the
written agreement of each of its officers and directors and substantially all
beneficial owners of its Common Stock and/or securities exercisable or
exchangeable for, or convertible into, Common Stock (collectively, "Material
Holders") to the effect that each of the Material Holders will not, for a period
of twelve (12) months following the Closing Date, offer, sell or contract to
sell, or otherwise dispose of any Common Stock and/or securities exercisable or
exchangeable for, or convertible into, Common Stock other than intra-family
transfers or transfers to trusts for estate planning purposes, without the prior
written consent of the Representatives.
(xvii) No labor disturbance by the employees of the Company or
any of its subsidiaries exists or is imminent, nor is the Company aware of any
existing or imminent labor disturbance by the employees of any principal
suppliers, contract manufacturing organizations, manufacturers, authorized
dealers or distributors, in either case, where such labor disturbance might be
expected to result in any material adverse change in the condition (financial or
otherwise), earnings, operations, business or prospects of the Company and its
subsidiaries, considered as a whole. No collective-bargaining agreement exists
with any of the Company's or any of the Company's subsidiaries' employees and,
to the best knowledge of the Company, no such agreement is imminent.
(xviii) Each of the Company and each of its subsidiaries has
filed all United States, state, local, Peoples' Republic of China and other
foreign tax returns which are respectively required of the Company and each of
its subsidiaries to be filed or has requested extensions thereof and has paid
all taxes, including withholding taxes, penalties and interest, assessments,
fees and other charges to the extent that the same have become due and payable.
No tax assessment or deficiency has been made or proposed against the Company or
any of its subsidiaries nor has the Company or any of its subsidiaries received
any notice of any proposed assessment or deficiency.
(xix) Except as set forth in the Prospectus, there are no
outstanding loans, advances or guaranties of indebtedness by the Company to or
for the benefit of any of its "affiliates", as such term is defined in the Rules
and Regulations, or any of the officers or directors of any of its subsidiaries,
or any of the members of the families of any of them.
(xx) Neither the Company nor any of its subsidiaries has,
directly or indirectly, at any time (i) made any contributions to any candidate
for political office, or failed to disclose fully any such contribution, in
violation of law; (ii) made any payment to any state, federal or foreign
governmental officer or official, or other person charged with similar public or
quasi-public duties, other than payments required or allowed by all applicable
laws; or (iii) violated nor is it in violation of any provision of the Foreign
Corrupt Practices Act of 1977, as amended.
(xxi) Neither the Company nor any of its subsidiaries has any
liability, known or unknown, matured or not matured, absolute or contingent,
assessed or unassessed, imposed or based upon any provision of, or has received
notice of any potential liability under, any law, rule or regulation, or the
civil or common law, or any tort, nuisance or absolute liability theory,
applicable to
7
the Company or any of its subsidiaries, or under any code, order, decree,
judgment or injunction applicable to the Company or any of its subsidiaries
relating to public health or safety, worker health or safety or pollution,
damage to or protection of the environment, including, without limitation, laws
relating to damage to natural resources, emissions, discharges, releases or
threatened releases of hazardous materials into the environment (including,
without limitation, ambient air, surface water, groundwater, land surface or
subsurface strata), or otherwise relating to the manufacture, processing, use,
treatment, storage, generation, disposal, transport or handling of hazardous
materials, which liabilities, individually or in the aggregate, would have a
Material Adverse Effect. As used herein, "hazardous material" includes chemical
substances, wastes, pollutants, contaminants, hazardous or toxic substances,
constituents, materials or wastes, whether solid, gaseous or liquid in nature.
(xxii) The Company has not distributed and will not distribute
prior to the Closing Date or on or prior to any date on which the Option Shares
are to be purchased, as the case may be, any prospectus or other offering
material in connection with the offering and sale of the Shares other than the
Preliminary Prospectus, the Prospectus, the Registration Statement and any other
material which may be permitted by the Securities Act and the Rules and
Regulations.
(xxiii) The Common Stock has been approved for listing on the
American Stock Exchange (the "American Stock Exchange"), subject to official
notice of issuance.
(xxiv) The Company is familiar with and has discussed with its
United States legal counsel the Investment Company Act of 1940, as amended (the
"1940 Act"), and the rules and regulations thereunder, and has in the past
conducted, and intends in the future to conduct, its affairs in such a manner as
to ensure that it will not become an "investment company" within the meaning of
the 1940 Act and such rules and regulations.
(xxv) The Representatives' Warrants have been duly and validly
authorized, and when issued and delivered against payment therefor will be valid
and binding obligations of the Company in accordance with their terms, except as
rights to indemnity and contribution hereunder and thereunder may be limited by
Federal or state securities laws or principles of public policy and as such
enforcement is limited by bankruptcy, insolvency and other similar laws
affecting the enforcement of creditors' rights generally and by equitable
principles of general application; the Representatives' Warrant Stock has been
duly and validly authorized for issuance upon exercise of the Representatives'
Warrants, and when so issued against payment therefor will be validly issued,
fully paid and non-assessable; and no stockholder of the Company has any
preemptive rights with respect to the Representatives' Warrants or the
Representatives' Warrant Stock.
(xxvi) The Company does not know of any facts which may
materially and adversely affect its earnings, prospects or business which have
not been fully disclosed in writing to the Representatives.
2. Purchase, Sale and Delivery of Shares.
(a) On the basis of the representations, warranties and covenants
contained in this Agreement, and subject to the terms and conditions set forth
in this Agreement, the Company agrees to sell to the Underwriters, and the
Underwriters agree to purchase from the Company, at a purchase
8
price of $_____ per Firm Share, the number of Firm Shares set forth opposite
such Underwriter's name in Schedule I hereto.
(b) On the basis of the representations, warranties and covenants
contained in this Agreement, and subject to the terms and conditions set forth
in this Agreement, including the terms set forth below, the Company grants an
option to the Underwriters to purchase all or any portion of 150,000 Option
Shares at the same price per Share as the Underwriters shall pay for the Firm
Shares. Said option may be exercised only to cover over-allotments in the sale
of the Firm Shares by the Underwriters and may be exercised in whole or in part
at any time on or before the 45th business day after the date of the Prospectus
upon written, telecopied or telegraphic notice by the Representatives to the
Company setting forth the aggregate number and class of Option Shares as to
which the Underwriters are exercising the option and the settlement date. The
Option Shares shall be purchased severally, and not jointly, by each
Underwriter, if purchased at all, in the same proportion that the number of Firm
Shares to be purchased by such Underwriter bears to the total number of Firm
Shares to be purchased by the Underwriters under Section 2(a), above, subject to
such adjustments as the Representatives in their absolute discretion shall make
to eliminate any fractional shares. Delivery of certificates for the Option
Shares, and payment therefor, shall be made as provided in Section 2(c) and
Section 2(d) below.
(c) Delivery of certificates for the Firm Shares and the Option Shares
(if the option granted by the Company in Section 2(b) above shall have been
exercised not later than 10:00 a.m., New York time, on the date two business
days preceding the Closing Date), and payment therefor shall be made at the
office of Westpark Capital, Inc., ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, at 10:00 a.m., New York time, on the latest to occur
of (i) the fourth business day after the date of this Agreement, (ii) the third
business day after the date the Firm Shares are first offered to the public, or
(iii) as provided in Section 8 of this Agreement. The date and hour of delivery
and payment for the Firm Shares are referred to in this Agreement as the
"Closing Date." As used in this Agreement, "business day" means a day on which
the New York Stock Exchange and the American Stock Exchange are open for trading
and on which banks in New York and California are open for business and not
permitted by law or executive order to be closed.
(d) If any of the options granted by the Company in Section 2(b) above
shall be exercised after 10:00 a.m., New York time, on the date two business
days preceding the Closing Date, delivery of certificates for the Option Shares,
and payment therefor, shall be made at the office of Westpark Capital, Inc.,
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, at 10:00
a.m., New York time, on the date specified by the Representatives (which shall
not be earlier than four and not later than 10 full business days after the
exercise of said option, nor in any event prior to the Closing Date, and such
time and date is referred to herein as the "Option Closing Date." Time shall be
of the essence and delivery at the time and place specified in this subsection
(d) is a further condition to your obligations hereunder.
(e) Payment of the purchase price for the Firm Shares and the Option
Shares by the Underwriters, less (i) any reimbursable expenses provided for in
Section 4(a) of this Agreement, (ii) the non-accountable expense allowance
provided for in Section 4(b) of this Agreement, (iii) the amount of the
consulting fee to be paid in accordance with the Consulting Agreement to be
entered into in accordance with Section 3(t), (iv) the amount specified by ▇▇▇▇
& ▇▇▇▇▇ Professional
9
Corporation as being owed to it by the Company as of the Closing Date (or, if
applicable, the Option Closing Date) for legal services and disbursements, and
(v) any other amounts that the Company has advised you in writing that it has
agreed to pay to service providers out of the purchase price for the Firm Shares
and the Option Shares, shall be made by certified or official bank check or
checks drawn in next-day funds, payable to the order of the Company (and the
Company agrees not to deposit or permit deposit of any such check in the bank on
which drawn until the day following the date of its delivery to the Company).
