EXHIBIT 1.01
2,000,000 SHARES
EASYLINK INFORMATION TECHNOLOGY CO., LTD.
(a British Virgin Island corporation)
COMMON STOCK
(No Par Value)
UNDERWRITING AGREEMENT
October , 2001
--
Xxxxxxx Xxxxxxx Investments, Inc.
0000 Xxxxx Xxxxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Ladies and Gentlemen:
Easylink Information Technology Co., Ltd. (the "Company") confirms its
agreement with you as the underwriter ("you" or the "Underwriter") with respect
to the sale by the Company of up to 2,000,000 shares of its Common Stock, no par
value (shares of which class of stock of the Company are hereinafter referred to
as the "Common Stock"), and the employment of the Underwriter as the exclusive
agent for the Company to offer and sell to the public a minimum of 1,000,000
shares on a "all-or-nothing, best efforts" basis, and an additional 1,000,000
shares on a "best efforts" basis. The aforesaid 2,000,000 shares of Common Stock
are collectively hereinafter called the "Shares".
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form F-1 (Registration No. __________)
and a related preliminary prospectus for the registration of the Shares under
the Securities Act of 1933 (the "1933 Act") and has filed such amendments
thereto, if any, and such amended preliminary prospectuses as may have been
required to the date hereof, a copy of each of which heretofore has been
delivered to you. The registration statement, as amended, (including exhibits
previously filed or filed therewith) and the amended prospectus on file with the
Commission at the time the
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registration statement becomes effective are hereinafter called the
"Registration Statement" and the "Prospectus", respectively, except that if the
prospectus filed by the Company pursuant to the Rule 424(b) under the 1933 Act
differs from the prospectus on file at the time the Registration Statement
becomes effective, the term "Prospectus" shall refer to the Rule 424(b)
prospectus from and after the time it is transmitted to the Commission for
filing.
The Company understands that the Underwriter proposes to make a public
offering of the Shares as soon as you deem advisable after the Registration
Statement becomes effective.
SECTION 1
REPRESENTATIONS AND WARRANTIES
(a) The Company represents and warrants to you as follows:
(i) At the time the Registration Statement becomes
effective, the Registration Statement will comply in all
material respects with the requirements of the 1933 Act and
the rules and regulations thereunder (the "1933 Act
Regulations") and will not contain an untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, and at the time the Registration Statement becomes
effective (unless the term "Prospectus" refers to the Rule
424(b) prospectus, in which case at the time it is transmitted
to the Commission for filing), and at the Closing Time
referred to in Section 2 and at the Date of Delivery referred
to in Section 2, the Prospectus will not contain an untrue
statement of a material fact or omit to state a 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 the representations and
warranties in this subsection shall not apply to statements in
or omissions from the Registration Statement or Prospectus
made in reliance upon and in conformity with information
furnished to the Company in writing by you expressly for use
in the Registration Statement or Prospectus.
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(ii) The accountants who certified the financial
statements included in the Registration Statement are
independent public accountants as required by the 1933 Act and
the 1933 Act Regulations.
(iii) The financial statements and supporting
schedules included in the Registration Statement present
fairly the financial position of the Company as at the dates
indicated and the results of its operations for the periods
specified; said financial statements have been prepared in
conformity with generally accepted accounting principles
applied on a consistent basis; and the supporting schedules
included in the Registration Statement present fairly the
information required to be stated therein.
(iv) Since the respective dates as of which
information is given in the Registration Statement, except as
otherwise stated therein, (A) there has been no material
adverse change in the condition, financial or otherwise, of
the Company, or in the earnings, properties, or business of
the Company, whether or not arising in the ordinary course of
business, (B) there have been no material transactions entered
into by the Company other than those in the ordinary course of
business, and (C) there has been no dividend or distribution
of any kind declared, paid, or made by the Company on its
capital stock.
(v) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the British Virgin Islands with corporate power and
authority to own, lease and operate its properties and conduct
its business as described in the Registration Statement; and
the Company is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction
in which it owns or leases substantial properties or in which
the conduct of its business requires such qualification except
for such jurisdictions in which the failure to qualify in the
aggregate would not have a material and adverse effect on the
earnings, properties, or business of the Company.
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(vi) Except as described in the Registration
Statement, the Company does not have any subsidiaries and does
not own any equity investment in any other corporation,
partnership, joint venture, or other entity.
(vii) The authorized, issued, and outstanding capital
stock of the Company is as set forth in the Registration
Statement under "Capitalization"; the shares of issued and
outstanding capital stock set forth thereunder have been duly
authorized and validly issued and are fully paid and
non-assessable; the Shares have been duly authorized for
issuance and sale to members of the public pursuant to this
Agreement and, when issued and delivered by the Company
pursuant to this Agreement against payment of the
consideration set forth in Section 2 hereof, will be validly
issued and fully paid and non- assessable; the Common Stock
and the Preferred Stock conform to all the statements relating
thereto contained in the Registration Statement; and the
issuance of the Shares is not subject to preemptive rights.
