Exhibit 10.1
Changyou.com
Limited
7,500,000 American Depositary
Shares
Representing
15,000,000 Class A Ordinary
Shares
UNDERWRITING
AGREEMENT
April 1, 2009
C REDIT S UISSE S ECURITIES (USA) LLC
Eleven Madison Avenue
New York, New York 10010-3629
U.S.A.
M ERRILL L YNCH ,
P IERCE , F ENNER & S MITH I NCORPORATED
4 World Financial Center
250 Vesey Street,
New York, New York 10080
U.S.A.
As Representatives of the Several
Underwriters
Dear Sirs:
1. Introductory .
Changyou.com Limited, a Cayman Islands company (the “
Company ”), agrees with the several Underwriters named
in Schedule A hereto (the “ Underwriters ”) to
issue and sell to the Underwriters, for whom you are acting as
representatives (the “ Representatives ”), an
aggregate of 3,750,000 American Depository Shares (“
ADSs ”), each ADS representing two Class A
ordinary shares, par value US$0.01 per share (the “
Ordinary Shares ”), of the Company, and Sohu.com
(Game) Limited (the “ Selling Shareholder ”), a
Cayman Islands company and a wholly owned subsidiary of Sohu.com
Inc. (“ Sohu ”), proposes to sell to the
Underwriters an aggregate of 3,750,000 ADSs. The 7,500,000 ADSs to
be sold by the Company and the Selling Shareholder are herein
called the “ Firm Securities .” The Selling
Shareholder also proposes to sell to the Underwriters, at the
option of the Underwriters, an aggregate of not more than 1,125,000
additional ADSs (the “ Optional Securities ”).
The Firm Securities and the Optional Securities are herein
collectively called the “ Offered Securities .”
Schedule B attached hereto lists the number of Firm Securities and
maximum number of Optional Securities to be sold by the Company and
the Selling Shareholder. Unless the context otherwise requires,
each reference to the Firm Securities, the Optional Securities or
the Offered Securities herein also includes the underlying Ordinary
Shares (hereinafter referred to as the “ Firm Shares
,” “ Optional Share s” and “
Offered Shares ”).
The ADSs purchased by the
Underwriters pursuant to this agreement will be evidenced by
American Depositary Receipts (“ ADRs ”) to be
issued pursuant to a deposit agreement (the “ Deposit
Agreement ”), to be entered into among the Company, The
Bank of New York Mellon, as depositary (the “
Depositary ”), and owners and holders from time to
time of the ADSs.
2. Representations and
Warranties
(A) Representations and
Warranties of the Company . The Company represents and warrants
to, and agrees with, the several Underwriters that:
(a) Filing and Effectiveness of
Registration Statement; Certain Defined Terms . The Company has
filed with the Commission a registration statement on Form F-1 (No.
333-158061) covering the registration of the Offered Securities
under the Act, including a related preliminary prospectus or
prospectuses. At any particular time, this initial registration
statement, in the form then on file with the Commission, including
all information contained in the registration statement (if any)
pursuant to Rule 462(b) and then deemed to be a part of the initial
registration statement, and all 430A Information and all 430C
Information, that in any case has not then been superseded or
modified, shall be referred to as the “ Initial
Registration Statement .” The Company may also have
filed, or may file with the Commission, a Rule 462(b) registration
statement covering the registration of Offered Securities. At any
particular time, this Rule 462(b) registration statement, in the
form then on file with the Commission, including the contents of
the Initial Registration Statement incorporated by reference
therein and including all 430A Information and all 430C
Information, that in any case has not then been superseded or
modified, shall be referred to as the “ Additional
Registration Statement .” A registration statement on
Form F-6 (No. 333-158104) relating to the ADSs has been filed with
the Commission and has become effective (such registration
statement on Form F-6, including all exhibits thereto, as amended
through the time such registration statement becomes effective,
being hereinafter called the “ ADS Registration
Statement ”). The Company has also filed, in accordance
with Section 12 of the Exchange Act, a registration statement
(such registration statement as amended through the time such
registration statement becomes effective, being hereinafter called
the “ Exchange Act Registration Statement ”), on
Form 8-A (No. 001-34271) under the Exchange Act to register, under
Section 12(b) of the Exchange Act, the Ordinary Shares and the
ADSs. For purposes of this Agreement, all references to the Initial
Registration Statement, the Additional Registration Statement, the
ADS Registration Statement, the Exchange Act Registration
Statement, any preliminary prospectus or any amendment or
supplement, or the Final Prospectus (including any prospectus
wrapper) to any of the foregoing shall be deemed to include the
copy filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval system (“ EDGAR
”).
As of the time of execution and
delivery of this Agreement, the Initial Registration Statement has
been declared effective under the Act and is not proposed to be
amended, and the Exchange Act Registration Statement has become
effective, as provided in Section 12 of the Exchange Act. Any
Additional Registration Statement has or will become effective upon
filing with the Commission pursuant to Rule 462(b) and is not
proposed to be amended. The Offered Securities all have been or
will be duly registered under the Act pursuant to the Initial
Registration Statement and, if applicable, the Additional
Registration Statement.
For purposes of this
Agreement:
“ 430A Information
,” with respect to any registration statement, means
information included in a prospectus and retroactively deemed to be
a part of such registration statement pursuant to
Rule 430A(b).
“ 430C Information
,” with respect to any registration statement, means
information included in a prospectus then deemed to be a part of
such registration statement pursuant to Rule 430C.
“ Act ” means the
Securities Act of 1933, as amended.
“ Applicable Time
” means 9:25 p.m. (U.S. Eastern time) on the date of this
Agreement.
“ Closing Date ”
has the meaning defined in Section 3 hereof.
2
“ Commission ”
means the Securities and Exchange Commission.
“ 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 the date and time as of
which such Registration Statement was declared effective by the
Commission or has become effective upon filing pursuant to
Rule 462(c). 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).
“ Exchange Act ”
means the Securities Exchange Act of 1934, as amended.
“ Final Prospectus
” means the Statutory Prospectus that discloses the public
offering price, other 430A Information and other final terms of the
Offered Securities and otherwise satisfies Section 10(a) of
the Act.
“ General Use Issuer Free
Writing Prospectus ” means any Issuer Free Writing
Prospectus that is intended for general distribution to prospective
investors (other than a Bona Fide Electronic Road Show (as defined
below,)) as evidenced by its being so specified in Schedule C to
this Agreement.
“ Issuer Free Writing
Prospectus ” means any “issuer free writing
prospectus,” as defined in Rule 433, relating to the Offered
Securities in the form filed or required to be filed with the
Commission or, if not required to be filed, in the form retained in
the Company’s records pursuant to Rule 433(g), or is a
“road show that is a written communication” within the
meaning of Rule 433(d)(8)(i), whether or not required to be filed
with the Commission. The Company has made available a “bona
fide electronic road show,” as defined in Rule 433, in
compliance with Rule 433(d)(8)(ii) (the “ Bona Fide
Electronic Road Show ”) such that no filing of any
“road show” (as defined in Rule 433(h)) is required in
connection with the offering of the Offered Securities.
