Initial Public Offering (IPO): Pre-Effective Amendment to Registration Statement (General Form) — Form S-1
Filing Table of Contents
Document/Exhibit Description Pages Size
1: S-1/A Pre-Effective Amendment to Registration Statement 134 654K
(General Form)
2: EX-1.1 Form of Underwriting Agreement 34 113K
3: EX-3.1 Fifth Amended and Restated Certificate of Incorpo 25 99K
4: EX-3.3 Form of Sixth Amended and Restated Certificate of 4 18K
5: EX-5.1 Opinion of Sullivan & Cromwell, Us Counsel to the 2 8K
6: EX-23.2 Consent of Transasia Lawyers 1 5K
7: EX-23.3 Consent of Independent Accountants 1 5K
EX-1.1 — Form of Underwriting Agreement
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Exhibit 1.1
SHARES
SOHU.COM INC.
COMMON STOCK
FORM OF UNDERWRITING AGREEMENT
July [ ], 2000
Credit Suisse First Boston Corporation
As Representative of the Several U.S. Underwriters,
Eleven Madison Avenue,
New York, N.Y. 10010-3629.
Credit Suisse First Boston (Hong Kong) Limited
As Representative of the Several International Managers,
13/F, Three Exchange Square,
8 Connaught Place Central
Hong Kong
Dear Sirs:
1. Introductory. Sohu.com Inc., a Delaware corporation ("Company"),
proposes to issue and sell to the several Underwriters (as defined below) shares
of its common stock, par value $0.001 per share ("Securities"). It is understood
that, subject to the conditions hereafter stated: (a) shares of Securities (the
"U.S. Firm Securities") will be sold to the several U.S. Underwriters named in
Schedule A hereto (the "U.S. Underwriters") in connection with the offering (the
"U.S. Offering") and sale of such U.S. Firm Securities in the United States and
Canada to United States and Canada Persons (as such terms are defined in the
Agreement Between U.S. Underwriters and International Managers of even date
herewith) and (b) shares of Securities (the "International Firm Securities")
will be sold to the several International Managers named in Schedule B hereto
(the "International Managers") in connection with the offering (the
"International Offering") and sale of such International Firm Securities outside
the United States and Canada to persons other than United States and Canada
Persons. Credit Suisse First Boston Corporation shall act as representative (the
"U.S. Representative") of the several U.S. Underwriters, and Credit Suisse First
Boston (Hong Kong) Limited shall act as representative (the "International
Representative" and, together with the
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U.S. Representative, the "Representatives") of the several International
Managers. The U.S. Underwriters and International Managers are hereinafter
collectively referred to as the "Underwriters".
In addition, as set forth below, the Company proposes to issue and sell:
(a) to the U.S. Underwriters at the option of the U.S. Underwriters, an
aggregate of not more than additional shares of Securities (the "U.S. Optional
Securities"), and (b) to the International Managers, at the option of
International Managers, an aggregate of not more than additional shares of
Securities (the "International Optional Securities").
The U.S. Firm Securities and the U.S. Optional Securities are hereinafter
called the "U.S. Securities"; the International Firm Securities and
International Optional Securities are hereinafter called the "International
Securities"; the U.S. Firm Securities and the International Firm Securities are
hereinafter called the "Firm Securities"; the U.S. Optional Securities and the
International Optional Securities are hereinafter called the "Optional
Securities"; and the U.S. Securities and the International Securities are
collectively referred to as the "Offered Securities". As part of the Offering
contemplated by this Agreement, Donaldson, Lufkin & Jenrette Securities
Corporation, the "Designated Underwriter" has agreed to reserve out of the Firm
Securities purchased by it under this Agreement up to shares for sale to the
Company's strategic partners, consultants and friends and family of its
officers, employees and other parties associated with the Company (collectively,
"Participants"), as set forth in the Prospectus under the heading "Underwriting"
(the "Directed Share Program"). The Firm Securities to be sold by the Designated
Underwriter pursuant to the Directed Share Program (the "Directed Shares") will
be sold by the Designated Underwriter pursuant to this Agreement at the public
offering price. Any Directed Shares not subscribed for by the end of the
business day on which this Agreement is executed will be offered to the public
by the Underwriters as set forth in the Prospectus.
To provide for the coordination of their activities, the U.S. Underwriters
and the International Managers have entered into an Agreement Between U.S.
Underwriters and International Managers which permits them, among other things,
to sell the Offered Securities to each other for purposes of resale.
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The Company hereby agrees with the several Underwriters as follows:
2. Representations and Warranties of the Company. The Company represents
and warrants to, and agrees with, the several Underwriters that:
4
(a) A registration statement (No. 333-96137) relating to the Offered
Securities, including a form of prospectus, has been filed with the
Securities and Exchange Commission ("Commission") and either (i) has been
declared effective under the Securities Act of 1933 ("Act") and is not
proposed to be amended or (ii) is proposed to be amended by amendment or
post-effective amendment. If such registration statement (the "initial
registration statement") has been declared effective, either (A) an
additional registration statement (the "additional registration statement")
relating to the Offered Securities may have been filed with the Commission
pursuant to Rule 462(b) ("Rule 462(b)") under the Act and, if so filed, has
become effective upon filing pursuant to such Rule and the Offered
Securities all have been duly registered under the Act pursuant to the
initial registration statement and, if applicable, the additional
registration statement or (B) such an additional registration statement is
proposed to be filed with the Commission pursuant to Rule 462(b) and will
become effective upon filing pursuant to such Rule and upon such filing the
Offered Securities will all have been duly registered under the Act
pursuant to the initial registration statement and such additional
registration statement. If the Company does not propose to amend the
initial registration statement or if an additional registration statement
has been filed and the Company does not propose to amend it, and if any
post-effective amendment to either such registration statement has been
filed with the Commission prior to the execution and delivery of this
Agreement, the most recent amendment (if any) to each such registration
statement has been declared effective by the Commission or has become
effective upon filing pursuant to Rule 462(c) ("Rule 462(c)") under the Act
or, in the case of the additional registration statement, Rule 462(b). For
purposes of this Agreement, "Effective Time" with respect to the initial
registration statement or, if filed prior to the execution and delivery of
this Agreement, the additional registration statement means (i) if the
Company has advised the Representatives that it does not propose to amend
such registration statement, the date and time as of which such
registration statement, or the most recent post-effective amendment thereto
(if any) filed prior to the execution and delivery of this Agreement, was
declared effective by the Commission or has become effective upon filing
pursuant to Rule 462(c), or (ii) if the Company has advised the
Representatives that it proposes to file an amendment or post-effective
amendment to such registration statement, the date and time as of which
such registration statement, as amended by such amendment or post-effective
amendment, as the case may be, is declared effective by the Commission. If
an additional registration statement has not been filed prior to the
execution and delivery of this Agreement but the Company has advised the
Representatives that it proposes to file one, "Effective Time" with respect
to such additional registration statement means the date and time as of
which such registration statement is filed and becomes effective pursuant
to Rule 462(b). "Effective Date" with respect to the initial registration
statement or the additional registration statement (if any) means the date
of the Effective Time thereof. The initial registration statement, as
amended at its Effective Time, including all information contained in the
additional registration statement (if any) and deemed to be a part of the
initial registration statement as of the Effective Time of the additional
registration statement pursuant to the General Instructions of the Form on
which it is filed and including all information (if any) deemed to be a
part of the initial registration statement
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as of its Effective Time pursuant to Rule 430A(b) ("Rule 430A(b)") under
the Act, is hereinafter referred to as the "Initial Registration
Statement". The additional registration statement, as amended at its
Effective Time, including the contents of the initial registration
statement incorporated by reference therein and including all information
(if any) deemed to be a part of the additional registration statement as of
its Effective Time pursuant to Rule 430A(b), is hereinafter referred to as
the "Additional Registration Statement". The Initial Registration Statement
and the Additional Registration Statement are hereinafter referred to
collectively as the "Registration Statements" and individually as a
"Registration Statement". The form of prospectus relating to the Offered
Securities as first filed with the Commission pursuant to and in accordance
with Rule 424(b) ("Rule 424(b)") under the Act or (if no such filing is
required) as included in the Registration Statement, is hereinafter
referred to as the "Prospectus". No document has been or will be prepared
or distributed in reliance on Rule 434 under the Act.
