EXHIBIT 1.1
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UTSTARCOM, INC.
(a Delaware corporation)
9,000,000 Shares of Common Stock
PURCHASE AGREEMENT
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Dated: [____________], 2001
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TABLE OF CONTENTS
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SECTION 1. Representations and Warranties.......................................................... 2
(a) Representations and Warranties by the Company............................................ 3
(i) Compliance with Registration Requirements.................................... 3
(ii) Incorporated Documents....................................................... 3
(iii) Independent Accountants...................................................... 4
(iv) Financial Statements......................................................... 4
(v) No Material Adverse Change in Business....................................... 4
(vi) Good Standing of the Company................................................. 5
(vii) Good Standing of Subsidiaries................................................ 5
(viii) Good Standing of Joint Ventures.............................................. 5
(ix) Capitalization............................................................... 6
(x) Authorization of Agreement and Registration Statement........................ 6
(xi) Authorization and Description of Securities.................................. 6
(xii) Absence of Defaults and Conflicts............................................ 7
(xiii) Absence of Labor Dispute..................................................... 7
(xiv) Absence of Proceedings....................................................... 8
(xv) Accuracy of Exhibits......................................................... 8
(xvi) Possession of Intellectual Property.......................................... 8
(xvii) Absence of Further Requirements.............................................. 8
(xviii) Possession of Licenses and Permits........................................... 9
(xix) Title to Property............................................................ 9
(xx) Repatriation of Dividends and Other Distributions............................ 10
(xxi) PRC Taxes.................................................................... 10
(xxii) Taxes........................................................................ 10
(xxiii) Sovereign Immunity........................................................... 10
(xxiv) Choice of Law................................................................ 10
(xxv) Investment Company Act....................................................... 11
(xxvi) Environmental Laws........................................................... 11
(xxvii) Foreign Corrupt Practices Act................................................ 11
(xxviii) Registration Rights.......................................................... 12
(b) Representations and Warranties by the Selling Stockholders............................... 12
(i) Accurate Disclosure.......................................................... 12
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(ii) Authorization of Agreements................................................... 12
(iii) Good and Marketable Title..................................................... 13
(iv) Due Execution of Power of Attorney and Custody Agreement...................... 13
(v) Absence of Manipulation....................................................... 13
(vi) Absence of Further Requirements............................................... 13
(vii) Restriction on Sale of Securities............................................. 14
(viii) Certificates Suitable for Transfer............................................ 14
(ix) No Association with NASD...................................................... 14
(c) Officer's Certificates.................................................................... 14
SECTION 2. Sale and Delivery to Underwriters; Closing............................................... 14
(a) Initial Securities........................................................................ 14
(b) Option Securities......................................................................... 15
(c) Payment................................................................................... 15
(d) Denominations; Registration............................................................... 16
SECTION 3. Covenants of the Company................................................................. 16
(a) Compliance with Securities Regulations and Commission Requests............................ 16
(b) Filing of Amendments...................................................................... 17
(c) Delivery of Registration Statements....................................................... 17
(d) Delivery of Prospectuses.................................................................. 17
(e) Continued Compliance with Securities Laws................................................. 17
(f) Blue Sky Qualifications................................................................... 18
(g) Rule 158.................................................................................. 18
(h) Use of Proceeds........................................................................... 18
(i) Listing................................................................................... 18
(j) Restriction on Sale of Securities......................................................... 19
(k) Reporting Requirements.................................................................... 19
SECTION 4. Payment and Expenses..................................................................... 19
(a) Expenses.................................................................................. 19
(b) Expenses of the Selling Stockholders...................................................... 20
(c) Termination of Agreement.................................................................. 20
(d) Allocation of Expenses.................................................................... 20
SECTION 5. Conditions of Underwriters' Obligations.................................................. 20
(a) Effectiveness of Registration Statement................................................... 20
(b) Opinion of Counsel for the Company........................................................ 21
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TABLE OF CONTENTS
(continued)
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(c) Opinion of PRC Counsel for the Company...................................... 24
(d) Opinion of Counsel for the Selling Stockholders............................. 29
(e) Opinion of Counsel for the Underwriters..................................... 30
(f) Officers' Certificate....................................................... 30
(g) Certificate of Selling Stockholders......................................... 30
(h) Accountant's Comfort Letter................................................. 30
(i) Bring-down Comfort Letter................................................... 31
(j) Approval of Listing......................................................... 31
(k) No Objection................................................................ 31
(l) Lock-up Agreements.......................................................... 31
(m) Conditions to Purchase of Option Securities................................. 31
(i) Officers' Certificate................................................. 31
(ii) Opinion of Counsel for the Company.................................... 31
(iii) Opinion of PRC Counsel for the Company................................ 32
(iv) Opinion of Counsel for the Underwriters............................... 32
(v) Bring-down Comfort Letter............................................. 32
(n) Additional Documents........................................................ 32
(o) Termination of Agreement.................................................... 32
SECTION 6. Indemnification.............................................................. 32
(a) Indemnification of the Underwriters by the Company.......................... 33
(b) Indemnification of the Underwriters by the Selling Stockholders............. 33
(c) Indemnification of the Company, Directors, Officers and Selling
Stockholders.............................................................. 35
(d) Actions Against Parties. Notification...................................... 36
(e) Settlement Without Consent If Failure to Reimburse.......................... 36
(f) Other Agreements with Respect to Indemnification............................ 36
SECTION 7. Contribution................................................................. 37
SECTION 8. Representations, Warranties and Agreements to Survive Delivery............... 38
SECTION 9. Termination of Agreement..................................................... 38
(a) Termination; General........................................................ 38
(b) Liabilities................................................................. 39
SECTION 10. Default by One or More of the Underwriters.................................. 39
SECTION 11. Default by One or More of the Selling Stockholders or the Company........... 40
SECTION 12. Notices..................................................................... 41
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TABLE OF CONTENTS
(continued)
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SECTION 13. Parties.................................................................... 41
SECTION 14. Governing Law And Time..................................................... 41
SECTION 15. The Headings............................................................... 42
SCHEDULES
Schedule A - List of Underwriters........................................... Sch A-1
Schedule B - List of Selling Stockholders................................... Sch B-1
Schedule C - Pricing Information............................................ Sch C-1
Schedule D - List of Persons Subject to Lock-up............................. Sch D-1
Schedule E - List of Joint Ventures and Ownership
Percentages Held by the Company.............................. Sch E-1
EXHIBITS
Exhibit A - Form of Opinion of Company's Counsel........................... A-1
Exhibit B - Form of Opinion of Company's PRC Counsel....................... B-1
Exhibit C - Form of Opinion of Selling Stockholders' Counsel............... C-1
Exhibit D - Form of Lock-up Agreement for Persons Who Do Not Have 10b5-1
Plans........................................................ D-1
Exhibit E - Form of Lock-up Agreement for Persons
Who Have 10b5-1 Plans........................................ E-1
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UTSTARCOM, INC.
(a Delaware corporation)
9,000,000 Shares of Common Stock
(Par Value $.00125 Per Share)
PURCHASE AGREEMENT
[____________], 2001
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc.
Banc of America Securities LLC
HSBC Securities (USA) Inc.
U.S. Bancorp ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc.
as Representatives of the several Underwriters
▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
UTStarcom, Inc., a Delaware corporation (the "Company"), and the persons
listed in Schedule B hereto (the "Selling Stockholders"), confirm their
respective agreements with ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ &
▇▇▇▇▇ Incorporated ("▇▇▇▇▇▇▇ ▇▇▇▇▇") and each of the other Underwriters named in
Schedule A hereto (collectively, the "Underwriters," which term shall also
include any underwriter substituted as hereinafter provided in Section 10
hereof), for whom ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., Banc of America
Securities LLC, HSBC Securities (USA) Inc. and U.S. Bancorp ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc.
are acting as representatives (in such capacity, the "Representatives"), with
respect to the (i) sale by the Company and the Selling Stockholders, acting
severally and not jointly, and the purchase by the Underwriters, acting
severally and not jointly, of the respective numbers of shares of Common Stock,
par value $.00125 per share, of the Company ("Common Stock") set forth in said
Schedules A and B hereto and (ii) the grant by the Company to the Underwriters,
acting severally and not jointly, of the option described in Section 2(b) hereof
to purchase all or any part of 1,350,000 additional shares of Common Stock to
cover over-allotments, if any. The aforesaid 9,000,000 shares of Common Stock
(the "Initial Securities") to be purchased by the Underwriters and all or any
part of the 1,350,000 shares of Common Stock subject to the option described in
Section 2(b) hereof (the "Option Securities") are hereinafter called,
collectively, the "Securities."