“ Limited Use Issuer Free
Writing Prospectus ” means any Issuer Free Writing
Prospectus that is not a General Use Issuer Free Writing
Prospectus.
The Initial Registration Statement
and the Additional Registration Statement are referred to
collectively as the “ Registration Statements ”
and individually as a “ Registration Statement
.” A “ Registration Statement ” with
reference to a particular time means the Initial Registration
Statement and any Additional Registration Statement as of such
time. A “ Registration Statement ” without
reference to a time means such Registration Statement as of its
Effective Time. For purposes of the foregoing definitions, 430A
Information with respect to a Registration Statement shall be
considered to be included in such Registration Statement as of the
time specified in Rule 430A.
“ Rules and Regulations
” means the rules and regulations of the
Commission.
“ Securities Laws
” means, collectively, the Sarbanes-Oxley Act of 2002
(“ Sarbanes-Oxley ”), the Act, the Exchange Act,
the Rules and Regulations, the auditing principles, rules,
standards and practices applicable to auditors of
“issuers” (as defined in Sarbanes-Oxley) promulgated or
approved by the Public Company Accounting Oversight Board and, as
applicable, and the NASDAQ Stock Market Rules (“ Exchange
Rules ”).
“ Statutory Prospectus,
” with reference to a particular time, means the prospectus
included in a Registration Statement immediately prior to that
time, including any 430A Information or 430C Information with
respect to such Registration Statement. For purposes of the
foregoing definition, 430A Information shall be considered to be
included in the Statutory Prospectus as of the actual time that
form of prospectus is filed with the Commission pursuant to Rule
424(b) or Rule 462(c) and not retroactively.
Unless otherwise specified, a
reference to a “rule” is to the indicated rule under
the Act.
3
(b) Compliance with Securities
Act Requirements . (i) (A) At their respective
Effective Times, (B) on the date of this Agreement and
(C) on each Closing Date, each of the Initial Registration
Statement, the Additional Registration Statement (if any), the ADS
Registration Statement and any amendments and supplement thereto
conformed and will conform in all respects to the requirements of
the Act and the Rules and Regulations and did not and will 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, and (ii) on its
date, at the time of filing of the Final Prospectus pursuant to
Rule 424(b) or (if no such filing is required) at the Effective
Time of the Additional Registration Statement in which the Final
Prospectus is included, and on each Closing Date, the Final
Prospectus will conform in all respects to the requirements of the
Act and the Rules and Regulations and will 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. The preceding sentence does not apply to
statements in or omissions from any such document 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 8(c) hereof.
(c) Ineligible Issuer Status
. (i) At the time of initial filing of the Initial
Registration Statement and (ii) at the date of this Agreement,
the Company was not and is not an “ineligible issuer,”
as defined in Rule 405, including (x) the Company or any other
subsidiary in the preceding three years not having been convicted
of a felony or misdemeanor or having been made the subject of a
judicial or administrative decree or order as described in Rule 405
and (y) the Company in the preceding three years not having
been the subject of a bankruptcy petition or insolvency or similar
proceeding, not having had a registration statement be the subject
of a proceeding under Section 8 of the Act and not being the
subject of a proceeding under Section 8A of the Act in
connection with the offering of the Offered Securities, all as
described in Rule 405.
(d) General Disclosure
Package . As of the Applicable Time, neither (i) the
General Use Issuer Free Writing Prospectus(es) issued at or prior
to the Applicable Time and, the preliminary prospectus, dated
March 17, 2009 (which is the most recent Statutory Prospectus
distributed to investors generally) and the other information, if
any, stated in Schedule C to this Agreement to be included in the
General Disclosure Package, all considered together (collectively,
the “ General Disclosure Package ”), nor
(ii) any individual Limited Use Issuer Free Writing
Prospectus, when considered together with the General Disclosure
Package, included any untrue statement of a material fact or
omitted 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 preceding sentence does not
apply to statements in or omissions from any Statutory Prospectus
or any Issuer Free Writing Prospectus in reliance upon and in
conformity with 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 furnished by any Underwriter consists of the
information described as such in Section 8(c)
hereof.
(e) Issuer Free Writing
Prospectuses . Each Issuer Free Writing Prospectus, as of its
issue date and at all subsequent times through the completion of
the public offer and sale of the Offered Securities or until any
earlier date that the Company notified or notifies the
Representatives as described in the next sentence, did not, does
not and will not include any information that conflicted, conflicts
or will conflict with the information then contained in the
Registration Statement, General Disclosure Package or Final
Prospectus. If at any time following issuance of an Issuer Free
Writing Prospectus there occurred or occurs an event or development
as a result of which such Issuer Free Writing Prospectus conflicted
or would conflict with the information then contained in the
Registration Statement or as a result of which such Issuer Free
Writing Prospectus, if republished immediately following such event
or development, would include an untrue statement of a material
fact or omitted or would omit to state a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they
4
were made, not misleading,
(i) the Company has promptly notified or will promptly notify
the Representatives and (ii) the Company has promptly amended
or will promptly amend or supplement such Issuer Free Writing
Prospectus to eliminate or correct such conflict, untrue statement
or omission.
(f) Good Standing of the
Company . The Company has been duly incorporated and is
existing and in good standing under the laws of the Cayman Islands,
with power and authority (corporate and other) to own its
properties and conduct its business as described in the
Registration Statement, General Disclosure Package and Final
Prospectus; and the Company is duly qualified to do business as a
foreign corporation in good standing in all other jurisdictions in
which its ownership or lease of property or the conduct of its
business requires such qualification, except where such failure to
be qualified would not, individually or in the aggregate, result in
a material adverse effect on the condition (financial or
otherwise), results of operations, business, properties or
prospects of the Company and its Controlled Entities (as defined in
Section 2(A)(g) below) taken as a whole (“ Material
Adverse Effect ”). The Memorandum and Articles of
Association or other constitutive or organizational documents of
the Company comply with the requirements of applicable Cayman
Islands law and are in full force and effect. Complete and correct
copies of all constitutive documents of the Company and all
amendments thereto have been delivered to the Representatives;
except as set forth in the exhibits to the Registration Statement,
no change will be made to any such constitutive documents on or
after the date of this Agreement through and including each Closing
Date.
(g) Controlled Entities .