(b) If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement: (i) on the Effective
Date of the Initial Registration Statement, the Initial Registration
Statement conformed in all material respects to the requirements of the Act
and the published rules and regulations of the Commission ("Rules and
Regulations") and did not include any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) on the
Effective Date of the Additional Registration Statement (if any), each
Registration Statement conformed, or will conform, in all respects to the
requirements of the Act and the Rules and Regulations and did not include,
or will not include, any untrue statement of a material fact and did not
omit, or will not omit, to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and
(iii) on the date of this Agreement, the Initial Registration Statement
and, if the Effective Time of the Additional Registration Statement is
prior to the execution and delivery of this Agreement, the Additional
Registration Statement each conforms, and at the time of filing of the
Prospectus pursuant to Rule 424(b) or (if no such filing is required) at
the Effective Date of the Additional Registration Statement in which the
Prospectus is included, each Registration Statement and the Prospectus will
conform, in all material respects to the requirements of the Act and the
Rules and Regulations, and none of such documents includes, or will
include, any untrue statement of a material fact or omits, or will omit, to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading. If the Effective Time of the Initial
Registration Statement is subsequent to the execution and delivery of this
Agreement: on the Effective Date of the Initial Registration Statement, the
Initial Registration Statement and the Prospectus will conform in all
material respects to the requirements of the Act and the Rules and
Regulations, none of such documents, will include
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any untrue statement of a material fact or will omit to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading, and no Additional Registration Statement has been
or will be filed. The two preceding sentences do not apply to statements in
or omissions from a Registration Statement or the Prospectus based upon
written information furnished to the Company by any Underwriter through the
Representatives specifically for use therein, it being understood and
agreed that the only such information is that described as such in Section
7(b) hereof.
(c) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Delaware, with
full power and authority (corporate and other) to own, lease, license and
use its properties and other assets and conduct its current and proposed
businesses as described in the Prospectus; and the Company is duly
qualified to do business as a foreign corporation in good standing in the
People's Republic of China (the "PRC") through Sohu ITC Information
Technology (Beijing) Co. Ltd., a subsidiary of the Company (the
"Subsidiary").
(d) The Subsidiary is a wholly-owned subsidiary of the Company and is
duly qualified to do business in the PRC and in all other jurisdictions in
which its ownership, leasehold, license and use of property or other assets
or the conduct of its business requires such qualification. The Subsidiary
has been duly organized and is an existing corporation under the laws of
the PRC with full power and authority (corporate and other) to own, lease,
license and use its properties and other assets and conduct its current and
proposed businesses as described in the Prospectus and is validly existing
as a wholly-foreign owned enterprise with limited liability and a wholly-
owned subsidiary of the Company under the laws of the PRC and its business
license is in full force and effect; the Subsidiary has been duly qualified
as a foreign investment enterprise under the laws of PRC; the Articles of
Association of the Subsidiary comply with the requirements of applicable
PRC law and are in full force and effect; the Subsidiary is the only
subsidiary of the Company.
(e) All of the issued and outstanding capital stock of the Subsidiary
has been duly authorized and validly issued and is fully paid and
nonassessable; and all such capital stock is owned by the Company free from
liens, encumbrances and defects.
(f) The Offered Securities and all other outstanding shares of common
stock of the Company have been duly authorized; all outstanding shares of
common stock of the Company are, and, when the Offered Securities have been
delivered and paid for in accordance with this Agreement on each Closing
Date (as defined below), will have been, validly issued, fully paid and
nonassessable and will conform to the description thereof contained in the
Prospectus in all material respects; and the stockholders of the Company
have no preemptive rights with respect to the Securities.
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(g) All the outstanding shares of Series A Preferred Stock, Series B
Preferred Stock, Series B-1 Preferred Stock, Series C Preferred Stock and
Series D Preferred Stock of the Company (collectively, the "Preferred
Stock") have been duly authorized and validly issued and are fully paid and
nonassessable and conform to the descriptions thereof contained in the
Prospectus in all material respects; all the shares of common stock of the
Company issuable upon the mandatory conversion of the Preferred Stock as
described in the Prospectus have been duly authorized; and, prior to or
concurrently with the Closing, all the Preferred Stock will be converted
into common stock of the Company and all such shares of common stock will
be validly issued and fully paid and nonassessable.
[conversion price issue]
(h) Except as disclosed in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person that would
give rise to a valid claim against the Company or any Underwriter for a
brokerage commission, finder's fee or other like payment in connection with
this Offering.
(i) Except as disclosed in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person granting
such person the right to require the Company to file a registration
statement under the Act with respect to any securities of the Company owned
or to be owned by such person or to require the Company to include such
securities in the securities registered pursuant to a Registration
Statement or in any securities being registered pursuant to any other
registration statement filed by the Company under the Act.
(j) The Securities have been approved for listing on The Nasdaq Stock
Market's National Market ("Nasdaq National Market"), subject to notice of
issuance.
(k) No consent, approval, authorization, or order of, or filing with,
any governmental agency or body or any court (including, without
limitation, the China Securities Regulatory Commission ("CSRC")) is
required for the consummation of the transactions contemplated by this
Agreement in connection with the issuance and sale of the Offered
Securities by the Company, except such as have been obtained and made under
the Act and such as may be required under state securities laws, all of
which have been obtained.
(l) The execution, delivery and performance of this Agreement and the
issuance and sale of the Offered Securities will not result in a breach or
violation of any of the terms and provisions of, or constitute a default
under, (i) any statute, any rule, regulation or order of any governmental
agency or body or any court, domestic or foreign, having jurisdiction over
the Company or the Subsidiary or any of their properties, or (ii) any
agreement or instrument
8
to which the Company or the Subsidiary is a party or by which the Company
or the Subsidiary is bound or to which any of the properties of the Company
or the Subsidiary is subject, or (iii) the charter or by-laws or other
governing instruments of the Company or the Subsidiary, except in the case
of (ii), where such breach, violation or default would not, individually or
in the aggregate, have a material adverse effect on the condition
(financial or other), business, properties, results of operations of the
Company and the Subsidiary, taken as a whole ("Material Adverse Effect")
and the Company has full power and authority to authorize, issue and sell
the Offered Securities, as contemplated by this Agreement.
(m) This Agreement has been duly authorized, executed and delivered by
the Company.
(n) Except as disclosed in the Prospectus, the Company and the
Subsidiary have good and marketable title to all real properties and all
other properties and assets owned by them, in each case free from liens,
encumbrances and defects that would materially affect the value thereof or
materially interfere with the use made or to be made thereof by them; and
except as disclosed in the Prospectus, the Company and the Subsidiary hold
any leased real or personal property under valid and enforceable leases
with no exceptions that would materially interfere with the use made or to
be made thereof by them.