(viii) This Agreement has been duly and validly
authorized and has been duly executed and delivered by the
Company and constitutes a valid and binding agreement,
enforceable in accordance with its terms, except as
enforceability of any indemnification provision may be limited
under federal securities laws and except as enforceability of
such agreements may be limited by applicable bankruptcy,
reorganization, insolvency, moratorium, or other laws relating
to or affecting generally the enforcement of the creditor's
rights.
(ix) The Company has good and marketable title to all
properties, licenses, and assets described in the Prospectus
as owned by it, free and clear of all liens, charges,
encumbrances, or restrictions, except such as are described or
referred to in the Prospectus or are not materially
significant or important in relation to the business of the
Company; all of the leases or subleases under which the
Company is the lessor or sublessor of properties or assets or
under which the Company holds properties or assets as lessee
or sublessee as described in the Prospectus are in full force
and effect, and the Company is not in default in any material
respect in
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respect of any of the terms or provisions of any of such
leases or subleases, and to the best of the Company's
knowledge, no claim has been asserted by anyone adverse to the
Company's rights as lessor, sublessor, lessee, or sublessee
under any of the leases or subleases mentioned above or
affecting or questioning the Company's rights to the continued
possession of the leased or subleased premises or assets under
any such lease or sublease.
(x) To the best of the Company's knowledge, no labor
disturbance by the employees of the Company exists or is
imminent which might be expected to materially and adversely
affect the conduct of the business, operations, financial
condition, or income of the Company.
(xi) The Company is not in violation of its charter
documents or by-laws or in default in the performance or
observance of any material obligation, agreement, covenant, or
condition contained in any material bond, debenture, note, or
other evidence of indebtedness or in any contract, indenture,
mortgage, loan agreement, lease, joint venture, or other
agreement or instrument to which the Company is a party or by
which it or any of its properties are bound; and the execution
and delivery of this Agreement and the Warrant Agreement, the
incurrence of the obligations herein and therein set forth and
the consummation of the transactions herein and therein
contemplated will not conflict with, or result in a breach of
any of the terms, conditions, or provisions of, or constitute
a default under, the charter documents or by-laws of the
Company or any material bond, debenture, contract, indenture,
mortgage, loan agreement, lease, joint venture, or other
agreement or instrument to which the Company is a party or by
which it or any of its properties are bound, or result in any
material violation by the Company of any law, administrative
regulation, or court decree.
(xii) Except as set forth in the Registration
Statement, there is no action, suit, or proceeding before or
by any court or governmental agency or body, domestic or
foreign, now pending, or, to the knowledge of the Company,
threatened against or affecting the Company, which might
result in any material and adverse change in
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the condition (financial or otherwise), business or earnings
of the Company.
(xiii) There are no contracts or documents of the
Company which would be required to be filed as exhibits to the
Registration Statement by the 1933 Act or by the 1933 Act
Regulations which have not been previously filed or filed as
exhibits to the Registration Statement; each contract to which
the Company is a party and which has been previously filed or
filed as an exhibit to the Registration Statement is in full
force and effect or has terminated in accordance with its
terms or as set forth in the Registration Statement; and no
party to any such contract has given notice of the
cancellation or breach of, or its intention to cancel or
declare a breach of, any such contract and to the best of the
Company's knowledge no party to any such contract intends to
cancel or declare a breach of any such contract.
(xiv) The Company owns or possesses, or can acquire
on reasonable terms, adequate patent rights or licenses or
other rights to use patent rights, inventions, trademarks,
service marks, proprietary information, and trade names,
government permits and copyrights necessary to conduct the
business now operated by it. The Company has not received any
notice of infringement of or conflict with asserted rights of
others with respect to any patent, patent rights, inventions,
trademarks, service marks, proprietary information, trade
names or copyrights owned by or licensed to the Company, which
singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would materially and adversely
affect the conduct of the business, operations, financial
condition, or income of the Company.
(xv) The Company has not received any notice of
proceedings relating to the revocation or modification of any
franchises which, singly or in the aggregate, if the subject
of any unfavorable decision, ruling or finding, would
materially adversely affect the conduct of the business,
operations, financial condition, or income of the Company.
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(xvi) Except as set forth in the Registration
Statement, the Company maintains property, damage and products
liability insurance, which is in full force and effect, of the
types which the Company believes is in line with insurance
maintained by similar companies and businesses.
(xvii) There are no outstanding claims for services
either in the nature of a finder's fee, brokerage fee, or
otherwise with respect to this financing for which the Company
or the Underwriter may be responsible.
(xiii) The Company has not taken, and will not take,
directly or indirectly, any action designed to constitute or
which has constituted or which might be reasonably expected to
cause or result in the stabilization of the price of the
Common Stock or a violation of Rule 10b-6 under the Securities
Exchange Act of 1934 (the "1934 Act") or in a manipulation of
the price of any security issued by the Company.
(b) Any certificate required to be signed by any officer of
the Company and delivered to you or to your counsel shall be deemed a
representation and warranty by the Company to the Underwriter as to the
matters covered thereby.