The Company and the Selling Stockholders understand that the Underwriters
propose to make a public offering of the Securities as soon as the
Representatives deem advisable after this Agreement has been executed and
delivered.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333-63356) covering the
registration of the Securities under the Securities Act of 1933, as amended (the
"1933 Act"), including the related preliminary prospectus or prospectuses.
Promptly after execution and delivery of this Agreement, the Company will
prepare and file a prospectus in accordance with the provisions of Rule 430A
("Rule 430A") of the rules and regulations of the Commission under the 1933 Act
(the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule 424(b)") of
the 1933 Act Regulations. The information included in such prospectus that was
omitted from such registration statement at the time it became effective but
that is deemed to be part of such registration statement at the time it became
effective pursuant to paragraph (b) of Rule 430A is referred to as "Rule 430A
Information." Each prospectus used before such registration statement became
effective, and any prospectus that omitted the Rule 430A Information that was
used after such effectiveness and prior to the execution and delivery of this
Agreement, is herein called a "preliminary prospectus." Such registration
statement, including the exhibits thereto, schedules thereto, if any, and the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the 1933 Act, at the time it became effective and including the Rule 430A
Information, is herein called the "Registration Statement." Any registration
statement filed pursuant to Rule 462(b) of the 1933 Act Regulations is herein
referred to as the "Rule 462(b) Registration Statement," and after such filing
the term "Registration Statement" shall include the Rule 462(b) Registration
Statement. The final prospectus, including the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 under the 1933 Act, in the
form first furnished to the Underwriters for use in connection with the offering
of the Securities is herein called the "Prospectus." For purposes of this
Agreement, all references to the Registration Statement, any preliminary
prospectus, the Prospectus or any amendment or supplement 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 ("▇▇▇▇▇").
All references in this Agreement to financial statements and schedules and
other information which is "contained," "included" or "stated" in the
Registration Statement, any preliminary prospectus or the Prospectus (or other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
by reference in the Registration Statement, any preliminary prospectus or the
Prospectus, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement, any preliminary
prospectus or the Prospectus shall be deemed to mean and include the filing of
any document under the Securities Exchange Act of 1934 (the "1934 Act") which is
incorporated by reference in the Registration Statement, such preliminary
prospectus or the Prospectus, as the case may be.
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SECTION 1. Representations and Warranties.
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(a) Representations and Warranties by the Company. The Company
represents and warrants to each Underwriter as of the date hereof, as of the
Closing Time referred to in Section 2(c) hereof, and as of each Date of Delivery
(if any) referred to in Section 2(b) hereof, and agrees with each Underwriter,
as follows:
(i) Compliance with Registration Requirements. The Company
meets the requirements for use of Form S-3 under the 1933 Act. Each of the
Registration Statement and any Rule 462(b) Registration Statement has become
effective under the 1933 Act and no stop order suspending the effectiveness of
the Registration Statement or any Rule 462(b) Registration Statement has been
issued under the 1933 Act and no proceedings for that purpose have been
instituted or are pending or, to the knowledge of the Company, are contemplated
by the Commission, and any request on the part of the Commission for additional
information has been complied with.
At the respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto became
effective and at the Closing Time (and, if any Option Securities are purchased,
at the Date of Delivery), the Registration Statement, the Rule 462(b)
Registration Statement and any amendments and supplements thereto complied and
will comply in all material respects with the requirements of the 1933 Act and
the 1933 Act Regulations and did not and will not contain an untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading. Neither the
Prospectus nor any amendments or supplements thereto, at the time the Prospectus
or any amendments or supplements were issued and at the Closing Time (and, if
any Option Securities are purchased, at the Date of Delivery), included or will
include an untrue statement of a material fact or omitted or will omit to state
a material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading. The
representations and warranties in this subsection shall not apply to statements
in or omissions from the Registration Statement or the Prospectus made in
reliance upon and in conformity with information furnished to the Company in
writing by any Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the
Registration Statement or the Prospectus.
Each preliminary prospectus and the prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment thereto,
or filed pursuant to Rule 424 under the 1933 Act, complied when so filed in all
material respects with the 1933 Act Regulations and each preliminary prospectus
and the Prospectus delivered to the Underwriters for use in connection with this
offering was identical to the electronically transmitted copies thereof filed
with the Commission pursuant to ▇▇▇▇▇, except to the extent permitted by
Regulation S-T.
(ii) Incorporated Documents. The documents incorporated or
deemed to be incorporated by reference in the Registration Statement and the
Prospectus, at the time they were or hereafter are filed with the Commission,
complied and will comply in all material respects with the requirements of the
1934 Act and the rules and regulations of the Commission thereunder (the "1934
Act Regulations"), and, when read together with the other information in the
Prospectus, at
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the time the Registration Statement became effective, at the time the Prospectus
was issued and at the Closing Time (and, if any Option Securities are purchased,
at the Date of Delivery), did not and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.
(iii) Independent Accountants. The accountants who certified the
financial statements and supporting schedules included or incorporated by
reference in the Registration Statement are independent public accountants as
required by the 1933 Act and the 1933 Act Regulations; each of the Company, its
subsidiaries and its Joint Ventures maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (A) transactions are
executed in accordance with management's general or specific authorizations; (B)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles ("GAAP")
in China with a reconciliation to GAAP in the United States; (C) access to
assets is permitted only in accordance with management's general or specific
authorization; (D) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate actions taken with
respect to any differences; and (E) each of the Company, its subsidiaries and
its Joint Ventures has made and kept books, records and accounts which, in
reasonable detail, accurately and fairly reflect the transactions and
dispositions of assets of such entity and provide a sufficient basis for the
preparation of combined financial statements in accordance with Chinese GAAP,
with a reconciliation thereof to U.S. GAAP.
(iv) Financial Statements. The financial statements (including
any separate financial statements for any subsidiary or any Joint Venture (as
defined below) of the Company other than the Company and its consolidated
subsidiaries) included or incorporated by reference in the Registration
Statement and the Prospectus, together with the related schedules and notes,
present fairly the financial position of the Company and its consolidated
subsidiaries at the dates indicated and the statement of operations,
stockholders' equity and cash flows of the Company and its consolidated
subsidiaries for the periods specified; said financial statements have been
prepared in conformity with GAAP applied on a consistent basis throughout the
periods involved, except as may be expressly stated in the related notes
thereto. The supporting schedules, if any, included or incorporated by reference
in the Registration Statement present fairly in accordance with GAAP the
information required to be stated therein. The selected financial data and the
summary financial information included or incorporated by reference in the
Prospectus present fairly the information shown therein and have been compiled
on a basis consistent with that of the audited financial statements included or
incorporated by reference in the Registration Statement.
(v) No Material Adverse Change in Business. Since the
respective dates as of which information is given in the Registration Statement
and the Prospectus, except as otherwise stated therein, (A) there has been no
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company, its
subsidiaries and its Joint Ventures (as defined below), considered as one
enterprise, whether or not arising in the ordinary course of business (a
"Material Adverse Effect"), (B) there have been no transactions entered into by
the Company, any of its subsidiaries or any of its Joint Ventures, other than
those in the ordinary course of business, which are material with respect to the
Company, its subsidiaries and
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its Joint Ventures, considered as one enterprise, and (C) there has been no
dividend or distribution of any kind declared, paid or made by the Company on
any class of its capital stock at any time.
(vi) Good Standing of the Company. The Company has been duly
organized and is validly existing as a corporation in good standing under the
laws of the State of Delaware and has corporate power and authority to own,
lease and operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under this Agreement;
and the Company is duly qualified as a foreign corporation to transact business
and is in good standing in each other jurisdiction in which such qualification
is required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure so to qualify or to be in good
standing would not result in a Material Adverse Effect.