(o) The Company and the Subsidiary possess adequate licenses,
consents, authorization, approvals, orders, certificates, franchises,
clearances, qualifications, concessions or permits (collectively, the
"Consents") of and from, and have made all declarations and filings with,
all courts and governmental agencies or bodies necessary to conduct their
current and proposed businesses as described in the Prospectus, such
Consents contain no materially burdensome restrictions or conditions not
described in the Registration Statement or the Prospectus; neither the
Company nor the Subsidiary has any reason to believe that any regulatory
body is considering modifying in any material respect, suspending or
revoking any such Consents and each of the Company and the Subsidiary is in
compliance with the provisions of all such Consents in all material
respects; and neither the Company nor the Subsidiary has received any
notice of proceedings relating to the revocation or modification of any
such Consent that, if determined adversely to the Company or the
Subsidiary, would individually or in the aggregate have a Material Adverse
Effect.
(p) No labor dispute with the employees of the Company or the
Subsidiary exists or, to the knowledge of the Company or the Subsidiary, is
imminent that might individually or in the aggregate have a Material
Adverse Effect.
(q) The Company and the Subsidiary own, possess or can acquire on
reasonable terms, adequate trademarks, trade names and other rights to
9
inventions, know-how, patents, copyrights, confidential information and
other intellectual property (collectively, "intellectual property rights")
necessary to conduct the business now operated by them, or presently
employed by them, and, except as disclosed in the Prospectus, have not
received any notice of infringement of or conflict with asserted rights of
others with respect to the intellectual property rights that, if determined
adversely to the Company or the Subsidiary, would individually or in the
aggregate have a Material Adverse Effect.
(r) Except as disclosed in the Prospectus, there are no pending
actions, suits or proceedings against or affecting the Company, the
Subsidiary or any of their respective properties that, if determined
adversely to the Company or the Subsidiary, would individually or in the
aggregate have a Material Adverse Effect, or would materially and adversely
affect the ability of the Company to perform its obligations under this
Agreement, or which are otherwise material in the context of the sale of
the Offered Securities; and, to the knowledge of the Company or the
Subsidiary, no such actions, suits or proceedings are threatened or
contemplated.
(s) The unaudited pro forma consolidated financial statements as of
December 31, 1999 and March 31, 2000 included in the Registration Statement
and the Prospectus (the "pro forma financial statements") fairly the
financial position of the Company and the Subsidiary as of the dates shown
and their results of operations and cash flows for the periods shown, and
such financial statements have been prepared in conformity with the
generally accepted accounting principles in the United States applied on a
consistent basis; and the assumptions used in preparing the pro forma
financial statements provide a reasonable basis for presenting the
significant effects directly attributable to the transactions or events
described therein, the related pro forma adjustments give appropriate
effect to those assumptions, and the pro forma columns therein reflect the
proper application of those adjustments to the corresponding historical
financial statement amounts.
(t) Except as disclosed in the Prospectus, since the date of the
latest audited financial statements included in the Prospectus there has
been no material adverse change, nor any development or event involving a
prospective material adverse change, in the condition (financial or other),
business, properties or results of operations of the Company and the
Subsidiary taken as a whole, and, except as disclosed in or contemplated by
the Prospectus, there has been no dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital stock.
(u) The Company is not and, after giving effect to this Offering and
the sale of the Offered Securities and the application of the proceeds
thereof as described in the Prospectus, will not be an "investment company"
as defined in the Investment Company Act of 1940.
10
(v) The Subsidiary is not currently prohibited, directly or
indirectly, from paying any dividends or other distributions to the
Company, from making any other distribution on the Subsidiary's equity
interest, or from transferring any of the Subsidiary's property or assets
to the Company, except as described in or contemplated by the Prospectus;
all dividends and other distributions declared and payable upon the equity
interests in the Subsidiary to the Company may be converted into foreign
currency that may be freely transferred out of the PRC, and all such
dividends and other distributions are not and, except as disclosed in the
Registration Statements and the Prospectus, will not be subject to
withholding or other taxes under the laws and regulations of the PRC and,
except as disclosed in the Registration Statements and the Prospectus, are
otherwise free and clear of any other tax, withholding or deduction in the
PRC, in each case without the necessity of obtaining any governmental or
regulatory authorization in the PRC, except such as have been obtained;
(w) The Company and the Subsidiary carry, or are covered by, insurance
in such amounts and covering such risks as are adequate for the conduct of
their respective businesses and the value of their respective properties
and as are customary for companies engaged in similar businesses in similar
industries.
(x) The Company and the Subsidiary have filed with all appropriate
taxing authorities all income, franchise or other tax returns required to
be filed through the date hereof, and no tax deficiency has been determined
adversely to the Company or the Subsidiary which has had (nor does the
Company or the Subsidiary have any knowledge of any tax deficiency which,
if determined adversely to the Company or the Subsidiary, might
individually or in the aggregate have) a Material Adverse Effect.
(y) The Registration Statement, the Prospectus and any preliminary
prospectus comply, and any further amendments or supplements thereto will
comply, with any applicable laws or regulations of foreign jurisdictions in
which the Prospectus or any preliminary prospectus, as amended or
supplemented, if applicable, are distributed in connection with the
Directed Share Program, and no authorization, approval, consent, license,
order, registration or qualification of or with any government,
governmental instrumentality or court, other than such as have been
obtained, is necessary under the securities law and regulations of foreign
jurisdictions in which the Directed Shares are offered outside the United
States.
(z) The Company has not offered, or caused any Underwriter to offer,
any Offered Securities to any person pursuant to the Directed Share Program
with the specific intent to unlawfully influence (i) a customer or supplier
of the Company or the Subsidiary to alter the customer's or supplier's
level or type of business with the Company or the Subsidiaries or (i) a
trade journalist or publication to write or publish favorable information
about the Company, the Subsidiary or any of their products or services.
11
(aa) Neither the Company nor the Subsidiary, nor any director,
officer, agent, employee or other person associated with or acting on
behalf of the Company or the Subsidiary, has used any corporate funds for
any unlawful contribution, gift, entertainment or other unlawful expenses
relating to political activity, made any direct or indirect unlawful
payment to any foreign or domestic government official or employee from
corporate funds; violated or is in violation of any provision of the
Foreign Corrupt Practices Act of 1977; or made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment.
3. Purchase, Sale and Delivery of Offered Securities. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to sell to the
Underwriters, and the Underwriters agree, severally and not jointly, to purchase
from the Company, at a purchase price of US$ per share, the respective numbers
of shares of the Firm Securities set forth opposite the names of the
Underwriters in Schedules A and B hereto.
The Company will deliver the Firm Securities to the Representatives for the
accounts of the Underwriters, against payment of the purchase price in U.S.
dollars in Federal (same day) funds by official bank check or checks or wire
transfer to an account at a bank reasonably acceptable to Credit Suisse First
Boston Corporation ("CSFBC") drawn to the order of the Company, at the office of
Cravath, Swaine & Moore, at 9:00 A.M., New York time, on July [ ], 2000 or at
such other time not later than seven full business days thereafter as CSFBC and
the Company determine, such time being herein referred to as the "First Closing
Date". For purposes of Rule 15c6-1 under the Securities Exchange Act of 1934,
the First Closing Date (if later than the otherwise applicable settlement date)
shall be the settlement date for payment of funds and delivery of securities for
all the Offered Securities sold pursuant to the U.S. Offering and the
International Offering. The certificates for the Firm Securities so to be
delivered will be in definitive form, in such denominations and registered in
such names as the applicable Representative requests and will be made available
for checking and packaging at the above office of Cravath, Swaine & Moore at
least 24 hours prior to the First Closing Date.