(i) The Company does not own or control, directly or
indirectly, any corporation or entity other than Changyou.com (HK)
Limited (“ Changyou HK ”), a wholly owned
subsidiary of the Company incorporated under the laws of Hong Kong,
AmazGame Entertainment (US), Inc., an indirect wholly owned
subsidiary of the Company incorporated under the laws of the State
of Delaware (“ AmazGame U.S. ”), Beijing
AmazGame Age Internet Technology Co., Ltd. (“ AmazGame
”), an indirect wholly owned subsidiary of the Company
incorporated under the laws of the People’s Republic of China
(the “ PRC ”), and Beijing Gamease Age Digital
Technology Co., Ltd. (“ Gamease ”), a variable
interest entity of the Company incorporated under the laws of the
PRC. Changyou HK, AmazGame U.S., AmazGame and Gamease shall be
referred to hereinafter each as a “ Controlled Entity
” and collectively as the “ Controlled Entities
.” Other than the equity interests in Changyou HK, AmazGame
U.S. and AmazGame and the control over Gamease, the Company does
not own, directly or indirectly, any shares of stock or any other
equity interests or long-term debt securities of, or otherwise
control, any corporation, firm, partnership, joint venture,
association or other entity; (ii) each Controlled Entity of
the Company has been duly incorporated and is existing and in good
standing under the laws of the jurisdiction of its incorporation,
with power and authority (corporate and other) to own its
properties and conduct its business as described in the
Registration Statement, General Disclosure Package and Final
Prospectus, and is duly qualified to do business as a foreign
corporation in good standing in all other jurisdictions in which
its ownership or lease of property or the conduct of its business
requires such qualification, except where such failure to be
qualified would not, individually or in the aggregate, result in a
Material Adverse Effect. The constitutive documents of each
Controlled Entity comply with the requirements of applicable laws
of the jurisdiction of its incorporation and are in full force and
effect; (iii) all of the issued and outstanding capital stock
of Changyou HK, AmazGame U.S. and AmazGame has been duly authorized
and validly issued and is fully paid and nonassessable, and such
capital stock is owned by the Company, directly or through a
subsidiary, free from liens, encumbrances and defects;
(iv) all of the issued and outstanding capital stock of
Gamease has been duly authorized and validly issued and is fully
paid and nonassessable, and such capital stock is owned directly by
Tao Wang and a Sohu employee as set forth in the Registration
Statement, General Disclosure Package and Final Prospectus, free
from liens, encumbrances and defects except such as disclosed
therein. Tao Wang and the Sohu employee are citizens of the PRC,
and no application is pending in any other jurisdiction by them or
on their behalf for naturalization or citizenship.
5
(h) Offered Securities and
Capitalization . The Offered Securities and all other
outstanding shares of capital stock of the Company have been duly
authorized; the authorized equity capitalization of the Company is
as set forth in the Registration Statement, General Disclosure
Package and Final Prospectus; all outstanding shares of capital
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, such Offered Securities will have been, validly
issued, fully paid and nonassessable, will conform to the
information in the Registration Statement, General Disclosure
Package and Final Prospectus and to the description of such Offered
Securities contained in the Final Prospectus; there are no
outstanding rights (including, without limitation, preemptive
rights), warrants or options to acquire, or instruments convertible
into or exchangeable for, any shares of capital stock or other
equity interest in the Company or any of the Controlled Entities,
or any contract, commitment, agreement, understanding or
arrangement of any kind relating to the issuance of any capital
stock of the Company or any such Controlled Entity, any such
convertible or exchangeable securities or any such rights, warrants
or options; the Offered Shares to be sold by the Company, when
issued and delivered against payment thereof, may be freely
deposited by the Company with the Depositary against issuance of
ADRs evidencing the ADSs; the ADSs to be sold by the Company, when
issued and delivered against payment thereof, will be freely
transferable by the Company to or for the account of the
Underwriters; and there are no restrictions on subsequent transfers
of such ADSs under the laws of the Cayman Islands, the PRC or the
United States, except as described in the Registration Statement,
General Disclosure Package and Final Prospectus.
(i) Intercompany Agreements .
The description of each of the Master Transaction Agreement, Asset
Transfer Agreements, Technology Transfer Agreement, Trademark
Assignment Agreement, Services Transfer Agreement, Non-Competition
Agreement and Marketing Services Agreement (collectively, the
“ Intercompany Agreements ”) in the Registration
Statement, General Disclosure Package and Final Prospectus under
the captions “Our History and Corporate Structure” and
“Our Relationship with Sohu” is true and correct in all
material respects. Each Intercompany Agreement has been duly
authorized, executed and delivered by the relevant parties of such
agreement, is in full force and effect, and constitutes a valid and
binding obligation of such parties, enforceable against such
parties in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws of general applicability affecting
creditors’ rights or by equitable principles relating to
enforceability. The execution, delivery and performance by the
Company or its Controlled Entity of each of the Intercompany
Agreements will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute
default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company or
any Controlled Entity is bound or to which the Company or any
Controlled Entity is subject, nor will such actions result in any
violation of any applicable law or any order, rule or regulation of
any court or governmental agency or body having jurisdiction over
the Company or any Controlled Entity or any of their properties or
assets; nor will such actions result in any violation of any
provision of any constitutive documents of the Company or its
Controlled Entity; and no consent, approval, authorization or order
of, or filing or registration with, any court or governmental
agency or body is required for the execution and delivery by the
Company or its Controlled Entity of, and compliance by the Company
or its Controlled Entity with, the provisions of each of the
Intercompany Agreements, except such as shall have been obtained or
waived.
(j) Restructuring
Transactions . The restructuring transactions described in the
Registration Statement, General Disclosure Package and Final
Prospectus relating to the carve-out of the Company from Sohu (the
“ Restructuring Transactions ”) are true and
correct in all material respects. Each of the Restructuring
Transactions, and all the Restructuring Transactions taken as
a
6
whole, (i) were and are in
compliance with all applicable laws, orders, rules and regulations
of any court or governmental agency or body having jurisdiction
over the parties involved; (ii) were properly authorized and
executed in compliance with the articles of association, business
license or other corporate constitutive documents of the parties
involved; and (iii) did not, do not and will not conflict with
or result in a breach or violation of any of the terms or
provisions of, or constitute default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or any Controlled Entity is bound
or to which the Company or any Controlled Entity is
subject.
(k) VIE Agreements .
(i) The description of each of the agreements described under
the caption “Our History and Corporate Structure” in
the Registration Statement, General Disclosure Package and Final
Prospectus relating to our corporate structure, to which any of
AmazGame, Gamease and the shareholders of Gamease is a party
(collectively, the “ VIE Agreements ”), is true
and correct in all material respects, and all material agreements
relating to our corporate structure have been so disclosed. Each
party of the VIE Agreements has the legal right, power and
authority (corporate and other, as the case may be) to enter into
and perform their respective obligations under the VIE Agreements
and has taken all necessary corporate action to authorize the
execution, delivery and performance of, and have authorized,
executed and delivered, each of the VIE Agreements; and each of the
VIE Agreements constitutes a valid and legally binding obligation
of the parties thereto, enforceable in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws of general
applicability affecting creditors’ rights or by equitable
principles relating to enforceability.
