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EXHIBIT 1.1
Zindart Limited
(a Hong Kong corporation)
3,000,000 American Depositary Shares
Representing 3,000,000 Ordinary Shares(1)
UNDERWRITING AGREEMENT
March __, 1998
▇▇▇ ▇▇▇▇▇▇ & COMPANY
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & CO., INC.
As Representatives of the several
Underwriters named on Schedule I
c/o ▇▇▇ ▇▇▇▇▇▇ & Company
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Zindart Limited, a corporation formed under the laws of Hong Kong (the
"Company"), and the selling shareholders listed on Schedule I hereto (the
"Selling Shareholders") propose to issue and sell to the several Underwriters
named on Schedule II hereto (the "Underwriters") 3,000,000 American Depositary
Shares (the "Firm Shares") representing 3,000,000 of the Company's Ordinary
Shares (the "Firm Ordinary Shares"), of which 1,000,000 American Depositary
Shares representing 1,000,000 of the Company's Ordinary Shares are to be sold by
the Company, and 2,000,000 American Depositary Shares representing 2,000,000 of
the Company's Ordinary Shares are to be sold by the Selling Shareholders; the
number of American Depositary Shares to be sold by each Selling Shareholder is
shown on Schedule I. In addition, the Company and the Selling Shareholders also
propose to grant to the Underwriters an option to purchase up to an additional
450,000 American Depositary Shares representing 450,000 Ordinary Shares on the
terms and for the purposes set forth in Section 3(b) (the "Option Shares"). The
Company has granted the Underwriters the option to purchase 403,333 of the
Option Shares; the Selling Shareholders have granted to the Underwriters the
right to purchase the number of Option Shares set forth on Schedule I. The
Shares and any Option Shares
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(1) Plus an option to purchase from the Company and the Selling
Shareholders up to 450,000 additional American Depositary Shares representing
450,000 Ordinary Shares solely to cover over-allotments, if any.
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purchased pursuant to this Agreement are referred to collectively in this
Agreement as the "Securities." ▇▇▇ ▇▇▇▇▇▇ & Company and ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ &
Co., Inc. are acting as representatives of the several Underwriters and in that
capacity are referred to in this Agreement as the "Representatives." The Selling
Shareholders have executed Custody Agreements and Powers of Attorney, the forms
of which have been previously delivered to the Representatives, pursuant to
which the Selling Shareholders have placed the Selling Shareholder Shares in
custody with the Company and agreed to take certain other actions with respect
thereto and hereto.
The Company hereby confirms its agreements with the several Underwriters
as set forth below.
1. Representations and Warranties of the Company. The Company hereby
represents and warrants to and agrees with each Underwriter as follows:
(a) A Registration Statement (Registration No. 333-8134) on Form
F-1 under the Securities Act of 1933, as amended (the "Securities Act"),
including such amendments to such registration statement as may have been
required to the date of this Agreement, relating to the Securities has been
prepared by the Company under and in conformity with the provisions of the
Securities Act, the rules and regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission") thereunder and has been
filed with the Commission. After the execution of this Agreement, the Company
will file with the Commission either (i) if such registration statement, as it
may have been amended, has been declared by the Commission to be effective under
the Securities Act, a prospectus in the form most recently included in an
amendment to such registration statement (or, if no such amendment has been
filed, in such registration statement), with such changes or insertions as are
required by Rule 430A of the Rules and Regulations or permitted by Rule 424(b)
of the Rules and Regulations, and as has been provided to and approved by the
Representatives prior to the execution of this Agreement, or (ii) if such
registration statement, as it may have been amended, has not been declared by
the Commission to be effective under the Securities Act, an amendment to such
registration statement, including a form of prospectus, a copy of which
amendment has been furnished to and approved by the Representative prior to the
execution of this Agreement. As used in this Agreement, the term "Registration
Statement" means such registration statement, including all financial schedules
and exhibits thereto and including any information omitted therefrom pursuant to
Rule 430A of the Rules and Regulations and included in the Prospectus (defined
below), in the form in which it became effective, and any registration statement
filed pursuant to Rule 462(b) of the Rules and Regulations with respect to the
Securities (a "Rule 462(b) Registration Statement"), and, in the event of any
amendment thereto after the effective date of such registration statement (the
"Effective Date"), shall also mean (from and after the effectiveness of such
amendment) such registration statement as so amended (including
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any 462(b) Registration Statement); the term "Preliminary Prospectus" means each
prospectus subject to completion filed with such registration statement or any
amendment thereto (including the prospectus subject to completion, if any,
included in the Registration Statement or any amendment thereto at the time it
was or is declared effective); the term "Prospectus" means:
(A) the prospectus first filed with the Commission
pursuant to Rule 424(b) under the Securities Act; or
(B) if no prospectus is required to be filed pursuant
to Rule 424(b) under the Securities Act, the prospectus included in the
Registration Statement;
provided that if any revised prospectus that is provided to the Underwriters by
the Company for "use in connection with the offering of the Securities" differs
from the prospectus on file with the Commission at the time the Registration
Statement became or becomes, as the case may be, effective, whether or not the
revised prospectus is required to be filed with the Commission pursuant to Rule
424(b)(3) of the Rules and Regulations, the term "Prospectus" shall mean such
revised prospectus from and after the time it is first provided to the
Underwriters for such use.
(b) No order suspending the effectiveness of the Registration
Statement or preventing or suspending the issue of any Preliminary Prospectus or
the Prospectus has been issued and no proceedings for that purpose are pending
or, to the knowledge of the Company, threatened or contemplated by the
Commission; no order suspending the sale of the Securities in any jurisdiction
has been issued and no proceedings for that purpose are pending or, to the
knowledge of the Company, threatened or contemplated, and any request of the
Commission for additional information (to be included in the Registration
Statement, any Preliminary Prospectus or the Prospectus or otherwise) has been
complied with or otherwise appropriately addressed. For the purposes of this
Agreement, a proceeding is "pending" if written notice thereof has been served
upon the Company or any of the Subsidiaries (as defined below), or if any
officer, director, employee or counsel of the Company or any of the Subsidiaries
has actual knowledge thereof.
(c) When the Preliminary Prospectus was filed with the Commission
it (i) contained all statements required to be contained therein and complied in
all respects with the requirements of the Securities Act, the Rules and
Regulations, the Securities Exchange Act of 1934, as amended (the "Exchange
Act") and the rules and regulations of the Commission thereunder (the "Exchange
Act Rules and Regulations") and (ii) did not include 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 under which they were
made, not misleading. When the Registration Statement or any amendment thereto
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was or is declared effective, it (i) contained or will contain all statements
required to be contained therein and complied or will comply in all respects
with the requirements of the Securities Act, the Rules and Regulations, the
Exchange Act and the Exchange Act Rules and Regulations and (ii) did not or will
not include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading. When the
Prospectus or any amendment or supplement to the Prospectus is filed with the
Commission pursuant to Rule 424(b) (or, if the Prospectus or such amendment or
supplement is not required to be so filed, when the Registration Statement or
the amendment thereto containing such amendment or supplement to the Prospectus
was or is declared effective) and at all times subsequent thereto up to and
including the Closing Date (defined below) and any date on which Option Shares
are to be purchased, the Prospectus, as amended or supplemented at any such
time, (i) contained or will contain all statements required to be contained
therein and complied or will comply in all respects with the requirements of the
Securities Act, the Rules and Regulations, the Exchange Act and the Exchange Act
Rules and Regulations and (ii) did not or will not include 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 under which they were
made, not misleading. The foregoing provisions of this paragraph (c) do not
apply to statements or omissions made in any Preliminary Prospectus, the
Registration Statement or any amendment thereto or the Prospectus or any
amendment or supplement thereto in reliance upon and in conformity with written
information furnished to the Company by any Underwriter through the
Representatives specifically for use therein.
(d) The subsidiaries (each, a "Subsidiary" and collectively the
"Subsidiaries") of the Company and the jurisdiction of incorporation of each
Subsidiary is listed on Exhibit A hereto. As used in this Agreement, the word
"subsidiary" means any corporation, partnership, joint venture, limited
liability company or other entity of which the Company directly or indirectly
owns 50 percent or more of the equity or that the Company directly or indirectly
controls. The Company has no subsidiaries other than the Subsidiaries listed on
Exhibit A to this Agreement, and except as set forth on such Exhibit, the
Company owns 100 percent of the issued and outstanding stock of each of the
Subsidiaries. Exhibit B hereto lists each entity in which the Company or any
Subsidiary holds an equity interest that is not otherwise disclosed on Exhibit
A, whether as a shareholder, partner, member, joint venturer or otherwise.
Except as set forth on Exhibit A or Exhibit B, neither the Company nor any
Subsidiary has any equity interest in any person.
(e) The Company and each of its Subsidiaries has been duly
incorporated or organized and is validly existing as a corporation or other
legal entity in good standing under the laws of the jurisdiction of its
incorporation or organization, has full power (corporate and other) and
authority to own or lease its properties and conduct
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its business as described in the Registration Statement and the Prospectus and
as currently being conducted and proposed to be conducted by it and is duly
qualified as a foreign corporation 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 effect on the business,
properties, condition (financial or otherwise), results of operations or
prospects of the Company and its Subsidiaries, taken as a whole (a "Material
Adverse Effect")). The Company and each of its Subsidiaries is in possession of
and operating in compliance with all authorizations, licenses, certificates,
consents, orders and permits from federal, state, local, foreign and other
governmental or regulatory authorities necessary or desirable for the conduct of
its business, all of which are valid and in full force and effect (except where
the failure to possess, maintain or operate in compliance with any such
authorization, license, certificate, consent, order or permit would not or could
not reasonably be expected to have a Material Adverse Effect). Each Chinese
contractual joint venture in which the Company is involved is operating in
compliance with the terms of its joint venture agreement (except where the
failure to comply would not or could not reasonably be expected to have a
Material Adverse Effect).