(vii) Good Standing of Subsidiaries. Other than Hangzhou
UTStarcom, Ltd., UTStarcom China, Ltd. (the "Subsidiary") is the only
significant subsidiary (as defined in Rule 1-02 of Regulation S-X) of the
Company, and has been duly organized and is validly existing as a corporation in
good standing under the laws of the jurisdiction of its incorporation, has
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Prospectus and is duly qualified as a
foreign corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except where the
failure so to qualify or to be in good standing would not result in a Material
Adverse Effect; except as otherwise disclosed in the Registration Statement, all
of the issued and outstanding capital stock of such Subsidiary has been duly
authorized and validly issued, is fully paid and non-assessable and is owned by
the Company, directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity; none of the
outstanding shares of capital stock of the Subsidiary was issued in violation of
the preemptive rights of any securityholder of such Subsidiary pursuant to the
Subsidiary's charter documents or applicable law or any agreement or instrument
to which such Subsidiary is a party or by which the Subsidiary is bound which
has not otherwise been waived by such securityholder.
(viii) Good Standing of Joint Ventures. Each of Guangdong
UTStarcom, Ltd. and Hangzhou UTStarcom, Ltd. (each a "Joint Venture" and,
together, the "Joint Ventures") has been duly organized and is validly existing
as a limited liability company in good standing under the laws of the People's
Republic of China (the "PRC"), and its business license is in full force and
effect; the joint venture contract, the articles of association and other
corporate formation documents of each of the above entities comply with the
requirements of PRC law and are in full force and effect. The Company owns,
directly or through subsidiaries, an interest in the Joint Ventures which
ownership percentage of the Company is listed in Schedule E hereto. Each Joint
Venture has the power and authority under the laws of the PRC to own, lease and
operate its assets and properties in accordance with the terms of its joint
venture contract and its articles of association and to conduct its business as
currently conducted, as specified in its business license and as described in
the Prospectus. All registered capital required to be paid by each of the
Company and the Chinese partner has been paid in full to each Joint Venture
under the joint venture contract and the articles of association for such Joint
Venture. All of the equity interests of the Joint Ventures have been duly
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and validly authorized and issued, are fully paid and non-assessable, and
are owned by the Company, directly or through subsidiaries, free and clear of
any security interest, mortgage, pledge, lien, encumbrance, claim or equity. The
liability of the Company with respect to its equity interest in the Joint
Ventures is limited to its investments therein. The Company and the Subsidiary
do not hold an interest in any joint venture that is not a Joint Venture.
(ix) Capitalization. The authorized, issued and outstanding
capital stock of the Company, as of March 31, 2001, is as set forth in the
Prospectus in the column entitled "Actual" under the caption "Capitalization"
(except for subsequent issuances, if any, pursuant to this Agreement, pursuant
to reservations, agreements or employee benefit plans referred to in the
Prospectus or pursuant to the exercise of convertible securities, warrants or
options referred to in the Prospectus). The shares of issued and outstanding
capital stock, including the Securities to be purchased by the Underwriters from
the Selling Stockholders, have been duly authorized and validly issued and are
fully paid and non-assessable; none of the outstanding shares of capital stock,
including the Securities to be purchased by the Underwriters from the Selling
Stockholders, was issued in violation of any preemptive rights of any
securityholder of the Company pursuant to the Company's Certificate of
Incorporation or Bylaws or applicable law or any agreement or instrument to
which the Company is a party or by which the Company is bound which has not
otherwise been waived by such securityholder.
(x) Authorization of Agreement and Registration Statement. This
Agreement has been duly authorized, executed and delivered by the Company. The
Registration Statement and the Prospectus and the filing of the Registration
Statement and the Prospectus with the Commission have been duly authorized by
and on behalf of the Company, and the Registration Statement has been duly
signed by and on behalf of the Company pursuant to such authorization.
(xi) Authorization and Description of Securities. The Securities
to be purchased by the Underwriters from the Company have been duly authorized
for issuance and sale to the Underwriters pursuant to this Agreement and, when
issued and delivered by the Company pursuant to this Agreement against payment
of the consideration set forth herein, will be validly issued, fully paid and
non-assessable; the Common Stock conforms in all material respects to all
statements relating thereto contained in the Prospectus and such description
conforms in all material respects to the rights set forth in the instruments
defining the same; no holder of the Securities will be subject to personal
liability by reason of being such a holder; and the issuance of the Securities
is not subject to any preemptive rights of any securityholder of the Company
pursuant to the Company's Certificate of Incorporation or Bylaws or applicable
law or any agreement or instrument to which the Company is a party or by which
the Company is bound which has not otherwise been waived by such securityholder.
(xii) Absence of Defaults and Conflicts. Neither the Company nor
any of its subsidiaries or Joint Ventures is in violation of its articles,
charter, by-laws or joint venture contract or in default in the performance or
observance of any obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, deed of trust, loan or credit agreement, note,
lease or other agreement or instrument to which the Company or any of its
subsidiaries or any
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of its Joint Ventures is a party or by which it or any of them may be bound, or
to which any of the property or assets of the Company or any subsidiary or any
Joint Venture is subject (collectively, "Agreements and Instruments"), except
for such defaults that would not result in a Material Adverse Effect; and the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated herein and in the Registration Statement
(including the issuance and sale of the Securities and the use of the proceeds
from the sale of the Securities as described in the Prospectus under the caption
"Use of Proceeds") and compliance by the Company with its obligations hereunder
have been duly authorized by all necessary corporate action and do not and will
not, whether with or without the giving of notice or passage of time or both,
conflict with or constitute a breach of, or default or Repayment 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
subsidiary or any Joint Venture pursuant to, the Agreements and Instruments
(except for such conflicts, breaches or defaults or liens, charges or
encumbrances that would not result in a Material Adverse Effect), nor will such
action result in any violation of the provisions of the articles, charter, by-
laws or joint venture contract of the Company or any subsidiary or any Joint
Venture or any applicable law, statute, rule, regulation, judgment, order, writ
or decree, known to the Company of any government, government instrumentality or
court, domestic or foreign, having jurisdiction over the Company or any
subsidiary or any Joint Venture or any of their assets, properties or
operations. As used herein, a "Repayment Event" means any event or condition
which gives 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 subsidiary or any Joint Venture.
(xiii) Absence of Labor Dispute. No labor dispute with the
employees of the Company or any subsidiary or any Joint Venture exists or, to
the knowledge of the Company, is imminent, and the Company is not aware of any
existing or imminent labor disturbance by the employees of any of its or any
subsidiary's or any Joint Venture's principal suppliers, manufacturers,
customers or contractors, which, in either case, may reasonably be expected to
result in a Material Adverse Effect.
(xiv) Absence of Proceedings. There is no action, suit,
proceeding, inquiry or investigation before or brought by any company or
governmental agency or body, domestic or foreign, now pending, or, to the
knowledge of the Company, threatened, against the Company or any subsidiary or
any Joint Venture, which is required to be disclosed in the Registration
Statement (other than as disclosed therein), or which might reasonably be
expected to result in a Material Adverse Effect, or which might reasonably be
expected to materially and adversely affect the properties or assets thereof or
the consummation of the transactions contemplated in this Agreement or the
performance by the Company of its obligations hereunder; the aggregate of all
pending legal or governmental proceedings to which the Company or any subsidiary
or any Joint Venture is a party or of which any of their respective property or
assets is the subject which are not described in the Registration Statement,
including ordinary routine litigation incidental to the business, could not
reasonably be expected to result in a Material Adverse Effect.
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(xv) Accuracy of Exhibits. There are no contracts or
documents which are required to be described in the Registration Statement, the
Prospectus or the documents incorporated by reference therein or to be filed as
exhibits thereto which have not been so described and filed as required.
(xvi) Possession of Intellectual Property. The Company, its
subsidiaries and its Joint Ventures own or possess, or can acquire on reasonable
terms, adequate patents, patent rights, licenses, inventions, copyrights, know-
how (including trade secrets and other unattended and/or unpatentable
proprietary or confidential information, systems or procedures), trademarks,
service marks, trade names or other intellectual property (collectively,
"Intellectual Property") necessary to carry on the business now operated by
them, and neither the Company nor any of its subsidiaries nor any of its Joint
Ventures has received any notice or is otherwise aware of any infringement of or
conflict with asserted rights of others with respect to any Intellectual
Property or of any existing facts or circumstances which would render any
Intellectual Property invalid or inadequate to protect the interest of the
Company or any of its subsidiaries or any of its Joint Ventures therein, and
which infringement or, conflict (if the subject of any unfavorable decision,
ruling or finding) or invalidity or inadequacy singly or in the aggregate, would
result in a Material Adverse Effect.