(ii) The execution and delivery by
AmazGame, Gamease and shareholders of Gamease of, and the
performance by AmazGame, Gamease and shareholders of Gamease of
their respective obligations under, each of the VIE Agreements and
the consummation by AmazGame, Gamease and shareholders of Gamease
of the transactions contemplated therein did not, does not and will
not: (A) conflict with or result in a breach or violation of
any of the terms or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, lease, loan agreement or
other agreement or instrument to which the Company, AmazGame,
Gamease or shareholders of Gamease, as the case may be, are a party
or by which the Company, AmazGame, Gamease and shareholders of
Gamease are bound or to which any of the properties or assets of
the Company, AmazGame, Gamease or shareholders of Gamease are
subject; (B) result in any violation of the provisions of
constitutive documents or business license of the Company, AmazGame
or Gamease, as the case may be; or (C) result in any violation
of any PRC statute or any order, rule or regulation of any PRC
governmental agency having jurisdiction over the Company, AmazGame,
Gamease, shareholders of Gamease or any of their
properties.
(iii) Each of the VIE Agreements is
in proper legal form under the laws of the PRC for the enforcement
thereof against either AmazGame, Gamease or shareholders of
Gamease, as the case may be, in the PRC without further action by
AmazGame, Gamease or shareholders of Gamease, as the case may be;
and to ensure the legality, validity, enforceability or
admissibility in evidence of each of the VIE Agreements in the PRC,
it is not necessary that any such document be filed or recorded
with any court or other authority in the PRC or that any stamp or
similar tax be paid on or in respect of any of the VIE
Agreements.
(iv) The Company possesses, directly
or indirectly, the power to direct or cause the direction of the
management and policies of Gamease, through, among other things,
its rights to direct the shareholders of Gamease as to the exercise
of their voting rights.
7
(v) The agreements relating to the
structure of the predecessors of the Company and its Controlled
Entities, to the extent such agreements apply to the business of
the Company and its Controlled Entities as described in the
Registration Statement, General Disclosure Package and Final
Prospectus, were in compliance with all applicable laws and
regulations.
(l) Operating and Other Company
Data . All operating and other Company data disclosed in the
Registration Statement, General Disclosure Package and Final
Prospectus, including but not limited to, the number of peak
concurrent users, average concurrent users and active paying
accounts, the amount of average revenue per active paying account,
and sales discount offered to the Company’s distributors and
game players who purchase game points through Sohu’s PEAK
system as well as other charges related to the Company’s
sales and distribution of prepaid game cards and game points, are
true and accurate in all material respects.
(m) Game Operations . There
have been no material disruptions of the operations of any online
game of, nor any material breaches to any online-payment systems
used by, the Company and its Controlled Entities or their
respective predecessors, and to the best knowledge of the Company
after due inquiry, there are no facts or circumstances that are
reasonably likely to lead to such material disruptions or
breaches.
(n) Game License . There have
been no material disputes with any of the parties to which the
Company or any of its Controlled Entities licenses out its online
games, and to the best knowledge of the Company after due inquiry,
there are no facts or circumstances that are reasonably likely to
lead to any material disputes with such parties or any premature
expiration of the license agreements.
(o) Directors and Officers .
To the best knowledge of the Company after due inquiry, none of the
Company’s directors, director nominees or executive officers
is a party to any legal, governmental or regulatory proceeding that
causes such director or officer to be unsuitable for his or her
position on the board or in the Company.
(p) Independent Accountants .
PricewaterhouseCoopers Zhong Tian CPAs Limited Company, which has
certified certain financial statements of the Company and its
Controlled Entities, is an independent registered public accounting
firm with respect to the Company and its Controlled Entities within
the applicable rules and regulations adopted by the Commission and
the Public Company Accounting Oversight Board (United States) and
as required by the Act.
(q) No Finder’s Fee .
Except as disclosed in the Registration Statement, General
Disclosure Package and Final 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. To the best
knowledge of the Company after due inquiry, there are no
arrangements, agreements, understandings, payments or issuance with
respect to the Company, its Controlled Entities, or any of their
officers, directors, shareholders, partners, employees or
affiliates that may affect the Underwriters’ compensation as
determined by the Financial Industry Regulatory Authority (the
“ FINRA ”).
(r) Registration Rights .
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
(collectively, “ registration rights
”).
8
(s) Listing . The Offered
Securities have been approved for listing on the Nasdaq Global
Select Market, subject only to notice of issuance.
(t) Absence of Further
Requirements . No consent, approval, authorization, or order
of, or filing or registration with, any person (including any
governmental agency or body or any court) is required for the
consummation of the transactions contemplated by this Agreement and
the Deposit Agreement (collectively, the “ Transaction
Documents ”) in connection with the offering, issuance
and sale of the Offered Securities by the Company, except such as
have been obtained, or made and such as may be required under state
securities laws.
(u) Title to Property . The
Company and its Controlled Entities have good and marketable title
to all real properties and all other material properties and assets
owned by them, in each case free from liens, charges, encumbrances
and defects that would affect the value thereof or interfere with
the use made or to be made thereof by them and the Company and its
Controlled Entities hold any leased real or personal property under
valid and enforceable leases with no terms or provisions that would
materially interfere with the use made or to be made thereof by
them.
(v) Absence of Defaults and
Conflicts Resulting from Transaction . The execution, delivery
and performance by the Company of the Transaction Documents, the
issuance and sale of the Offered Securities by the Company
hereunder, the deposit of the Offered Shares with the Depositary
against issuance of the ADRs evidencing the Offered Securities and
the consummation of the transactions contemplated by the
Transaction Documents in connection with this offering will not
(i) conflict with or result in a breach or violation of any of
the terms or provisions of, or constitute a default or a Debt
Repayment Triggering Event (as defined below) under, or result in
the creation or imposition of any lien, charge or encumbrance upon
any property or assets of the Company or any of its Controlled
Entities pursuant to, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company or
any of its Controlled Entities is a party or by which the Company
or any of its Controlled Entities is bound or to which any of the
properties or assets of the Company or any of its Controlled
Entities is subject; (ii) result in any violation of the
provisions of the articles of association, business license or
other constituent documents of the Company or any of its Controlled
Entities; (iii) result in the violation of any judgment, law
or statute or any order, rule or regulation of any court or
arbitrator or governmental or regulatory authority having
jurisdiction over the Company or any of its Controlled Entities or
any of their properties or assets. A “ Debt Repayment
Triggering Event ” means any event or condition that
gives, or with the giving of notice or lapse of time would give,
the holder of any note, debenture, or other evidence of
indebtedness (or any person acting on such holder’s behalf)
the right to require the repurchase, redemption or repayment of all
or a portion of such indebtedness by the Company or any of its
Controlled Entities.