(f) 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 business of the Company or any Subsidiary
from fire, explosion, flood, earthquake 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
Subsidiary, or any dividend or distribution of any kind declared, paid or made
on the capital stock or registered capital of the Company or any Subsidiary, or
any material change, or a development known to the Company that might cause or
result in a material change, in or affecting the business, properties, condition
(financial or otherwise), results of operation or prospects of the Company and
its Subsidiaries, taken as a whole, whether or not arising from transactions in
the ordinary course of business, in each case other than as may be 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 Subsidiary has
entered into any material transaction not described in the Registration
Statement and the Prospectus.
(g) 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. All contracts described in the Prospectus,
if any, are in full force and effect on the date hereof, and none of the
Company, its Subsidiaries or any other party thereto is in breach of or default
under any such contract (except where such breach or default would not or could
not reasonably be expected to have a Material Adverse Effect).
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(h) The authorized and outstanding capital stock of the Company
is set forth in the Prospectus as of the dates set forth therein, and the
description of the Ordinary Shares and of the Securities therein conforms with
and accurately describes in all material respects the rights set forth in the
instruments defining the same. Except as set forth in the Prospectus, the
Securities and the Ordinary Shares represented by the Securities have been duly
and validly authorized and, when issued and delivered against payment therefor
as provided herein, will be duly and validly issued, fully paid and
nonassessable, and the issuance of the Ordinary Shares and the Securities is not
subject to any preemptive or similar rights.
(i) All of the outstanding Ordinary Shares of the Company have
been duly authorized and validly issued and are fully paid and nonassessable,
have been issued in compliance with all applicable securities laws and were not
issued in violation of or subject to any preemptive rights or other rights to
subscribe for or purchase securities 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 in all material respects the
information presented with respect to such plans, arrangements, options and
rights. Other than this Agreement and the options to purchase Ordinary Shares
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 other than options and other equity incentives that are granted in the
ordinary course pursuant to the equity incentive plan described in the
Prospectus. There are no preemptive rights, rights of first refusal, or other
similar restrictions applicable to any of the Securities to be sold by the
Company or, to the Company's knowledge, the Selling Shareholders.
(j) Except as set forth in the Prospectus, all of the stock or
registered capital in the Subsidiaries owned by the Company as set forth on
Exhibit A is owned by the Company free and clear of any pledge, lien, security
interest, encumbrance, claim or equitable interest of any type, kind or nature.
All of the outstanding stock or registered capital of each of the Subsidiaries
has been duly authorized and validly issued and is fully paid and nonassessable,
has been issued in compliance with all applicable laws, including securities
laws, and was not issued in violation of or subject to any preemptive rights or
other rights to subscribe for or purchase securities of such Subsidiary. There
are no options, warrants or other rights outstanding to subscribe for or
purchase any shares of the capital stock or registered capital of any Subsidiary
and no Subsidiary is subject to any obligation, commitment, plan, arrangement or
court or administrative order with respect to same. There are no preemptive
rights applicable to any shares of capital stock or registered capital of the
Subsidiaries.
(k) This Agreement has been duly authorized, executed and
delivered by, and constitutes the valid and binding obligation of the Company,
enforceable against
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the Company in accordance with its terms, except as enforceability may be
limited by general equitable principles, specific performance, bankruptcy,
insolvency, reorganization, moratorium and laws affecting creditors' rights
generally, and except as rights to indemnification hereunder may be limited by
applicable federal or state securities laws. Other than the registration rights
described in the Prospectus, there are no rights for or relating to the
registration of any capital stock of the Company. The filing of the Registration
Statement does not give rise to any rights, other than those which have been
waived in writing, for or relating to the registration of any capital stock of
the Company.
(l) 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
completion of the transactions contemplated by this Agreement result in a
violation of or constitute a breach of or a default (including without
limitation with the giving of notice, the passage of time or otherwise) under,
the Memorandum of Association, Articles of Association or other governing
documents of the Company or such Subsidiary 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 Subsidiary is a party or by which any properties of the
Company or any Subsidiary may be bound or affected. The Company has not incurred
any liability, direct or indirect, for any finders' or similar fees payable on
behalf of the Company or the Underwriters in connection with the public offering
of the Securities. The performance by the Company of its obligations under this
Agreement will not violate any law, ordinance, rule or regulation, or any order,
writ, injunction, judgment or decree of any governmental agency or body or of
any court having jurisdiction over the Company or any Subsidiary or any
properties of the Company or any Subsidiary, or result in the creation or
imposition of any lien, charge, claim or encumbrance upon any property or asset
of the Company or any Subsidiary. Except for permits and similar authorizations
required under the Securities Act, the Exchange Act or under other securities or
Blue Sky laws of certain jurisdictions and for such permits and authorizations
that have been obtained, no consent, approval, authorization or order of any
court, governmental agency or body, financial institution or any other person is
required in connection with the completion of the transactions contemplated by
this Agreement.
(m) Except as described in the Prospectus, the Company and each
Subsidiary owns, or has valid rights to use, all items of real and personal
property which are material to the business of the Company or such Subsidiary
(including, without limitation, all real property on which the Company's
manufacturing facilities are located)
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free and clear of all liens, encumbrances and claims that would or could
reasonably be expected to result in a Material Adverse Effect.
(n) The Company or the appropriate Subsidiary, as the case may
be, owns or possesses adequate rights to use all patents, patent rights,
inventions, trade secrets, know-how, trademarks, service marks, trade names and
copyrights (collectively, "Intellectual Property") described or referred to in
the Registration Statement and the Prospectus as owned by or used by the Company
or such Subsidiary, or which are necessary for the conduct of the business of
the Company or such Subsidiary as described in the Registration Statement and
the Prospectus; and neither the Company nor any Subsidiary has received any
notice of infringement of or conflict with asserted rights of others with
respect to any Intellectual Property which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would or could reasonably
be expected to have a Material Adverse Effect. Except as described in the
Registration Statement and the Prospectus, and except for any agreements with
its customers entered into in the ordinary course of business granting the
Company or a Subsidiary the right to manufacture copyrighted or trademarked
materials, neither the Company nor any Subsidiary is a party to any material
options, licenses, or agreements of any kind relating to Intellectual Property
or that grant rights to any other party to manufacture, license, produce,
assemble, market or sell the products of the Company or any Subsidiary, nor is
the Company or any Subsidiary bound by or a party to any material options,
licenses, or agreements of any kind with respect to the Intellectual Property of
any other party.
(o) There is no litigation or governmental proceeding to which
the Company or any Subsidiary is a party or to which any property of the Company
or any Subsidiary is subject which is pending or, to the knowledge of the
Company, is threatened or contemplated against the Company or any Subsidiary
that might have a material effect on the business, properties, condition
(financial or otherwise), results of operations or prospects of the Company or
any Subsidiary, that might prevent consummation of the transactions contemplated
by this Agreement or that are required to be disclosed in the Registration
Statement or Prospectus and are not so disclosed.
(p) None of the Company or any Subsidiary is in violation of, or
has received any notice or claim from any governmental agency or third party
that any of them is in violation of, any law, order, ordinance, rule or
regulation, or any order, writ, injunction, judgment or decree of any agency or
body or of any court, to which it or its properties (whether owned or leased)
may be subject, which violation would or could reasonably be expected to have a
Material Adverse Effect.
(q) 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 Exchange Act
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Rules and Regulations or otherwise, the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Securities.
(r) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co., whose reports appear in the
Registration Statement and the Prospectus, are, and during the periods covered
by their reports in the Registration Statement were, independent accountants as
required by the Securities Act and the Rules and Regulations. The financial
statements and schedules included in the Registration Statement, each
Preliminary Prospectus and the Prospectus present fairly the financial
condition, results of operations, cash flow and changes in shareholders' equity
and the financial statements and schedules included in the Registration
Statement present fairly the information required to be stated therein. Such
financial statements and schedules have been prepared in accordance with United
States generally accepted accounting principles applied on a consistent basis
throughout the periods presented. The selected and summary financial and
statistical data included in the Registration Statement and the Prospectus
present fairly the information shown therein. No other material financial
statements or schedules are required to be included in the Registration
Statement. Except as set forth in such financial statements or as set forth in
the Prospectus, the Company has no material debts, liabilities or obligations
(whether absolute, accrued, contingent or otherwise) of any nature whatsoever,
including, without limitation, any tax liabilities or deferred tax liabilities
or any other debts, liabilities or obligations.
(s) The books, records and accounts of the Company and each
Subsidiary (for the periods reflected in the Prospectus) accurately and fairly
reflect, in reasonable detail, the transactions in and dispositions of the
assets of the Company and such Subsidiary. The systems of internal accounting
controls maintained by the Company and each Subsidiary 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 (x) to permit preparation of financial statements in conformity
with generally accepted accounting principles and (y) to maintain accountability
for assets; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(t) The Company will not, and the Company has delivered to the
Representatives the written agreement of ZIC Holdings Limited ("ZICHL"),
Longvest Management Limited ("Longvest") and Ertl (Hong Kong Limited ("Ertl"),
holding, respectively, 3,800,000, 700,000 and 500,000 of the Company's ordinary
shares prior to the offering contemplated hereby, to the effect that ZICHL,
Longvest and Ertl will not, for a period of 90 days following the date of this
Agreement, without the prior written consent of ▇▇▇ ▇▇▇▇▇▇ & Company, offer,
sell or contract to sell, or otherwise dispose of,
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or announce the offer of, any Ordinary Shares, American Depositary Shares
("ADSs") representing Ordinary Shares, or options, convertible securities or
other securities exercisable or exchangeable for, or convertible into, Ordinary
Shares or ADSs in each case without the prior written consent of the ▇▇▇ ▇▇▇▇▇▇
& Company (except for granting options and other equity incentives in the
ordinary course pursuant to any equity incentive plan described in the
Prospectus).
(u) The Company has delivered to ▇▇▇ ▇▇▇▇▇▇ & Company the First
Amendment to Agreement Regarding Future Share Distributions executed by the
Company, ZICHL, Longvest and Ertl.
(v) No labor disturbance by the employees of the Company or any
Subsidiary exists, or, to the knowledge of the Company, is imminent,
contemplated or threatened; and the Company is not aware of an existing,
imminent or threatened labor disturbance by the employees of any principal
suppliers, contract manufacturing organizations, manufacturers, authorized
dealers or distributors that would or could reasonably be expected to have a
Material Adverse Effect. No collective bargaining agreement exists with any
employees of the Company or any such Subsidiary and, to the knowledge of the
Company, no such agreement is imminent. Except as disclosed in the Registration
Statement, no officer, employee or consultant of the Company or any Subsidiary
whose continued services are material to the conduct of the business of the
Company or any Subsidiary has any plans to terminate employment with the Company
or such Subsidiary nor does the Company or any Subsidiary have a present
intention to terminate the employment or contract of any such person.