SECTION 2
SALE AND DELIVERY OF UNDERWRITERS; CLOSING
On the basis of the representation and warranties herein contained and
subject to the terms and conditions herein set forth, the Company agrees to
employ you as its exclusive agent to sell to the public the first 1,000,000
Shares (the "Initial Shares") on an all-or-nothing, best efforts basis and you
agree to use your bests efforts as exclusive agent for the Company to sell to
the public such Initial Shares on an all or nothing basis.
In addition, on the basis of the representations and warranties herein
contained and subject to the terms and conditions
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herein set forth, the Company agrees to employ you as its exclusive agent to
sell to the public the remaining 1,000,000 Shares (the "Additional Shares"), on
a best efforts basis and you agree to use your best efforts as exclusive agent
for the Company to sell to the public the Additional Shares. The time and date
of delivery of the Additional Shares shall be determined by you ("the Date of
Delivery") but shall not be earlier than the first, nor later than the fifteenth
full business day after the completion of the sale of the Additional Shares, nor
in any event prior to Closing Time as hereinafter defined.
The agency between you and the Company shall continue until all of the
Shares are sold or until 90 days after the effective date of the Registration
Statement, whichever event first occurs. This period may be extended up to an
additional 30 days if mutually agreed upon by you and the Company. Prior to the
termination of the agency, all proceeds received from the sale of the Shares
will be transmitted to an escrow account entitled "Key Bank-Reng Bang Escrow
Account" with Key Bank, Denver, Colorado in accordance with Rule 15c2-4 under
the 1934 Act. If all of the Initial Shares are not sold following 90 days after
the effective date of the Registration Statement (or up to an additional 30 days
if mutually agreed upon in writing by you and the Company), all proceeds
received from the sale of the Initial Shares will be returned to the respective
purchasers in accordance with Rule 10b-9 under the 1934 Act.
The initial public offering price shall be $5.00 per share and you
shall receive a commission of $0.30 for each Share sold, which amount shall be
deducted from the proceeds payable to the Company pursuant to the provisions of
this Section.
Payment of the purchase price for, and delivery of certificates for,
the Initial Shares to be purchased by members of the public (and any Additional
Shares that may have, at the time, been purchased) shall be made at the office
of Xxxxxxx Xxxxxxx Investments, Inc., in Englewood, Colorado, or at such other
place as shall be agreed upon by you and the Company, at 10:00 a.m., on a date
to be designated by you which shall be not later than ten (10) business days
following the date all of the Initial Shares are sold (such time and date of
payment and delivery being herein called "Closing Time") which in no event shall
be later than the Date of Delivery. In addition, in the event that any or all of
the
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Additional Shares are purchased by members of the public, payment of the
purchase price for, and delivery of certificates for, the Additional Shares not
paid for and delivered at Closing Time shall be made at the above-mentioned
office of Xxxxxxx Xxxxxxx Investments, Inc., on the Date of Delivery which shall
be no later than fifteen days following the termination of the agency
established hereunder. Payment shall be made to the Company of an amount equal
to the initial public offering price less the commission payable to you
multiplied by the number of Shares sold on behalf of the Company; provided,
however, that no payment shall be made unless and until all of the Initial
Shares are sold. Payment shall be made to the Company by certified or official
bank check or checks in Denver Clearing House or similar next day funds payable
to the order of the Company, against delivery to you for the respective accounts
of the purchasers of the Shares of certificates for the Shares to be purchased
by them. Certificates for the Initial Shares and the Additional Shares shall be
in such denominations and registered in such names as you may request in writing
at least two business days before Closing Time in the case of the Initial Shares
and at least two days before the Date of Delivery in the case of the Additional
Shares. The certificates for the Initial Shares and the Additional Shares will
be made available for examination and packaging by you not later than 10:00 a.m.
on the last business day prior to Closing Time and the Date of Delivery, as the
case may be, at the offices of Xxxxxxx Xxxxxxx Investments, Inc., in Englewood,
Colorado.
SECTION 3
COVENANTS OF THE COMPANY
The Company covenants with each Underwriter as follows:
(a) The Company will notify you or your counsel immediately,
and confirm the notice in writing, (i) of the effectiveness of the
Registration Statement and any amendment thereto, (ii) of the receipt
of any comments from the Commission, (iii) of any request by the
Commission for any amendment or supplement to the Prospectus or for
additional information, and (iv) of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for that purpose. The
Company will make every reasonable effort to prevent the issuance of
any stop order and, if any stop order is issued, to obtain the lifting
thereof at the earliest possible moment.
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(b) The Company will give you notice of its intention to file
any amendment to the Registration Statement or any amendment or
supplement to the Prospectus (including a prospectus filed pursuant to
Rule 424(b) which differs from the prospectus on file at the time the
Registration Statement becomes effective), and will not file any such
amendment or supplement to which you or your counsel shall reasonably
object.
(c) The Company will deliver to you as many signed copies of
the Registration Statement as originally filed and of each amendment
thereto (including exhibits filed therewith or incorporated by
reference therein) as you may reasonably request.
(d) The Company will furnish to you, from time to time during
the period when the Prospectus is required to be delivered under the
1933 Act, such number of copies of the Prospectus (as amended or
supplemented) as each such Underwriter may reasonably request for the
purposes contemplated by the 1933 Act or the 1933 Act Regulations and
for purposes contemplated by the 1934 Act and the rules and regulations
thereunder.