(w) Possession of Licenses and
Permits, Compliance with Laws . Except as disclosed in the
Registration Statement, General Disclosure Package and Final
Prospectus, the Company and its Controlled Entities possess, and
are in compliance with the terms of, all adequate certificates,
authorizations, franchises, licenses and permits and have made all
declarations and filings with, the appropriate domestic or foreign
governmental or regulatory authorities (collectively, “
Licenses ”) necessary or material to the conduct of
the business now conducted or proposed in the Registration
Statement, General Disclosure Package and Final Prospectus to be
conducted by them and have not received any notice of proceedings
relating to the revocation or modification of any Licenses, except
where failure to be in compliance would not, individually or in the
aggregate, result in a Material Adverse Effect. Except as disclosed
in the Registration Statement, General Disclosure Package and Final
Prospectus, the Company and its Controlled Entities are in
compliance with all applicable laws in the jurisdictions to which
such entities are subject, except where failure to be in compliance
would not, individually or in the aggregate, result in a Material
Adverse Effect.
9
(x) Absence of Existing Defaults
and Conflicts . Neither the Company nor any of its Controlled
Entities is (i) in violation of its respective Memorandum and
Articles of Association or other constitutive documents, or
(ii) in default (or with the giving of notice or lapse of time
would be in default) under any existing obligation, agreement,
covenant or condition contained in any indenture, loan agreement,
mortgage, lease or other agreement or instrument to which any of
them is a party or by which any of them is bound or to which any of
the properties of any of them is subject, except in the case of
(ii) such defaults that would not, individually or in the
aggregate, result in a Material Adverse Effect.
(y) Authorization of Underwriting
Agreement . This Agreement has been duly authorized, executed
and delivered by the Company.
(z) Authorization of Deposit
Agreement . The Deposit Agreement has been duly authorized,
executed and delivered by the Company and constitutes a valid and
legally binding agreement of the Company enforceable against the
Company in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws of general applicability affecting
creditors’ rights or by equitable principles relating to
enforceability. Upon due execution and delivery by the Depositary
of ADRs evidencing Offered Securities and the deposit of Offered
Shares in respect thereof in accordance with the provisions of the
Deposit Agreement, such ADRs will be duly and validly issued and
the persons in whose names the ADRs are registered will be entitled
to the rights specified therein and in the Deposit Agreement; and
the Deposit Agreement and the ADRs conform in all material respects
to the descriptions thereof contained in the Registration
Statement, General Disclosure Package and Final
Prospectus.
(aa) Description of Transaction
Documents . Description of each Transaction Document in the
Registration Statement, General Disclosure Package and Final
Prospectus conforms in all material respects to such Transaction
Document.
(bb) Absence of Labor Dispute
. No labor dispute with the employees of the Company or any of its
Controlled Entities exists or, to the best knowledge of the Company
after due inquiry, is threatened or contemplated.
(cc) Possession of Intellectual
Property . The Company and its Controlled Entities own, possess
or can acquire on reasonable terms trademarks, trade names, patent
rights, copyrights, domain names, licenses, approvals, trade
secrets, inventions, technology, know-how and other intellectual
property and similar rights, including registrations and
applications for registration thereof (collectively, “
Intellectual Property Rights ”) necessary or material
to the conduct of the business now conducted or proposed in the
Registration Statement, General Disclosure Package and Final
Prospectus to be conducted by them, and the expected expiration of
any such Intellectual Property Rights would not, individually or in
the aggregate, have a Material Adverse Effect. Except as disclosed
in the Registration Statement, General Disclosure Package and Final
Prospectus, (i) to the best knowledge of the Company after due
inquiry, there are no rights of third parties to any of the
Intellectual Property Rights owned by the Company or its Controlled
Entities; (ii) there is no pending or, to the best knowledge
of the Company after due inquiry, threatened action, suit,
proceeding or claim by others challenging the validity,
enforceability or scope of any such Intellectual Property Rights,
and the Company is unaware of any facts which would form a
reasonable basis for any such claim; (iii) to the best
knowledge of the Company after due inquiry, there is no material
infringement, misappropriation, breach, default or other violation,
or the occurrence of any event that with notice or the passage of
time would constitute any of the foregoing, by any third parties of
any of the Intellectual Property Rights of the Company or its
Controlled Entities; (iv) none of the Company and its
Controlled Entities is in violation of any Intellectual Property
Rights of any third parties, except where such violations would
not, individually or in the aggregate, result in a Material Adverse
Effect, and there is no pending or, to the best
10
knowledge of the Company after due
inquiry, threatened action, suit, proceeding or claim by others
challenging the Company’s or any Controlled Entity’s
rights in or to, or the violation of any of the terms of, any of
such third parties’ Intellectual Property Rights, and the
Company is unaware of any facts which would form a reasonable basis
for any such claim; and (v) none of the Intellectual Property
Rights used by the Company or its Controlled Entities in their
businesses has been obtained or is being used by the Company or its
Controlled Entities in violation of any contractual obligation
binding on the Company, or any of its Controlled Entities, or, to
the best knowledge of the Company after due inquiry, is in
violation of the rights of any third parties.
(dd) Rights Relating to TLBB and
DMD . The Company and its Controlled Entities had and have all
necessary legal rights to adapt the Louis Cha novels “Tian
Long Ba Bu” and “Duke of Mount Deer” into online
games and operate such online games in the manner as described in
the Registration Statement, General Disclosure Package and Final
Prospectus at all applicable time. The license agreements between
the Company’s Controlled Entities, or their predecessors, as
the case may be, and Louis Cha relating to the Company’s
games TLBB and DMD are, or were, valid and legally binding
obligations of the parties thereto, and neither the Company’s
Controlled Entities (including their predecessors) nor, to the best
knowledge of the Company after due inquiry, Louis Cha is or was in
breach of any provisions of such agreements. There is and has been
no dispute between the Company’s Controlled Entities
(including their predecessors) and Louis Cha, and, to the best
knowledge of the Company after due inquiry, there are no facts or
circumstances that are reasonably likely to lead to any disputes
relating to such license agreements.
(ee) TLBB Trademark . The
operation of TLBB by the Company and its Controlled Entities is in
compliance with PRC Laws in all material respects. Failure to
register the Chinese name “Tian Long Ba Bu” as a
trademark in the PRC will not affect in any respect the operation
of the game, including the use of the Chinese name “Tian Long
Ba Bu” in the way it is currently used in connection with
such operation.
(ff) Environmental Laws .
Neither the Company nor any of its Controlled Entities is in
violation of any statute, any rule, regulation, decision or order
of any governmental agency or body or any court, domestic or
foreign, relating to the use, disposal or release of hazardous or
toxic substances or relating to the protection or restoration of
the environment or human exposure to hazardous or toxic substances
(collectively, “ environmental laws ”), owns or
operates any real property contaminated with any substance that is
subject to any environmental laws, is liable for any off-site
disposal or contamination pursuant to any environmental laws, or is
subject to any claim relating to any environmental laws; and, to
the best knowledge of the Company after due inquiry, there is no
pending investigation which might lead to such a claim.
(gg) Accurate Disclosure .