In addition, upon written notice from CSFBC given to the Company from time
to time not more than 30 days subsequent to the date of the Prospectus, the U.S.
Underwriters may purchase all or less than all of the U.S. Optional Securities
and the International Managers may purchase all or less than all of the
International Optional Securities at the purchase price per Security to be paid
for the corresponding U.S. Firm Securities and International Firm Securities.
The Optional Securities to be purchased by the U.S. Underwriters or the
International Managers on any Optional Closing Date shall be in the same
proportion to all the Optional Securities to be purchased by the U.S.
Underwriters and the International Managers on such Optional Closing Date as the
U.S. Firm Securities
12
bear to all the Firm Securities and the International Firm Securities bear to
all the Firm Securities.
The Company agrees to sell to the Underwriters such Optional Securities and
the Underwriters agree, severally and not jointly to purchase such Optional
Securities. Such U.S. Optional Securities or International Optional Securities
as the case may be, shall be purchased for the account of each U.S. Underwriter
or International Manager, as applicable, in the same proportion as the number of
shares of the U.S. Firm Securities or International Firm Securities, as
applicable, set forth opposite such U.S. Underwriter's or International
Manager's name bears to the total number of shares of the U.S. Firm Securities
or International Firm Securities, (subject to adjustment by CSFBC to eliminate
fractions), as the case may be, and may be purchased by the Underwriters only
for the purpose of covering over-allotments made in connection with the sale of
the Firm Securities. No Optional Securities shall be sold or delivered unless
the Firm Securities previously have been, or simultaneously are, sold and
delivered. The right to purchase the Optional Securities or any portion thereof
may be exercised from time to time and to the extent not previously exercised
may be surrendered and terminated at any time upon notice by CSFBC on behalf of
Underwriters to the Company. It is understood that CSFBC is authorized to make
payment for and accept delivery of such Optional Securities on behalf of the
Underwriters pursuant to the terms of CSFBC's instructions to the Company.
Each time for the delivery of and payment for the Optional Securities,
being herein referred to as an "Optional Closing Date", which may be the First
Closing Date (the First Closing Date and each Optional Closing Date, if any,
being sometimes referred to as a "Closing Date"), shall be determined by CSFBC
but shall be not later than five full business days after written notice of
election to purchase the Optional Securities is given. The Company will deliver
the Optional Securities being purchased on each Optional Closing Date to the
Representative for the accounts of the several Underwriters, against payment of
the purchase price therefor in Federal (same day) funds by official bank check
or checks or wire transfer to an account at a bank reasonably acceptable to
CSFBC, drawn to the order of the Company, at the office of Cravath, Swaine &
Moore. The certificates for the Optional Securities will be in definitive form,
in such denominations and registered in such names as the applicable
Representative requests upon reasonable notice prior to such Optional Closing
Date and will be made available for checking and packaging at the above office
of [ ] at a reasonable time in advance of such Optional Closing Date.
4. Offering by Underwriters. It is understood that the several Underwriters
propose to offer the Securities for sale to the public as set forth in the
Prospectus.
5. Certain Agreements of the Company. The Company agrees with the several
Underwriters that:
(a) If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement, the Company will
file the Prospectus with the Commission pursuant to and in accordance with
Subparagraph (1) (or, if applicable and if consented to by CSFBC,
13
subparagraph (4)) of Rule 424(b) not later than the earlier of (A) the
second business day following the execution and delivery of this Agreement
or (B) the fifteenth business day after the Effective Date of the Initial
Registration Statement. The Company will advise CSFBC promptly of any such
filing pursuant to Rule 424(b). If the Effective Time of the Initial
Registration Statement is prior to the execution and delivery of this
Agreement and an additional registration statement is necessary to register
a portion of the Offered Securities under the Act but the Effective Time
thereof has not occurred as of such execution and delivery, the Company
will file the additional registration statement or, if filed, will file a
post-effective amendment thereto with the Commission pursuant to and in
accordance with Rule 462(b) on or prior to 10:00 P.M., New York time, on
the date of this Agreement or, if earlier, on or prior to the time the
Prospectus is printed and distributed to any U.S. Underwriter or
International Manager, or will make such filing at such later date as shall
have been consented to by CSFBC.
(b) The Company will advise CSFBC promptly of any proposal to amend or
supplement the initial or any additional registration statement as filed or
the related prospectus or the Initial Registration Statement, the
Additional Registration Statement (if any) or the Prospectus and will not
effect such amendment or supplementation without CSFBC's prior consent;
which consent may not be unreasonably withheld and the Company will also
advise CSFBC promptly of the effectiveness of each Registration Statement
(if its Effective Time is subsequent to the execution and delivery of this
Agreement) and of any amendments or supplementation of a Registration
Statement or the Prospectus and of the institution by the Commission of any
stop order proceedings in respect of a Registration Statement and will use
its reasonable best efforts to prevent the issuance of any such stop order
and to obtain as soon as possible its lifting, if issued.
(c) If, at any time prior to the expiration of two years after the
time of issue of the Prospectus, a prospectus relating to the Offered
Securities is required to be delivered under the Act in connection with
sales by any Underwriter or dealer, any event occurs as a result of which
the Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading, or if it is necessary at any time to
amend the Prospectus to comply with the Act, the Company will promptly
notify CSFBC of such event and will promptly prepare and file with the
Commission, at its own expense, an amendment or supplement which will
correct such statement or omission or an amendment which will effect such
compliance. Neither CSFBC's consent to, nor the Underwriters' delivery of,
any such amendment or supplement shall constitute a waiver of any of the
conditions set forth in Section 6.
(d) As soon as practicable, but not later than the Availability Date
(as defined below), the Company will make generally available to its
14
securityholders an earnings statement covering a period of at least 12
months beginning after the Effective Date of the Initial Registration
Statement (or, if later, the Effective Date of the Additional Registration
Statement) which will satisfy the provisions of Section 11(a) of the Act.
For the purpose of the preceding sentence, "Availability Date" means the
45th day after the end of the fourth fiscal quarter following the fiscal
quarter that includes such Effective Date, except that, if such fourth
fiscal quarter is the last quarter of the Company's fiscal year,
"Availability Date" means the 90th day after the end of such fourth fiscal
quarter.
(e) The Company will furnish to the Representatives copies of the
Registration Statement (four of which will be signed and will include all
exhibits), each preliminary prospectus relating to the Offered Securities,
and, so long as a prospectus relating to the Offered Securities is required
to be delivered under the Act in connection with sales by any Underwriter
or dealer, the Prospectus and all amendments and supplements to such
documents, in each case in such quantities as CSFBC reasonably requests.
The Prospectus shall be so furnished in New York City on or prior to 3:00
P.M., New York time, on the business day following the later of the
execution and delivery of this Agreement or the Effective Time of the
Initial Registration Statement. All other such documents shall be so
furnished as soon as available. The Company will pay the expenses of
printing and distributing to the Underwriters all such documents.