Such payment shall be made upon delivery of certificates for the Shares to you
for the account of the Underwriters. Certificates for the Shares to be delivered
to you shall be registered in such name or names and shall be in such
denominations as the Representatives may request at least two business days
before the Closing Date, in the case of Firm Shares, and at least one business
day prior to the Option Closing Date, in the case of the Option Shares. Such
certificates will be made available to the Representatives for inspection,
checking and packaging at the offices Westpark Capital, Inc., ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, not less than one full business
day prior to the Closing Date or, in the case of the Option Shares, by 3:00
p.m., New York time, on the first business day preceding the date of purchase.
(f) It is understood that the Underwriters propose to offer the Shares
for sale to the public as soon as the Representatives deems it advisable to do
so (the "Public Offering"). The Firm Shares are to be initially offered to the
public at the public offering price set forth in the Prospectus (the "Public
Offering Price"). The Underwriters may from time to time thereafter change the
public offering price and other selling terms.
(g) The statements in the first paragraph, the fourth sentence through
the end of the second paragraph, the eighth, eleventh, thirteenth, fifteenth and
sixteenth paragraphs under the caption "Underwriting" in any Preliminary
Prospectus and in the final form of Prospectus filed pursuant to Rule 424(b)
constitute the only information furnished by the Underwriters to the Company for
inclusion in any Preliminary Prospectus, the Prospectus or the Registration
Statement, and the Underwriters represent and warrant that such statements are
accurate.
3. Further Agreements of the Company. The Company covenants and agrees with the
Underwriters as follows:
(a) The Company will use its best efforts to cause the Registration
Statement, and any amendment thereof, if not effective at the time of execution
of this Agreement, to become effective as promptly as possible. If the
Registration Statement has become or becomes effective pursuant to Rule 430A, or
filing of the Prospectus is otherwise required under Rule 424(b), the Company
will file the Prospectus, properly completed (and in form and substance
reasonably satisfactory to counsel for the Underwriters) pursuant to Rule 424(b)
within the time period prescribed and will provide evidence satisfactory to the
Representatives of such timely filing. The Company will not file the Prospectus,
any amended Prospectus, any amendment of the Registration Statement or
supplement to the Prospectus or make any filing under Rule 462(b) of the Rules
and Regulations without advising the Representatives of, and furnishing the
Underwriters with copies thereof a reasonable time prior to the proposed filing
of, such amendment or supplement and without obtaining the prior consent of the
Representatives to such filing, which consent shall not be unreasonably
withheld. The Company will prepare and file with the Commission, promptly upon
the request of the Representatives, any amendment to the Registration Statement
or supplement to the Prospectus that may be necessary or
10
advisable in connection with the distribution of the Shares by you, and use its
best efforts to cause the same to become effective as promptly as possible.
(b) The Company will promptly advise the Representatives (i) when the
Registration Statement shall have become effective, (ii) when any amendment
thereof shall have become effective, (iii) of any request by the Commission for
any amendment of or supplement to the Registration Statement or the Prospectus
or for any additional information, (iv) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or the
institution or threatening of any proceeding for that purpose and (v) of the
receipt by the Company of any notification with respect to the suspension of the
qualification of the Shares for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose. The Company will use its best
efforts to prevent the issuance of any such stop order or suspension and, if
issued, to obtain as soon as possible the withdrawal thereof.
(c) The Company will (i) on or before the Closing Date, deliver to each
of you and your counsel a conformed copy of the Registration Statement as filed
and of each amendment thereto filed prior to the time the Registration Statement
becomes effective and, promptly upon the filing thereof, a conformed copy of
each 462(b) Registration Statement and post-effective amendment, if any, to the
Registration Statement (together with, in each case, all exhibits thereto unless
previously furnished to you) and all documents filed by the Company with the
Commission under the Exchange Act and deemed to be incorporated by reference
into any Preliminary Prospectus or the Prospectus, and will also deliver to you,
for distribution to the Underwriters, a sufficient number of additional
conformed copies of each of the foregoing (excluding exhibits) so that one copy
of each may be distributed to each Underwriter, (ii) as promptly as possible
deliver to the Underwriters, at such office or offices as you may designate, as
many copies of any Preliminary Prospectus and the Prospectus as you may
reasonably request and (iii) thereafter from time to time during the period in
which a prospectus is required by law to be delivered by an Underwriter or a
dealer, likewise send to the Underwriters as many additional copies of the
Prospectus and as many copies of any supplement to the Prospectus and of any
amended Prospectus, filed by the Company with the Commission, as you may
reasonably request for the purposes contemplated by the Securities Act.
(d) If at any time during the period in which a prospectus is required
by law to be delivered by an Underwriter or a dealer any event shall occur as a
result of which it is necessary to supplement or amend the Prospectus in order
to make the Prospectus not misleading in the light of the circumstances existing
at the time it is delivered to a purchaser of the Shares, or if it shall be
necessary to amend or to supplement the Prospectus to comply with the Securities
Act or the Rules and Regulations, the Company will forthwith prepare and file
with the Commission a supplement to the Prospectus or an amended Prospectus so
that the Prospectus as so supplemented or amended will not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances existing
at the time such Prospectus is delivered to such purchaser, not misleading, and
so that it then will otherwise comply with the Securities Act and the Rules and
Regulations. If, after the public offering of the Shares by the Underwriters and
during such period, the Underwriters shall propose to vary the terms of offering
thereof by reason of changes in general market conditions or otherwise, you will
advise the Company in writing of the proposed variation, and, if in the opinion
either of counsel for the Company or of counsel for the Underwriters such
proposed variation requires that the Prospectus be supplemented
11
or amended, the Company will forthwith prepare and file with the Commission a
supplement to the Prospectus or an amended prospectus setting forth such
variation. The Company authorizes the Underwriters and all dealers to whom any
of the Shares may be sold by the Underwriters to use the Prospectus, as from
time to time amended or supplemented, in connection with the sale of the Shares
in accordance with the applicable provisions of the Securities Act and the Rules
and Regulations for such period.
(e) Prior to the filing thereof with the Commission, the Company will
submit to you, for your information, a copy of any 462(b) Registration
Statement, post-effective amendment to the Registration Statement and any
supplement to the Prospectus or any amended Prospectus proposed to be filed.
(f) The Company will cooperate with you and your counsel in the
qualification of the Shares for offer and sale under the securities or Blue Sky
laws of such jurisdictions as you may designate and, during the period in which
a prospectus is required by law to be delivered by an Underwriter or a dealer,
in keeping such qualifications in good standing under said securities or Blue
Sky laws; provided, however, that the Company shall not be obligated to file any
general consent to service of process or to qualify to do business as a foreign
corporation in any jurisdiction in which it is not so qualified. The Company
will, from time to time, prepare and file such statements, reports, and other
documents as are or may be required to continue such qualifications in effect
for so long a period as you may reasonably request for distribution of the
Shares.
(g) During a period of five years commencing with the date of this
Agreement, the Company will promptly furnish to you, and to each Underwriter who
may so request in writing, copies of all periodic and special reports furnished
to stockholders of the Company, of all information, documents and reports filed
with Commission, any securities exchange or the National Association of
Securities Dealers, Inc. and of all press releases and material news items or
articles in respect of the Company, its products or affairs released or prepared
by the Company (other than promotional and marketing materials disseminated
solely to customers and potential customers of the Company in the ordinary
course of business); and any additional publicly available information
concerning the Company or its business which you may reasonably request.
(h) As soon as practicable, but not later than the 45th day following
the end of the fiscal quarter first ending after the first anniversary of the
Effective Date, the Company will make generally available to its securities
holders and furnish to the Underwriters an earnings statement or statements in
accordance with Section 11(a) of the Securities Act and Rule 158 thereunder.
(i) The Company agrees that it will cause each of its executive officers
and directors and those other Material Holders designated by the Representatives
prior to the date of this Agreement to enter into agreements with the
Representatives to the effect that they will not, directly or indirectly,
without your prior written consent, sell, offer, contract to sell, grant any
option to purchase, or otherwise dispose of any shares of Common Stock, or any
securities convertible into, exchangeable for or exercisable for Common Stock,
or any rights to purchase or acquire Common Stock (other than intra-family
transfers or transfers to trusts for estate planning purposes) for a period of
twelve months after the Closing Date.
12
(j) The Company will apply the net proceeds from the offering received
by it in the manner set forth under the caption "Use of Proceeds" in the
Prospectus and will file such reports with the Commission with respect to the
sale of the Shares and the application of the proceeds therefrom as may be
required pursuant to Rule 463 of the Rules and Regulations. The net proceeds
will be disbursed only upon the written authorization of the Company's Chief
Executive Officer in accordance with guidelines to be established after the
Closing Date by the Company's Board of Directors. Pending the use and
disbursement of the net proceeds in the manner described in this paragraph and
in the Prospectus under "Use of Proceeds," the net proceeds will remain in the
United States and will be invested in marketable, investment-grade securities,
certificates of deposit or direct or guaranteed obligations of the U.S.
government.