(xvii) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration, qualification or
decree of, any court or governmental authority or agency is necessary or
required for the performance by the Company of its obligations hereunder in
connection with the offering, issuance or sale of the Securities or the
consummation of the transactions contemplated herein, except such as have been
already obtained or as may be required under the 1933 Act or the 1933 Act
Regulations or state securities laws.
(xviii) Possession of Licenses and Permits. Except as otherwise
stated in the Prospectus and the Registration Statement, the Company, its
subsidiaries and its Joint Ventures possess such permits, licenses, approvals,
consents and other authorizations (collectively, "Governmental Licenses") issued
by the appropriate federal, state, local or foreign regulatory agencies or
bodies (including the PRC State Council, the PRC Ministry of Information
Industry, the State Development Planning Commission, the State Economic and
Trade Commission, the China Securities Regulatory Commission (the "CSRC"), the
Ministry of Foreign Trade and Economic Cooperation ("MOF-TEC"), the Ministry of
Land and Resources, the State Administration of Foreign Exchange ("SAFE"), the
General Administration of Customs, the relevant Posts and Telecommunications
Administrations ("PTA") and the relevant Price Bureaus) necessary to conduct the
business now operated by them; the Company, its subsidiaries and its Joint
Ventures are in compliance with the terms and conditions of all such
Governmental Licenses, except where the failure so to comply would not, singly
or in the aggregate, have a Material Adverse Effect; all of the Governmental
Licenses are valid and in full force and effect, except when the invalidity of
such Governmental Licenses or the failure of such Governmental Licenses to be in
full force and effect would not have a Material Adverse Effect; and neither the
Company nor any of its subsidiaries nor any of its Joint Ventures has received
any notice of proceedings relating to the revocation,
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suspension or modification of any such Governmental Licenses which, singly or in
the aggregate, if the subject of an unfavorable decision, ruling or finding,
would result in a Material Adverse Effect.
(xix) Title to Property. The Company, its subsidiaries and its
Joint Ventures have good and marketable title to all real property owned by the
Company, its subsidiaries and its Joint Ventures and good title to all other
properties owned by them, in each case, free and clear of all mortgages,
pledges, liens, security interests, claims, restrictions or encumbrances of any
kind except such as (a) are described in the Prospectus or (b) do not, singly or
in the aggregate, materially affect the value of such property and do not
interfere with the use made and proposed to be made of such property by the
Company or any of its subsidiaries or any of its Joint Ventures; and all of the
leases and subleases material to the business of the Company, its subsidiaries
and its Joint Ventures, considered as one enterprise, and under which the
Company or any of its subsidiaries or any of its Joint Ventures holds properties
described in the Prospectus, are in full force and effect, and neither the
Company nor any subsidiary or any Joint Venture has any notice of any material
claim of any sort that has been asserted by anyone adverse to the rights of the
Company or any subsidiary or any Joint Venture under any of the leases or
subleases mentioned above, or affecting or questioning the rights of the Company
or such subsidiary or such Joint Venture to the continued possession of the
leased or subleased premises under any such lease or sublease.
(xx) Repatriation of Dividends and Other Distributions. All
dividends and other distributions declared and payable on the equity or other
interests in the Subsidiary or the Joint Ventures may, under the laws and
regulations of the PRC, be paid to the Company and may be converted into foreign
currency that may be freely transferred out of the PRC, and except as disclosed
in the Registration Statement and the Prospectus, all such dividends and
distributions will not be subject to withholding or other taxes under the laws
and regulations of the PRC and are otherwise free and clear of any other tax,
withholding or deduction in the PRC and may be so paid without the necessity of
obtaining any governmental authorization, whether local, provincial or national,
in the PRC.
(xxi) PRC Taxes. Other than as described in the Prospectus, 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 Company to
the PRC or any political subdivision or taxing authority thereof or therein in
connection with the issuance, sale and delivery of the Securities or the
execution, delivery and performance of this Agreement. No stamp or other
issuance or transfer taxes or duties and no capital gains, income or withholding
other taxes are payable by or on behalf of the Underwriters to the PRC or any
political subdivision or taxing authority thereof or therein in connection with
the issuance, sale and delivery of the Securities to the Underwriters or by the
Underwriters to the initial purchasers thereof, or the execution, delivery and
performance of this Agreement.
(xxii) Taxes. Each of the Company, its subsidiaries and the
Joint Ventures has filed all reports or filings required thereof for taxation
purposes, including those required by the PRC or any political subdivision
thereof, and has paid all taxes required to be paid by it and any other
assessment, fine or penalty levied against it, to the extent that any of the
foregoing is due and
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payable, except for any such assessment, fine or penalty that is currently being
contested in good faith or would not have a Material Adverse Effect.
(xxiii) Sovereign Immunity. Under the laws of the PRC, neither
the Company nor any of its subsidiaries nor the Joint Ventures, or any of their
properties, assets or revenues are 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 service of process,
from attachment to or in aid of execution of judgment or from other legal
process or proceeding for the giving of any relief or for the enforcement of any
judgment.
(xxiv) Choice of Law. Under the laws of the PRC, the courts of
the PRC recognize and give effect to the choice of law provisions set forth
herein and enforce judgments of U.S. courts obtained against the Company to
enforce this Agreement, provided that the judgment (A) was not obtained by
fraud; (B) was final and conclusive; (C) in the opinion of the relevant PRC
court after the review of such judgment pursuant to international treaties
concluded or acceded to by the PRC government or in accordance with the
principle of reciprocity, or otherwise in accordance with the Civil Procedure
Law of the PRC, did not contradict the basic principles of PRC law; and (D) in
the opinion of the relevant PRC court after its review of such judgment pursuant
to international treaties concluded or agreed to by the PRC government or in
accordance with the principle of reciprocity, or otherwise in accordance with
the Civil Procedure Law of the PRC, did not violate state sovereignty, security
or public interest.
(xxv) Investment Company Act. The Company is not, and upon the
issuance and sale of the Securities as herein contemplated and the application
of the net proceeds therefrom as described in the Prospectus will not be, an
"investment company" or an entity "controlled" by an "investment company" as
such terms are defined in the Investment Company Act of 1940, as amended (the
"1940 Act").
(xxvi) Environmental Laws. Except as described in the
Registration Statement and except as would not, singly or in the aggregate,
result in a Material Adverse Effect, (A) neither the Company nor any of its
subsidiaries nor the Joint Ventures is in violation of any federal, state, local
or foreign statute, law, rule, regulation, ordinance, code, policy or rule of
common law or any judicial or administrative interpretation thereof, including
any judicial or administrative order, consent decree or judgment, relating to
pollution or protection of human health, the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or subsurface
strata) or wildlife, including, without limitation, laws and regulations
relating to the release or threatened release of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances, petroleum or
petroleum products (collectively, "Hazardous Materials") or to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials (collectively, "Environmental Laws"), (B) the
Company, its subsidiaries and the Joint Ventures have all permits,
authorizations and approvals required under any applicable Environmental Laws
and are each in compliance with their requirements, (C) there are no pending or,
to the Company's knowledge, threatened administrative, regulatory or judicial
actions, suits, demands, demand letters, claims, liens, notices of noncompliance
or violation, investigation or
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proceedings relating to any Environmental Law against the Company or any of its
subsidiaries or the Joint Ventures and (D) the Company is not aware of any
events or circumstances that might reasonably be expected to form the basis of
an order for clean-up or remediation, or an action, suit or proceeding by any
private of or governmental body or agency, against the Company or any of its
subsidiaries or any of its Joint Ventures relating to Hazardous Materials or any
Environmental Laws.
(xxvii) Foreign Corrupt Practices Act. Neither the Company, any of
its subsidiaries or any of its Joint Ventures, nor any officer, director,
employee or agent thereof or any stockholder thereof acting on behalf of the
Company or any of its subsidiaries or any of its Joint Ventures, has done any
act or authorized, directed or participated in any act, in violation of any
provision of the United States Foreign Corrupt Practices Act of 1977, as
amended, applied to such entity or person.
(xxviii) Registration Rights. Except as described in the
Registration Statement or as have otherwise been waived in writing, there are no
persons with registration rights or other similar rights to have any securities
registered pursuant to the Registration Statement or otherwise registered by the
Company under the 1933 Act.