(e) If any event shall occur as a result of which it is
necessary, in the opinion of your counsel, to amend the Registration
Statement and the Prospectus or to supplement 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, the Company will
forthwith amend the Registration Statement and the Prospectus or
supplement the Prospectus, as the case may be, by preparing and
furnishing to you a reasonable number of copies of an amendment or
amendments of, or a supplement or supplements to the Registration
Statement and the Prospectus (in form and substance satisfactory to
your counsel), so that, as so amended or supplemented, the Registration
Statement and the Prospectus, as the case may be, will not contain an
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances existing at the time the Prospectus is delivered to a
purchaser, not misleading.
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(f) The Company will endeavor, in cooperation with you and
your counsel, to qualify the Shares for offering and sale under the
applicable securities laws of such states and other jurisdictions of
the United States and foreign jurisdictions as you may designate, and
will maintain such qualifications in effect for as long as may be
required for the distribution of the Shares. The Company shall not,
however, be obligated to file any general consent to service of process
or to qualify as a foreign corporation or as a dealer in securities in
any jurisdiction in which it is not so qualified except as may be
required by the laws of the State of New York. The Company will file
such statements and reports as may be required by the laws of each
jurisdiction in which such securities have been qualified as above
provided.
(g) The Company will make generally available to its security
holders as soon as practicable, but not later than 90 days after the
close of the period covered thereby, an earnings statement (in form
complying with the provisions of Section 11(a) of the 1933 Act, which
need not be certified by independent public accountants unless required
by the 1933 Act or the 1933 Act Regulations) covering a twelve-month
period beginning not later than the first day of the Company's fiscal
quarter next following the effective date of the Registration
Statement.
(h) The Company will for a period of five years from the
effective date of the Registration Statement furnish directly to you,
as soon as the same shall be sent to the Company's shareholders, copies
of any annual or interim reports of the Company to its shareholders,
and it will, for the same period, also furnish you with the following:
(i) Concurrently with furnishing to the Company's
shareholders one copy of the annual independent accountants'
report, including therein the accountants' certificate, the
consolidated balance sheet of the Company and its
subsidiaries, if any, and the related consolidated statements
of income, operations, retained earnings, and changes in
financial position;
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(ii) copies of any report, application, or document
which the Company shall file with the Commission, the National
Association of Securities Dealers Automated Quotation System
(NASDAQ), or any securities exchange;
(iii) copies of any press releases disseminated to
the public; and,
(iv) as soon as the same shall be sent to the
shareholders, each communication which shall be sent to the
shareholders as a class.
(i) The Company will apply the net proceeds from the sale of
the Shares sold by it hereunder for the purposes set forth under "Use
of Proceeds" in the Prospectus in substantially the amounts indicated
thereunder.
(j) The Company will comply with the safeguards proposed for
transient investment companies as set forth in Rule 3a-2 of the
Investment Company Act of 1940 for temporary exclusion from its
requirements.
(k) For a period of twenty-four (24) months beginning on the
effective date of the Registration Statement, the Company will not, and
will not permit any of its subsidiaries to, issue any shares of Common
Stock to any person or any warrants, option, or other rights to
purchase or acquire any shares of Common Stock to any officer,
director, or principal shareholder of the Company or any affiliate or
associate thereof except with your prior written consent, such consent
not to be unreasonably withheld.
(l) For a period of thirty (30) days beginning on the
effective date of the Registration Statement, the Company will not hold
any discussion with any member of the news media nor release any
information or other publicity about itself, its properties, or its
management without your prior written consent and prior notification to
your counsel.
(m) The Company will not retain any NASD member within a
period of twelve (12) months after the sale of Shares hereunder, to act
as a finder or consultant for purposes of locating a merger/acquisition
candidate.
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(n) The Company undertakes not to retain any person or entity
to conduct a search, or to assist in the conduct of the Company's
search, for merger/acquisition candidates, without providing you with
thirty days notification and sufficient information to permit you to
respond to the NASD with respect to such retention.
(o) The Company will prepare and file with the Commission a
report on Form SR in accordance with the 1933 Act regulations and will
supply copies of the Form SR, and any amendments or supplements
thereto, to you and your counsel within five days of its filing with
the Commission.
(p) If not accomplished as of the effective date, within 30
days following the Closing Time, the Company will register its equity
securities under Section 12(g) of the 1934 Act, will use its best
efforts to cause the Registration Statement to become effective, and
will supply copies of the Form 8-A, and any amendments or supplements
thereto, to you and your counsel within five days of its filing with
the Commission.
(q) The Company will obtain a CUSIP number for its Common
Stock by the first day for trading of the Shares. The Company will use
its best efforts to have the Shares listed on NASDAQ on the first day
of trading of the Shares with a NASDAQ symbol mutually agreeable to you
and the Company. For as long as the Common Stock is registered under
the 1934 Act, the Company will comply in all material respects with the
1934 Act and the rules and regulations thereunder and will hold an
annual meeting of shareholders for the election of directors within 180
days following the end of the Company's fiscal year.