(k) The Company will, prior to the date of this Agreement, and at all
times thereafter, unless such securities are then listed on a national
securities exchange, cause the Shares and Representatives' Warrant Stock to be
included for quotation on the American Stock Exchange, and the Company will
comply with all registration, filing, reporting and other requirements of the
Exchange Act and the American Stock Exchange which may from time to time be
applicable to the Company, provided, however, that the Company shall not be
liable to the Underwriters or any other party if it subsequently fails to
satisfy quantitative requirements for continued listing on the American Stock
Exchange. The Company further agrees not to delist from the American Stock
Exchange without the Representatives' approval, unless required to do so by the
American Stock Exchange. As soon as practicable after the Shares become eligible
therefor, the Company will apply for listing in one or more securities manuals
(such as ▇▇▇▇▇'▇ Over-the-Counter Industrial Manual or Standard & Poor's
Corporation Description Manual).
(l) The Company will use its best efforts to maintain insurance of the
types and in the amounts which it deems adequate for its business and consistent
with insurance coverage maintained by companies of similar size and engaged in
similar businesses, including, but not limited to, general liability insurance
covering all real and personal property owned or leased by the Company against
theft, damage, destruction, acts of vandalism and all other risks customarily
insured against. The Company will use its best efforts to obtain and maintain a
reasonable amount of Directors and Officers liability insurance from a reputable
insurer, and the level of coverage as well as the identity of the insurer shall
be reasonably acceptable to the Representatives.
(m) In accordance with the Representatives' Warrants, the Company
agrees, in consideration for the sum of $100.00 in payment therefor, to deliver
to the Representatives on the Closing Date upon completion of the purchase and
sale of the Firm Shares pursuant to Section 2 of this Agreement, the
Representatives' Warrants representing the right to purchase up to 100,000
shares of Common Stock at a price equal to 165% of the offering price per share
of Common Stock to the public as set forth on the cover page of the Prospectus.
(n) The Company shall retain in their current positions the individuals
named as executive officers under the caption "Management" in the Registration
Statement for at least one year after the consummation of the Public Offering,
unless approved by the Representatives.
(o) The Company agrees that the Representatives shall have the right for
a period of four (4) years from the Closing to designate one nominee for
election to the Board of Directors of the
13
Company, such nominee to be reasonably acceptable to the Company. In the event
that the Company is unable to obtain the Directors and Officers insurance
described in Section 3(l) above, the Representatives shall have the right for
such four (4) year period to designate a consultant to the Board of Directors of
the Company, which consultant shall have the right to attend all Board and Board
committee meetings and shall be compensated at a level no less than the outside
members of the Board.
(p) The Company shall use its best efforts to at all times maintain at
least three (3) independent directors (that is directors that are not officers
of the Company, who are neither related to its officers nor represent
concentrated or family holdings of the Company's shares, and who, in the view of
the Company's board of directors, are free of any relationship that would
interfere with the exercise of independent judgment (the "Independent
Directors"). The Independent Directors shall constitute a majority of the
Company's audit and compensation committees. Further, the favorable vote of a
majority of the Company's Independent Directors shall be required as to any
related party transaction between the Company and any 5% or more stockholder of
the Company and/or officer or director of the Company (or any affiliates of such
individuals); provided, however, that a transaction between the Company and one
of its subsidiaries shall not be considered a "related party transaction". The
joint venture agreement that the Company entered into with Weifang Neoluck
(Group) Corporation pursuant to which the Company holds its ownership interest
in Fuhua shall be considered a related party transaction. Any proposed changes
in the Company's Bylaws that are not otherwise approved by the majority vote of
the shares held by the Company's non-management stockholders (i.e., stockholders
exclusive of officers and directors of the Company) shall be approved by a
majority of the Company's directors and not disapproved by a majority of the
Company's Independent Directors.
(q) Except in connection with acquisitions of businesses by the Company
and except for shares of Common Stock issuable upon exercise of options or
warrants outstanding prior to the Closing Date and except for the grant of
options to its officers and employees under the Company's 2001 Stock Incentive
Plan at an exercise price equal to or greater than the Public Offering Price per
share, during the period of the offering, and for a period of twelve (12) months
from the Closing Date, the Company will not (i) sell or otherwise dispose of any
securities of the Company (except as described in this paragraph) or (ii)
purchase any shares of capital stock of the Company, without your prior written
consent.
(r) The Company will instruct its transfer agent to provide the
Representatives with copies of the Depository Trust Company stock transfer
sheets on a weekly basis for a period of six months from the Closing Date and on
a monthly basis thereafter for six additional months.
(s) The Company will reserve and keep available the maximum number of
its authorized but unissued securities which is issuable upon exercise of the
Representatives' Warrants.
(t) The Company agrees to deliver to the Representatives on the Closing
Date upon completion of the purchase and sale of the Firm Shares pursuant to
Section 2 of this Agreement a consulting agreement in the form attached hereto
as Exhibit A.
14
(u) The Company agrees to engage the services of an investor relations
advisory firm, reasonably acceptable to the Representatives and to retain the
services of such firm for at least one year following the date of Closing.
4. Fees and Expenses. The Company agrees with each Underwriter that:
(a) The Company shall pay all costs and expenses incident to the
purchase, sale and delivery of the Shares, including without limitation, all
fees and expenses of filing the Registration Statement with the Commission and
the NASD; all Blue Sky fees and expenses not to exceed an aggregate of $30,000,
including legal fees and expenses, if any, of the Underwriters' counsel (which
shall undertake all such Blue Sky matters); fees and disbursements of counsel
and accountants for the Company; printing and mailing costs, including costs of
printing the Registration Statement, any amendments thereto, all underwriting
documents, Blue Sky memoranda and a reasonable quantity of prospectuses as
determined by the Representatives; the Company's road show cost and expenses;
and the cost of preparing a total of four (4) sets of bound volumes of the
Public Offering documents for the Representatives and Underwriters' counsel. The
Company shall also pay for the cost of advertising the Public Offering,
including the cost of "tombstone" ads in various financial and news publications
or other promotional material as directed by the Representatives and shall pay
for all other expenses for advertising undertaken at the Company's request,
including graphic slide costs. The Company shall also pay all expenses for due
diligence including meetings and drafting meetings associated with this Public
Offering; all due diligence expenses and meetings associated with this Public
Offering are reimbursable monthly or as incurred, as may be requested by the
Representatives; however, in cases of road show and travel expenses, the Company
shall provide arrangements for the payment of these expenses when incurred. The
Underwriters shall pay the fees and disbursements of its counsel, with the
exception of the Blue Sky fees described above, and the Representatives' road
show costs and expenses. The Company shall also pay for a background search of
its officers and management and if so requested by the Representatives, the
Company shall prepare, at the Company's expense, an Internet-based road show for
viewing by prospective investors selected by the Representatives. The Company
agrees to pay the cost of listing the offering through an Internet-based
distribution website. The Company also commits to and will pay reasonable
expenses for a minimum of one annual U.S. road show with the Representatives to
provide an annual update to investors of the Company.
(b) In addition to its obligations under Section 4(a) above, the Company
agrees to pay the Representatives a non-accountable expense allowance equal to
three percent (3%) of the aggregate Public Offering Price of the Shares
respectively sold by them in the Public Offering. Such allowance, less the
aggregate of any amounts which was paid to the Representatives by the Company as
an advance against non-accountable expenses, shall be paid to the
Representatives by the Company as provided in Section 2(d) of this Agreement. In
the event the Public Offering is not completed for any reason, the
Representatives agrees to repay to the Company any portion of the amounts which
the Company advanced against non-accountable expenses that has not been paid or
incurred by the Representatives for its actual out-of-pocket expenses in
connection with the Public Offering.
15
(c) No person is entitled either directly or indirectly to compensation
from the Company, from any Underwriter or from any other person for services as
a finder in connection with the proposed offering, and the Company agrees to
indemnify and hold harmless you, and you agree to indemnify and hold harmless,
the Company from and against any losses, claims, damages or liabilities, (which
shall, for all purposes of this Agreement, include, but not be limited to, all
reasonable costs of defense and investigation and all reasonable attorneys'
fees), to which the indemnified party may become subject insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon the claim of any person (other than an employee of the party
claiming indemnity) or entity that he or it is entitled to a finder's fee in
connection with the proposed offering by reason of such person's or entity's
influence or prior contact with the indemnifying party.
(d) In addition to its other obligations under Section 7(a) and subject
to the terms and conditions of Section 7(c) hereof, the Company agrees that, as
an interim measure during the pendency of any claim, action, investigation,
inquiry or other proceeding described in Section 7(a) hereof, it will pay the
Underwriters on a monthly basis for all reasonable legal or other expenses
incurred in connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the Company's
obligation to pay the Underwriters for such expenses and the possibility that
such payments might later be held to have been improper by a court of competent
jurisdiction. To the extent that any such interim reimbursement payment is so
held to have been improper, the Underwriters shall promptly return such payment
to the Company together with interest, compounded daily, determined on the basis
of the prime rate (or other commercial lending rate for borrowers of the highest
credit standing) listed from time to time in The Wall Street Journal which
represents the base rate on corporate loans posted by a substantial majority of
the nation's thirty (30) largest banks (the "Prime Rate"). Any such interim
payments which are not made to the Underwriters within thirty (30) days of a
request for reimbursement shall bear interest at the Prime Rate from the date of
such request.