(w) The Company and each Subsidiary has filed all federal, state,
national, provincial, local and foreign tax returns that are required to be
filed or has requested extension 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, except where the
failure to pay any such taxes has not had and could not reasonably be expected
to have a Material Adverse Effect, or where such taxes are currently being
contested by the Company or have been fully reserved against in the financial
statements appearing in the Prospectus. No tax assessment or deficiency has been
made or proposed against the Company or any of its Subsidiaries, nor has the
Company or any Subsidiary received any notice of any proposed tax assessment or
deficiency.
(x) 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 (i) its "affiliates," as such term is defined in the
Rules and Regulations, (ii) any of the officers or directors of any of its
Subsidiaries or (iii) any of the members of the families of any of them.
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(y) Neither the Company nor any Subsidiary has, directly or
indirectly, at any time: (i) made any contributions to any candidate for
political office in violation of law; (ii) made any payment to any local, state,
federal or foreign governmental officer or official, or other person charged
with similar public or quasi-public duties; or (iii) violated any provision of
the Foreign Corrupt Practices Act of 1977, as amended.
(z) Neither the Company nor any Subsidiary has any liability,
absolute or contingent, relating to: (i) public health or safety; (ii) worker
health or safety; (iii) product defect or warranty; or (iv) except as may be
disclosed in the Registration Statement and Prospectus, pollution, damage to or
protection of the environment, including, without limitation, 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 any hazardous materials, except where such
liability has not had and could not reasonably be expected to have a Material
Adverse Effect or where such liability has been fully reserved against in the
financial statements appearing in the Prospectus. 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.
(aa) 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 Securities other than
the Preliminary Prospectus, the Prospectus, the initially-filed Registration
Statement and any filed amendments thereto and any other material which may be
permitted by the Securities Act and the Rules and Regulations.
(bb) The Company has filed and will file in a timely manner all
reports and other documents required to be filed with the Commission under the
Exchange Act and with the National Association of Securities Dealers, Inc. (the
"NASD"), and each such report or other document contained, at the time it was
filed, such information as was required to be included in such report or other
document and all such information was correct and complete in all material
respects; except as disclosed in the Registration Statement, no event has
occurred or is likely to occur that required or would require an amendment to
any report or document referred to in this section that has not been filed or
distributed as required.
(cc) The Securities have been approved for inclusion for listing
on the Nasdaq National Market ("NNM"). The Company has taken no action designed
to, or likely to have the effect of, terminating the registration of the Common
Stock under the 1934 Act or delisting the Common Stock from the NNM, nor has the
Company received
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any notification that the Commission or the NNM is contemplating terminating
such registration or listing.
(dd) The Company is not now, and intends to conduct its affairs
in the future in such a manner so that it will not become, an investment company
within the meaning of the Investment Company Act of 1940, as amended.
(ee) The Company satisfies the requirements for filing a
registration statement on Form F-1.
(ff) Except as described in the Prospectus, neither the Company
nor any Subsidiary has entered into any transaction with any affiliate of the
Company other than an arm's length transaction, and all such transactions
required to be described in the Registration Statement or the Prospectus have
been described therein.
(gg) The Exchange Agreement dated February 10, 1998 by and among
the Company, ▇▇▇ ▇▇▇▇ Holdings Co., Limited, ▇▇▇ ▇▇▇▇ Printing Holdings Co.,
Limited, the Shareholders of ▇▇▇ ▇▇▇▇ Holdings Co., Limited, and the principal
shareholders of HYP Holdings Limited (the "▇▇▇ ▇▇▇▇ Acquisition Agreement") is a
valid and binding obligation of each party thereto, enforceable in accordance
with its terms. The transactions contemplated by the ▇▇▇ ▇▇▇▇ Acquisition
Agreement have closed, and ▇▇▇ ▇▇▇▇ is now a Subsidiary of the Company.
2. Representations and Warranties of the Selling Shareholders. Each
Selling Shareholder severally and not jointly represents and warrants to the
Underwriters for itself that:
(a) Such Selling Shareholder has and at the Closing Date will
have good and marketable title to the Securities to be sold hereunder by such
Selling Shareholder (the "Selling Shareholder Shares"), free and clear of any
outstanding liens, encumbrances, security interests, rights, subscriptions,
warrants, calls, preemptive rights, options or other agreements, claims or
restrictions of any kind, and full right, power and authority to effect the sale
and delivery of such Shares; and upon the delivery of and payment for the
Selling Shareholder Shares pursuant to this Agreement, good and marketable title
thereto, free and clear of any liens, encumbrances, security interests, rights,
subscriptions, warrants, calls, preemptive rights, options or other agreements,
claims or restrictions of any kind, will be transferred to the several
Underwriters.
(b) Such Selling Shareholder has full right, power and authority
to execute and deliver this Agreement and the Custody Agreement referred to
below and to perform its obligations under such agreements. The execution and
delivery of this Agreement and the consummation by such Selling Shareholder of
the transactions herein
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contemplated and the fulfillment by such Selling Shareholder of the terms hereof
will not require any consent, approval, authorization, or other order of any
court, regulatory body, administrative agency or other governmental body (except
as may be required under the Securities Act, state securities laws or Blue Sky
laws). The consummation of the transactions herein contemplated and the
fulfillment of the terms hereof will not conflict with or result in a breach of
any of the terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust or other material agreement or instrument to which such
Selling Shareholder is a party, or any order, rule or regulation applicable to
such Selling Shareholder of any court or of any regulatory body or
administrative agency or other governmental body having jurisdiction.
(c) Such Selling Shareholder has not taken and will not take,
directly or indirectly, any action designed to or which has constituted or which
might reasonably be expected to cause or result, under the Exchange Act, or
otherwise, in stabilization or manipulation of the price of the Company's
American Depositary Shares to facilitate the sale or resale of the Shares.
(d) Such Selling Shareholder has executed and delivered this
Agreement and the Custody Agreement, and in connection herewith, such Selling
Shareholder further represents, warrants and agrees that such Selling
Shareholder has deposited with the Company, pursuant to the Custody Agreement,
the certificates in negotiable form representing such Selling Shareholder Shares
for the purpose of further delivery pursuant to this Agreement; and the form of
the Custody Agreement has been previously delivered to you.
(e) There is no litigation or governmental proceeding to which
such Selling Shareholder is a party or to which any Selling Shareholder Shares
are subject which is pending or, to the knowledge of such Selling Shareholders,
threatened or contemplated that might affect the ability of the Selling
Shareholder to transfer good title to the Selling Shareholder Shares as required
hereby, or otherwise prevent the consummation of the transactions contemplated
hereby, or which is required to be disclosed, and is not so disclosed, in the
Registration Statement or Prospectus.
(f) Without having undertaken to determine independently the
accuracy or completeness of either the representations and warranties of the
Company contained herein or the information contained in the Registration
Statement and documents incorporated therein by reference, such Selling
Shareholder (i) has no reason to believe that the representations and warranties
of the Company contained in Section 1 hereof are not true and correct in all
material respects, and (ii) is familiar with the Registration Statement and has
no knowledge of any material fact, condition or information not disclosed in the
Registration Statement that has had a Material Adverse Effect; and the sale of
such Selling Shareholder's Shares by the Selling Shareholder pursuant hereto is
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not prompted by any information concerning the Company or any of the
Subsidiaries which is not set forth in the Registration Statement.
3. Purchase, Sale and Delivery of the Securities.
(a) On the basis of the representations, warranties, covenants
and agreements contained in this Agreement and subject to the terms and
conditions set forth in this Agreement, (i) the Company agrees to sell to the
several Underwriters, and each of the Underwriters agrees, severally and not
jointly, to purchase from the Company, at a purchase price of $_____ per Share
(the "Purchase Price") the respective number of Shares set forth opposite the
name of such Underwriter on Schedule II to this Agreement (subject to adjustment
as provided in Section 10 of this Agreement) and (ii) each Selling Shareholder
agrees to sell to the Underwriters the number of shares set forth opposite the
name of such Selling Shareholder on Schedule I hereof, subject to adjustments in
accordance with Section 10 hereof. The number of Firm Shares to be purchased by
each Underwriter from the Company and each Selling Shareholder shall be as
nearly as practicable in the same proportion to the total number of Firm Shares
being sold by the Company and the Selling Shareholders as the number of Firm
Shares being purchased by each Underwriter bears to the total number of Firm
Shares to be sold hereunder. The obligations of the Company and each of the
Selling Shareholders shall be several and not joint.
(b) Certificates in negotiable form for the total number of
Shares to be sold hereunder by the Selling Shareholders have been placed in
custody with the Company pursuant to the Custody Agreements executed by the
Selling Shareholders for delivery of all Selling Shareholder Shares. Each
Selling Shareholder specifically agrees that the Firm Shares and Option Shares
represented by the certificates held in custody for such Selling Shareholder
under the Custody Agreement are subject to the interest of the Underwriters
hereunder, and that the arrangements made by such Selling Shareholder for such
custody are to that extent irrevocable, and that the obligations of such Selling
Shareholder hereunder shall not be terminable by any act or deed of the Selling
Shareholder (or by any other person, firm or corporation, including the Company,
or the Underwriters) or by operation of law or by the occurrence of any other
event or events, except as set forth in the Custody Agreement. If any such event
should occur prior to the delivery to the Underwriters of the Firm Shares or
Option Shares hereunder, certificates for the Firm Shares or Option Shares shall
be delivered by the Company in accordance with the terms and conditions of this
Agreement as if such event had not occurred. The Company is authorized to
receive and acknowledge receipt of the proceeds of the sale of the Selling
Shareholder Shares held by it against the delivery of such Shares.