(r) Within 10 days following the Closing Time, the Company
will apply for listing on Xxxxx'x Over-the-Counter Industrial Manual
and Standard & Poor's Corporation Description Manual.
(s) The Company shall retain a transfer agent satisfactory to
you to transfer the shares of Common Stock.
(t) Within 90 days following the Closing Time, the Company
will at its expense prepare for you and your counsel three bound
volumes of the offering documents.
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SECTION 4
PAYMENT OF EXPENSES
(a) The Company will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
printing and filing of the Registration Statement and the printing of
this Agreement and the Selected Dealers Agreement, (ii)the issuance and
delivery of the Shares including stock transfer taxes, if any, payable
upon sale and transfer of the Shares to the public purchasers thereof,
(iii) the fees and disbursements of the Company's counsel and
accountants, (iv) the expenses in connection with the qualification of
the Shares under all applicable securities laws in accordance with the
provisions of Sections 3(f), including filing fees and the reasonable
fees and disbursements of your counsel in connection therewith and in
connection with the preparation of the Blue Sky Survey, (v)the printing
and delivery to you of copies of the Registration Statement and all
amendments thereto, of the preliminary prospectuses, and any amendments
thereto, and of the Prospectus and any amendments or supplements
thereto, (vi)the printing and delivery to the Underwriter of copies of
the Blue Sky Survey, (vii) the fee of the National Association of
Securities Dealers, Inc., and (viii) the listing fees of NASDAQ.
(b) The Company has previously paid to you a non-refundable
advance payment of $25,000.00. If this Agreement is terminated for any
reason, you shall retain such advance payment.
SECTION 5
CONDITIONS OF UNDERWRITERS' OBLIGATIONS
The obligations of the Underwriter hereunder is subject to the accuracy
of the representations and warranties of the Company of its obligations
hereunder, and to the following further conditions:
(a) The Registration Statement shall have become effective not
later than 5:30 p.m., Washington, D.C. time, on
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the date hereof, or with your consent, at a later time and date not
later, however, than 5:30 p.m., Washington, D.C. time, on the first
business day following the date hereof, or at such later time and date
as may be approved by the Underwriter; and at Closing Time and the Date
of Delivery no stop order suspending the effectiveness of the
Registration Statement shall have been issued under the 1933 Act or
proceedings therefor initiated or threatened by the Commission.
(b) At Closing Time you shall have received the favorable
opinion, dated as of Closing Time, of Xxxx X. Agron, Esq, counsel for
the Company, and such other foreign counsel for the Company as you may
require, in form and substance satisfactory to your counsel, to the
effect that:
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of Delaware.
(ii) The Company has corporate power and authority to
own, lease, and operate its properties and conduct its
business as described in the Registration Statement.
(iii) The Company is duly qualified as a foreign
corporation to transact business and is in good standing in
each jurisdiction in which it owns or leases substantial
properties or in which the conduct of its business requires
such qualification, except for such jurisdictions in which the
failure to qualify in the aggregate would not have a
materially adverse effect on the earnings, business or
properties of the Company.
(iv) The Company does not have any subsidiaries and
does not own any equity investment in any other corporation,
partnership, joint venture, or other entity.
(v) The authorized, issued, and outstanding capital
stock of the Company is as set forth in the Registration
Statement under "Capitalization" and the shares of issued and
outstanding Common and Preferred Stock set forth thereunder
have been duly authorized and validly issued and are fully
paid and non-assessable.
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(vi) The Shares have been duly authorized for
issuance and sale to the Underwriter pursuant to this
Agreement and, when issued and delivered by the Company
pursuant to this Agreement against payment of the
consideration set forth in Section 2 hereof, will be validly
issued and fully paid and nonassessable; and the issuance of
the Shares is not subject to preemptive rights.
(vii) This Agreement has been duly and validly
authorized and has been duly executed and delivered by the
Company and constitutes a valid and binding agreement,
enforceable in accordance with its terms, except as
enforceability of any indemnification provision may be limited
under federal securities laws and except as enforceability of
such agreements may be limited by applicable bankruptcy,
reorganization, insolvency, moratorium, or other laws relating
to or affecting generally the enforcement of creditor's
rights.
(viii) The Company has good and marketable title to
all properties, licenses, and assets described in the
Prospectus as owned by it, free and clear of all liens,
charges, encumbrances, or restrictions, except such as are
described or referred to in the Prospectus or are not
materially significant or important in relation to the
business of the Company; all of the leases or subleases under
which the Company is the lessor or sublessor of properties or
assets or under which the Company holds properties or assets
as lessee or sublessee as described in the Prospectus are in
full force and effect, and nothing has come to their attention
that would lead them to believe the Company is in default in
any material respect in respect of any of the terms or
provisions of any of such leases or subleases, and no claim
has been asserted by anyone adverse to the Company's rights as
lessor, sublessor, lessee, or sublessee under any of the
leases or subleases mentioned above or affecting or
questioning the Company's rights to he continued possession of
the leased or subleased premises or assets under any such
lease or sublease.