(f) The Company will arrange for the qualification of the Offered
Securities for sale under the laws of such jurisdictions in the United
States and the laws of such other countries as CSFBC reasonably designates
and will continue such qualifications in effect so long as required for the
distribution.
(g) During the period of five years hereafter, the Company will
furnish to the Representatives and, upon request, to each of the other
Underwriters, as soon as practicable after the end of each fiscal year, a
copy of its annual report to stockholders for such year; and the Company
will furnish to the Representatives (i) as soon as available, a copy of
each report and any definitive proxy statement of the Company filed with
the Commission under the Exchange Act or mailed to stockholders, and (ii)
from time to time, such other public information concerning the Company as
CSFBC may reasonably request.
(h) The Company will pay all expenses incident to the performance of
its obligations under this Agreement for any filing fees and other expenses
(including, without limitation, fees and disbursements of its counsel,
accountants, registrar and transfer agent) in connection with qualification
of the Offered Securities for sale under the laws of such jurisdictions in
the United States as CSFBC reasonably designates and the printing of
memoranda relating thereto, the filing fee incident to the review by the
National Association of Securities Dealers, Inc. of the Offered Securities,
applicable listing or other fees, including without limitation, those
payable to the Commission and the fees for quotation of the Offered
Securities on the
15
Nasdaq National Market, any travel expenses of the Company's officers and
employees and any other expenses of the Company in connection with
attending or hosting meetings with prospective purchasers of the Offered
Securities and for expenses incurred in printing and distributing
preliminary prospectuses and the Prospectus (including any amendments and
supplements thereto) to the Underwriters. In addition to the foregoing, the
Company will reimburse CSFBC on the First Closing Date for all
out-of-pocket expenses, including without limitation, all travel and
accommodation expenses, but excluding the fees and disbursement of U.S. and
local counsel to the Underwriters, that shall have been incurred by them in
connection with this Offering, in addition to the costs and expenses to be
paid by the Company pursuant to the foregoing provisions of this Section
5(h). Such amount may be deducted from the purchase price for the Offered
Securities set forth in Section 3. In addition to the foregoing, CSFBC, on
behalf of the Underwriters, on the First Closing Date, will pay to the
Company the sum of US$[ ] as a non-accountable reimbursement of the
Company's out-of-pocket expenses in connection with the Offering.
(i) For a period of 180 days after the date of this Agreement, the
Company will not (a) offer, sell, contract to sell, pledge or otherwise
dispose of, directly or indirectly, or file with the Commission a
registration statement under the Act relating to, any additional shares of
its Securities or securities convertible into or exchangeable or
exercisable for any shares of its Securities, or (b) enter into any
transaction which would have the same effect, or enter into any swap hedge
or other arrangement that transfers, in whole or in part, any of the
economic consequences of ownership of the Securities, whether any such
transaction described in clause (a) or (b) above is to be settled by
delivery of its Securities or other securities in cash or otherwise, or (c)
publicly disclose the intention to do any of the above in each case without
the prior written consent of CSFBC, except grants of employee stock options
pursuant to the terms of a plan in effect on the date hereof and, issuances
of Securities pursuant to the exercise of such options.
(j) In connection with the Directed Share Program, the Company will
ensure that the Directed Shares will be restricted to the extent required
by the NASD or the NASD rules from sale, transfer, assignment, pledge or
hypothecation for a period of three months following the date of the
effectiveness of the Registration Statement. The Designated Underwriter
will notify the Company as to which Participants will need to be so
restricted. The Company will direct the transfer agent to place stop
transfer restrictions upon such Securities for such period of time.
(k) The Company will pay all fees and disbursements of counsel
incurred by the Underwriters in connection with the Directed Shares Program
and stamp duties, similar taxes or duties or other taxes, if any, incurred
by the Underwriters in connection with the Directed Share Program.
16
Furthermore, the Company covenants with the Underwriters that the
Company will comply with all applicable securities and other applicable
laws, rules and regulations in each foreign jurisdiction in which the
Directed Shares are offered in connection with the Directed Share Program.
6. Conditions of the Obligations of the Underwriters. The obligations of
the several Underwriters to purchase and pay for the Firm Securities on the
First Closing Date and the Optional Securities to be purchased on each Optional
Closing Date will be subject to the accuracy of the representations and
warranties on the part of the Company herein, to the accuracy of the statements
of Company officers made pursuant to the provisions hereof and to the
performance by the Company of its obligations hereunder and to the following
additional conditions precedent:
(a) The Representatives shall have received a letter, dated the date
of delivery thereof (which, if the Effective Time of the Initial
Registration Statement is prior to the execution and delivery of this
Agreement, shall be on or prior to the date of this Agreement or, if the
Effective Time of the Initial Registration Statement is subsequent to the
execution and delivery of this Agreement, shall be prior to the filing of
the amendment or post-effective amendment to the registration statement to
be filed shortly prior to such Effective Time), of PricewaterhouseCoopers
confirming that they are independent public accountants within the meaning
of the Act and the applicable published Rules and Regulations thereunder
and stating to the effect that:
(i) in their opinion the financial statements examined by them
and included in the Registration Statements comply as to form in all
material respects with the applicable accounting requirements of the
Act and the related published Rules and Regulations;
(ii) they have performed the procedures specified by the American
Institute of Certified Public Accountants for a review of interim
financial information as described in Statement of Auditing Standards
No. 71, Interim Financial Information, on the unaudited financial
statements included in the Registration Statements;
(iii)on the basis of the review referred to in clause (ii) above,
a reading of the latest available interim financial statements of the
Company, inquiries of officials of the Company who have responsibility
for financial and accounting matters and other specified procedures,
nothing came to their attention that caused them to believe that:
(A) the unaudited financial statements included in the
Registration Statements do not comply as to form in all material
respects with the applicable accounting requirements of the Act
and the related published Rules and Regulation or any material
modification should be made to such unaudited
17
financial statements for them to be in conformity with generally
accepted accounting principles;
(B) at the date of the latest available balance sheet read
by such accountants, and at a subsequent specified date not more
than three business days prior to the date of this Agreement,
there was any change in the capital stock or any increase in
short-term indebtedness or long-term debt of the Company and its
consolidated subsidiaries or, at the date of the latest available
balance sheet read by such accountants and at a subsequent
specified date not more than three business days prior to the
date of this Agreement, there was any decrease in consolidated
net current assets, as compared with amounts shown on the latest
balance sheet included in the Prospectus; or
(C) for the period from the closing date of the latest
income statement included in the Prospectus to the closing date
of the latest available income statement read by such accountants
and for the period from the closing date of the latest available
income statement read by such accountants to a specified date not
more than three business days prior to the date of this
Agreement, there were any decreases in consolidated total revenue
or increases in operating loss, net loss or net loss attributable
to common stockholders, as compared with the corresponding period
of the previous year.
except in all cases set forth in clauses (B) and (C) above for
changes, increases or decreases which the Prospectus discloses have
occurred or may occur and which are described in such letter; and
(iii) on the basis of a reading of the pro forma financial
statements; carrying out certain specified procedures; inquiries of
certain officials of the Company who have responsibility for financial
and accounting matters; and proving the arithmetic accuracy of the
application of the pro forma adjustments to the historical amounts in
the pro forma financial statements, nothing came to their attention
which caused them to believe that the pro forma financial statements
do not comply as to form in all material respects with the applicable
accounting requirements of Rule 11-02 of Regulation S-X or that the
pro forma adjustments have not been properly applied to the historical
amounts in the compilation of such statements.