(c) On the basis of the several (and not joint) representations,
warranties, covenants and agreements of the Underwriters contained in this
Agreement and subject to
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the terms and conditions set forth in this Agreement, the Company and the
Selling Shareholders grant an option to the several Underwriters to purchase
from the Company and such Selling Shareholder all or any portion of the Option
Shares at the Purchase Price. Each Selling Shareholder agrees to sell the number
of Option Shares set forth next to such Selling Shareholders name on Schedule I.
This option may be exercised only to cover over-allotments in the sale of the
Shares by the Underwriters and may be exercised in whole or in part at any time
(but not more than once) on or before the 30th day after the date of the
Prospectus upon written, telecopied or telegraphic notice by the Representatives
to the Company setting forth the aggregate principal number of Option Shares as
to which the several Underwriters are exercising the option and the settlement
date. If the option to purchase the Option Shares is exercised, the Option
Shares shall be purchased severally, and not jointly, by each Underwriter in the
same proportion that the number of Shares set forth opposite the name of the
Underwriter on Schedule I to this Agreement bears to the total number of Shares
to be purchased by the Underwriters under Section 3(a) above, subject to such
adjustments as the Representatives in their absolute discretion shall make to
eliminate any fractional Shares. Delivery of Option Shares, and payment
therefor, shall be made as provided in Section 2(d) and Section 2(e) below.
(d) Delivery of the Firm Shares and the Option Shares (if the
option granted by the Company in Section 3(c) above has been exercised not later
than 7:00 a.m., San Francisco time, on the date two business days preceding the
Closing Date), and payment therefor, shall be made at the office of ▇▇▇ ▇▇▇▇▇▇ &
Company, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ at 7:00 a.m., San
Francisco time, on the third business day after the date of this Agreement, or
as provided in Section 10 of this Agreement. The date and hour of delivery and
payment for the Shares are referred to in this Agreement as the "Closing Date."
As used in this Agreement, "business day" means a day on which the NNM is
operating and on which banks in New York and California are open for business
and not permitted by law or executive order to be closed. American Depositary
Receipts ("ADRs") representing the Shares shall be in such denominations and
registered in such names as the Representatives may request in writing at least
two business days before the Closing Date.
(e) If the option granted by the Company in Section 3(c) above is
exercised after 7:00 a.m., San Francisco time, on the date two business days
preceding the Closing Date, delivery of the Option Shares and payment therefor
shall be made at the office of ▇▇▇ ▇▇▇▇▇▇ & Company, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ at 7:00 a.m., San Francisco time, on the date specified by
the Representatives (which shall be three or four or fewer business days after
the exercise of the option, but not in excess of the period specified in the
Rules and Regulations).
(f) Payment of the purchase price for the Securities to the
Company and each of the Selling Shareholders by the several Underwriters shall
be made by wire
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transfer, payable to the order of the Company and each of the Selling
Shareholders or as otherwise provided in the Custody Agreement, in all cases to
such accounts as the Representatives shall have been advised to make payments
in writing at least two business days prior to the Closing Date. Such payment
shall be made upon delivery of the Securities to the Representatives for the
respective accounts of the several Underwriters. The Securities to be delivered
to the Representatives 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 the Shares, and at least one business
day prior to the purchase of the Option Shares, in the case of the Option
Shares. The Representatives, individually and not on behalf of the Underwriters,
may (but shall not be obligated to) make payment to the Company or the Selling
Shareholder, as the case may be, for Shares to be purchased by any Underwriter
whose check shall not have been received by the Representatives on the Closing
Date or any later date on which Option Shares are purchased for the account of
such Underwriter. Any such payment shall not relieve such Underwriter from any
of its obligations hereunder.
(g) The several Underwriters propose to offer the Securities for
sale to the public as soon as the Representatives deem it advisable to do so.
The Securities are to be initially offered to the public at the public offering
price set forth (or to be set forth) in the Prospectus. The Representatives may
from time to time thereafter change the public offering price and other selling
terms.
(h) The information set forth in the last paragraph on the front
cover page (insofar as such information relates to the Underwriters), the
preceding table and footnotes, the legends respecting stabilization and passive
market making set forth on page 3 and the statements set forth under the caption
"Underwriting" in the Registration Statement, 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.
4. Further Agreements of the Company. The Company covenants and agrees
with the several 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 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 (including post-effective
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amendments) of the Registration Statement or any supplement to the Prospectus
without (i) advising the Representatives of the proposed filing of such
amendment or supplement and, a reasonable time prior to the proposed filing,
furnishing the Representatives with copies thereof and (ii) obtaining the prior
consent of the Representatives to such filing. 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 advisable in the reasonable opinion of the Representatives in
connection with the distribution of the Securities by the Underwriters and shall
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 becomes effective, (ii) when any post-effective
amendment thereof becomes 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
registration, qualification or exemption from registration or qualification of
the Securities 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 the Representatives and to Underwriters' counsel a signed copy of the
Registration Statement as originally filed and of each amendment thereto filed
prior to the time the Registration Statement becomes effective and, promptly
upon the filing thereof, a signed copy of each post-effective amendment, if any,
to the Registration Statement (together with, in each case, all exhibits thereto
unless previously furnished to the Representatives) and will also deliver to the
Representatives for distribution to the several 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 Representatives and send to the several
Underwriters, at such office or offices as the Representatives may designate, as
many copies of the Prospectus as the Representatives 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 to 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 the Representatives may reasonably
request for the purposes contemplated by the Securities Act.
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(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 or so that the Prospectus will
not omit to state a material fact necessary to be stated therein, in each case
at the time the Prospectus is delivered to a purchaser of the Securities, 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 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 Securities by the Underwriters
and during such period, the Underwriters propose to vary the terms of offering
thereof by reason of changes in general market conditions or otherwise, the
Representatives will advise the Company in writing of the proposed variation and
if, in the opinion either of counsel for the Company or counsel for the
Underwriters, such proposed variation requires that the Prospectus be
supplemented or amended, the Company will forthwith prepare and file with the
Commission a supplement to the Prospectus setting forth such variation. The
Company authorizes the Underwriters and all dealers to whom any of the
Securities may be sold by the Underwriters to use the Prospectus, as from time
to time so amended or supplemented, in connection with the sale of the
Securities in accordance with the applicable provisions of the Securities Act
and the Rules and Regulations for such period.
(e) The Company will cooperate with the Representatives and
Underwriters' counsel in the qualification or registration of the Securities for
offer and sale under the securities or Blue Sky laws of such states as the
Representatives may designate and, if applicable, in connection with exemptions
from such qualification or registration 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, registrations and exemptions in effect; provided,
however, that, other than the appointment of a United States representative as
required by the Securities Act, 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,
registrations and exemptions in effect for so long a period as the
Representatives may reasonably request for the distribution of the Securities.
(f) During a period of five years commencing with the date of
this Agreement, the Company will promptly furnish to the Representatives and to
each
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Underwriter who may so request in writing copies of (i) all periodic and special
reports furnished by it to shareholders of the Company, (ii) all information,
documents and reports filed by it with the Commission, any securities exchange
on which any securities of the Company are then listed, the NNM or the NASD, and
(iii) all press releases and material news items or articles in respect of the
Company or its 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).
(g) 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 Representatives an earnings statement or
statements in accordance with Section 11(a) of the Securities Act and Rule 158
of the Rules and Regulations.
(h) The Company will apply the net proceeds from the offering of
the Securities in the manner set forth under the caption "Use of Proceeds" in
the Prospectus.
(i) The Company will comply with all provisions of all
undertakings contained in the Registration Statement.
(j) The Company will cause the Securities to be listed on the
NNM, and will use its best efforts to cause such listing (or a listing on a
comparable national securities exchange) to be continued (unless terminated as a
result of a "going private" transaction or an acquisition of the Company) for at
least five years after the date of this Agreement, and the Company will comply
with all registration, filing, reporting and other requirements of the Exchange
Act and the NNM which may from time to time be applicable to the Securities, the
Ordinary Shares and the Company.
(k) The Company will use all commercially reasonable efforts to
maintain insurance of the types and in the amounts which it deems adequate for
its business consistent with insurance coverage maintained by companies of
similar size and engaged in similar businesses in similar geographic locations,
including, but not limited to, product liability insurance and 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.
(l) The Company will issue no press release prior to the Closing
Date with respect to the offering without the Representatives' prior consent.
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(m) The Company will not effect a change in its accounting firm
to any other firm other than a "big six" accounting firm for a period of three
years from the date of this Agreement without the written consent of the
Representatives.
(n) The Company has not and will not, without the prior written
consent of the Representatives, seek any exemption from the listing requirements
of the NNM.
(o) The Company will take all steps necessary to comply with the
requirements of the NASD in connection with the issuance and sale of the
Securities.
(p) Within a reasonable time after the Closing Date, the Company
shall supply to the Underwriters' counsel, at the Company's cost, up to five
bound volumes, each containing all material documents relating to the offering
of the Stock, as reasonably requested by such counsel.
5. Representations and Warranties, and Covenants of, the Underwriters.
Each Underwriter, severally and not jointly, represents and warrants to, and
agrees with the Company, that:
(a) It has not offered or sold and will not offer or sell the
Securities to persons in the United Kingdom, other than to persons whose
ordinary activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of their businesses or
otherwise in circumstances which have not resulted and will not result in an
offer to the public in the United Kingdom within the meaning of the Public
Offers of Securities Regulations 1995 of the United Kingdom;
(b) It has only issued or passed on and will only issue or pass
on in the United Kingdom any document received by it in connection with the
issue and sale of the Securities to a person who is of a kind described in
Article 11(3) of the Financial Services ▇▇▇ ▇▇▇▇ (Investment Advertisement)
(Exemptions) Order 1996 or is a person to whom such a document may otherwise
lawfully be issued or passed on; and
(c) It has complied and will comply with all applicable
provisions of the Financial Services ▇▇▇ ▇▇▇▇ with respect to anything done by
it in relation to the Securities, from or otherwise involving the United
Kingdom.