(ix) The execution and delivery of this Agreement and
the Warrant Agreement and the consummation of the
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transactions herein and therein contemplated will not conflict
with or constitute a breach of, or default under, the charter
or by-laws of the Company or any contract, indenture,
mortgage, loan agreement, note, lease, or other instrument
filed as an exhibit to the Registration Statement to which the
Company is a party or by which it may be bound, or any or
court decree known to such counsel or any law or
administrative regulation.
(x) The Registration Statement is effective under the
1933 Act and, to the best of their knowledge and information,
no stop order suspending the effectiveness of the Registration
Statement has been issued under the 1933 Act or proceedings
therefor initiated or threatened by the Commission.
(xi) At the time the Registration Statement became
effective, the Registration Statement (other than the
financial statements and supporting schedules included
therein, as to which no opinion need be rendered) complied as
to form in all material respects with the requirements of the
1933 Act and the 1933 Act Regulations.
(xii) Nothing has come to their attention that would
lead them to believe that the Registration Statement, at the
time it became effective, contained an untrue statement of
material fact or omitted to state a material fact required to
be stated therein or necessary to make the statements therein
not misleading or that the Prospectus, at the time the
Registration Statement became effective (unless the term
"Prospectus" refers to the Rule 424(b) prospectus, in which
case at the time it was mailed to the Commission for filing)
or at Closing Time, contained an untrue statement of a
material fact or omitted to state a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they are made not misleading.
(xiii) There are no contracts, indentures, mortgages,
loan agreements, notes, leases, or other instruments known to
such counsel that are required to be described or referred to
in the Registration Statement or to be filed as exhibits
thereto other than those
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described or referred to therein or filed or incorporated by
reference as exhibits thereto; the descriptions thereof or
references thereto are accurate, and to such counsel's
knowledge no default exists in the due performance or
observance of any material obligation, agreement, covenant, or
condition contained in any contract, indenture, loan
agreement, note, lease, or other instrument so described,
referred to, filed or incorporated by reference.
(xiv) Except as set forth in the Registration
Statement and Prospectus, such counsel does not know of any
action, suit, or proceeding before or by any court or
governmental agency or body, domestic or foreign, now pending,
or, threatened against or affecting, the Company, which might
result in any material and adverse change in the condition
(financial or otherwise), business or earnings of the Company,
or might materially and adversely affect the properties or
assets thereof.
(xv) The Common and Preferred Stock conform to the
description thereof contained in the Registration Statement,
and the certificates used to evidence the Common Stock are in
due and proper form.
(xvi) No authorization, approval or consent of any
court or governmental authority or agency is required in
connection with the sale of the Shares to the purchasers
thereof, except as may be required under the 1933 Act and
state securities or Blue Sky laws.
(c) At Closing Time there shall not have been, since the
respective dates as of which information is given in the Registration
Statement and the Prospectus, any material adverse change in the
condition, financial or otherwise, of the Company, or in the earnings,
business, or properties of the Company, whether or not arising in the
ordinary course of business, and you shall have received a certificate
from each of the Chief Executive Officer, President, Secretary, and
Vice President of Finance of the Company, dated as of Closing Time, to
the effect that (i) there has been no such material adverse change,
(ii) that the other representations and warranties of the Company
contained in Section 1 are true and correct with the same force and
effect as though expressly made at and as
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of Closing Time, (iii) that the Company has complied with all
agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to Closing Time, and (iv) that no stop order
suspending the effectiveness of the Registration Statement has been
issued and to the best of such officer's knowledge, no proceedings for
that purpose have been initiated or threatened by the Commission.
(d) At the time of the execution of this Agreement, you shall
have received from Xxxxxx Xxxxxxx, Hong Kong, independent auditors a
letter dated such date, in form and substance satisfactory to you, to
the effect that (i) they are independent public accountants as required
by the 1933 Act and the 1933 Act Regulations and the answer to Item 13
of the Registration Statement is correct insofar as it related to them;
(ii) it is their opinion that the financial statements and supporting
schedules included in the Registration Statement and covered by their
opinion therein comply as to form in all material respects with the
applicable accounting requirements of the 1933 Act and the 1933 Act
Regulations; (iii) based upon limited procedures set forth in detail in
such letter, nothing has come to their attention which causes them to
believe that (A) the unaudited condensed financial statements and
supporting schedules of the Company as of June 30, 2001, and June 30,
2000, and for the six month periods ended as of these dates and for the
period from January 1, 1996 through December 31, 1997, included in the
Registration Statement do not comply as to form in all material
respects with the applicable accounting requirements of the 1933 Act
and the 1933 Act Regulations or are not fairly presented in conformity
with generally accepted accounting principles applied on a basis
consistent in all material respects with the audited financial
statements included in the Registration Statement, or (B) during the
period from June 30, 2001, to a specified date not more than five days
prior to the date of this Agreement, there has been any change in the
capital stock or funded debt of the Company, or any decrease in
consolidated net current assets, net assets, or stockholders' equity as
compared with the amounts shown in the June 30, 2001, balance sheet or
any decrease, as compared with the corresponding period in the
preceding year, in total revenues or total or per share amounts of
earnings of the Company in each case except as set forth or
contemplated in the Registration Statement; and (iv) they have read in
the Registration
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Statement the information under "Prospectus Summary - the Offering,"
"Prospectus Summary - Summary Financial Information," "Use of
Proceeds," "Capitalization," "Dilution," "Managements Discussion and
Analysis," "Business" and "Management - Executive Compensation" and the
notes thereto and other information specified by you and have performed
the procedures set forth in detail in such letter and found such
amounts or information to be in agreement with the relevant accounting
and financial records of the Company.