(e) In addition to its other obligations under Section 7(b) and subject
to the terms and conditions under Section 7(c) hereof, the Underwriters agree
that, as an interim measure during the pendency of any claim, action,
investigation, inquiry or other proceeding described in Section 7(b) hereof, it
will reimburse the Company on a monthly basis for all reasonable legal or other
expenses incurred in connection with investigating or defending any such claim,
action, investigation, inquiry or other proceeding, notwithstanding the absence
of a judicial determination as to the propriety and enforceability of the
Underwriters' obligation to reimburse the Company for such expenses and the
possibility that such payments might later be held to have been improper by a
court of competent jurisdiction. To the extent that any such interim
reimbursement payment is so held to have been improper, the Company shall
promptly return such payment to the Underwriters together with interest,
compounded daily, determined on the basis of the Prime Rate. Any such interim
reimbursement payments which are not made to the Company within thirty (30) days
of a request for reimbursement shall bear interest at the Prime Rate from the
date of such request.
(f) It is agreed that any controversy arising out of the operation of
the interim reimbursement arrangements set forth in Sections 4(d) and (e)
hereof, including the amounts of any requested reimbursement payments, the
method of determining such amounts and the basis
16
on which such amounts shall be apportioned among the reimbursing parties, shall
be settled by arbitration conducted pursuant to the Code of Arbitration
Procedure of the NASD in Los Angeles County, California. Any such arbitration
may be commenced by service of a written demand for arbitration or a written
notice of intention to arbitrate, therein electing the arbitration tribunal. In
the event the party demanding arbitration does not make such designation of an
arbitration tribunal in such demand or notice, then the party responding to said
demand or notice is authorized to do so. Any such arbitration will be limited to
the operation of the interim reimbursement provisions contained in Sections 4(d)
and (e) hereof and will not resolve the ultimate propriety or enforceability of
the obligation to indemnify for expenses which is created by the provisions of
Sections 7(a) and 7(b) hereof or the obligation to contribute to expenses which
is created by the provisions of Section 7(d) hereof.
5. Conditions of Underwriters' Obligations. The obligations of the Underwriters
to purchase and pay for the Shares shall be subject to the accuracy as of the
date of execution of this Agreement, the Closing Date and the date on which the
Option Shares are to be purchased, as the case may be, of the representations
and warranties of the Company set forth in this Agreement, to the accuracy of
the statements of the Company and its officers made in any certificate delivered
pursuant to the terms of this Agreement, to the performance by the Company of
all of its obligations to be performed under this Agreement at or prior to the
Closing Date or any later date on which Option Shares are to be purchased, as
the case may be, and to the following additional conditions:
(a) The Registration Statement shall have become effective, (or, if a
post-effective amendment is required to be filed pursuant to Rule 430A under the
Act, such post-effective amendment shall become effective and, at the Closing
Date, or, with respect to the Option Shares, the date on which such Option
Shares are to be purchased, no stop order suspending the effectiveness of the
Registration Statement or any qualification or exemption from qualification for
the sale of the Shares in any jurisdiction shall have been issued and no
proceedings for that purpose shall have been instituted or threatened; and any
request for additional information on the part of the Commission shall have been
complied with to the reasonable satisfaction of the Underwriters and their
counsel.
(b) You shall have received from ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, LLP, counsel
for the Underwriters, an opinion dated the Closing Date, with respect to such
matters related to the Public Offering as the Underwriters may reasonably
require, and the Company shall have furnished counsel for the Underwriters with
the legal opinion of its counsel and all other documents which it may request
for the purpose of enabling it to pass upon such matters.
(c) You shall have received on the Closing Date and on any Option
Closing Date on which Option Shares are purchased, as the case may be, the
opinion of ▇▇▇▇ & ▇▇▇▇▇ Professional Corporation, United States counsel for the
Company, addressed to the Underwriters and dated the Closing Date or such later
date, to the effect set forth in Annex A to this Agreement.
(d) You shall have received on the Closing Date and on any Option
Closing Date on which Option Shares are purchased, as the case may be, the
opinion of King & Wood, PRC Lawyers, Peoples' Republic of China counsel for the
Company, addressed to the Underwriters and to the Company and dated the Closing
Date or such later date, to the effect set forth in Annex B to this Agreement.
▇▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇, LLP, counsel for the Underwriters, and ▇▇▇▇ and ▇▇▇▇▇
17
Professional Corporation, counsel to the Company, shall be entitled to rely on
such opinion and the opinions expressed therein in connection with the Company's
initial public offering and in connection with any opinions that they deliver on
behalf of the Underwriters or the Company, respectively.
(e) You shall be satisfied that there has not been any material change
in the market for securities in general or in political, financial or economic
conditions from those reasonably foreseeable as to render it impracticable in
your sole judgment to make a public offering of the Shares, or a material
adverse change in market levels for securities in general (or those of companies
in particular) or financial or economic conditions which render it inadvisable
to proceed.
(f) You shall have received on the Closing Date and on any Option
Closing Date on which Option Shares are purchased a certificate, dated the
Closing Date or such later date, as the case may be, and signed by the Chief
Executive Officer and the Chief Financial Officer of the Company, stating that:
(i) The representations and warranties of the Company set forth
in Section 1 of this Agreement are true and correct in all material respects
with the same force and effect as if expressly made at and as of such date, and
the Company has complied in all material respects with all the agreements and
satisfied all the conditions on its part to be performed or satisfied at or
prior to such date;
(ii) no stop order suspending the effectiveness of the
Registration Statement has been issued and, to their knowledge, no proceedings
for that purpose have been instituted or are pending or are threatened under the
Securities Act;
(iii) the Common Stock has been duly designated for listing on
the American Stock Exchange beginning no later than the time Firm Shares are
first offered to the public; and
(iv) (A) they have carefully examined the Registration Statement
in the form in which it originally became effective and the Prospectus and any
supplements or amendments thereto, and that, as of the Effective Date, the
statements made in the Registration Statement and the Prospectus were true and
correct in all material respects, and the Registration Statement did not omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein not misleading, and the Prospectus did not omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstance under which they were
made, not misleading, (B) since the Effective Date, no event has occurred that
should have been set forth in a supplement or amendment to the Prospectus that
has not been set forth in such a supplement or amendment, (C) since the
respective dates as of which information is given in the Registration Statement
in the form in which it originally became effective and the Prospectus contained
therein, there has not been any material adverse change or any development
involving a prospective material adverse change in or affecting the business,
properties, condition (financial or otherwise), capitalization, prospects or
results of operations of the Company and its subsidiaries, taken as a whole,
whether or not arising from transactions in the ordinary course of business,
and, since such dates, except in the ordinary course of business, neither the
Company nor any of its subsidiaries has entered into any material transaction
not referred to in the Registration Statement
18
in the form in which it originally became effective and the Prospectus contained
therein, (D) there are not any pending or known threatened legal proceedings to
which the Company or any of its subsidiaries is a party or of which property of
the Company or any of its subsidiaries is the subject which are material and
which are not disclosed in the Registration Statement and the Prospectus, and
(E) there are not any license agreements, contracts, leases or other documents
that are required to be filed as exhibits to the Registration Statement that
have not been filed as required.
(g) You shall have received on the Closing Date and on any Option
Closing Date later date on which Option Shares are to be purchased, as the case
may be, a letter from BDO International, addressed to the Company and the
Underwriters, dated the Closing Date or such later date on which Option Shares
are to be purchased, as the case may be, confirming that they are independent
certified public accountants with respect to the Company within the meaning of
the Securities Act and the applicable published Rules and Regulations and based
upon the procedures described in such letter delivered to you concurrently with
the execution of this Agreement (herein called the "Original Letter"), but
carried out to a date not more than five (5) business days prior to the Closing
Date or such later date on which Option Shares are to be purchased, as the case
may be, (i) confirming, to the extent true, that the statements and conclusions
set forth in the Original Letter are accurate as of the Closing Date or such
later date on which Option Shares are to be purchased, as the case may be, and
(ii) setting forth any revisions and additions to the statements and conclusions
set forth in the Original Letter which are necessary to reflect any changes in
the facts described in the Original Letter since the date of such letter, or to
reflect the availability of more recent financial statements, data or
information. The letter shall not disclose any change in the condition
(financial or otherwise), earnings, operations, business or business prospects
of the Company from that set forth in the Registration Statement or Prospectus,
which, in your sole judgment, is material and adverse and that makes it, in your
sole judgment, impracticable or inadvisable to proceed with the public offering
of the Shares as contemplated by the Prospectus. The Original Letter from BDO
International shall be addressed to or for the use of the Underwriters and the
Company in form and substance satisfactory to the Underwriters and shall (i)
represent, to the extent true, that they are independent certified public
accountants with respect to the Company within the meaning of the Act and the
applicable published Rules and Regulations, (ii) set forth its opinion with
respect to its examination of the consolidated balance sheet of the Company as
of December 31, 2000 and 2001 and related consolidated statements of income and
comprehensive income, stockholders' equity and cash flows for the years ended
December 31, 1999, 2000 and 2001, (iii) and address other matters agreed upon by
BDO International and you.