The statements in the Registration Statement, General Disclosure
Package and the Final Prospectus under the headings
“Summary,” “Risk Factors,” “Use of
Proceeds,” “Dividend Policy,”
“Enforceability of Civil Liabilities,”
“Business,” “Management’s Discussion and
Analysis of Financial Condition and Results of Operations,”
“Regulation,” “Management,” “Related
Party Transactions,” “Description of Share
Capital,” “Description of American Depositary
Shares,” “Shares Eligible for Future Sale,”
“Taxation” and “Underwriting,” insofar as
such statements summarize legal matters, agreements, documents or
proceedings discussed therein, are accurate and fair summaries of
such legal matters, agreements, documents or proceedings and
present the information required to be shown.
(hh) No Stabilization .
Neither the Company nor any director, officer, agent, employee,
affiliate or person acting on its behalf has taken, directly or
indirectly, any action designed, or which has constituted or might
reasonably be expected to cause or result in, under the Exchange
Act or otherwise, the stabilization or manipulation of the price of
any security of the Company to facilitate the sale or resale of the
Offered Securities.
11
(ii) Statistical and
Market-Related Data . Any statistical and market-related data
included in the Registration Statement, General Disclosure Package
and Final Prospectus are based on or derived from sources that the
Company believes to be reliable and accurate, and such data agree
with the sources from which they are derived. The Company has
obtained the written consent for the use of such data from such
sources to the extent required.
(jj) Internal Controls and
Compliance with the Sarbanes-Oxley Act . The Company, its
Controlled Entities and the Company’s Board of Directors (the
“ Board ”) are in compliance with Sarbanes-Oxley
and all applicable Exchange Rules. The Company maintains a system
of internal controls, including, but not limited to, disclosure
controls and procedures, internal controls over accounting matters
and financial reporting, an internal audit function and legal and
regulatory compliance controls (collectively, “ Internal
Controls ”) that comply with the Securities Laws and are
sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with
management’s general or specific authorizations,
(ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with U.S.
generally accepted accounting principles (“ U.S. GAAP
”) and 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. The Internal Controls
are, or upon consummation of the offering of the Offered Securities
will be, overseen by the Audit Committee (the “ Audit
Committee ”) of the Board in accordance with Exchange
Rules. The Company has not publicly disclosed or reported to the
Audit Committee or the Board, and within the next 90 days the
Company does not reasonably expect to publicly disclose or report
to the Audit Committee or the Board, a significant deficiency,
material weakness, change in Internal Controls or fraud involving
management or other employees who have a significant role in
Internal Controls (each, an “ Internal Control Event
”), any violation of, or failure to comply with, the
Securities Laws, or any matter which, if determined adversely,
would have a Material Adverse Effect.
(kk) Absence of Accounting
Issues . A member of the Board has confirmed to the Chief
Financial Officer that, except as set forth in the Registration
Statement, General Disclosure Package and Final Prospectus, the
Board is not reviewing or investigating, and neither the
Company’s independent auditors nor its internal auditors have
recommended that the Board review or investigate, (i) adding
to, deleting, changing the application of, or changing the
Company’s disclosure with respect to, any of the
Company’s material accounting policies; (ii) any matter
which could result in a restatement of the Company’s
financial statements for any annual or interim period during the
current or prior three fiscal years; or (iii) any Internal
Control Event.
(ll) Litigation . There are
no pending actions, suits or proceedings (including, to the best
knowledge of the Company after due inquiry, any inquiries or
investigations by any court or governmental agency or body,
domestic or foreign) against or affecting the Company, any of its
Controlled Entities or any of their respective properties that, if
determined adversely to the Company or any of its Controlled
Entities, would have a Material Adverse Effect, or would materially
and adversely affect the ability of the Company to perform its
obligations under the Transaction Documents, or which are otherwise
material in the context of the sale of the Offered Securities; and
no such actions, suits or proceedings (including any inquiries or
investigations by any court or governmental agency or body,
domestic or foreign) are, to the best knowledge of the Company
after due inquiry, threatened or contemplated.
12
(mm) Exhibits . There are no
statutes, regulations or contracts or other documents that are
required under the Act to be filed as exhibits to the Registration
Statement or described in the Registration Statement, General
Disclosure Package and Final Prospectus that are not so filed or
described.
(nn) Financial Statements .
The financial statements and the related notes thereto included in
each Registration Statement, the General Disclosure Package and
Final Prospectus comply in all respects with the applicable
requirements of the Act and the Exchange Act and present fairly the
financial position of the Company and its consolidated entities as
of the dates shown and their results of operations and cash flows
for the periods shown; such financial statements have been prepared
in conformity with U.S. GAAP applied on a consistent basis
throughout the periods covered thereby; and the schedules included
in each Registration Statement, the General Disclosure Package and
Final Prospectus present fairly the information required to be
stated therein. No pro forma financial statements are required to
be included in the Registration Statement, General Disclosure
Package and Final Prospectus under Article 11 of Regulation
S-X.
(oo) No Material Adverse Change
in Business . Except as disclosed in the Registration
Statement, General Disclosure Package and Final Prospectus, since
the end of the period covered by the latest audited financial
statements included in the Registration Statement, General
Disclosure Package and Final Prospectus, (i) there has been no
change, nor any development or event involving a prospective
change, in the condition (financial or otherwise), results of
operations, business, properties or prospects of the Company and
its Controlled Entities, taken as a whole that is material and
adverse; (ii) there has been no dividend or distribution of
any kind declared, paid or made by the Company on any class of its
equity capital stock; (iii) there has been no material adverse
change in the capital stock, short-term indebtedness, long-term
indebtedness, net current assets or net assets of the Company and
its Controlled Entities; (iv) neither the Company nor any of
its Controlled Entities has entered into any material transaction
or agreement or incurred any material liability or obligation,
direct or contingent, that is not disclosed in the Registration
Statement, General Disclosure Package and Final Prospectus; and
(v) neither the Company nor any of its Controlled Entities has
sustained any material loss or interference with its business from
fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor disturbance or dispute or any action,
order or decree of any court or arbitrator or governmental or
regulatory authority, and (vi) to the best knowledge of the
Company after due inquiry, there has been no change, nor any
development or event involving a prospective change, in the
condition (financial or otherwise), results of operations,
business, properties or prospects of Sohu that will result in a
Material Adverse Effect.
(pp) Investment Company Act .
The Company is not and, after giving effect to the offering and
sale of the Offered Securities and the application of the proceeds
thereof as described in the Registration Statement, General
Disclosure Package and Final Prospectus, will not be an
“investment company” or an entity
“controlled” by an “investment company” as
defined in the Investment Company Act of 1940, as amended, and the
rules and regulations of the Commission thereunder (collectively,
the “ Investment Company Act ”).