(iv) they have compared specified dollar amounts (or percentages
derived from such dollar amounts) and other financial information
contained in the Registration Statements (in each case to the extent
that such dollar amounts, percentages and other financial information
are derived from the general accounting records of the Company and the
Subsidiary subject to the internal controls of the
18
Company's accounting system or are derived directly from such records
by analysis or computation) with the results obtained from inquiries,
a reading of such general accounting records and other procedures
specified in such letter and have found such dollar amounts,
percentages and other financial information to be in agreement with
such results, except as otherwise specified in such letter.
For purposes of this subsection, (i) if the Effective Time of the
Initial Registration Statement is subsequent to the execution and delivery
of this Agreement, "Registration Statements" shall mean the initial
registration statement as proposed to be amended by the amendment or
post-effective amendment to be filed shortly prior to its Effective Time,
and (ii) if the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement but the Effective
Time of the Additional Registration is subsequent to such execution and
delivery, "Registration Statements" shall mean the Initial Registration
Statement and the additional registration statement as proposed to be filed
or as proposed to be amended by the post-effective amendment to be filed
shortly prior to its Effective Time, and (iii) "Prospectus" shall mean the
prospectus included in the Registration Statements.
(b) If the Effective Time of the Initial Registration Statement is not
prior to the execution and delivery of this Agreement, such Effective Time
shall have occurred not later than 10:00 P.M., New York time, on the date
of this Agreement or such later date as shall have been consented to by
CSFBC. If the Effective Time of the Additional Registration Statement (if
any) is not prior to the execution and delivery of this Agreement, such
Effective Time shall have occurred not later than 10:00 P.M., New York
time, on the date of this Agreement or, if earlier, the time the Prospectus
is printed and distributed to any Underwriter or International Manager, or
shall have occurred at such later date as shall have been consented to by
CSFBC. If the Effective Time of the Initial Registration Statement is prior
to the execution and delivery of this Agreement, the Prospectus shall have
been filed with the Commission in accordance with the Rules and Regulations
and Section 5(a) of this Agreement. Prior to the Closing Date, no stop
order suspending the effectiveness of a Registration Statement shall have
been issued and no proceedings for that purpose shall have been instituted
or, to the knowledge of the Company or the Representatives, shall be
contemplated by the Commission.
(c) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred (i) a change in the United States, PRC or
international financial, political or economic conditions or currency
exchange rates or exchange controls as would, in the judgment of a majority
in interest of the Underwriters (including the Representatives), be likely
to prejudice materially the success of the proposed issue, sale or
distribution of the Offered Securities, whether in the primary market or in
respect of dealings in the secondary
19
market, (ii) any change, or any development or event involving a
prospective change, in the condition (financial or other), business,
properties or results of operations of the Company or the Subsidiary which,
in the judgment of a majority in interest of the Underwriters, including
the Representatives, is material and adverse and makes it impractical or
inadvisable to proceed with completion of the public offering or the sale
of and payment for the Offered Securities; (iii) any suspension or
limitation of trading in securities generally on the New York Stock
Exchange or The Nasdaq National Market, or any setting of minimum prices
for trading on any such exchange, or any suspension of trading of any
securities of the Company on any exchange or in the over- the-counter
market; (iv) any banking moratorium declared by U.S. Federal, New York or
the PRC authorities; or (v) any outbreak or escalation of major hostilities
in which the United States or the PRC is involved, any declaration of war
by the United States Congress or the PRC or any other substantial national
or international calamity or emergency if, in the judgment of a majority in
interest of the Underwriters, including the Representatives, the effect of
any such outbreak, escalation, declaration, calamity or emergency makes it
impractical or inadvisable to proceed with completion of the public
offering or the sale of and payment for the Offered Securities.
(d) The Representatives shall have received an opinion and letter,
dated such Closing Date, of Sullivan & Cromwell, special U.S. counsel for
the Company, a form of which is attached hereto as Exhibit A.
20
(e) The Representatives shall have received an opinion dated , 2000(1)
and such Closing Date, of TransAsia Lawyers, PRC counsel for the Company, a
form of which is attached hereto as Exhibit B.
(f) The Representatives shall have received from Cravath, Swaine &
Moore, U.S. counsel for the Underwriters, such opinion or opinions, dated
such Closing Date, with respect to the validity of the Offered Securities
delivered on such Closing Date, the Registration Statements, the Prospectus
and other related matters as the Representatives may require, and the
Company shall have furnished to such counsel such documents as they
reasonably request for the purpose of enabling them to pass upon such
matters.
(g) The Representatives shall have received an opinion dated , 20001
and such Closing Date, of Commerce and Finance Law Offices, PRC counsel for
the Underwriters, a form of which is attached hereto as Exhibit B, and the
Company shall have furnished to such counsel such documents as they
reasonably request for the purpose of enabling them to pass upon such
matters.
(h) The Representatives shall have received a certificate, dated such
Closing Date, of the Chief Executive Officer and Chief Financial Officer of
the Company in which such officers, to the best of their knowledge after
reasonable investigation, shall state that: the representations and
warranties of the Company in this Agreement are true and correct; the
Company has complied with all agreements and satisfied all conditions on
its part to be performed or satisfied hereunder at or prior to such Closing
Date; no stop order suspending the effectiveness of any Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are contemplated by the Commission; the Additional
Registration Statement (if any) satisfying the requirements of
subparagraphs (1) and (3) of Rule 462(b) was filed pursuant to Rule 462(b),
including payment of the applicable filing fee in accordance with Rule
111(a) or (b) under the Act, prior to the time the Prospectus was printed
and distributed to any Underwriter; and, subsequent to the date of the most
recent financial statements in the Prospectus, there has been no material
adverse change, nor any development or event involving a prospective
material adverse change, in the condition (financial or other), business,
properties or results of operations of the Company and the Subsidiary taken
as a whole except as set forth in or contemplated by the Prospectus and as
described in such certificate.
(i) The Representatives shall have received a letter, dated such
Closing Date, of PricewaterhouseCoopers which meets the requirements of
subsection (a) of this Section, except that the specified date referred to
in such subsection will be a date not more than three business days prior
to such Closing Date for the purposes of this subsection.
----------
(1)Note to TransAsia and Commerce & Finance: the opinion will first be delivered
to the Underwriters prior to printing the preliminary prospectus.
21
(j) Each officer, director and preferred shareholder of the Company
named in Schedule C shall have furnished to the Representatives a letter
substantially in the form of Appendix A and each such letter shall be in
full force and effect on the Closing Date.
[(k) Concurrent with or subsequent to the execution and delivery of
this Agreement, a 2.6-for-one stock split as approved by the board of the
Company on June [21], 2000 and described in the Prospectus has become
effective.]
The Company will furnish the Representatives with such conformed copies of such
opinions, certificates, letters and documents as the Representatives reasonably
requests. The applicable Representative may in its sole discretion waive on
behalf of the Underwriters compliance with any conditions to the obligations of
the Underwriters hereunder, whether in respect of an Optional Closing Date or
otherwise.