(h) The Common Stock has been duly designated for listing on the
American Stock Exchange effective no later than the time Firm Shares were first
offered to the public.
(i) On or prior to the Closing Date, you shall have received from the
Company's officers and directors and substantially all Material Holders executed
lock-up agreements covering the matters described in Section (1)(xvi) of this
Agreement.
(j) On the Closing Date, the Company shall have executed the
Representatives' Warrants, substantially in the form filed as Exhibit 10.5 to
the Registration Statement; and on the Closing Date, concurrently with the
purchase and sale of the Shares, the Company shall have issued, sold and
delivered the Representatives' Warrants to the Representatives.
19
(k) On or prior to the Closing Date, the Company shall have entered into
a Financial Consulting Agreement with Westpark Capital, Inc. in the form of
Annex D whereby for a period of twenty-four (24) months and for a fee of
$30,000, payable in advance at the Closing, the Company shall retain the
Westpark Capital, Inc. to continue the development of interest and sponsorship
in the Common Shares of the Company.
(l) The Company shall have furnished to you such further certificates
and documents as you shall reasonably request (including certificates of
officers of the Company), as to the accuracy of the representations and
warranties of the Company set forth in this Agreement, as to the performance by
the Company of its obligations under this Agreement and as to the other
conditions concurrent and precedent to the obligations of the Underwriters under
this Agreement.
(m) You shall have received from counsel to Jimswood Investment and
Development Corporation ("Jimswood"), an opinion dated the Closing Date to the
effect set forth in Annex C to this Agreement and reasonably satisfactory to the
Underwriters, with respect to (1) Jimswood's compliance with securities laws in
relation with Jimswood's dissolution (the "Dissolution"), (2) the distribution
of the shares of the Company owned by Jimswood to the shareholders of Jimswood,
(3) the number of shares of the Company owned by existing shareholders after the
Dissolution and (4) such matters related to the Dissolution as the Underwriters
may reasonably require.
All the agreements, opinions, certificates and letters mentioned above
or elsewhere in this Agreement will be in compliance with the provisions of this
Agreement only if they are reasonably satisfactory to ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇,
LLP, counsel for the Underwriters. The Company will furnish you with such number
of conformed copies of such opinions, certificates, letters and documents as you
shall reasonably request.
If any of the conditions specified in this Section 5 shall not have been
fulfilled in all material respects when and as provided in this Agreement, or if
any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Underwriters and its counsel, this Agreement and all
obligations of the Underwriters hereunder may be canceled by the Underwriters
at, or at any time prior to, the Closing Date or (with respect to the Option
Shares) prior to the Option Closing Date upon which the Option Shares are to be
purchased, as the case may be. Notice of such cancellation shall be given to the
Company in writing or by telephone, telecopy or telegraph confirmed in writing.
Any such termination shall be without liability of the Company to the
Underwriters (except as provided in Section 4 or Section 7 of this Agreement)
and without liability of the Underwriters to the Company (except to the extent
provided in Section 7 of this Agreement).
6. Conditions of the Obligation of the Company. The obligations of the Company
to sell and deliver the Shares required to be delivered as and when specified in
this Agreement shall be subject to the condition that at the Closing Date or
(with respect to the Option Shares) the date upon which the Option Shares are to
be purchased, no stop order suspending the effectiveness thereof shall be in
effect and no proceedings therefor shall be pending or threatened by the
Commission, and shall be subject to the accuracy, in all material respects, as
of the Closing Date and the date on which the Option Shares are to be purchased,
as the case may be, of the representations and warranties of the
20
Underwriters set forth in this Agreement and to the performance by the
Underwriters of all of their obligations to be performed under this Agreement at
or prior to the Closing Date or any later date on which Option Shares are to be
purchased, as the case may be.
7. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless the Underwriters
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriters may become subject under the Securities Act, the Exchange Act
or otherwise insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon (i) any breach of any
representation, warranty, agreement or covenant of the Company herein contained,
(ii) any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement or any amendment or supplement thereto,
or the omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
(iii) any untrue statement or alleged untrue statement of any material fact
contained in any Preliminary Prospectus or the Prospectus or any amendment or
supplement thereto, or the omission or alleged omission to state therein 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, and, subject to Section 7(c) hereof, agrees to reimburse each
Underwriter for any legal or other expenses reasonably incurred by it in
connection with investigating or defending any such loss, claim, damage,
liability or action, or (iv) any untrue statement or alleged untrue statement of
a material fact contained in any application or other document, or any amendment
or supplement thereto, executed by the Company or based upon written information
furnished by or on behalf of the Company filed in any jurisdiction in order to
qualify the Shares under the securities or Blue Sky laws thereof or filed with
the Commission or any securities association or securities exchange, or the
omission or alleged omission to state therein a 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; provided, however,
that the Company shall not be liable in any such case to the extent that any
such loss, claim, damage, liability or action arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in the Registration Statement, such Preliminary Prospectus or the
Prospectus, or any such amendment or supplement thereto, in reliance upon, and
in conformity with, written information relating to any Underwriter furnished to
the Company by such Underwriter, directly or through you, specifically for use
in the preparation thereof and, provided further, that the indemnity agreement
provided in this Section 7(a) with respect to any Preliminary Prospectus shall
not inure to the benefit of any Underwriter from whom the person asserting any
losses, claims, damages, liabilities or actions based upon any untrue statement
or alleged untrue statement of material fact or omission or alleged omission to
state therein a material fact purchased Shares, if a copy of the Prospectus in
which such untrue statement or alleged untrue statement or omission or alleged
omission was corrected had not been sent or given to such person within the time
required by the Securities Act and the Rules and Regulations, unless such
failure is the result of noncompliance by the Company with Section 3(d) hereof.
The indemnity agreements of the Company contained in this Section 7(a) and the
representations and warranties of the Company contained in Section 1 of this
Agreement shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any indemnified party and shall survive
the delivery of and payment for the Shares.
21
The indemnity agreement in this Section 7(a) shall extend upon the same
terms and conditions to, and shall inure to the benefit of, each person, if any,
who controls any of the Underwriters within the meaning of the Securities Act or
the Exchange Act. This indemnity agreement shall be in addition to any
liabilities which the Company may otherwise have.
(b) The Underwriters severally agree, each in proportion to the number
of Firm Shares to be purchased by such Underwriter bears to the total number of
Firm Shares to be purchased pursuant to Section 2(a) hereof, to indemnify and
hold harmless the Company against any losses, claims, damages or liabilities,
joint or several, to which the Company may become subject under the Securities
Act or otherwise, specifically including, but not limited to, losses, claims,
damages or liabilities, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon (i) any breach of
any representation, warranty, agreement or covenant of such Underwriter herein
contained, (ii) any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement or any amendment or supplement
thereto, or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or (iii) any untrue statement or alleged untrue statement of any
material fact contained in any Preliminary Prospectus or the Prospectus or any
amendment or supplement thereto, or the omission or alleged omission to state
therein a material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, in the case of
subparagraphs (ii) and (iii) of this Section 7(b) to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to the Company by such Underwriter, directly or through
you, specifically for use in the preparation thereof, and agrees to reimburse
the Company for any legal or other expenses reasonably incurred by the Company
in connection with investigating or defending any such loss, claim, damage,
liability or action.
The indemnity agreement in this Section 7(b) shall extend upon the same
terms and conditions to, and shall inure to the benefit of, each officer of the
Company who signed the Registration Statement and each director of the Company
and each person, if any, who controls the Company within the meaning of the Act
or the Exchange Act. This indemnity agreement shall be in addition to any
liabilities which the Underwriters may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section 7
of notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against any indemnifying party under this
Section 7, notify the indemnifying party in writing of the commencement thereof.