(b) Representations and Warranties by the Selling Stockholders. Each
Selling Stockholder severally represents and warrants to each Underwriter as of
the date hereof and as of the Closing Time and agrees with each Underwriter, as
follows:
(i) Accurate Disclosure. To the best knowledge of each Selling
Stockholder who is an officer of the Company, the representations and warranties
of the Company contained in Section 1(a) hereof are true and correct; such
Selling Stockholder has read the contents of the Registration Statement and the
Prospectus, and such Selling Stockholder has no reason to believe that the
Prospectus or any amendments or supplements thereto includes any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading; such Selling Stockholder is not prompted
to sell the Securities to be sold by such Selling Stockholder hereunder by any
information concerning the Company or any subsidiary of the Company or Joint
Venture which is not set forth in the Prospectus.
(ii) Authorization of Agreements. Each Selling Stockholder has
the full right, power and authority to enter into this Agreement and a Power of
Attorney and Custody Agreement (the "Power of Attorney and Custody Agreement")
and to sell, transfer and deliver the Securities to be sold by such Selling
Stockholder hereunder. The execution and delivery of this Agreement and the
Power of Attorney and Custody Agreement and the sale and delivery of the
Securities to be sold by such Selling Stockholder and the consummation of the
transactions contemplated herein and compliance by such Selling Stockholder with
its obligations hereunder have been duly authorized by such Selling Stockholder
and do not and will not, whether with or without the giving of notice or passage
of time or both, conflict with or constitute a breach of, or default under, or
result in the creation or imposition of any tax, lien, charge or encumbrance
upon the Securities to be sold by such Selling Stockholder or any property or
assets of such Selling Stockholder pursuant to any contract, indenture,
mortgage, deed of trust, loan or credit agreement,
-11-
note, license, lease or other agreement or instrument to which such Selling
Stockholder is a party or by which such Selling Stockholder may be bound, or to
which any of the property or assets of such Selling Stockholder is subject, nor
will such action result in any violation of the provisions of the charter or by-
laws or other organizational instrument of such Selling Stockholder, if
applicable, or any applicable treaty, law, statute, rule, regulation, judgment,
order, writ or decree of any government, government instrumentality or court,
domestic or foreign, having jurisdiction over such Selling Stockholder or any of
its properties.
(iii) Good and Marketable Title. Such Selling Stockholder has and
will at the Closing Time have good and marketable title to the Securities to be
sold by such Selling Stockholder hereunder, free and clear of any security
interest, mortgage, pledge, lien, charge, claim, equity or encumbrance of any
kind, other than pursuant to this Agreement; and upon delivery of such
Securities and payment of the purchase price therefor as herein contemplated,
assuming each such Underwriter has no notice of any adverse claim, each of the
Underwriters will receive good and marketable title to the Securities purchased
by it from such Selling Stockholder, free and clear of any security interest,
mortgage, pledge, lien, charge, claim, equity or encumbrance of any kind.
(iv) Due Execution of Power of Attorney and Custody Agreement. Such
Selling Stockholder has duly executed and delivered, in the form heretofore
furnished to the Representatives, the Power of Attorney with Hong ▇▇▇▇▇ ▇▇ and
▇▇▇▇▇▇▇ ▇. Sophie as attorneys-in-fact (the "Attorneys-in-Fact") and the Custody
Agreement with Fleet National Bank (formerly known as BankBoston, N.A.) as
custodian (the "Custodian"); the Custodian is authorized to deliver the
Securities to be sold by such Selling Stockholder hereunder and to accept
payment therefor; and the Attorneys-in-Fact are authorized to execute and
deliver this Agreement and the certificate referred to in Section 5(g) or that
may be required pursuant to Section 5(n) on behalf of such Selling Stockholder,
to sell, assign and transfer to the Underwriters the Securities to be sold by
such Selling Stockholder hereunder, to determine the purchase price to be paid
by the Underwriters to such Selling Stockholder, as provided in Section 2(a)
hereof, to authorize the delivery of the Securities to be sold by such Selling
Stockholder hereunder, to accept payment therefor, and otherwise to act on
behalf of such Selling Stockholder in connection with this Agreement.
(v) Absence of Manipulation. Such Selling Stockholder has not
taken, and will not take, directly or indirectly, any action which is designed
to or which has constituted or which might reasonably be expected to cause or
result in stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities.
(vi) Absence of Further Requirements. No filing with, or consent,
approval, authorization, order, registration, qualification or decree of, any
court or governmental authority or agency, domestic or foreign, is necessary or
required for the performance by each Selling Stockholder of its obligations
hereunder or in the Power of Attorney and Custody Agreement, or in connection
with the sale and delivery of the Securities hereunder or the consummation of
the transactions contemplated by this Agreement, except such as may have
previously been made or obtained or as may be required under the 1933 Act or the
1933 Act Regulations or state or foreign securities laws.
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(vii) Restriction on Sale of Securities. Each of the Selling
Stockholders listed on Schedule D hereto has signed an agreement in the form of
Exhibit D or E hereto, as specified opposite each Selling Stockholder's name in
Schedule D hereto.
(viii) Certificates Suitable for Transfer. Certificates for all
of the Securities to be sold by such Selling Stockholder pursuant to this
Agreement, in suitable form for transfer by delivery or accompanied by duly
executed instruments of transfer or assignment in blank with signatures
guaranteed, have been placed in custody with the Custodian with irrevocable
conditional instructions to deliver such Securities to the Underwriters pursuant
to this Agreement.
(ix) No Association with NASD. Neither such Selling
Stockholder nor any of its affiliates directly, or indirectly through one or
more intermediaries, controls, or is controlled by, or is under common control
with, or has any other association with (within the meaning of Article I,
Section 1(m) of the By-laws of the National Association of Securities Dealers,
Inc.), any member firm of the National Association of Securities Dealers, Inc.
(c) Officer's Certificates. Any certificate signed by any officer of
the Company or any of its subsidiaries or the Joint Ventures delivered to the
Representatives or to counsel for the Underwriters shall be deemed a
representation and warranty by the Company to each Underwriter as to the matters
covered thereby; and any certificate signed by or on behalf of the Selling
Stockholders as such and delivered to the Representatives or to counsel for the
Underwriters pursuant to the terms of this Agreement shall be deemed a
representation and warranty by such Selling Stockholder to the Underwriters as
to the matters covered thereby.
SECTION 2. Sale and Delivery to Underwriters; Closing.
------------------------------------------
(a) Initial Securities. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company and each Selling Stockholder, severally and not jointly,
agree to sell to each Underwriter, severally and not jointly, and each
Underwriter, severally and not jointly, agrees to purchase from the Company and
each Selling Stockholder, at the price per share set forth in Schedule C, that
proportion of the number of Initial Securities set forth in Schedule B opposite
the name of the Company or such Selling Stockholder, as the case may be, which
the number of Initial Securities set forth in Schedule A opposite the name of
such Underwriter, plus any additional number of Initial Securities which such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof, bears to the total number of Initial Securities, subject, in
each case, to such adjustments among the Underwriters as the Representatives in
their sole discretion shall make to eliminate any sales or purchases of
fractional securities.
(b) Option Securities. In addition, on the basis of the
representations and warranties herein contained and subject to the terms and
conditions herein set forth, the Company hereby grants an option to the
Underwriters, severally and not jointly, to purchase up to an additional
1,350,000 shares of Common Stock at the price per share set forth in Schedule C,
less an amount per share equal to any dividends or distributions declared by the
Company and payable on the Initial Securities but not payable on the Option
Securities. The option hereby granted will expire 30 days
-13-
after the date hereof and may be exercised in whole or in part from time to time
only for the purpose of covering over-allotments which may be made in connection
with the offering and distribution of the Initial Securities upon notice by the
Representatives to the Company setting forth the number of Option Securities as
to which the several Underwriters are then exercising the option and the time
and date of payment and delivery for such Option Securities. Any such time and
date of delivery (a "Date of Delivery") shall be determined by the
Representatives, but shall not be later than seven full business days after the
exercise of said option, nor in any event prior to the Closing Time, as
hereinafter defined. If the option is exercised as to all or any portion of the
Option Securities, each of the Underwriters, acting severally and not jointly,
will purchase that proportion of the total number of Option Securities then
being purchased which the number of Initial Securities set forth in Schedule A
opposite the name of such Underwriter bears to the total number of Initial
Securities, subject in each case to such adjustments as the Representatives in
their discretion shall make to eliminate any sales or purchases of fractional
shares.