7. Indemnification and Contribution. (a) The Company will indemnify and
hold harmless each Underwriter, its partners, directors and officers and each
person, who controls such Underwriter within the meaning of Section 5 of the
Act, against any losses, claims, damages or liabilities, joint or several, to
which such Underwriter may become subject, under the Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any Registration Statement, the Prospectus, or
any amendment or supplement thereto, or any related preliminary prospectuses, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse each Underwriter for any
legal or other expenses reasonably incurred by such Underwriter in connection
with investigating or defending any such loss, claim, damage, liability or
action as such expenses are incurred; provided, however, that the Company will
not be liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or alleged
untrue statement in or omission or alleged omission from any of such documents
in reliance upon and in conformity with written information furnished to the
Company by any Underwriter through the applicable Representative specifically
for use therein, it being understood and agreed that the only information
furnished by any Underwriter consists of the information described as such in
subsection (b) below; and provided, further, that with respect to any untrue
statement or alleged untrue statement in or omission or alleged omission from
any preliminary prospectus the indemnity agreement contained in this subsection
(a) shall not inure to the benefit of any Underwriter from whom the person
asserting any such losses, claims, damages or liabilities purchased the Offered
Securities concerned, to the extent that a prospectus relating to such Offered
Securities was required to be delivered by such Underwriter under the Act in
connection with such purchase and any such loss, claim, damage or liability of
such Underwriter results from the fact that there was not sent or given to such
person, at or prior to the written confirmation of the sale of such Offered
Securities to such person, a copy of the Prospectus if the Company had
previously furnished copies thereof to such Underwriter. The Company agrees to
indemnify and hold harmless the
22
Underwriters and each person, if any, who controls the Underwriter within the
meaning of either Section 15 of the Act or Section 20 of the Exchange Act (the
"Designated Entities"), from the against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) (i) caused by any untrue statement or alleged untrue statement
of a material fact contained in any material prepared by or with the consent of
the Company for distribution to Participants in connection with the Directed
Share Program or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading; (ii) caused by the failure of any Participant to pay for
and accept delivery of Directed Shares that the Participant agreed to purchase;
or (iii) related to, arising out of, or in connection with the Directed Share
Program, other than losses, claims, damages or liabilities (or expenses relating
thereto) that are finally judicially determined to have resulted primarily from
the bad faith or gross negligence of the Designated Entities.
(b) Each Underwriter will severally and not jointly indemnify and hold
harmless the Company against any losses, claims, damages or liabilities to which
the Company may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any Registration Statement, the Prospectus, or any
amendment or supplement thereto, or any related preliminary prospectuses, or
arise out of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to the Company by such Underwriter through the
Representatives specifically for use therein, and will reimburse any legal or
other expenses reasonably incurred by the Company in connection with
investigating or defending any such loss, claim, damage, liability or action as
such expenses are incurred, it being understood and agreed that the only such
information furnished by any Underwriter consists of the following information
in the Prospectus furnished on behalf of each Underwriter: the concession and
reallowance figures appearing in the fourth paragraph under the caption
"Underwriting" and the information relating to sales to discretionary accounts
contained in the seventh paragraph under the caption "Underwriting".
(c) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
subsection (a) or (b) above, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under subsection (a) or (b) above. In case any such action is brought against
any indemnified party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel
23
satisfactory to such indemnified party (who shall not, except with the consent
of the indemnified party, be counsel to the indemnifying party), and after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party will not be liable to such
indemnified party under this Section, for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened action in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party unless such settlement (i) includes
an unconditional release of such indemnified party from all liability on any
claims that are the subject matter of such action and (ii) does not include a
statement as to, or an admission of, fault, culpability or a failure to act by
or on behalf of an indemnified party. Notwithstanding anything contained herein
to the contrary, if indemnity may be sought pursuant to the last paragraph in
Section 7(a) hereof in respect of such action or proceeding, then in addition to
such separate firm for the indemnified parties, the indemnifying party shall be
liable for the reasonable fees and expenses of not more than one separate firm
(in addition to any local counsel) for the Designated Underwriter for the
defense of any losses, claims, damages and liabilities arising out of the
Directed Share Program, and all persons, if any, who control the Designated
Underwriter within the meaning of either Section 15 of the Act of Section 20 of
the Exchange Act.
(d) If the indemnification provided for in this Section is unavailable or
insufficient to hold harmless an indemnified party under subsection (a) or (b)
above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in subsection (a) or (b) above (i) in such proportion as
is appropriate to reflect the relative benefits received by the Company on the
one hand and the Underwriters on the other from the offering of the Offered
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 the Company on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriters on the other shall be deemed to be in the same proportion
as the total net proceeds from the offering of the Offered Securities (before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by the Underwriters. The 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 the Company or the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. The
amount paid by an indemnified party as a result of the losses, claims, damages
or liabilities referred to in the first sentence of this subsection (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any action or
claim which is the subject of
24
this subsection (d). Notwithstanding the provisions of this subsection (d), no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Offered Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations in
this subsection (d) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(e) The obligations of the Company under this Section shall be in addition
to any liability which the Company may otherwise have and shall extend, upon the
same terms and conditions, to each person, if any, who controls any Underwriter
within the meaning of the Act; and the obligations of the Underwriter under this
Section shall be in addition to any liability which the respective Underwriters
may otherwise have and shall extend, upon the same terms and conditions, to each
director of the Company, to each officer of the Company who has signed a
Registration Statement and to each person, if any, who controls the Company
within the meaning of the Act.
8. Default of Underwriters. If any Underwriter or Underwriters default in
their obligations to purchase the Offered Securities hereunder on either the
First or any Optional Closing Date and the aggregate number of shares of the
Offered Securities that such defaulting Underwriter or Underwriters agreed but
failed to purchase does not exceed 10% of the total number of shares of the
Offered Securities that the Underwriters are obligated to purchase on such
Closing Date, the Representatives may make arrangements satisfactory to the
Company for the purchase of such Offered Securities by other persons, including
any of the Underwriters, but if no such arrangements are made by such Closing
Date, the non-defaulting Underwriters shall be obligated severally, in
proportion to their respective commitments hereunder, to purchase the Securities
that such defaulting Underwriters agreed but failed to purchase on such Closing
Date. If any Underwriter or Underwriters so default and the aggregate number of
shares of the Offered Securities with respect to which such default or defaults
occur exceeds 10% of the total number of shares of the Offered Securities that
the Underwriters are obligated to purchase on such Closing Date and arrangements
satisfactory to the Representatives and the Company for the purchase of such
Securities by other persons are not made within 36 hours after such default,
this Agreement will terminate without liability on the part of any non-
defaulting Underwriter or the Company, except as provided in Section 9 (provided
that if such default occurs with respect to the Optional Securities after the
First Closing Date, this Agreement will not terminate as to the Firm Securities
or any Optional Securities purchased prior to such termination). As used in this
Agreement, the term "Underwriter" includes any person substituted for an
Underwriter under this Section. Nothing herein will relieve a defaulting
Underwriter from liability for its default.
9. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
25
Company or its officers and of the several Underwriters set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation, or statement as to the results thereof, made by or on behalf
of any Underwriter, the Company or any of their respective officers or directors
or any controlling person, and will survive delivery of and payment for the
Offered Securities. If this Agreement is terminated pursuant to Section 8 or if
for any reason the purchase of the Offered Securities by the Underwriters is not
consummated, the Company shall remain responsible for the expenses to be paid or
reimbursed by it pursuant to Section 5 and the respective obligations of the
Company and the Underwriters pursuant to Section 7 shall remain in effect and if
any Securities have been purchased hereunder the representations and warranties
in Section 2 and all obligations under Section 5 shall also remain in effect. If
the purchase of the Offered Securities by the Underwriters is not consummated
for any reason other than solely because of the termination of this Agreement
pursuant to Section 8 or the occurrence of any event specified in clause (iii),
(iv), or (v) of Section 6(c), the Company will reimburse the Underwriters for
all out-of-pocket expenses (including fees and disbursements of counsel)
reasonably incurred by them in connection with the offering of the Offered
Securities.