(qq) Ratings . No
“nationally recognized statistical rating organization”
as such term is defined for purposes of Rule 436(g)(2)
(i) has imposed (or has informed the Company that it is
considering imposing) any condition (financial or otherwise) on the
Company’s retaining any rating assigned to the Company or any
securities of the Company or (ii) has indicated to the Company
that it is considering any of the actions described in
Section 9(ii) hereof.
(rr) PFIC Status . The
Company was not a “passive foreign investment company”
(“ PFIC ”) as defined in Section 1297 of
the United States Internal Revenue Code of 1986, as amended, for
its most recently completed taxable year and, based on the
Company’s current projected income, assets and activities,
the Company does not expect to be classified as a PFIC for its
current taxable year.
13
(ss) Payments in Foreign
Currency. Except as disclosed in the Registration Statement,
General Disclosure Package and Final Prospectus, under current laws
and regulations of the Cayman Islands, Hong Kong and the PRC and
any political subdivision thereof, all dividends and other
distributions declared and payable on the Offered Securities may be
paid by the Company to the holder thereof in United States dollars
or any other currency that may be converted into United State
dollars and freely transferred out of the Cayman Islands, Hong Kong
and the PRC and all such payments made to holders thereof or
therein who are nonresidents of the Cayman Islands, Hong Kong or
the PRC will not be subject to income, withholding or other taxes
under laws and regulations of the Cayman Islands, Hong Kong and the
PRC or any political subdivision or taxing authority thereof or
therein and will otherwise be free and clear of any other tax,
duty, withholding or deduction in the Cayman Islands, Hong Kong and
the PRC or any political subdivision or taxing authority thereof or
therein and without the necessity of obtaining any governmental
authorization in the Cayman Islands, Hong Kong and the PRC or any
political subdivision or taxing authority thereof or
therein.
(tt) Taxes . The Company and
its Controlled Entities have filed all tax returns that are
required to be filed or have requested extensions thereof; and the
Company and its Controlled Entities have paid all taxes (including
any assessments, fines or penalties) required to be paid by them.
All local and national PRC governmental tax holidays, exemptions,
waivers, financial subsidies, and other local and national PRC tax
relief, concessions and preferential treatment enjoyed by the
Company or any Controlled Entity (including any predecessor) as
described in the Registration Statement, General Disclosure Package
and Final Prospectus are valid, binding and enforceable and do not
violate any laws, regulations, rules, orders, decrees, guidelines,
judicial interpretations, notices or other legislation of the
PRC.
(uu) No Undisclosed
Relationships . No relationship, direct or indirect, exists
between or among the Company or any of its Controlled Entities, on
the one hand, and the directors, officers, shareholders, customers
or suppliers of the Company or any of its Controlled Entities, on
the other, that is required by the Act to be described in the
Registration Statement, General Disclosure Package and Final
Prospectus and that is not so described in such
documents.
(vv) No Immunity . None of
the Company, its Controlled Entities, and any of their properties,
assets or revenues is entitled to any right of immunity on the
grounds of sovereignty from any legal action, suit or proceeding,
from set-off or counterclaim, from the jurisdiction of any court,
from services of process, from attachment prior to or in aid of
execution of judgment, or from any other legal process or
proceeding for the giving of any relief or for the enforcement of
any judgment. The irrevocable and unconditional waiver and
agreement of the Company in the Transaction Documents not to plead
or claim any such immunity in any legal action, suit or proceeding
based on the Transaction Documents is valid and binding under the
laws of the Cayman Islands, Hong Kong and the PRC.
(ww) Insurance. Except as
disclosed in the Registration Statement, General Disclosure Package
and Final Prospectus, the Company and its Controlled Entities have
insurance covering their respective properties, operations,
personnel and businesses; and neither the Company nor any of its
Controlled Entities has (i) received notice from any insurer
or agent of such insurer that capital improvements or other
expenditures are required or necessary to be made in order to
continue such insurance or (ii) any reason to believe that it
will not be able to renew its existing insurance coverage as and
when such coverage expires or to obtain similar coverage at
reasonable cost from similar insurers as may be necessary to
continue its business. Neither the Company nor any Controlled
Entity has been denied any insurance coverage which it has sought
or for which it has applied.
14
(xx) Business Practices .
None of the Company and the Controlled Entities, or, any of the
respective executive officers or directors, or to the best
knowledge of the Company after due inquiry, any employees,
representatives, consultants or agents of the Company or any
Controlled Entity has offered, promised, authorized or made,
directly or indirectly, (A) any unlawful payments or
(B) payments or other inducements (whether lawful or unlawful)
to any Government Official (as defined below), with the intent or
purpose of: (i) influencing any act or decision of such
Government Official in his official capacity, (ii) inducing
such Government Official to do or omit to do any act in violation
of the lawful duty of such Government Official, (iii) securing
any improper advantage for the Company or any of the Controlled
Entities, or (iv) inducing such Government Official to use his
influence with a government or instrumentality thereof, political
party or international organization to affect or influence any act
or decision of such government or instrumentality, political party
or international organization, in order to assist the Company or
any of the Controlled Entities in obtaining or retaining business
for or with, or directing business to, any person. None of the
Company and the Controlled Entities, or, any of the respective
executive officers or directors, or to the best knowledge of the
Company after due inquiry, any employees, representatives,
consultants or agents of the Company or any Controlled Entity has
offered, promised, authorized or made, directly or indirectly, any
payments or other inducements specified in the proceeding sentence
to a Government Officials in violation of anti-bribery laws,
including but not limited to, the U.S. Foreign Corrupt Practices
Act of 1977 or any other law, rule or regulation of similar purpose
and scope. As used in this subsection and elsewhere in this
Agreement, “ Government Official ” means
(A) any employee or official of any government, including any
employee or official of any entity owned or controlled by a
government, (B) any employee or official of a political party,
(C) any candidate for political office or his employee, or
(D) any employee or official of an international organization.
For the avoidance of doubt, the term Government Official shall
include any employee or official of a television station owned or
controlled by a government.
(yy) Compliance with Money
Laundering Laws . The operations of the Company and its
Controlled Entities are and have been conducted at all times in
compliance with applicable financial recordkeeping and reporting
requirements of the Currency and Foreign Transactions Reporting Act
of 1970, as amended, the money laundering statutes of all
jurisdictions, the rules and regulations thereunder and any related
or similar rules, regulations or guidelines, issued, administered
or enforced by any governmental agency (collectively, the “
Money Laundering Laws ”) and no action, suit or
proceeding by or before any court or governmental agency, authority
or body or any arbitrator involving the Company or any of its
Controlled Entities with respect to the Money Laundering Laws is
pending or threatened.
(zz) Compliance with OFAC .
None of the Company, the Controlled Entities, or to the best
knowledge of the Company after due inquiry, any of the respective
officers, employees, directors, representatives, consultants or
agents of the Company or any Controlled Entity, has conducted or
entered into a contract to conduct any transaction with the
governments or any subdivision thereof, agents or representatives,
residents of, or any entity based or resident in the countries that
are currently subject to any U.S. sanctions administered by the
Office of Foreign Assets Control of the U.S. Treasury Department
(“ OFAC ”); and none of the Company or the
Controlled Entities has financed the activities of any person
currently subject to any U.S. sanctions administered by
OFAC.