The omission so to notify the indemnifying party within ten days after the
indemnified party's receipt of such notice will relieve the indemnifying party
of liability under this Section 7 but will not relieve the indemnifying party
from any liability which it may have to any indemnified party otherwise than
under this Section 7. In case any such action is brought against any indemnified
party, and it notified the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the extent
that it shall elect by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such indemnified party, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party; provided, however, that if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably
22
concluded upon written advice of counsel a copy of which shall be delivered to
the indemnifying party, that there may be legal defenses available to it and/or
other indemnified parties which are different from or additional to those
available to the indemnifying party, the indemnified party or parties shall have
the right to select separate counsel to assume such legal defenses and to
otherwise participate in the defense of such action on behalf of such
indemnified party or parties. Upon receipt of notice from the indemnifying party
to such indemnified party of the indemnifying party's election so to assume the
defense of such action and approval by the indemnified party of counsel, the
indemnifying party will not be liable to such indemnified party under this
Section 7 or under Section 4(d) or 4(e) hereof for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the next preceding sentence (it being understood,
however, that the indemnifying party shall not be liable for the expenses of
more than one separate counsel (together with appropriate local counsel)
approved by the indemnifying party representing all the indemnified parties
under Section 7(a) or 7(b) hereof who are parties to such action), (ii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after notice of commencement of the action or (iii) the indemnifying party
has authorized the employment of counsel for the indemnified party at the
expense of the indemnifying party. In no event shall any indemnifying party be
liable in respect of any amounts paid in settlement of any action unless the
indemnifying party shall have approved the terms of such settlement; provided
that such consent shall not be unreasonably withheld. No indemnifying party
shall, without the prior written consent of the indemnified party (which consent
shall not be unreasonably withheld), effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party is or could have
been a party and indemnification could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
(d) In order to provide for just and equitable contribution in any
action in which a claim for indemnification is made pursuant to this Section 7
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 7 provides for
indemnification in such case, all the parties hereto shall contribute to the
aggregate losses, claims, damages or liabilities to which they may be subject
(after contribution from others) in such proportion so that the Underwriters are
responsible for the portion represented by the percentage that the underwriting
discount bears to the initial public offering price, and the Company is
responsible for the remaining portion, provided, however, that (i) no
Underwriter shall be required to contribute any amount in excess of the
underwriting discount applicable to the Shares purchased by such Underwriter in
excess of the amount of damages which such Underwriter has otherwise been
required to pay and (ii) no person guilty of a fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who is not guilty of such fraudulent
misrepresentation. The contribution agreement in this Section 7(d) shall extend
upon the same terms and conditions to, and shall inure to the benefit of, each
person, if any, who controls any of the Underwriters or the Company within the
meaning of the Act or the Exchange Act and each officer of the Company who
signed the Registration Statement and each director of the Company.
23
(e) The parties to this Agreement hereby acknowledge that they are
sophisticated business persons who were represented by counsel during the
negotiations regarding the provisions hereof including, without limitation, the
provisions of this Section 7, and are fully informed regarding said provisions.
They further acknowledge that the provisions of this Section 7 fairly allocate
the risks in light of the ability of the parties to investigate the Company and
its business in order to assure that adequate disclosure is made in the
Registration Statement and Prospectus as required by the Securities Act and the
Exchange Act. The parties are advised that federal or state public policy, as
interpreted by the courts in certain jurisdictions, may be contrary to certain
of the provisions of this Section 7 and to the extent permitted by applicable
law, and the parties hereto hereby expressly waive and relinquish any right or
ability to assert such public policy as a defense to a claim under this Section
7 and further agree not to attempt to assert any such defense.
8. Effective Date of Agreement and Termination.
(a) If the Registration Statement has not been declared effective prior
to the date of this Agreement, this Agreement shall become effective at such
time, after notification of the effectiveness of the Registration Statement has
been released by the Commission, as you shall release the Shares to the public.
If you shall not have released the Shares prior to 5:00 p.m., New York time, on
the fifth full business day after the Registration Statement shall have become
effective, this Agreement shall thereupon terminate without liability on the
part of the Underwriters to the Company or the Company to the Underwriters,
except as set forth in Section 7 of this Agreement. By giving notice as set
forth in Section 9 of this Agreement before the time this Agreement becomes
effective, you, as Representatives, may prevent this Agreement from becoming
effective without liability of any party to the other party, except as set forth
in Section 7 of this Agreement and that the Company shall remain obligated to
pay costs and expenses to the extent provided in Section 4 of this Agreement. If
the Registration Statement has been declared effective prior to the date of this
Agreement, this Agreement shall become effective upon execution and delivery by
you and the Company.
(b) This Agreement may be terminated by you in your absolute discretion
by giving written notice to the Company at any time on or prior to the Closing
Date or, with respect to the purchase of the Option Shares, on or prior to any
later date on which the Option Shares are to be purchased, as the case may be,
if prior to such time any of the following has occurred or, in your opinion, is
likely to occur: (i) after the respective dates as of which information is given
in the Registration Statement and the Prospectus, any material adverse change or
development involving a prospective adverse change in or affecting particularly
the condition (financial or otherwise) of the Company and its subsidiaries
considered as a whole or the earnings, prospects or business affairs of the
Company and its subsidiaries considered as a whole, whether or not arising in
the ordinary course of business, which would materially impair the investment
quality of the offered securities; or (ii) if there shall have been the
engagement in major hostilities or an escalation of major hostilities by the
United States or the declaration of war or a national emergency by the United
States on or after the date hereof, or any outbreak of major hostilities or
other national or international calamity or crisis or material adverse change in
economic or political conditions, if the effect of such outbreak, calamity,
crisis or material adverse change in economic or political conditions on the
financial markets of the United States would, in your sole judgment, make the
offering or delivery of the Shares impracticable, or (iii) if there shall have
been suspension of trading in securities generally or a material adverse decline
in value of securities generally on the New York Stock Exchange, the
24
American Stock Exchange, or The Nasdaq Stock Market, or limitations on prices
(other than limitations on hours or numbers of days of trading) for securities
on either such exchange or system, or (iv) if there shall have been the
enactment, publication, decree or other promulgation of any federal or state
statute, regulation, rule or order of, or commencement of any proceeding or
investigation by, or change in material substantive policy by, any court,
legislative body, agency or other foreign or domestic governmental authority
which in your sole judgment materially and adversely affects or will materially
adversely affect the business, operations or prospects of the Company and its
subsidiaries considered as a whole, or (v) if there shall have been the
declaration of a banking moratorium by United States, New York or California
state authorities, or (vi) if there shall have been the taking of any action by
any United States, state or local government or agency in respect of its
monetary or fiscal affairs which in your reasonable judgment has a material
adverse effect on the securities markets in the United States or (vii) existing
international monetary conditions shall have undergone a material change which,
in your sole judgment, makes the offering or delivery of the Shares
impracticable. If this Agreement shall be terminated pursuant to this Section 8,
there shall be no liability of the Company to the Underwriters and no liability
of the Underwriters to the Company (except to the extent provided in Section 4
or Section 7 of this Agreement); provided, however, that in the event of any
such termination the Company agrees to indemnify and hold harmless the
Underwriters from all costs or expenses of the Company incident to the
performance of the obligations of the Company under this Agreement, including
all costs, expenses and advances referred to in Section 4 of this Agreement.
9. Notices. Except as otherwise provided herein, all communications hereunder
shall be in writing or by telecopier and, if to the Underwriters, shall be
mailed, telecopied or personally delivered to Westpark Capital, Inc., ▇▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (telecopier: (310)
843-9304), Attention: Managing Director Corporate Finance; and if to the
Company, shall be mailed, telecopied, or personally delivered to Intra-Asia
Entertainment Corporation, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (telecopier: (▇▇▇) ▇▇▇-▇▇▇▇), Attention: Chief Executive
Officer. All notices given by telecopy or telegraph shall be promptly confirmed
by letter.
10. Persons Entitled to Benefit of Agreement. This Agreement shall inure to the
benefit of the Company and the Underwriters and, with respect to the provisions
of Section 4 and Section 7 of this Agreement, the several parties (in addition
to the Company and the Underwriters) indemnified under the provisions of said
Section 4 and Section 7, and their respective personal representatives,
successors and assigns. Nothing in this Agreement is intended or shall be
construed to give to any other person, firm or corporation any legal or
equitable remedy or claim under or in respect of this Agreement or any provision
herein contained. The term "successors and assigns" as herein used shall not
include any purchaser, as such purchaser, of any of the Shares from the
Underwriters.
11. Miscellaneous. Notwithstanding any provision of this Agreement to the
contrary, the reimbursement, indemnification and contribution agreements
contained in this Agreement and the representations, warranties and covenants in
this Agreement shall remain in full force and effect regardless of (a) any
termination of this Agreement, (b) any investigation made by or on behalf of any
Underwriter or controlling person thereof, or by or on behalf of the Company or
their respective directors or officers, and (c) delivery and payment for the
Shares under this Agreement.
25
This Agreement may be executed in two or more counterparts, each of
which shall constitute an original, but all of which together shall constitute
one and the same instrument.
12. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA APPLICABLE TO
CONTRACTS MADE, AND TO BE PERFORMED, SOLELY WITHIN THAT STATE.
13. Submission to Jurisdiction and Waiver of Immunity and Inconvenient Forum.
Subject to the arbitration provisions of Section 4(f), the Company and
Underwriters agree that any and all disputes arising in connection with this
Underwriting Agreement and the transactions contemplated by this Underwriting
Agreement, including the offer and sale of the Firm Shares and the Option
Shares, may be brought in any state or federal court of record located in the
County of Los Angeles, State of California. By their signatures to this
Agreement, the Company and the Underwriters irrevocably submit to the
jurisdiction of the state and federal courts located in the County of Los
Angeles, State of California, in any legal action or proceeding relating to this
Underwriting Agreement and the transactions contemplated by this Underwriting
Agreement, including the offer and sale of the Firm Shares and the Option
Shares.
The Company and the Underwriters irrevocably waive all immunity from
jurisdiction, attachment and execution, whether on the basis of sovereignty or
otherwise, to which each of them respectively might otherwise be entitled in any
legal action or proceeding in any state or federal court located in the County
of Los Angeles, State of California. The Company and the Underwriters
irrevocably waive, to the fullest extent permitted by law, any objection which
they may now or hereafter have to any suit, action or proceeding relating to
this Underwriting Agreement and the transactions contemplated by this
Underwriting Agreement, including the offer and the sale of the Firm Shares and
the Option Shares, being brought in the federal or state courts located in the
County of Los Angeles, State of California, and hereby further irrevocably waive
any claim that any such suit, action or proceeding brought in any such court has
been brought in an inconvenient forum.