(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of ▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or
at such other place as shall be agreed upon by the Representatives, the Company
and the Selling Stockholders, at 6:00 A.M. (California time) on the third
(fourth, if the pricing occurs after 4:30 P.M. (Eastern time) on any given day)
business day after the date hereof (unless postponed in accordance with the
provisions of Section 10), or such other time not later than ten business days
after such date as shall be agreed upon by the Representatives, the Company and
the Selling Stockholders (such time and date of payment and delivery being
herein called "Closing Time").
In addition, in the event that any or all of the Option Securities are
purchased by the Underwriters, payment of the purchase price for, and delivery
of certificates for, such Option Securities shall be made at the above-mentioned
offices, or at such other place as shall be agreed upon by the Representatives
and the Company, on each Date of Delivery as specified in the notice from the
Representatives to the Company.
Payment shall be made to the Company and the Selling Stockholders by wire
transfer of immediately available funds to a bank account designated by the
Company and a bank account designated by the Custodian pursuant to each Selling
Stockholder's Power of Attorney and Custody Agreement, as the case may be,
against delivery to the Representatives for the respective accounts of the
Underwriters of certificates for the Securities to be purchased by them. It is
understood that each Underwriter has authorized the Representatives, for its
account, to accept delivery of, receipt for, and make payment of the purchase
price for, the Initial Securities and/or the Option Securities, if any, which it
has agreed to purchase. ▇▇▇▇▇▇▇ ▇▇▇▇▇, individually and not as representative
of the Underwriters, may (but shall not be obligated to) make payment of the
purchase price for the Initial Securities or the Option Securities, if any, to
be purchased by any Underwriter whose funds have not been received by the
Closing Time or the relevant Date of Delivery, as the case may be, but such
payment shall not relieve such Underwriter from its obligations hereunder.
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(d) Denominations; Registration . Certificates for the Initial
Securities and the Option Securities, if any, shall be in such denominations and
registered in such names as the Representatives may request in writing at least
two full business days before the Closing Time or the relevant Date of Delivery,
as the case may be. The certificates for the Initial Securities and the Option
Securities, if any, will be made available for examination and packaging by the
Representatives in The City of New York not later than 10:00 A.M. (Eastern time)
on the business day prior to the Closing Time or the relevant Date of Delivery,
as the case may be.
SECTION 3. Covenants of the Company. The Company covenants with each
------------------------
Underwriter as follows:
(a) Compliance with Securities Regulations and Commission Requests.
The Company, subject to Section 3(b), will comply with the requirements of Rule
430A and will notify the Representatives immediately, and confirm the notice in
writing, (i) when any post-effective amendment to the Registration Statement
shall become effective, or any supplement to the Prospectus or any amended
Prospectus shall have been filed, (ii) of the receipt of any comments from the
Commission, (iii) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Prospectus or for
additional information, and (iv) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or of any order
preventing or suspending the use of any preliminary prospectus, or of the
suspension of the qualification of the Securities for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceedings for any of
such purposes. The Company will promptly effect the filings necessary pursuant
to Rule 424(b) and will take such steps as it deems necessary to ascertain
promptly whether the form of prospectus transmitted for filing under Rule 424(b)
was received for filing by the Commission and, in the event that it was not, it
will promptly file such prospectus. The Company will make every reasonable
effort to prevent the issuance of any stop order and, if any stop order is
issued, to obtain the lifting thereof at the earliest possible moment.
(b) Filing of Amendments. The Company will give the Representatives
notice of its intention to file or prepare any amendment to the Registration
Statement (including any filing under Rule 462(b)) or any amendment, supplement
or revision to either the prospectus included in the Registration Statement at
the time it became effective or to the Prospectus, whether pursuant to the 1933
Act, the 1934 Act or otherwise, will furnish the Representatives with copies of
any such documents a reasonable amount of time prior to such proposed filing or
use, as the case may be, and will not file or use any such document to which the
Representatives or counsel for the Underwriters shall object.
(c) Delivery of Registration Statements. The Company has furnished
or will deliver to the Representatives and counsel for the Underwriters, without
charge, signed copies of the Registration Statement as originally filed and of
each amendment thereto (including exhibits filed therewith or incorporated by
reference therein and documents incorporated or deemed to be incorporated by
reference therein and documents incorporated or deemed to be incorporated by
reference therein) and signed copies of all consents and certificates of
experts, and will also deliver
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to the Representatives, without charge, a conformed copy of the Registration
Statement as originally filed and of each amendment thereto (without exhibits)
for each of the Underwriters. The copies of the Registration Statement and each
amendment thereto furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission pursuant to
▇▇▇▇▇, except to the extent permitted by Regulation S-T.
(d) Delivery of Prospectuses. The Company has delivered to each
Underwriter, without charge, as many copies of each preliminary prospectus as
such Underwriter reasonably requested, and the Company hereby consents to the
use of such copies for purposes permitted by the 1933 Act. The Company will
furnish to each Underwriter, without charge, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act, such
number of copies of the Prospectus (as amended or supplemented) as such
Underwriter may reasonably request. The Prospectus and any amendments or
supplements thereto furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission pursuant to
▇▇▇▇▇, except to the extent permitted by Regulation S-T.
(e) Continued Compliance with Securities Laws. The Company will
comply with the 1933 Act and the 1933 Act Regulations and the 1934 Act and the
1934 Act Regulations so as to permit the completion of the distribution of the
Securities as contemplated in this Agreement and in the Prospectus. If at any
time when a prospectus is required by the 1933 Act to be delivered in connection
with sales of the Securities, any event shall occur or condition shall exist as
a result of which it is necessary, in the opinion of counsel for the
Underwriters or for the Company, to amend the Registration Statement or amend or
supplement the Prospectus in order that the Prospectus will not include any
untrue statements of a material fact or omit to state a material fact necessary
in order to make the statements therein not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser, or if it
shall be necessary, in the opinion of such counsel, at any such time to amend
the Registration Statement or amend or supplement the Prospectus in order to
comply with the requirements of the 1933 Act or the 1933 Act Regulations, the
Company will promptly prepare and file with the Commission, subject to Section
3(b), such amendment or supplement as may be necessary to correct such statement
or omission or to make the Registration Statement or the Prospectus comply with
such requirements, and the Company will furnish to the Underwriters such number
of copies of such amendment or supplement as the Underwriters may reasonably
request.
(f) Blue Sky Qualifications. The Company will use its best efforts,
in cooperation with the Underwriters, to qualify the Securities for offering and
sale under the applicable securities laws of such states and other jurisdictions
(domestic or foreign) as the Representatives may designate and to maintain such
qualifications in effect for a period of not less than one year from the later
of the effective date of the Registration Statement and any Rule 462(b)
Registration Statement; provided, however, that the Company shall not be
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obligated to file any general consent to service of process or to qualify as a
foreign corporation or as a dealer in securities in any jurisdiction in which it
is not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject.
-16-
(g) Rule 158. The Company will timely file such reports pursuant to
the 1934 Act as are necessary in order to make generally available to its
security holders as soon as practicable an earnings statement for the purposes
of, and to provide the benefits contemplated by, the last paragraph of Section
11(a) of the 1933 Act.
(h) Use of Proceeds. The Company will use the net proceeds received
by it from the sale of the Securities in the manner specified in the Prospectus
under "Use of Proceeds."
(i) Listing. The Company will use its best efforts to effect and
maintain the quotation of the Securities on the Nasdaq National Market and will
file with the Nasdaq National Market all documents and notices required by, the
Nasdaq National Market of companies that have securities that are traded in the
over-the-counter market and quotations for which are reported by the Nasdaq
National Market.
(j) Restriction on Sale of Securities. During a period of 90 days
from the date of the Prospectus, the Company will not, without the prior written
consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇, (i) directly or indirectly, offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase or otherwise
transfer or dispose of any share of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock or file any registration
statement under the 1933 Act with respect to any of the foregoing or (ii) enter
into any swap or any ether agreement or any transaction that transfers, in whole
or in part, directly or indirectly, the economic consequence of ownership of the
Common Stock, whether any such swap or transaction described in clause (i) or
(ii) above is to be settled by delivery of Common Stock or such other
securities, in c ash or otherwise. The foregoing sentence shall not apply to (A)
the Securities to be sold hereunder, (B) any shares of Common Stock issued by
the Company upon the exercise of an option or warrant or the conversion of a
security outstanding on the date hereof and referred to in the Prospectus, (C)
any shares of Common Stock issued or options to purchase Common Stock granted
pursuant to existing employee benefit plans of the Company referred to in the
Prospectus, (D) any shares of Common Stock issued pursuant to any non-employee
director stock plan or dividend reinvestment plan, or (E) any shares of Common
Stock or securities convertible into or exchangeable for Common Stock issued in
connection with acquisitions (by purchase, merger or otherwise) of other
entities (or substantially all of the assets or operations of other entities) if
the recipients of such securities each executes a lock-up agreement with ▇▇▇▇▇▇▇
▇▇▇▇▇ in form and substance substantially similar to the lock-up set forth in
this Section 3(j).