(aaa) No Restrictions on
Dividends from Subsidiary . Except as disclosed in the
Registration Statement, General Disclosure Package and Final
Prospectus, no subsidiary of the Company is currently prohibited,
directly or indirectly, under any applicable laws or regulations,
any agreement or other instrument to which it is a party or is
subject, from paying dividends to the Company, from making any
other distribution on such subsidiaries’ capital stock, from
repaying to the Company any loans or advances to such subsidiary
from the Company or from transferring any of such
subsidiary’s properties or assets to the Company or any other
subsidiary of the Company.
15
(bbb) No Transfer Taxes . No
stamp or other issuance or transfer taxes or duties and no capital
gains, income, withholding or other taxes are payable by or on
behalf of the Underwriters to the government of the Cayman Islands
or the PRC, or any political subdivision or taxing authority
thereof or therein in connection with (i) the deposit with the
Depositary of Offered Shares by the Company against the issuance of
ADRs evidencing Offered Securities; (ii) the sale and delivery
by the Company of the Offered Securities to or for the respective
accounts of the several Underwriters; or (iii) the sale and
delivery outside the Cayman Islands by the several Underwriters of
the Offered Securities to the initial purchasers thereof in the
manner contemplated by this Agreement.
(ccc) No Reduction from Amounts
Payable. All amounts payable by the Company under this
Agreement shall be made free and clear of and without deduction for
or on account of any taxes imposed, assessed or levied by the
Cayman Islands or the PRC or any authority thereof or therein, nor
are any taxes imposed in the Cayman Islands or the PRC on, or by
virtue of the execution or delivery of, such documents.
(ddd) No Sale, Issuance or
Distribution of Shares . The Company has not sold, issued or
distributed any shares of its capital stock during the six-month
period preceding the date hereof, including any sales pursuant to
Rule 144A, Regulation D or Regulation S of the Act, other than
shares issued pursuant to employee benefit plans, qualified stock
option plans or other employee compensation plans or pursuant to
outstanding options, rights or warrants.
(eee) Foreign Private Issuer
. The Company is a “foreign private issuer” within the
meaning of Rule 405 under the Act.
(fff) Transaction Documents under
Cayman Law . Each of the Transaction Documents is in proper
form to be enforceable against the Company in the Cayman Islands in
accordance with its terms; to ensure the legality, validity,
enforceability or admissibility into evidence in the Cayman Islands
of the Transaction Documents, it is not necessary that the
Transaction Documents be filed or recorded with any court or other
authority in the Cayman Islands (other than court filings in the
normal course of proceedings) or that any stamp or similar tax
(other than nominal stamp duty if the Transaction Documents are
executed in or brought into the Cayman Islands) in the Cayman
Islands be paid on or in respect of the Transaction Documents or
any other documents to be furnished hereunder.
(ggg) Forward-Looking
Statements . No forward-looking statement (within the meaning
of Section 27A of the Act and Section 21E of the Exchange
Act) contained in the Registration Statement, General Disclosure
Package and Final Prospectus has been made without basis or has
been disclosed other than in good faith.
(hhh) No Undisclosed Indebtedness
or Arrangements . Except as disclosed in the Registration
Statement, General Disclosure Package and Final Prospectus, no
indebtedness (actual or contingent) and no contract or arrangement
is outstanding between the Company or any of its Controlled
Entities and any director or executive officer of the Company or
any of its Controlled Entities or any person connected with such
director or executive officer (including his/her spouse, minor
children, any company or undertaking in which he/she holds a
controlling interest) or any other third party; there are no
relationships or transactions between the Company or any of its
Controlled Entities on the one hand and its affiliates, officers
and directors or their shareholders, customers or suppliers or any
other third party on the other hand, which, although required to be
disclosed, are not disclosed in the Registration Statement, General
Disclosure Package and Final Prospectus.
16
(iii) No Undisclosed Benefits
. The Company has no obligation to provide retirement, death or
disability benefits to any of the present or past employees of the
Company or any of its Controlled Entities, or to any other person.
The Company and each Controlled Entity are in material compliance
with all applicable laws relating to employee benefits.
(jjj) Critical Accounting
Policies . The section entitled “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations—Critical Accounting Policies” in the
Registration Statement, General Disclosure Package and Final
Prospectus truly, accurately and completely in all respects
describes: (i) accounting policies which the Company believes
are important in the portrayal of the Company’s financial
condition and results of operations and which require
management’s most difficult, subjective or complex judgments
(“ Critical Accounting Policies ”);
(ii) judgments and uncertainties affecting the application of
Critical Accounting Policies; and (iii) the likelihood that
different amounts would be reported under different conditions or
using different assumptions; and the Board and management of the
Company have reviewed and agreed with the selection, application
and disclosure of Critical Accounting Policies and have consulted
with the Company’s independent registered public accounting
firm and external counsel with regard to such
disclosure.
(kkk) Liquidity and Capital
Resources . The section entitled “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations—Liquidity and Capital Resources” in the
Registration Statement, General Disclosure Package and Final
Prospectus accurately and fully describes all trends, demands,
commitments, events, uncertainties and risks, and the potential
effects thereof, that the Company believes would materially affect
liquidity and are reasonably likely to occur. The section entitled
“Management’s Discussion and Analysis of Financial
Condition and Results of Operations—Off-balance Sheet
Commitments and Arrangements” in the Registration Statement,
General Disclosure Package and Final Prospectus accurately and
fully describes in all material respects all off-balance sheet
transactions, arrangements and obligations of the Company or its
Controlled Entities.
(lll) Action against the
Company . Under the laws of the Cayman Islands, no holder of
ADSs issued pursuant to the Deposit Agreement shall be entitled,
except under the terms of the Deposit Agreement, to seek
enforcement of its rights through the Depositary or its nominee
registered as representative of the holders of the ADSs in a direct
suit, action or proceeding against the Company.
(mmm) Choice of Law . The
choice of the laws of the State of New York as the governing law of
the Transaction Documents is a valid choice of law under the laws
of the Cayman Islands and the PRC and will be honored by courts in
the Cayman Islands and the PRC, subject to the conditions and
restrictions described under the caption “Enforceability of
Civil Liabilities” in the Registration Statement, General
Disclosure Package and Final Prospectus. The Company has the power
to submit, and pursuant to Section 17 of this Agreement and
Section 7.07 of the Deposit Agreement, has legally, validly,
effectively and irrevocably submitted, to the personal jurisdiction
of each New York State and United States Federal court sitting in
The City of New York (each, a “ New York Court
”) and has validly and irrevocably waived any objection to
the laying of venue of any suit, action or proceeding br