6. Fees and Expenses.
(a) The Company and the Selling Shareholders agree with each
Underwriter that:
(i) The Company will pay and bear all costs and expenses
in connection with: the preparation, printing and filing of the Registration
Statement
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(including financial statements, schedules and exhibits), Preliminary
Prospectuses and the Prospectus, any drafts of each of them and any amendments
or supplements to any of them; the duplication (including all drafts thereof) of
this Agreement, the Agreement Among Underwriters, any Selected Dealer
Agreements, the Preliminary Blue Sky Survey and any Supplemental Blue Sky
Survey, the Underwriters' Questionnaire, the Power of Attorney and the
Depositary Agreement and the duplication and printing (including of drafts
thereof) of any other underwriting documents and material (including but not
limited to marketing memoranda and other marketing material) in connection with
the offering, purchase, sale and deliver of the Securities; the issuance and
delivery of the Securities under this Agreement to the several Underwriters,
including all expenses, taxes, duties, fees and commissions on the purchase and
sale of the Securities and stock exchange brokerage and transaction levies with
respect to the purchase and, if applicable, the sale of the Securities by the
Company to the Underwriters (provided, however, that the Company will pay only
one half of the stamp duty assessed by Hong Kong in connection with the transfer
of the Selling Shareholders Shares to the Underwriters, with the remainder to be
paid by the Selling Shareholders in proportion to the number of Shares to be
sold by them hereunder); the cost of printing the certificates for the
Securities; the Depositary's fees; the fees and disbursements of counsel for the
Company; all fees and other charges of the Company's independent public
accountants and any other experts named in the Prospectus; the cost of
furnishing to the several Underwriters copies of the Registration Statement
(including appropriate exhibits), Preliminary Prospectus and the Prospectus, the
agreements and other documents and instruments referred to above and any
amendments or supplements to any of the foregoing; the NASD filing fees; the
cost of qualifying or registering the Securities (or obtaining exemptions from
qualification or registration) under the laws of such jurisdictions as the
Representatives may designate (including filing fees and fees and
costs/disbursements of Underwriters' counsel in connection with such NASD
filings and state securities or Blue Sky qualifications, registrations and
exemptions and in preparing the preliminary and any final Blue Sky Memorandum
not to exceed $5,000); all fees and expenses in connection with listing of the
Securities on the NNM; and all other expenses incurred by the Company in
connection with the performance of its obligations hereunder. Amounts paid in
connection with state securities and Blue Sky qualification (including filing
fees, fees and expenses of counsel) shall be paid separately by the Company.
(ii) In addition to its obligations under Section 9(a) of
this Agreement, the Company agrees that, as an interim measure during the
pendency of any claim, action, investigation, inquiry or other proceeding
arising out of or based upon any loss, claim, damage or liability described in
Section 9(a) of this Agreement, it will reimburse or advance to or for the
benefit of the Underwriters, and each of them, on a monthly basis (or more
often, if requested, but in no case more frequently than weekly) for all legal
and other expenses reasonably incurred in connection with investigating or
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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 reimburse or advance for the
benefit of the Underwriters for such expenses or the possibility that such
payments might later be held to have been improper by a court of competent
jurisdiction. To the extent that any portion, or all, of any such interim
reimbursement payments or advances are so held to have been improper, the
Underwriters receiving the same shall promptly return such amounts to the
Company together with interest, compounded daily, at the prime rate (or other
commercial lending rate for borrowers of the highest credit standing) announced
from time to time by Bank of America, NT&SA, San Francisco, California (the
"Prime Rate"), but not in excess of the maximum rate permitted by applicable
law. Any such interim reimbursement payments or advances that are not made to or
for the Underwriters within 30 days of a request for reimbursement or for an
advance shall bear interest at the Prime Rate, compounded daily, but not in
excess of the maximum rate permitted by applicable law, from the date of such
request until the date paid.
(b) In addition to their obligations under Section 9(b) of this
Agreement, the Underwriters severally and in proportion to their obligation to
purchase Shares as set forth on Schedule I hereto, agree that, as an interim
measure during the pendency of any claim, action, investigation, inquiry or
other proceeding arising out of or based upon any loss, claim, damage or
liability described in Section 9(b) of this Agreement, they will reimburse or
advance to or for the benefit of the Company on a monthly basis (or more often,
if requested, but in no case more frequently than weekly) for all legal and
other expenses incurred by the Company 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 or
enforceability of the Underwriters' obligation to reimburse or advance for the
benefit of the Company for such expenses and the possibility that such payments
or advances might later be held to have been improper by a court of competent
jurisdiction. To the extent that any portion, or all, of any such interim
reimbursement payments or advances are so held to have been improper, the
Company shall promptly return such amounts to the Underwriters together with
interest, compounded daily, at the Prime Rate, but not in excess of the maximum
rate permitted by applicable law. Any such interim reimbursement payments or
advances that are not made to the Company within 30 days of a request for
reimbursement or for an advance shall bear interest at the Prime Rate,
compounded daily, but not in excess of the maximum rate permitted by applicable
law, from the date of such request until the date paid.
(c) Any controversy arising out of the operation of the interim
reimbursement and advance arrangements set forth in Sections 6(a)(ii) and 6(b)
above, including the amounts of any requested reimbursement payments or
advances, the method
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of determining such amounts and the basis on which such amounts shall be
apportioned among the indemnifying parties, shall be settled by arbitration
conducted under the provisions of the Code of Arbitration Procedure of the NASD.
Any such arbitration must be commenced by service of a written demand for
arbitration or a written notice of intention to arbitrate. If the party
demanding arbitration does not make such designation of an arbitration tribunal
in such demand or notice, then the party responding to the demand or notice is
authorized to do so. Any such arbitration will be limited to the interpretation
and obligations of the parties under the interim reimbursement and advance
provisions contained in Sections 6(a)(ii) and 6(b) above and will not resolve
the ultimate propriety or enforceability of the obligation to indemnify for or
contribute to expenses that is created by the provisions of Section 9 of this
Agreement.
(d) If the sale of the Securities provided for herein is not
consummated because any condition to the obligations of the Underwriters set
forth in Section 7 of this Agreement is not satisfied, or because of any
refusal, inability or failure on the part of the Company to perform any material
covenant or agreement set forth in this Agreement or to comply with any material
provision of this Agreement other than by reason of a default by any of the
Underwriters, the Company agrees to reimburse the several Underwriters upon
demand for all reasonable out-of-pocket accountable expenses actually incurred
(including fees and disbursements of counsel) that shall have been incurred by
any or all of them in connection with investigating, preparing to market or
marketing the Securities or otherwise in connection with this Agreement.
7. Conditions of Underwriters' Obligations. The several obligations of
the Underwriters to purchase and pay for the Securities shall be subject to the
accuracy in all material respects as of the date of execution of this Agreement,
the Closing Date and the date and time at which the Option Shares are to be
purchased, as the case may be, of the representations and warranties of the
Company and the Selling Shareholders set forth in this Agreement, to the
accuracy in all material respects of the statements of the Company and its
officers and the Selling Shareholders made in any certificate delivered pursuant
to this Agreement, to the performance in all material respects by the Company
and the Selling Shareholders 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, to the satisfaction of all
conditions to be satisfied or performed by the Company and the Selling
Shareholders at or prior to that date 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 the
Company shall have provided evidence satisfactory to the Representatives of such
filing and effectiveness) not later than 5:00 p.m., New York time, on the date
of this Agreement or at such later date
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and time as the Representatives may approve in writing 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, registration or exemption from qualification or
registration for the sale of the Securities 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
Representatives and Underwriters' counsel.
(b) The Representatives shall have received from ▇▇▇▇▇▇ ▇▇▇▇▇▇
White & ▇▇▇▇▇▇▇▇▇, counsel for the Underwriters, an opinion, on and dated as of
the Closing Date or, if applicable, the date on which Option Shares are to be
purchased, with respect to the issuance and sale of the Securities and such
other related matters as the Representatives may reasonably require, and the
Company shall have furnished such counsel with all documents which they may
reasonably request for the purpose of enabling them to pass upon such matters.
(c) The Representatives shall have received on the Closing Date
or, if applicable, the later date on which Option Shares are purchased, the
opinions of (i) Cooley Godward LLP, counsel for the Company, (ii) ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇ & Co., Hong Kong counsel to the Company, (iii) Guangzhou Law Office,
People's Republic of China counsel to the Company, (iv) Shenzhen Law Offices,
People's Republic of China counsel to the Company in connection with the ▇▇▇
▇▇▇▇ acquisition, and (v) counsel for the Selling Shareholders, addressed to the
Underwriters and dated the Closing Date or such later date, with reproduced
copies or signed counterparts thereof for each of the Underwriters in each case
in form and substance satisfactory to the Representatives.
(d) The Representatives shall have received on the Closing Date
and on any later 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
President and the Chief Financial Officer of the Company on behalf of the
Company stating that, to their knowledge:
(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 the
Closing Date or such later date on which Option Shares are purchased, and the
Company has complied with all the agreements and satisfied all the conditions in
all material respects on its part to be performed or satisfied at or prior to
the Closing Date or such later date;
(ii) no stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceedings for that purpose have
been
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instituted or are pending or, to the Company's knowledge, are threatened under
the Securities Act;
(iii) the Securities have been approved for listing on the
NNM; and
(iv) (A) the respective signers of such certificate have
carefully examined the Registration Statement in the form in which it originally
became effective and the Prospectus and any supplements or amendments to any of
them and, as of the Effective Date, the statements made in the Registration
Statement and the Prospectus were true and correct in all material respects and
neither the Registration Statement nor the Prospectus omitted to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading, (B) since the Effective Date, no event has
occurred that should have been set forth in an amendment to the Registration
Statement or a supplement or amendment to the Prospectus that has not been set
forth in such an amendment or supplement, (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, there has not been any material
change or any development involving a prospective material change that has had
or could reasonably be expected to have a Material Adverse Effect and, since
such dates, neither the Company nor any of its Subsidiaries has entered into any
material transaction out of the ordinary course of business not referred to in
the Registration Statement in the form in which it originally became effective
and the Prospectus contained therein, and (D) there are not any pending or known
threatened legal proceedings to which the Company or any Subsidiary is a party
or of which property of the Company or any Subsidiary is the subject which are
material and which are not disclosed in the Registration Statement and the
Prospectus.