(k) Reporting Requirements. The Company, during the period when the
Prospectuses are required to be delivered under the 1933 Act or the 1934 Act,
will file all documents required to be filed with the Commission pursuant to the
1934 Act within the time periods required by the 1934 Act and the 1934 Act
Regulations.
SECTION 4. Payment and Expenses.
--------------------
(a) Expenses. The Company will pay or cause to be paid all expenses
incident to the performance of its obligations under this Agreement, and the
obligations of the Selling
-17-
Stockholders under this Agreement which are not otherwise specifically provided
for in Section 4(b) below, including (i) the preparation, printing and filing of
the Registration Statement (including financial statements and exhibits) as
originally filed and of each amendment thereto, (ii) the preparation, printing
and delivery to the Underwriters of this Agreement, any Agreement among
Underwriters and such other documents as may be required in connection with the
offering, purchase, sale, issuance or delivery of the Securities, (iii) the
preparation, issuance and delivery of the certificates for the Securities to the
Underwriters, including any stock or other transfer taxes and any stamp or other
duties payable upon the sale, issuance or delivery of the Securities to the
Underwriters, (iv) the fees and disbursements of the Company's counsel,
accountants and other advisors, (v) the qualification of the Securities under
securities laws in accordance with the provisions of Section 3(f) hereof,
including filing fees and the reasonable fees and disbursements of counsel for
the Underwriters in connection therewith and in connection with the preparation
of the Blue Sky Survey and any supplement thereto, (vi) the printing and
delivery to the Underwriters of copies of each preliminary prospectus and of the
Prospectus and any amendments or supplements thereto, (vii) the preparation,
printing and delivery to the Underwriters of copies of the Blue Sky Survey and
any supplement thereto, (viii) the fees and expenses of any transfer agent or
registrar for the Securities, (ix) the filing fees incident to, and the
reasonable fees and disbursements of counsel to the Underwriters in connection
with, the review by the National Association of Securities Dealers, Inc. (the
"NASD") of the terms of the sale of the Securities and (x) the fees and expenses
incurred in connection with the inclusion of the Securities in the Nasdaq
National Market.
(b) Expenses of the Selling Stockholders. The Selling Stockholders
severally and not jointly will pay or cause to be paid (i) any stamp duties,
capital duties and stock transfer taxes, if any, payable upon the sale of the
Securities to the Underwriters, and their transfer between the Underwriters
pursuant to an agreement between such Underwriters, and (ii) the fees and
disbursements of their respective counsel and accountants.
(c) Termination of Agreement. If this Agreement is terminated by the
Representatives in accordance with the provisions of Section 5, Section 9(a)(i)
or Section 11 hereof, the Company shall reimburse the Underwriters for all of
their out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Underwriters.
(d) Allocation of Expenses. The provisions of this Section 4 shall
not affect any agreement that the Company and the Selling Stockholders may make
for the sharing of such costs and expenses.
SECTION 5. Conditions of Underwriters' Obligations. The obligations of the
---------------------------------------
several Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company and the Selling Stockholders
contained in Section 1 hereof or in certificates of any officer of the Company
or any subsidiary or any Joint Venture of the Company or on behalf of any
Selling Stockholder delivered pursuant to the provisions hereof, to the
performance by the Company of its covenants and other obligations hereunder, and
to the following further conditions:
(a) Effectiveness of Registration Statement. The Registration
Statement, including any Rule 462(b) Registration Statement, has become
effective and at Closing Time no stop
-18-
order suspending the effectiveness of the Registration Statement shall have been
issued under the 1933 Act or proceedings therefor initiated or threatened by the
Commission, and any request on the part of the Commission for additional
information shall have been complied with to the reasonable satisfaction of
counsel to the Underwriters. A prospectus containing the Rule 430A Information
shall have been filed with the Commission in accordance with Rule 424(b) (or
post-effective amendment providing such information shall have been filed and
declared effective an accordance with the requirements of Rule 430A).
(b) Opinion of Counsel for the Company. At Closing Time, the
Representatives shall have received the favorable opinion (a draft of such
opinion is attached as Exhibit A hereto), dated as of Closing Time, of ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Professional Corporation, counsel for the Company, in
form and substance satisfactory to the Representatives and counsel for the
Underwriters, together with signed or reproduced copies of such letter for each
of the other Underwriters to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware.
(ii) The Company has corporate power and authority to own,
lease and operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under this Agreement.
(iii) The Company is qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which the
Company owns or leases any material property or conducts any material business.
(iv) The authorized, issued and outstanding capital stock of
the Company, as of March 31, 2001, is as set forth in the Prospectus in the
column entitled "Actual" under the caption "Capitalization" (except for
subsequent issuances, if any, pursuant to this Agreement or pursuant to
reservations, agreements or employee benefit plans referred to in the Prospectus
or pursuant to the exercise of convertible securities or options referred to in
the Prospectus); the shares of issued and outstanding capital stock of the
Company, including the Securities to be purchased by the Underwriters from the
Selling Stockholders, have been duly authorized and validly issued and are fully
paid and non-assessable; and none of the outstanding shares of capital stock of
the Company was issued in violation of any preemptive rights of any
securityholder of the Company contained in the Company's Certificate of
Incorporation or Bylaws, the Delaware General Corporation Law or any agreement
or instrument described in or referred to in the Registration Statement or filed
as an exhibit thereto.
(v) The Securities to be purchased by the Underwriters from
the Company have been duly authorized for issuance and sale to the Underwriters
pursuant to this Agreement and, when issued and delivered by the Company
pursuant to this Agreement against payment of the consideration set forth in
this Agreement, will be validly issued, fully paid and non-assessable.
-19-
(vi) The issuance and sale of the Securities by the Company and the
sale of the Securities by the Selling Stockholders is not subject to preemptive
rights of any security holder of the Company contained in the Company's
Certificate of Incorporation or By-laws, the Delaware General Corporation Law or
any agreement or instrument described in or referred to in the Registration
Statement or filed as an exhibit thereto, which have not been waived by such
securityholder.
(vii) This Agreement has been duly authorized, executed and delivered
by the Company.
(viii) The Registration Statement, including any Rule 462(b)
Registration Statement, has been declared effective under the 1993 Act; any
required filing of the Prospectus pursuant to Rule 424(b) has been made in the
manner and within the time period required by Rule 424(b); and, to such
counsel's knowledge, no stop order suspending the effectiveness of the
Registration Statement or any Rule 462(b) Registration Statement has been issued
under the 1933 Act and no proceedings for that purpose have been instituted or
are pending, or threatened by the Commission.
(ix) The form of certificate used to evidence the Common Stock
complies in all material respects with the charter and the by-laws of the
Company and the requirements of the Nasdaq National Market.
(x) To such counsel's knowledge, in the United States, there is not
pending or threatened any action, suit, proceeding, inquiry or investigation, to
which the Company or any subsidiary or any Joint Venture is a party, or to which
the property of the Company or any subsidiary or any Joint Venture is subject,
before or brought by any U.S. court or governmental agency or body, which might
reasonably be expected to result in a Material Adverse Effect, or which might
reasonably be expected to materially and adversely affect the properties or
assets thereof or the consummation of the transactions contemplated in this
Agreement or the performance by the Company of its obligations hereunder.
(xi) The information in the Registration Statement under Item 15, to
the extent that it constitutes matters of law, summaries of legal matters, the
Company's charter and bylaws, descriptions of the Company's capital stock, legal
proceedings, or legal conclusions, has been reviewed by such counsel and fairly
summarizes the information in all material respects.
(xii) To such counsel's knowledge, there are no franchises,
contracts, indentures, mortgages, loan agreements, notes, leases or other
instruments required to be described or referred to in the Registration
Statement or to be filed as exhibits thereto other than those described or
referred to therein or filed or incorporated by reference as exhibits thereto,
and the descriptions thereof or references thereto are correct in all material
respects.