If the foregoing correctly sets forth the understanding between the
Company and the Underwriters, please so indicate in the space provided below for
that purpose, whereupon this letter shall constitute a binding agreement among
the Company and the Underwriters.
Very truly yours,
INTRA-ASIA ENTERTAINMENT CORPORATION
By:
---------------------------------
Name:
Title:
26
The foregoing Agreement is hereby confirmed and accepted as of the date
first above written.
WESTPARK CAPITAL, INC. I-BANKERS SECURITIES, INC.
By: By:
-------------------------------- ---------------------------------
Name: Name:
Title: Title:
27
ANNEX A
Matters to be Covered in the Opinion of
▇▇▇▇ & ▇▇▇▇▇ Professional Corporation
United States Counsel for the Company
(1) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware. The
Company is duly qualified to do business as a foreign corporation and is in good
standing in the State of California.
(2) The Company has the corporate power to own, lease and operate its
properties and to conduct its business as described in the Prospectus.
(3) The authorized, issued and outstanding capital stock of the Company
as of the Closing Date is as set forth in the Prospectus under the caption
"Capitalization." The issued and outstanding shares of capital stock of the
Company have been duly authorized by all necessary corporate action on the part
of the Company and are validly issued, fully paid and nonassessable and, to the
knowledge of such counsel, were not issued in violation of any preemptive right,
co-sale right, right of first refusal or other similar right.
(4) To the knowledge of such counsel, except as set forth in the
Registration Statement and the Prospectus, no holders of Common Stock or other
securities of the Company have registration rights with respect to securities of
the Company.
(5) The Shares to be issued and sold by the Company have been duly
authorized by all necessary corporate action on the part of the Company and,
upon issuance and delivery against payment therefor in accordance with the terms
of the Agreement, will be validly issued, fully paid and nonassessable and will
not have been issued in violation of any preemptive right, registration right,
co-sale right, right of first refusal or other similar right set forth in the
Certificate of Incorporation or Bylaws of the Company or, to the knowledge of
such counsel, in any other agreement or document.
(6) The Company has corporate power and corporate authority to enter
into the Agreement and the Representatives' Warrants and to issue, sell and
deliver the Shares to the Underwriters.
(7) The Agreement and the Representatives' Warrants have each been duly
authorized by all necessary corporate action on the part of the Company and each
has been duly executed and delivered by the Company.
(8) The performance of the Agreement and the Representatives' Warrants
and the consummation of the transactions contemplated thereby will not result in
the breach or violation of any of the terms or provisions of the Company's
Certificate of Incorporation or Bylaws, or, to the knowledge of such counsel,
result in the breach or violation of any of the terms and provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement, bond, debenture, note agreement, other evidence of indebtedness,
lease, license, contract or other agreement or instrument that provides that it
is governed by the laws of the United States of America or the State of
California or Delaware and that is known to such counsel and to which the
Company is a party or by which any of its properties are bound or, to the
knowledge of such counsel, any applicable United
▇-▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ or Delaware statute, rule or regulation or any order, writ or
decree of any United States, California or Delaware court or governmental agency
or body having jurisdiction over the Company or over any of its properties or
operations; provided, however, that no opinion need be rendered concerning
California or Delaware securities laws or concerning performance of the
Company's indemnification and contribution obligations under such agreements,
and provided further, that no opinion need be rendered concerning compliance
with statutes, rules, regulations, orders, writs or decrees that apply to
misstatements or omissions made in connection with the offer and sale of
securities.
(9) No authorization, approval or consent of any governmental authority
or agency of the United States of America or the State of California or Delaware
is necessary in connection with the consummation of the transactions
contemplated by the Agreement and the Representatives' Warrants, except such as
have been obtained under the Securities Act or such as may be required under the
rules and regulations of the National Association of Securities Dealers, Inc.,
or under California or Delaware securities laws in connection with the purchase
and the distribution of the Shares by the Underwriters or the purchase of the
Representatives' Warrant Stock; provided, however, that such opinion may be
limited to such authorizations, approvals and consents which, in such counsel's
experience, typically are applicable to public offerings of securities, and
provided further that no opinion need be rendered regarding the transfer of the
Representatives' Warrants or the resale or other transfer of the
Representatives' Warrant Stock.
(10) The Representatives' Warrant Stock has been duly authorized for
issuance upon exercise of the Representatives' Warrants by all necessary
corporate action on the part of the Company and, upon issuance and delivery
against payment therefor in accordance with the terms of the Representatives'
Warrants, will be validly issued, fully paid and nonassessable. To the knowledge
of such counsel, no stockholder of the Company has any preemptive rights with
respect to the Representative's Warrant Stock.
(11) The form of certificates evidencing the Common Stock complies with
the requirements of the Delaware General Corporation Law.
(12) The Registration Statement has become effective under the
Securities Act, and to the knowledge of such counsel, (i) no stop order
suspending the effectiveness of the Registration Statement has been issued, and
(ii) no proceedings for that purpose have been instituted or are pending or
threatened under the Securities Act.
(13) To the knowledge of such counsel, there are no agreements,
contracts, licenses, leases or documents of a character required to be described
or referred to in the Registration Statement or Prospectus or to be filed as an
exhibit to the Registration Statement that are not described or referred to
therein and filed as required.
(14) The Registration Statement, when it became effective, any
post-effective amendment to the Registration Statement, when such amendment
became effective, and the Prospectus and any amendment or supplement thereto, on
the date of filing thereof with the Commission (except for the financial
statements and the notes thereto, financial schedules and other financial and
statistical data and information included in the foregoing documents, as to
which such counsel need express no
A-2
opinion), complied as to form in all material respects with the requirements of
the Securities Act and the applicable Rules and Regulations.
(15) The description in the Registration Statement and the Prospectus of
the Certificate of Incorporation and Bylaws of the Company and, to the knowledge
of such counsel, of United States, California and Delaware statutes is accurate
in all material respects and fairly presents in all material respects the
information required to be presented by the Securities Act and the Rules and
Regulations.
(16) To the knowledge of such counsel, there are no legal or
governmental proceedings pending or threatened against the Company or any of its
subsidiaries of a character which are required to be disclosed in the
Registration Statement or the Prospectus by the Securities Act or the applicable
Rules and Regulations, other than those described therein.
(17) The statements in the Prospectus under the caption "Description of
Capital Stock," insofar as they describe the terms of the Common Stock, are a
fair summary of the material terms of the Common Stock.
In addition, such counsel shall state that they have participated in
conferences with officers and other representatives of the Company, the
Underwriters, Underwriters' counsel and the independent public accountants of
the Company, at which conferences the contents of the Registration Statement and
the Prospectus and related matters were discussed, and although they have not
(with the exception of the matters covered in paragraph (17) of their opinion)
independently checked or verified the accuracy, completeness or fairness of the
statements contained in the Registration Statement or the Prospectus and are not
passing upon or assuming any responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement or the
Prospectus, on the basis of the foregoing, no facts have come to the attention
of such counsel that caused them to believe that, at the time the Registration
Statement became effective, the Registration Statement contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading or, at
the Closing Date or any later date on which the Option Shares are to be
purchased, as the case may be, the Prospectus contained an untrue statement of a
material fact or omitted to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading (except that such counsel need not express any view as to
financial statements and notes thereto, financial schedules and other financial
and statistical data and information included in the Registration Statement or
the Prospectus).
The laws covered by the foregoing opinion will be limited to the federal
laws of the United States, the laws of the State of California and the General
Corporation Law of the State of Delaware. Counsel rendering the foregoing
opinion may state that, as to questions of fact relevant to their opinion, they
are relying (without conducting any independent investigation or inquiry
regarding such questions of fact) upon certificates, representations and
statements of the Company, officers of the Company and public officials,
provided that their opinion is to state that (without conducting any independent
investigation or inquiry regarding such questions of fact) they have no
knowledge of any material misstatement or inaccuracy in such certificates,
representations or statements. Copies of any
A-3
such certificate, representation or statement so relied upon will be delivered
to you, as Representatives of the Underwriters, and to Underwriters' counsel
upon your written request.
A-4
ANNEX B
Matters to be Covered in the Opinion of
King & Wood PRC Lawyers
China Counsel for the Company
(1) Weifang Fuhua Amusement Park Co., Ltd., has been duly organized and
is validly existing as a sino-foreign joint venture in good standing under the
laws of China. The sole joint venture partners of Weifang Fuhua Amusement Park
Co., Ltd. are the Company and Weifang Neo-Luck (Group) Corporation.
(2) Weifang Neo-Luck (Group) Corporation has the legal capacity,
necessary power and authority to execute and perform its obligations under the
Joint Venture Agreement, dated August 17, 1996, Amendment to Joint Venture
Agreement dated October 18, 1997 and the Amendment to Joint Venture Agreement
dated April 4, 2002 (the "Joint Venture Agreements").