(e) At Closing time you shall have received from Xxxxxx
Xxxxxxx, Hong Kong, a letter, dated as of Closing Time, to the effect
that they reaffirm the statements made in the letter furnished pursuant
to subsection (d) of this Section, except that the specified date
referred to shall be a date not more than five days prior to Closing
Time.
(f) At Closing Time your counsel shall have been furnished
with such documents and opinions as they may require for the purpose of
enabling them to pass upon the issuance and sale of the Shares as
herein contemplated and related proceedings, or in order to evidence
the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all
proceedings taken by the Company in connection with the issuance and
sale of the Shares as herein contemplated shall be satisfactory in form
and substance to you and your counsel.
(g) At the time of execution of this Agreement, you shall have
received a certificate in a form satisfactory to your counsel executed
by the President of the Company and all of the Board of Directors,
attesting to the fact that each has read the Registration Statement and
that it does not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to
make a statement therein not misleading.
(h) At Closing Time you shall have received a certificate,
dated the Closing Time, of the President and all of the Board of
Directors confirming that the certificate delivered pursuant to Section
6(g) hereof remains true as of the Closing Time.
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(i) In the event any or all of the Additional Shares are sold
as provided in Section 2 hereof, the representations and warranties of
the Company contained herein and the statements in any certificates
furnished by the Company shall be true and correct as of the Date of
Delivery, and you shall have received:
(1) A certificate dated as of the Date of Delivery,
from each of the Chief Executive Officer, President,
Secretary, and Vice-President of Finance of the Company,
confirming that the certificate of such officers delivered at
Closing Time pursuant to Section 6(c) hereof remains true as
of the Date of Delivery;
(2) The favorable opinion of Xxxx X. Agron, Esq.,
counsel to the Company, in form and substance
satisfactory to your counsel dated the Date of Delivery,
relating to the Additional Shares and otherwise to the
same effect as the opinion required by Section 6(b);
(3) A letter from Xxxxxx Xxxxxxx, Hong Kong, in form
and substance satisfactory to you and dated the Date of
Delivery, substantially the same in scope and substance as the
letter furnished to you pursuant to Section 6(d) hereof,
except that the "specified date" in the letter furnished
pursuant to this Section 6(i) shall be a date not more than
five days prior to the Date of Delivery;
(4) A certificate, dated the Date of Delivery, of the
President and all of the Board of Directors confirming that
the certificate delivered pursuant to Section 6(g) hereof
remains true as of the Date of Delivery.
If any condition specified in this Section shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be terminated
by you by written notice to the Company at any time at or prior to Closing Time,
and such termination shall be without liability of any party to any other party
except as provided in Section 4.
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SECTION 6
INDEMNIFICATION
(a) The Company agrees to indemnify and hold harmless the
Underwriter and each person, if any, who controls any Underwriter
within the meaning of Section 15 or the 1933 Act as follows:
(i) against any and all loss, liability, claim,
damage, and expense whatsoever arising out of any untrue
statement or alleged untrue statement of a material fact
contained in the Registration Statement (or any amendment
thereto), or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to
make the statements therein not misleading or arising out of
any untrue statement or alleged untrue statement of a material
fact contained in any preliminary prospectus or the Prospectus
(or any amendment or supplement thereto), or the omission or
alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading,
unless such untrue statement or omission was made in reliance
upon and in conformity with written information furnished to
the Company by you expressly for use in the Registration
Statement (or the Prospectus or any amendment or supplement);
(ii) against any and all loss, liability, claim,
damage, and expense whatsoever to the extent of the aggregate
amount paid in settlement of any litigation or investigation
or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or
omission, if such settlement is effected with the prior
written consent of the Company; and
(iii) against any and all expense whatsoever
(including the fees and disbursements of counsel chosen by
you) reasonably incurred in investigating, preparing or
defending against any litigation, or investigation or
proceeding by governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid
under (i) or (ii) above.
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(b) The Underwriter agrees to indemnify and hold
harmless the Company, its directors, each of its officers who
signed the Registration Statement, and each person, if any,
who controls the Company within the meaning of Section 15 of
the 1933 Act against any and all loss, liability, claim,
damage, and expense described in the indemnity contained in
subsection (a) of this Section, but only with respect to
untrue statements or omissions, or alleged untrue statements
or omissions, made in the Registration Statement (of any
amendment thereto) or any preliminary prospectus or the
Prospectus or any amendment or supplement thereto) in reliance
upon and in conformity with written information furnished to
the Company by such Underwriter expressly for use in the
Registration Statement (or any amendment thereto) or such
preliminary prospectus or the Prospectus (or any amendment or
supplement thereto).