(e) The Representatives shall have received on the Closing Date
and on any later 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
President and the Chief Financial Officer of each of each of the Selling
Shareholders, or by any Selling Shareholders who are individuals, stating that
the representations and warranties of each of the Selling Shareholders set forth
in Section 2 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 the Closing
Date or such later date on which Option Shares are purchased, and each of the
Selling Shareholders has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior to the Closing
Date or such later date.
(f) The Representatives shall have received from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
& Co., accountants to the Company, a letter or letters, addressed to the
Underwriters and dated the Closing Date and any later date on which Option
Shares are purchased,
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confirming that they are independent accountants with respect to the Company
within the meaning of the Securities Act and the applicable Rules and
Regulations thereunder and, based upon the procedures described in their letter
delivered to the Representatives concurrently with the execution of this
Agreement (the "Original Letter"), but carried out to a date not more than five
business days prior to the Closing Date or such later date on which Option
Shares are purchased, (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, as the case may be, and (ii) setting forth any
revisions and additions to the statements and conclusions set forth in the
Original Letter that are necessary to reflect any changes in the facts described
in the Original Letter since the date of the Original Letter or to reflect the
availability of more recent financial statements, data or information. Such
letters shall reflect that there is not any change, or any development involving
a prospective change, in or affecting the business, properties or condition
(financial or otherwise), results of operations or prospects of the Company
which, in the Representatives' reasonable judgment, makes it impractical or
inadvisable to proceed with the public offering of the Shares or the purchase of
the Option Shares as contemplated by the Prospectus.
(g) Prior to the Closing Date, the Securities shall have been
approved for listing on the NNM, subject only to official notice of issuance.
(h) On or prior to the Closing Date, the Representatives shall
have received from the Company, ZICHL, Longvest and Ertl the executed agreements
described in Sections 1(t) and 1(u) of this Agreement.
(i) The Company and the Selling Shareholders shall have furnished
to the Representatives such further certificates and documents as the
Representatives shall reasonably request (including certificates of officers of
the Company and the Selling Shareholders) as to the accuracy of the
representations and warranties of the Company and the Selling Shareholders set
forth in this Agreement, the performance by the Company and the Selling
Shareholders of their obligations under this Agreement and such other matters as
the Representatives may have then requested.
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 the
Representatives and the Underwriters' counsel. The Company and the Selling
Shareholders will furnish the Representatives with such number of conformed
copies of such opinions, certificates, letters and documents as the
Representatives shall reasonably request.
If any of the conditions specified in this Section 7 shall not
have been fulfilled in all material respects when and as provided in this
Agreement, time being of
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the essence, 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 Representatives and the Underwriters'
counsel, this Agreement and all obligations of the Underwriters hereunder may be
canceled by the Representatives at or at any time prior to, the Closing Date or,
with respect to the Option Shares, prior to the date which the Option Shares are
to be purchased, as the case may be. Notice of such cancellation shall be given
to the Company and the Selling Shareholders in writing or by telecopy or
telegraph confirmed in writing. Any such termination shall be without liability
of the Company and the Selling Shareholders to the Underwriters (except as
provided in Section 6 or Section 9 of this Agreement) and without liability of
the Underwriters to the Company or the Selling Shareholders (except as provided
in Section 9 of this Agreement).
8. Conditions of the Obligation of the Company and the Selling
Shareholders. The obligations of the Company and the Selling Shareholders to
sell and deliver the Securities 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 and time at which the Option
Shares are to be purchased, no stop order suspending the effectiveness of the
Registration Statement shall be in effect and no proceedings therefor shall be
pending or threatened by the Commission or any state securities authority.
9. Indemnification and Contribution.
(a) The Company and the Selling Shareholders agree to indemnify
and hold harmless each Underwriter and each person (including each partner or
officer thereof) who controls any Underwriter within the meaning of Section 15
of the Securities Act from and against any and all losses, claims, damages or
liabilities, joint or several, to which such indemnified parties or any of them
may become subject under the Securities Act, the Exchange Act or any other
federal, state or foreign statute, law or regulation, at common law or
otherwise, except to the extent such losses, claims, damages or liabilities are
finally judicially determined to have resulted from actions taken or the failure
to take action by the person claiming indemnification in bad faith or due to
gross negligence on the part of the person claiming indemnification, and the
Company and the Selling Shareholders agree to reimburse each such Underwriter
and controlling person for any legal or other expenses (including, except as
otherwise provided below, settlement expenses and fees and disbursements of
counsel) reasonably incurred by the respective indemnified parties in connection
with defending against any such losses, claims, damages or liabilities or in
connection with any investigation or inquiry of, or other proceeding that may be
brought against, the respective indemnified parties, in each case insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon, in whole or in part, (i) any untrue statement or
alleged untrue
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statement of a material fact contained in the Registration Statement in the form
originally filed or in any amendment thereto (including the Prospectus as part
thereof) or any post-effective amendment 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 (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus or the Prospectus (as amended or as supplemented if the
Company shall have filed with the Commission any amendment thereof or supplement
thereto) or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided, however, that (1) the indemnity agreements of the Company
and the Selling Shareholders contained in this Section 9(a) shall not apply to
such losses, claims, damages, liabilities or expenses if such statement or
omission was made in reliance upon and in conformity with information furnished
in writing to the Company by or on behalf of any Underwriter through the
Representatives specifically for use in any Preliminary Prospectus or the
Registration Statement or the Prospectus or any such amendment thereof or
supplement thereto and (2) the indemnity agreement contained in this Section
9(a) with respect to any Preliminary Prospectus shall not inure to the benefit
of any Underwriter from whom the person asserting any such losses, claims,
damages, liabilities or expenses purchased the Securities that is the subject
thereof (or to the benefit of any person controlling such Underwriter) if the
Company can demonstrate that at or prior to the written confirmation of the sale
of such Securities a copy of the Prospectus (or the Prospectus as amended or
supplemented) or, for this purpose, if applicable, a copy of the then most
recent Preliminary Prospectus was not sent or delivered to such person and the
untrue statement or omission of a material fact contained in such Preliminary
Prospectus or, if applicable, prior Preliminary Prospectus was corrected in the
Prospectus (or the Prospectus as amended or supplemented) or, if applicable, the
then most recent Preliminary Prospectus, unless the failure is the result of
noncompliance by the Company with Section 4 of this Agreement. The indemnity
agreements of the Company and the Selling Shareholders contained in this Section
9(a) and the representations and warranties of the Company and the Selling
Shareholders contained in Section 1 of this Agreement shall remain operative and
in full force and effect regardless of any investigation made by or behalf of
any indemnified party and shall survive the delivery of and payment for the
Securities. This indemnity agreement shall be in addition to any liabilities
which the Company and the Selling Shareholders may otherwise have. In no event
shall a Selling Shareholder's liability exceed the net proceeds received by such
Selling Shareholder in the offering.
(b) Each Underwriter, severally and not jointly, agrees to
indemnify and hold harmless the Company, each of its officers who signs the
Registration Statement, each of its directors, each other Underwriter and each
person (including each partner or
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29
officer thereof) who controls the Company or any such other Underwriter within
the meaning of Section 15 of the Securities Act and each of the Selling
Shareholders, each director of each Selling Shareholder and each person
(including each partner or officer thereof) who controls a Selling Shareholder
within the meaning of Section 15 of the Securities Act, from and against any and
all losses, claims, damages or liabilities, joint or several, to which such
indemnified parties or any of them may become subject under the Securities Act,
the Exchange Act, or other federal, state or foreign statute, law or regulation
or at common law or otherwise and to reimburse each of them for any legal or
other expenses (including, except as otherwise hereinafter provided, settlement
expenses and fees and disbursements of counsel) incurred by the respective
indemnified parties in connection with defending against any such losses,
claims, damages or liabilities or in connection with any investigation or
inquiry of, or other proceeding that may be brought against, the respective
indemnified parties, in each case arising out of or based upon (i) any breach of
any covenant or agreement of the indemnifying Underwriter contained in this
Agreement, (ii) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement (including the Prospectus as part
thereof) or any post-effective amendment 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 or (iii) any untrue statement or
alleged untrue statement of a material fact contained in any Preliminary
Prospectus or the Prospectus (as amended or as supplemented if the Company shall
have filed with the Commission any amendment thereof or supplement thereto) or
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, but in
each case under clauses (i), (ii) and (iii) above, as the case may be, only if
such statement or omission was made in reliance upon and in connection with
information furnished in writing to the Company by or on behalf of such
indemnifying Underwriter through the Representatives specifically for use in any
Preliminary Prospectus, the Registration Statement or the Prospectus or any such
amendment thereof or supplement thereto. The Company and the Selling
Shareholders acknowledge and agree that the matters described in Section 3(h) of
this Agreement constitute the only information furnished in writing by or on
behalf of any of the several Underwriters for inclusion in the Registration
Statement or the Prospectus or in any Preliminary Prospectus. The several
indemnity agreement of each Underwriter contained in this Section 9(b) 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 Securities. This indemnity agreement shall be in addition to
any liabilities which each Underwriter may otherwise have.
(c) Each person or entity indemnified under the provisions of
Sections 9(a) and 9(b) above agrees that, upon the service of a summons or other
initial legal
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30
process upon it in any action or suit instituted against it or upon its receipt
of written notification of the commencement of any investigation or inquiry of,
or proceeding against, it in respect of which indemnity may be sought on account
of any indemnity agreement contained in such Sections, it will, if a claim in
respect thereunder is to be made against the indemnifying party or parties under
this Section 9, promptly give written notice (the "Notice") of such service or
notification to the party or parties from whom indemnification may be sought
hereunder. No indemnification provided for in Sections 9(a) or 9(b) above shall
be available to any person who fails to so give the Notice if the party to whom
such Notice was not given was unaware of the action, suit, investigation,
inquiry or proceeding to which the Notice would have related, but only to the
extent such party was materially prejudiced by the failure to receive the
Notice, and the omission to so notify such indemnifying party or parties shall
not relieve such indemnifying party or parties from any liability which it or
they may have to the indemnified party for contribution or otherwise than on
account of Sections 9(a) and 9(b). Any indemnifying party shall be entitled at
its own expense to participate in the defense of any action, suit or proceeding
against, or investigation or inquiry of, an indemnified party. Any indemnifying
party shall be entitled, if it so elects within a reasonable time after receipt
of the Notice by giving written notice (the "Notice of Defense") to the
indemnified party, to assume (alone or in conjunction with any other
indemnifying party or parties) the entire defense of such action, suit,
investigation, inquiry or proceeding, in which event such defense shall be
conducted, at the expense of the indemnifying party or parties, by counsel
chosen by such indemnifying party or parties and reasonably satisfactory to the
indemnified party or parties; provided, however, that (i) if the indemnified
party or parties reasonably determine that there may be a conflict between the
positions of the indemnifying party or parties and of the indemnified party or
parties in conducting the defense of such action, suit, investigation, inquiry
or proceeding or that there may be legal defenses or rights available to such
indemnified party or parties different from or in addition to those available to
the indemnifying party or parties, then separate counsel for and selected by the
indemnified party or parties shall be entitled, at the expense of the
indemnifying parties, to conduct the defense of the indemnified parties to the
extent determined by counsel to the indemnified parties to be necessary to
protect the interests of the indemnified party or parties and (ii) in any event,
the indemnified party or parties shall be entitled to have counsel selected by
such indemnified party or parties participate in, but not conduct, the defense.