10. Notices. All communications hereunder will be in writing and, if sent
to the Underwriters, will be mailed, delivered or telegraphed and confirmed to
(a) the U.S. Representative, Credit Suisse First Boston Corporation, Eleven
Madison Avenue, New York, N.Y. 10010-3629, Attention: Investment Banking
Department - Transactions Advisory Group, (b) to the International
Representative at 13/F, Three Exchange Square, 8 Connaught Place, Central, Hong
Kong. Attention: and (c) , if sent to the Company, will be mailed, delivered or
telegraphed and confirmed to it at Sohu.com Inc., 7 Jianguomen Nei Avenue, Suite
1519, Tower 2 Bright China Chang An Building, Beijing 100005, China, Attention:
Chief Financial Officer; provided, however, that any notice to an Underwriter
pursuant to Section 7 will be mailed, delivered or telegraphed and confirmed to
such Underwriter.
11. Successors. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective successors and the officers and
directors and controlling persons referred to in Section 7, and no other person
will have any right or obligation hereunder.
12. Representation of Underwriters. The U.S. Representative will act for
the several U.S. Underwriters and the International Representative will act for
the several International Managers, in each case, in connection with this
financing. Any action under this Agreement taken by the U.S. Representative will
be binding upon all the U.S. Underwriters. Any action under this Agreement taken
by the International Representative will be binding upon all International
Managers.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
26
14. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAWS.
The Company hereby submits to the non-exclusive jurisdiction of the Federal
and state courts in the Borough of Manhattan in The City of New York in any suit
or proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby.
If the foregoing is in accordance with the Representative's understanding
of our agreement, kindly sign and return to the Company one of the counterparts
hereof, whereupon it will become a binding agreement between the Company and the
several Underwriters in accordance with its terms.
Very truly yours,
SOHU.COM INC.
By
......................
[Insert title]
27
The foregoing Underwriting Agreement is hereby confirmed
and accepted as of the date first above written.
CREDIT SUISSE FIRST BOSTON CORPORATION
BOCI ASIA LIMITED
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
UBS AG, acting through its financial services group UBS WARBURG
By Credit Suisse First Boston Corporation
By
......................
[Insert title]
CREDIT SUISSE FIRST BOSTON (HONG KONG) LIMITED
BOCI ASIA LIMITED
DONALDSON, LUFKIN & JENRETTE ASIA LIMITED
UBS AG, acting through its financial services group UBS WARBURG
By Credit Suisse First Boston (Hong Kong) Limited
By
......................
[Insert title]
SCHEDULE A
Number of
Firm Securities
U.S. Underwriter
Credit Suisse First Boston Corporation
BOCI Asia Limited
Donaldson, Lufkin & Jenrette Securities Corporation
UBS AG, acting through its financial services group UBS
Warburg
---------------
Total
SCHEDULE B
Number of
Firm Securities
International Manager
Credit Suisse First Boston (Hong Kong) Limited
BOCI Asia Limited
Donaldson, Lufkin & Jenrette Asia Limited
UBS AG, acting through its financial services group UBS
Warburg ---------------
Total
===============
SCHEDULE C
LIST OF OFFICERS, DIRECTORS AND THE PREFERRED SHAREHOLDERS
OF
THE COMPANY
Charles Zhang
Edward Roberts
James McGregor
George Chang
Mary Ma
Thomas Gurnee
Alan Li
Victor Koo
Edwin Chan
Gary Zhao
Xin Ye
Brant Binder
Nicholas Negroponte
Maxtech Enterprises Limited
Intel Corporation
Harrison Enterprises, Inc.
PTV-China, Inc.
Dow Jones & Company
Hikari Tsushin, Inc.
Legend New-Tech Investment Limited
Internet Creations Limited
APPENDIX A
Form of the lock-up agreement for each executive officer, director and preferred
shareholder
July [ ], 2000
Sohu.com Inc.
7 Jianguomen Nei Avenue, Suite 1519
Tower 2 Bright China Chang An Building
Beijing 100005, People's Republic of China
Credit Suisse First Boston Corporation
As Representative of the Several Underwriters
Eleven Madison Avenue
New York, N.Y. 10010-3629
Credit Suisse First Boston (Hong Kong) Limited
As Representative of the Several Managers,
13/F, Three Exchange Square,
8 Connaught Place Central
Hong Kong
Ladies and Gentlemen:
As an inducement to the Underwriters to execute the Underwriting Agreement,
pursuant to which an offering will be made that is intended to result in the
establishment of a public market for shares of common stock, par value $0.001
per share (the "SECURITIES") of Sohu.com Inc. (the "COMPANY"), the undersigned
hereby agrees that from the date hereof and until 180 days after the public
offering date set forth on the final prospectus used to sell the Securities (the
"PUBLIC OFFERING DATE") pursuant to the Underwriting Agreement, to which you are
or expect to become parties, the undersigned will not offer, sell, contract to
sell, pledge or otherwise dispose of, directly or indirectly, any shares of
Securities or securities convertible into or exchangeable or exercisable for any
shares of Securities, enter into a transaction which would have the same effect,
or enter into any swap, hedge or other arrangement that transfers, in whole or
in part, any of the economic consequences of ownership of the Securities,
whether any such aforementioned transaction is to be settled by delivery of the
Securities or such other securities, in cash or otherwise, or publicly disclose
the intention to make any such offer, sale, pledge or disposition, or to enter
into any such transaction, swap, hedge or other arrangement, without, in each
case, the prior written consent of Credit Suisse First Boston Corporation. In
addition, the undersigned agrees that, without the prior written consent of
Credit Suisse First Boston Corporation, it will not, during the period
commencing on the date hereof and ending 180 days after the Public Offering
Date, make any demand for or exercise any right with respect to, the
registration of any Securities or any security convertible into or exercisable
or exchangeable for the Securities. In connection with any existing registration
rights, the undersigned also waives
any right or rights he, she or it may have to receive notice from the Company of
any proposed registration of the Company's securities under the securities laws
of the United States contemplated at any time from the date hereof until 180
days after the Public Offering Date.
Any Securities received upon exercise of options granted to the undersigned
will also be subject to this Agreement. Any Securities acquired by the
undersigned in the open market will not be subject to this Agreement. A transfer
of Securities to a family member or trust may be made, provided the transferee
agrees to be bound in writing by the terms of this Agreement.
In furtherance of the foregoing, the Company and its transfer agent and
registrar are hereby authorized to decline to make any transfer of shares of
Securities if such transfer would constitute a violation or breach of this
Agreement.
This Agreement shall be binding on the undersigned and the successors,
heirs, personal representatives and assigns of the undersigned. This Agreement
shall lapse and become null and void if the Public Offering Date shall not have
occurred on or before December 31, 2000.
Very truly yours,
--------------------------------------------------------------
Name of executive officer, director, or preferred shareholder]
EXHIBIT A
[Form of Sullivan & Cromwell opinion]
[Currently being negotiated with Sullivan & Cromwell]
EXHIBIT B
[Form of PRC counsel regulatory opinion]
[Currently being negotiated with TransAsia and Commerce & Finance]
Dates Referenced Herein and Documents Incorporated by Reference
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