(3) The Joint Venture Agreements have been validly executed by the
parties to such agreements and are duly approved by the Chinese government and
constitute valid and binding obligations of each of Weifang Neo-Luck (Group)
Corporation and the Company, enforceable in accordance with their terms and
conditions under the law of China.
(4) Weifang Fuhua Amusement Park Co. Ltd. has the right and power to
own, lease and operate its properties and to conduct its business as described
in the Prospectus.
(5) All authorizations, approvals or consents of any governmental
authority or agency of China which are necessary in connection with the
consummation of the transactions contemplated by the Underwriting Agreement have
been received.
(6) The Company, Weifang Fuhua Amusement Park Co., Ltd. and Weifang
Fuhua Amusement Park are in possession of, and operating in China in compliance
with such authorizations, licenses, certificates, orders and permits as may be
required from applicable regulatory authorities in China which are material to
the conduct of their business as described in the Prospectus, all of which are
valid and in full force and effect; neither the Company nor Weifang Fuhua
Amusement Park Co., Ltd. or Weifang Fuhua Amusement Park are in default in the
performance or observance of any material obligation, agreement, covenant or
condition contained in any bond, debenture, note or other evidence of
indebtedness, or in any material lease, contract, indenture, mortgage, deed of
trust, loan agreement, joint venture or other agreement or instrument known to
us to which the Company, Weifang Fuhua Amusement Park Co., Ltd. or Weifang Fuhua
Amusement Park is a party or by which any of them or their properties may be
bound; and neither the Company nor Weifang Fuhua Amusement Park Co., Ltd. nor
Weifang Fuhua Amusement Park is in material violation of, or liable under, any
law, order, rule, regulation, writ, injunction, judgment or decree of any court,
government or governmental agency or body of China having jurisdiction over the
Company or Weifang Fuhua Amusement Park Co., Ltd. or Weifang Fuhua Amusement
Park or over any of their properties.
B-1
(7) All of the information in the Prospectus, to the extent describing
matters in the People's Republic of China has been reviewed by such counsel and
is a fair summary of such matters.
(8) There are no legal or governmental proceedings pending or, to such
counsel's knowledge, threatened against the Company, Weifang Fuhua Amusement
Park Co., Ltd. or Weifang Fuhua Amusement Park.
(9) Weifang Neo-Luck (Group) Corporation has been duly organized and is
validly existing in good standing under the laws of China.
(10) Weifang Neo-Luck (Group) Corporation, through its ownership of
Weicheng International,Inc., will beneficially own 52.0% of the Company's
outstanding common stock or 50.0% of the Company's common stock if the
underwriter's over-allotment option is exercised in full.
(11) The repayment of the principal and interest on Weifang Fuhua
Amusement Park Co., Ltd.'s loans from the Agricultural Bank of China and the
Communication Bank of China has been irrevocably and unconditionally guaranteed
by Weifang Neo-Luck (Group) Corporation or one of its subsidiaries or other
affiliates.
(12) The performance of the Underwriting Agreement and the
Representatives' Warrants and the consummation of the transactions contemplated
thereby will not result in the breach or violation of any of the terms and
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement, bond, debenture, note agreement or other evidence of
indebtedness, or any lease, license, contract or other agreement or instrument
known to such counsel to which the Company or Weifang Fuhua Amusement Park Co.,
Ltd. is a party or by which any of its properties are bound or any applicable
statute, rule or regulation or any order, writ or decree of any court or
governmental agency or body having jurisdiction over the Company or Weifang
Fuhua Amusement Park Co., Ltd. or over any of its properties or operations.
(13) Weifang Fuhua Amusement Park Co., Ltd. is not a party or subject to
any material agreements, contracts, licenses, leases or documents that are not
described in the Prospectus and filed as exhibits to the Registration Statement.
(14) Counsel shall state that although they have not (with the exception
of the matters covered in their opinion) independently checked or verified the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus relating to the Company, Weifang Fuhua
Amusement Park Co., Ltd. and their operations in China, nothing has come to the
attention of such counsel that caused them to believe that, at the time the
Registration Statement became effective, the Registration Statement (except as
to financial statements, financial data and supporting schedules contained
therein, as to which counsel need not express any view) contained any untrue
statement of a material fact, or omitted to sate a material fact required to be
stated therein or necessary to make such statements not misleading, or at the
Closing Date or any later date on which the Option Shares are to be purchased,
as the case may be, the Prospectus (except as aforesaid) contained any untrue
statement of a material fact or omitted to state a material fact to be stated
B-2
therein or necessary to make such statements, in light of the circumstances
under which they were made, not misleading.
In addition to the Underwriters and the Company, ▇▇▇▇▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇▇, LLP, counsel for the Underwriters, and ▇▇▇▇ and ▇▇▇▇▇ Professional
Corporation, counsel to the Company, shall be entitled to rely on such opinion
and the opinions expressed therein in connection with the Company's initial
public offering and in connection with any opinions that they deliver on behalf
of the Underwriters or the Company, respectively.
B-3
ANNEX C
Matters to be Covered in the Opinion of
▇▇▇▇ ▇. ▇▇▇▇, Esq.
Counsel for Jimswood Investment and Development Corporation
(1) Jimswood's shareholders duly elected to wind up and dissolve
Jimswood.
(2) Jimswood has been completely wound up and dissolved in accordance
with applicable law, and Jimswood and its shareholders, directors and officers
have taken all necessary action to wind up and dissolve Jimswood in accordance
with applicable law.
(3) Appendix A to this opinion letter lists all of the record owners of
the capital stock of Jimswood as of the date that the corporation was completely
wound up and dissolved and the percentage of such capital stock owned by each
shareholder. As of such date, (i) Jimswood had only one class of authorized and
outstanding capital stock, which was common stock, and (ii) there were no
outstanding options or other rights that required Jimswood to issue any
additional shares of its capital stock to any person or entity. All of the
outstanding capital stock of Jimswood was duly and validly authorized and issued
and was fully paid and non-assessable.
(4) Prior to its dissolution, Jimswood owned 294.1 shares of the Class A
common stock of Intra-Asia Entertainment Corporation, a Delaware corporation
("Intra-Asia"), and 29.41 shares of the Class B common stock of Intra-Asia (such
294.1 shares and 29.41 shares being referred to herein as the "Intra-Asia
Shares").
(5) In connection with its dissolution and after paying or adequately
providing for its known debts and liabilities, Jimswood duly distributed and
transferred to its shareholders all of the Intra-Asia Shares on a pro rata basis
in accordance with the percentage of the capital stock of Jimswood that was
owned by each of its shareholders. The number of each class of Intra-Asia Shares
that was acquired by each Jimswood shareholder is set forth in Appendix A. No
other person or entity is entitled to be listed as the record owner of any of
the Intra-Asia Shares on the books and records of Intra-Asia.
(6) Jimwood's distribution and transfer of the Intra-Asia Shares to its
shareholders was exempt from registration under the Securities Act of 1933 and
was exempt from qualification under the California Corporate Securities Law of
1968 because the transaction did not involve an "offer" or "sale" of securities.
Alternatively, if the distribution and transfer of the Intra-Asia Shares to
Jimswood's shareholders did involve an offer and sale of securities, (i) the
transaction was exempt from registration under the Securities Act of 1933 by
reason of the exemption provided in Section 4(1) of said act or the so-called
"Section 4(1-1/2) exemption" of said act, and (ii) the transaction was exempt
from qualification under the California Corporate Securities Law of 1968 by
reason of the exemption provided in Section 25104(a) of said law.
The laws covered by the foregoing opinion will be limited to the federal
laws of the United States, the laws of the State of California and the General
Corporation Law of the State of Delaware.
C-1
ANNEX D
FINANCIAL CONSULTING AGREEMENT
This Financial Consulting Agreement (the "Agreement") is made as of
November __, 2002 by and between Intra-Asia Entertainment Corporation, a
Delaware corporation having its business address at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ (hereinafter the "Company") and
Westpark Capital, Inc., having its principal place of business at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (hereinafter the
"Consultant").
WHEREAS, the Company is in the process of becoming a publicly held
corporation with its common stock to be traded on the American Stock Exchange;
and
WHEREAS, the Company believes it is important at this time to keep both
existing shareholders and the general investing public informed of the Company's
current and proposed activities; and
WHEREAS, the Consultant has experience in the area of investor
communications and public relations;
NOW THEREFORE, in consideration of the promises and the mutual covenants
and agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
1. Term of Consultancy. The Company hereby agrees to retain the
Consultant to act in a consultancy capacity to the Company and the Consultant
hereby agrees to provide personal services to the Company, for a period of
twenty-four (24) months, commencing on the date of this Agreement and ending
______________, 2004.
2. Duties of Consultant. The Consultant agrees to provide the following
specified consulting services:
(a) Provide corporate finance assistance including assistance
with raising additional capital if such should become necessary;
(b) Provide financial investor relations for the Company
including disseminating current information about the Company to relevant public
markets;
(c) Provide advice and counsel to the Company regarding its
relations with the investment markets; and
(d) Seek out, identify and introduce strategic partners to
further corporate objectives.
D-1