If, within a reasonable time after receipt of the Notice, an indemnifying party
gives a Notice of Defense and, unless separate counsel is to be chosen by the
indemnified party or parties as provided above, the counsel chosen by the
indemnifying party or parties is reasonably satisfactory to the indemnified
party or parties, the indemnifying party or parties will not be liable under
Sections 9(a) through 9(c) for any legal or other expenses subsequently incurred
by the indemnified party or parties in connection with the defense of the
action, suit, investigation, inquiry or proceeding, except that (A) the
indemnifying party or parties shall bear and pay the legal
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and other expenses incurred in connection with the conduct of the defense as
referred to in clause (i) of the "provided, however" clause in the preceding
sentence and (B) the indemnifying party or parties shall bear and pay such other
expenses as it or they have authorized to be incurred by the indemnified party
or parties. If, within a reasonable time after receipt of the Notice, no Notice
of Defense has been given, the indemnifying party or parties shall be
responsible for any legal or other expenses incurred by the indemnified party or
parties in connection with the defense of the action, suit, investigation,
inquiry or 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
9 but 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 to appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 9 provides for
indemnification in such case, each indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of the losses,
claims, damages, liabilities and expenses referred to in Section 9(a) or 9(b)
above (i) in such proportion as is appropriate to reflect the relative benefits
received by each indemnifying party from the offering of the Securities or (ii)
if the allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of each
indemnifying party in connection with the statements or omissions that resulted
in such losses, claims, damages or liabilities, or actions in respect thereof,
as well as any other relevant equitable considerations. The relative benefits
received by the Company and the Selling Shareholders and the Underwriters shall
be deemed to be in the same respective proportion as the total proceeds from the
offering of the Securities, net of the underwriting discounts, received by the
Company and the Selling Shareholders and the total underwriting discount
retained by the Underwriters bear to the aggregate public offering price of the
Securities. Relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by each indemnifying party and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission.
The parties agree that it would not be just and equitable if
contribution pursuant to this Section 9(d) were to be determined by pro rata
allocation which does not take into account the equitable considerations
referred to in the first sentence of the first paragraph of this Section 9(d)
and to the considerations referred to in the third sentence of the first
paragraph of this Section 9(d). The amount paid by an indemnified party as a
result of the losses, claims, damages or liabilities, or actions in respect
thereof, referred to in the first sentence of the first paragraph of this
Section 9(d) shall be deemed to include
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any legal or other expenses incurred by such indemnified party in connection
with investigating, preparing to defend or defending against any action or claim
which is the subject of this Section 9(d). Notwithstanding the provisions of
this Section 9(d), no Underwriter shall be required to contribute any amount in
excess of the underwriting discount applicable to the Securities purchased by
that Underwriter. For purposes of this Section 9(d), each person who controls an
Underwriter within the meaning of the Securities Act shall have the same rights
to contribution as such Underwriter, and each person who controls the Company
within the meaning of the Securities Act, each officer of the Company who signed
the Registration Statement and each director of the Company shall have the same
rights to contribution as the Company; provided, however, in each case that no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations to contribute in this Section 9(d) are several in proportion to
their respective underwriting obligations and not joint.
Each party or other entity entitled to contribution agrees that
upon the service of a summons or other initial legal process upon it in any
action instituted against it in respect of which contribution may be sought, it
will promptly give written notice of such service to the party or parties from
whom contribution may be sought, but the omission to so notify such party or
parties of any such service shall not relieve the party from whom contribution
may be sought from any obligation it may have hereunder or otherwise (except as
specifically provided in Section 9(c) above).
(e) The Company and the Selling Shareholders shall not, without
the prior written consent of each Underwriter, settle or compromise or consent
to the entry of any judgment in any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not such Underwriter or any person who controls such
Underwriter within the meaning of Section 15 of the Securities Act is a party to
such claim, action, suit or proceeding) unless such settlement, compromise or
consent includes an unconditional release of each such Underwriter and each such
controlling person from any and all liability arising out of such claim, action,
suit or proceeding.
(f) The parties to this Agreement hereby acknowledge that they
are sophisticated business persons who were represented by counsel during the
negotiations regarding the provisions of this Agreement, including, without
limitation, the provisions of Sections 6(a)(ii), 6(b) and 6(c) and this Section
9 of this Agreement and that they are fully informed regarding all such
provisions. They further acknowledge that the provisions of Sections 6(a)(ii),
6(b) and 6(c) and this Section 9 of this Agreement 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
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and Prospectus as required by the Securities Act, the Rules and Regulations, the
Exchange Act and the Exchange Act Rules and Regulations. The parties are advised
that federal or state policy, as interpreted by the courts in certain
jurisdictions, may be contrary to certain provisions of Sections 6(a)(ii), 6(b)
and 6(c) and this Section 9 of this Agreement and, to the extent permitted by
law, the parties hereto hereby expressly waive and relinquish any right or
ability to assert such public policy as a defense to a claim under Sections
6(a)(ii), 6(b) or 6(c) or this Section 9 of this Agreement and further agree not
to attempt to assert any such defense.
(g) No Selling Shareholder will be liable under the indemnity
agreements of this Section 9 unless and until the Underwriters have made
written demand on the Company for payment hereunder and such demand has gone
unpaid for 60 days after receipt thereof. The Company and the Selling
Shareholders may agree, as among themselves and without limiting the rights of
the Underwriters under this Agreement, as to the respective amounts of such
liability for which they each will be responsible. The parties hereby
acknowledge and agree that nothing in this Section 9(g) shall be construed to
make the Selling Shareholders guarantors of the obligations of the Company
hereunder. The Selling Shareholders acknowledge and agree that their obligations
under this Section 9 are primary, joint and several with those of the Company.
The Selling Shareholders hereby expressly waive any defenses which would be
available to them if their obligations hereunder were to be construed as those
of a guarantor.
10. Substitution of Underwriters. If for any reason one or more of the
Underwriters fails or refuses (otherwise than for a reason sufficient to justify
the termination of this Agreement under the provisions of Section 7 or Section
11 of this Agreement) to purchase and pay for the number of Shares agreed to be
purchased by such Underwriter or Underwriters, the Representatives shall
immediately give notice thereof to the Company and the non-defaulting
Underwriters shall have the right within 24 hours after the receipt by the
Representatives of such notice to purchase, or procure one or more other
Underwriters to purchase, in such proportions as may be agreed upon among the
Representatives and such purchasing Underwriter or Underwriters and upon the
terms set forth herein, all or any part of the Shares that such defaulting
Underwriter or Underwriters agreed to purchase. If the non-defaulting
Underwriters fail to make such arrangements with respect to all such Shares, the
number of shares of Shares that each non-defaulting Underwriter is otherwise
obligated to purchase under this Agreement shall be automatically increased on a
pro rata basis to absorb the remaining Shares that the defaulting Underwriter or
Underwriters agreed to purchase; provided, however, that the non-defaulting
Underwriters shall not be obligated to purchase the Shares that the defaulting
Underwriter or Underwriters agreed to purchase if the aggregate amount of such
Shares exceeds 10% of the aggregate amount of Shares that all Underwriters
agreed to purchase under this Agreement. If the total number of shares of Shares
that the defaulting Underwriter or Underwriters agreed to purchase shall not be
purchased or absorbed in accordance with the two preceding sentences, the
Company shall have the right, within 24 hours next succeeding the first 24-hour
period above referred to, to make arrangements with other underwriters or
purchasers satisfactory to the Representatives for purchase of such Shares on
the terms set forth in this Agreement. In any such case, either the
Representatives or the Company shall have the right to postpone the Closing Date
determined as provided in Section 3(d) of this Agreement for not more than seven
business days after the date originally fixed as the Closing Date pursuant to
Section 3(d) in order that any necessary changes in the Registration Statement,
the Prospectus or any other documents or arrangements may be made.
If neither the non-defaulting Underwriters nor the Company shall
make arrangements within the time periods set forth above for the purchase of
all the Shares
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that the defaulting Underwriter or Underwriters agreed to purchase hereunder,
this Agreement shall be terminated without further act or deed and without any
liability on the part of the Company to any non-defaulting and without any
liability on the part of any nondefaulting Underwriters to the Company (except
to the extent provided in Section 9 of this Agreement). Nothing in this Section
10, and no action taken hereunder, shall relieve any defaulting Underwriter from
liability, if any, to the Company or any nondefaulting Underwriter for damages
occasioned by its default under this Agreement. The term "Underwriter" in this
Agreement shall include any persons substituted for an Underwriter under this
Section 10.
11. 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 the Representatives and the Company
shall agree upon the public offering price and other terms and the purchase
price of the Securities. If the public offering price and other terms and the
purchase price of the Securities shall not have been determined prior to 5:00
p.m., New York time, on the third full business day after the Registration
Statement has become effective, this Agreement shall thereupon terminate without
liability on the part of the Company to the Underwriters (except as provided in
Section 6 or Section 9 of this Agreement). By giving notice before the time this
Agreement becomes effective, the Representatives, as representative of the
several Underwriters, may prevent this Agreement from becoming effective without
liability of any party to the other party, except that the Company shall remain
obligated to pay costs and expenses to the extent provided in Section 6 and
Section 9 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 the Representatives, the Company and
the Selling Shareholders.