(c) Each indemnified party shall give prompt notice
to each indemnifying party of any action commenced against it
in respect of which indemnity may be sought hereunder, but
failure to so notify any indemnifying party shall not relieve
it from any liability which it may have otherwise than on
account of this indemnity agreement. An indemnifying party may
participate at its own expense in the defense of such action.
In no event shall the indemnifying parties be liable for the
fees and expenses of more than one counsel for all indemnified
parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances.
SECTION 7
CONTRIBUTION
In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in Section 7 is for
any reason held to be unenforceable by the Underwriters or the Company although
applicable in accordance with its terms, the Company and the Underwriter shall
contribute to the aggregate losses, liabilities, claims, damages, and expenses
of the nature contemplated by said indemnity agreement incurred by the
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Company and the Underwriter in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Underwriter from the offering
of the shares and the relative fault of the Company and the Underwriter in
connection with the statement or omissions which resulted in such loss,
liability, claim, damages, or expense as well as any other relevant equitable
considerations. The relative benefits received by the Company and the
Underwriter shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deductions for expenses) received by the
Company bears to the total underwriting discounts and commissions received by
the Underwriter. Notwithstanding the foregoing, no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 0000 Xxx) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section, each person, if any, who
controls the Underwriter within the meaning of Section 15 of the 1933 Act shall
have the same rights to contribution as such Underwriter, and each director of
the Company, each officer of the Company who signed the Registration Statement,
and each person, if any, who controls the Company within the meaning of Section
15 of the 1933 Act shall have the same rights to contribution as the Company.
SECTION 8
REPRESENTATIONS, WARRANTIES, AND AGREEMENTS
TO SURVIVE DELIVERY
All representations, warranties, and agreements contained in this
Agreement or contained in certificates of officers of the Company submitted
pursuant hereto shall remain operative and in full force and effect, regardless
of any investigation made by or on behalf of the Underwriter or controlling
person, or by or on behalf of the Company, and shall survive delivery of the
Shares to the purchasers thereof.
SECTION 9
TERMINATION OF AGREEMENT
(a) You, by notice to the Company, or the Company by notice to
you, may terminate this Agreement without cause at any time prior to
the earlier of (i) the time the Shares are released by you for sale to
the public, or (ii) 11:30 a.m.,
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Washington D.C. time, on the first business day following the date on
which the Registration Statement becomes effective.
(b) You may also terminate this Agreement, by notice to the
Company, at any time at or prior to Closing Time (i) if there has been,
since the respective dates as of which information is given in the
Registration Statement, any material adverse change in the condition,
financial or otherwise, of the Company or in the earnings, business or
properties of the Company and its Subsidiaries considered as one
enterprise whether or not arising in the ordinary course of business,
or (ii) if there has occurred any outbreak of hostilities or other
calamity or crisis the effect of which on the financial markets of the
United States is such as to make it, in your judgment impracticable to
market the Shares or enforce contracts for the sale of the Shares or
(iii) if trading in the Common Stock has been suspended by the
Commission, of if trading generally on either the American Stock
Exchange or the New York Stock Exchange has been suspended, or minimum
or maximum prices for trading have been fixed, or maximum ranges for
prices for securities have been required, by either of said exchanges
or by order of the Commission or any other governmental authority, or
if a banking moratorium has been declared by either federal or any
state authorities.
(c) If this Agreement is terminated pursuant to this Section,
such termination shall be without liability of any party to any other
party.
SECTION 10
NOTICE
All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given if delivered or sent by registered mail
or transmitted by any standard form of telecommunication. Notices to the
Underwriter shall be directed to you at Xxxxxxx Xxxxxxx Investments, Inc., 0000
Xxxxx Xxxxxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxx 00000; notices to the Company
shall be directed to 300 4F-3, Xx. 0, Xxxx 00 Xxxxxxx Xxxx, Xxxx Xxx, Xxxxxx,
Xxxxxxxx of China.
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SECTION 11
PARTIES
This Agreement shall inure to the benefit of and be binding upon the
Underwriter and the Company and their respective successors. Nothing expressed
or mentioned in this Agreement is intended or shall be construed to give any
person, firm, or corporation, other than the parties hereto and their respective
successors and the controlling persons and officers and directors referred to in
Section 6 and Section 7 and their heirs and legal representatives, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision herein contained. This Agreement and all conditions and provisions
hereof are intended to be for the sole and exclusive benefit of the parties
hereto and their legal respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm, or corporation. No purchaser of Shares shall
be deemed to be a successor by reason merely of such purchase.
SECTION 12
GOVERNING LAW
This Agreement shall be governed by the laws of the State of Colorado.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
instrument along with all counterparts will become a binding agreement Between
you and us in accordance with its terms.
Very truly yours,
EASYLINK INFORMATION TECHNOLOGY
CO., LTD
By
---------------------------
Li-Lung Chen, Chief
Executive Officer
Confirmed and Accepted,
as of the date first above
written:
XXXXXXX XXXXXXX INVESTMENTS, INC.
By:
-----------------------------
Xxxxxx Xxxxx, President
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