(b) This Agreement may be terminated by the Representatives 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 the Representatives'
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 change or development that has had or could reasonably be expected to
have a Material Adverse Effect and which would, in the Representatives' sole
judgment, make the offering or the delivery of the Securities impracticable or
inadvisable; or (ii) if trading in securities of the Company has been suspended
by the Commission or if trading generally on the New York Stock Exchange,
American Stock Exchange, NNM or over-the-counter market has been suspended or
minimum or maximum prices for trading have
34
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been fixed, or maximum ranges for prices for securities have been required, by
either of such exchanges, by the NASD or by the Commission; or (iii) if,
subsequent to the date hereof, 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, court,
legislative body, agency or other governmental authority which in the
Representatives' sole judgment materially affects or may materially affect the
business, properties, condition (financial or otherwise), results of operations
or prospects of the Company and its subsidiaries taken as a whole; (iv) if,
subsequent to the date hereof, there shall have been the declaration of a
banking moratorium by federal, New York or California authorities; (v) existing
international monetary conditions shall have undergone a material change,
subsequent to the date hereof, which, in the Representatives' sole judgment,
makes the offering or delivery of the Securities impracticable or inadvisable;
or (vi) if, subsequent to the date hereof, there has occurred any material
change in the financial markets in the United States or internationally or any
outbreak of hostilities or escalation of existing hostilities or other crisis,
the effect of which in the Representatives' sole judgment make the offering or
delivery of the Securities impracticable or inadvisable. If this Agreement shall
be terminated pursuant to this Section 11, there shall be no liability of the
Company to the Underwriters (except pursuant to Section 6 and Section 9 of this
Agreement) and no liability of the Underwriters to the Company (except pursuant
to Section 9 of this Agreement).
12. Notices. Except as otherwise provided herein, all communications
hereunder shall be in writing or by either telecopier or telegraph and, if to
the Underwriters or the Representatives, shall be mailed, telecopied or
telegraphed or delivered to ▇▇▇ ▇▇▇▇▇▇ & Company, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
(telecopier: (▇▇▇) ▇▇▇-▇▇▇▇), with copy to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq., ▇▇▇▇▇▇ ▇▇▇▇▇▇
White & ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (telecopier:
(▇▇▇) ▇▇▇-▇▇▇▇); if to the Company, shall be mailed, telecopied, telegraphed or
delivered to it at its office at ▇▇▇▇ ▇ & ▇, ▇▇/▇ ▇▇▇▇▇ ▇, ▇▇▇ Ping Industrial
Centre, 57 ▇▇▇▇ ▇▇▇ Road, Tai Po, N.T., Hong Kong, Attention: Feather Fok
(telecopier: (▇▇▇) ▇▇▇▇-▇▇▇▇), with a copy to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq., ▇▇▇▇▇▇
Godward LLP, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇ (telecopier : (▇▇▇) ▇▇▇-▇▇▇▇); and if to the Selling Shareholders
shall be mailed telecopied, telegraphed or delivered to ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
Esq., ChinaVest Limited, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (telecopier: (▇▇▇) ▇▇▇-▇▇▇▇). All notices given by telecopy or
telegraph shall be promptly confirmed by letter.
13. Persons Entitled to the Benefit of This Agreement. This Agreement
shall inure to the benefit of the Company, the Selling Shareholders, the several
Underwriters and, with respect to the provisions of Section 6 and Section 9 of
this
35
36
Agreement, the several parties (in addition to the Company, the Selling
Shareholders and the several Underwriters) indemnified under the provisions of
Section 6 and Section 9 and in addition, as to Section 6, ▇▇▇ ▇▇▇▇▇▇ & Company,
and its respective personal representatives, successors and assigns (whether
such succession or assignment is by sale, assignment, merger, reverse merger,
consolidation, operation of law or, without limitation, otherwise). 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 contained herein. The term "successors and
assigns" as herein used shall not include any purchaser, as such, of any of the
Shares from the several Underwriters.
14. General. Notwithstanding any provision of this Agreement to the
contrary, the reimbursement, indemnification and contribution agreements
contained in this Agreement and the representations, warranties, covenants and
agreements 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 Securities under this Agreement; provided, however, that if this
Agreement is terminated prior to the Closing Date, the provisions of Sections
4(f), 4(g), 4(h), 4(i) and 4(j) of this Agreement shall be of no further force
or effect.
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.
This Agreement supersedes and replaces in its entirety that certain
letter agreement, dated as of January 29, 1998, between the Company and ▇▇▇
▇▇▇▇▇▇ & Company.
15. Attorney-in-fact. Any person executing and delivering this Agreement
as Attorney-in-fact for any of the Selling Shareholders represents by so doing
that he or she has been duly appointed as Attorney-in-fact by such Selling
Shareholder pursuant to a validly existing and binding Power of Attorney which
authorizes such Attorney-in-fact to take such action. Any action taken under
this Agreement by an Attorney-in-fact will be binding on the Selling Shareholder
granting such Power of Attorney.
16. Jurisdiction. Governing Law. The parties agree that any litigation
arising out of or in any way related to this Agreement will be adjudicated in a
state or district court sitting in the City of San Francisco, California, and
the parties hereby consent to the jurisdiction of such court. The parties hereby
waive any right to object to such jurisdiction, including, without limitation,
any objection based on a claim of improper venue or forum non conveniens.
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37
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS, AND NOT THE LAWS PERTAINING TO CHOICE OR CONFLICT OF LAWS, OF THE
STATE OF CALIFORNIA.
17. Authority of the Representatives. In connection with this Agreement,
the Representatives will act for and on behalf of the several Underwriters, and
any action taken under this Agreement by the Representatives, as representatives
of the several Underwriters, will be binding on all of the Underwriters.
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38
If the foregoing correctly sets forth your understanding, please
so indicate by signing in the space provided below for that purpose, whereupon
this letter shall constitute a binding agreement among the Company and the
several Underwriters.
Very truly yours,
ZINDART LIMITED
By:
--------------------------------------
Its:
-------------------------------------
THE SELLING SHAREHOLDERS
By:
--------------------------------------
(Attorney in fact for the Selling
Shareholders named in Schedule I
hereto)
ZIC HOLDINGS LIMITED
By:
--------------------------------------
Its:
-------------------------------------
LONGVEST MANAGEMENT LIMITED
By:
--------------------------------------
Its:
-------------------------------------
ERTL (HONG KONG) LIMITED
By:
--------------------------------------
Its:
-------------------------------------
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39
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
▇▇▇ ▇▇▇▇▇▇ & COMPANY
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & CO., INC.
On behalf of each of the several
Underwriters named on Schedule II hereto
By: ▇▇▇ ▇▇▇▇▇▇ & COMPANY
By:
-------------------------------------
Name:
Its:
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40
SCHEDULE I
SELLING SHAREHOLDERS
Name No. of Shares No. of Option Shares
---- ------------- --------------------
ZIC Holdings Limited 1,188,889 0
Longvest Management Limited 311,111 46,667
Ertl (Hong Kong) Limited 500,000 0
Total 2,000,000 46,667
41
SCHEDULE II
UNDERWRITERS
Number of Firm Shares
Underwriters to be Purchased
------------ ---------------------
▇▇▇ ▇▇▇▇▇▇ & Company
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co., Inc.
Total
42
EXHIBIT A
Subsidiaries of the Company
Entity Jurisdiction Percent Ownership
------------------------------- ---------------- --------------------------------
▇▇▇ ▇▇▇▇ Holdings Co., Ltd. Cayman Islands 100%
------------------------------- ---------------- --------------------------------
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇ ▇▇▇▇ 100% (*)
Limited
------------------------------- ---------------- --------------------------------
Luen Tat Mould British Virgin 51%. Reference is made to
Manufacturing Limited Islands Note 3 of the Consolidated
Financial Statements of the
Company included in the
Registration Statement.
------------------------------- ---------------- --------------------------------
Onchart Industrial Limited Hong Kong 55%
------------------------------- ---------------- --------------------------------
Onchart Industrial Limited British Virgin 55%
Islands
------------------------------- ---------------- --------------------------------
Wealthy Holdings Limited British Virgin 100%
Islands
------------------------------- ---------------- --------------------------------
Dongguan Xinda PRC Joint Venture. Reference is
Giftware Company made to Note 3 of the
Limited Consolidated Financial
Statements of the Company
included in the Registration
Statement.
=============================== ================ =================================
(*) Of the 1,000 shares of ▇▇▇ ▇▇▇▇ Printing Holdings Co., Limited issued and
outstanding, one share is held by ▇▇▇▇▇▇ ▇▇▇▇▇ on behalf of ▇▇▇ ▇▇▇▇ Holdings
Co., Ltd; the balance of such shares are held by ▇▇▇ ▇▇▇▇ Holdings Co., Ltd.
43
================================== ===== =========================================
Guangzhou Zindart (Xin Xing) PRC Joint Venture. Reference is made to
(Giftware) Company Note 3 of the Consolidated Financial
Limited Statements of the Company included in
the Registration Statement.
-------------------------------- - ----- -----------------------------------------
Shenzhen Huaxuan Printing Product PRC Joint Venture. Reference is made to
Co., Ltd. Note 3 of the Consolidated Financial
Statements of the Company and Note 2
of the Consolidated Financial Statements
of ▇▇▇ ▇▇▇▇ Holdings Co., Ltd.
Included in the Registration Statement.
-------------------------------- - ----- -----------------------------------------
Guangzhou ▇▇▇ ▇▇ Advertising PRC Joint Venture. Reference is made to
Company Ltd. Note 3 of the Consolidated Financial
Statements of the Company and Note 2
of the Consolidated Financial Statements
of ▇▇▇ ▇▇▇▇ Holdings Co., Ltd.
Included in the Registration Statement.
================================== ===== =========================================
44
EXHIBIT B
Equity Interests of the Company and Its Subsidiaries
The Company owns 51% of Luen Tat Mould Manufacturing Limited, which in
turn owns 18% of Luen Tat Model Design Co. Ltd.