(xiii) To such counsel's knowledge, the Company is not (i) in
violation of its articles, charter or by-laws, and (ii) no default by the
Company exists in the due performance or observance of any material obligation,
agreement, covenant or condition contained in any contract,
-20-
indenture, mortgage, loan agreement, note, lease or other agreement or
instrument that is described or referred to in the Registration Statement or the
Prospectus or filed or incorporated by reference as an exhibit to the
Registration Statement.
(xiv) To such counsel's knowledge, no filing with, or
authorization, approval, consent, license, order, registration, qualification or
decree of, any U.S. court or governmental authority or agency (other than under
the 1933 Act and the 1933 Act Regulations, which have been obtained, or as may
be required under the securities or blue sky laws of the various states, as to
which such counsel need express no opinion) is necessary or required in
connection with the due authorization, execution and delivery of this Agreement
or for the offering, issuance or sale of the Securities.
(xv) The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated in this Agreement and in
the Registration Statement (including the issuance and sale of the Securities
and the use of the proceeds from the sale of the Securities as described in the
Prospectus under the caption "Use Of Proceeds") and compliance by the Company
with its obligations under this Agreement do not and will not, whether with or
without the giving of notice or lapse of time or both, conflict with or
constitute a breach of, or default or Repayment Event (as defined in Section
1(a)(xii) of this Agreement) under or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the Company
pursuant to any contract, indenture, mortgage, deed of trust, loan or credit
agreement, note, lease or any other agreement or instrument, known to such
counsel, to which the Company is a party or by which it may be bound, or to
which any of the property or assets of the Company is subject (except for such
conflicts, breaches or defaults or liens, charges or encumbrances that would not
have a Material Adverse Effect), nor will such action result in any violation of
the provisions of the articles, charter or by-laws of the Company, or any
applicable U.S. law, statute, rule, regulation, judgment, order, writ or decree,
known to such counsel, of any U.S. government, government instrumentality or
court, domestic or foreign, having jurisdiction over the Company or any of its
properties, assets or operations.
(xvi) To such counsel's knowledge, except as described in the
Registration Statement or otherwise waived in writing, there are no persons with
registration rights or other similar rights to have any securities registered
pursuant to the Registration Statement or otherwise registered by the Company
under the ▇▇▇▇ ▇▇▇.
(xvii) The Company is not an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in the 1940
Act.
No facts have come to such counsel's attention that have caused such
counsel to believe that, (i) as of its effective date and as of the date hereof,
the Registration Statement or any amendment thereto (other than the financial
statements and related schedules and the financial data derived from such
financial statements or schedules, as to which such counsel need express no
opinion) contained any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary in order to make
the statements therein not misleading, or (ii) as of its issue date or as of the
date hereof, the Prospectus or any amendment or supplement thereto (other than
the
-21-
financial statements and related schedules and the financial data derived
from such financial statements or schedules, as to which such counsel need
express no opinion) contained 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. In
addition, such counsel confirms that each of the Registration Statement and the
Prospectus, and each amendment or supplement thereto (other than the financial
statements and related schedules and the financial data derived from such
financial statements or schedules, as to which such counsel need express no
opinion) as of their respective effective or issue dates, complied as to form in
all material respects with the requirements of the 1933 Act and the 1933 Act
Regulations. Such counsel also confirms that the documents incorporated by
reference in the Prospectus (other than the financial statements and related
schedules and the financial data derived from such financial statements or
schedules, as to which such counsel need express no opinion), when they were
filed with the Commission complied as to form in all material respects with the
requirements of the 1934 Act and the 1934 Act Regulations.
In rendering such opinion, such counsel may rely as to matters of fact (but
not as to legal conclusions), to the extent they deem proper, on certificates of
responsible officers of the Company and public officials. Such opinion shall not
state that it is to be governed or qualified by, or that it is otherwise subject
to, any treatise, written policy or other document relating to legal opinions,
including, without limitation, the Legal Opinion Accord of the ABA Section of
Business Law (1991).
(c) Opinion of PRC Counsel for the Company. At Closing Time, the
Representatives shall have received the favorable opinion (a draft of such
opinion is attached as Exhibit B hereto), dated as of Closing Time, of ▇▇▇ ▇▇
Law Offices, PRC counsel for the Company, in form and substance satisfactory to
the Representatives and counsel for the Underwriters, together with signed or
reproduced copies of such letter for each of the other Underwriters to the
effect that:
(i) Each of the Subsidiary and the Joint Ventures have been duly
organized and is validly existing and duly qualified as a foreign investment
enterprise with limited liability under PRC law, and its business license is in
full force and effect; the joint venture contract and the articles of
association of each of the Subsidiary and the Joint Ventures comply with the
requirements of applicable PRC law and are in full force and effect; each has
full power and authority (corporate and other) and has all consents, approvals,
authorizations, orders, registrations, clearances and qualifications of or with
any court, governmental agency or body having jurisdiction over it or any of its
properties required for the ownership or lease of property by it and the conduct
of its business, and has the legal right and authority to own, use, lease and
operate its assets and to conduct its business in the manner presently conducted
and as described in the Prospectus and by representatives of the Company; each
of the Company, the Subsidiary and the Joint Ventures can ▇▇▇ and be sued in its
own name under the laws of the PRC;
(ii) The Company, as a foreign corporation for transaction of
business in the PRC, has all necessary licenses, consents, authorizations,
approvals, orders, certificates and permits of and from, and has made all
declarations and filings with all governmental agencies to
-22-
own, use or lease its properties and conduct business in the manner presently
conducted and as described in the Prospectus and by representatives of the
Company;
(iii) The equity interests of the Company in each of the
Subsidiary and the Joint Ventures have been duly and validly authorized and
issued, are fully paid and non-assessable, and are legally owned directly or
indirectly by the Company, free and clear of all liens, encumbrances, equities
or claims; no additional governmental approval or authorization of or filing
with any governmental agency is required under PRC law for the ownership by the
Company of its equity interests in each of the Subsidiary and the Joint
Ventures, except the approval from or registration with the relevant
governmental authorities, including, without limitation, the relevant local
branches of the Ministry of Foreign Trade and Economic Cooperation ("MOF-TEC"),
the State Administration of Industry and Commerce ("SAIC"), the State
Administration for Foreign Exchange ("SAFE"), the State Administration of
Taxation and the General Administration of Customs, which has been obtained and
is in full force and effect; the liability of the Company in respect of its
equity interests in each of the Subsidiary and the Joint Ventures is limited to
its investment therein;
(iv) Based on our general review of the title documents and
without independent check or verification thereof, the Subsidiary and the Joint
Ventures have valid title to, or valid leasehold interests in, all of their
material real and personal property owned by them, in each case free and clear
of all liens, encumbrances, third party rights or interests, defects or any
other restrictions except such as do not materially affect the value of such
property and do not interfere with the use made and proposed to be made of such
property by them; and any real property and buildings held under lease by the
Subsidiary and the Joint Ventures are held by them under valid and enforceable
leases in full force and effect, with such exceptions as are not material and do
not interfere with the use made and proposed to be made of such property and
buildings by them;
(v) To the best of our knowledge and other than as set forth
in the Prospectus, there are no pending actions, suits or proceedings by or
before any court or governmental agency, authority or body or any arbitrator in
the PRC to which any of the Company, the Subsidiary and the Joint Ventures is a
party or of which any property of the Company, the Subsidiary and the Joint
Ventures is subject which, if determined adversely to the Company, the
Subsidiary and the Joint Ventures, would individually or in the aggregate result
in any material adverse change or any event involving a prospective material
adverse change, in or affecting the general affairs, management, financial
position, stockholders' equity or results of operations of the Company and its
subsidiaries, taken as a whole; and, to the best of our knowledge, no such
actions, suits or proceedings are threatened or contemplated;
(vi) The issue and sale of the securities to be sold by the
Company and the execution, delivery and performance by the Company of this
Agreement and the consummation of the transactions herein contemplated will not
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, loan agreement or other agreement or instrument known to us to which any
of the Subsidiary and Joint Ventures is a party or by which any of the
Subsidiary and Joint Ventures is bound or to which any of the property or assets
of the Subsidiary and Joint Ventures is subject, nor will such action result in
-23-
any violation of the provisions of the joint venture contract and articles of
association or business licenses of any of the Subsidiary and Joint Ventures or
any law or statute or any order, rule or regulation known to us of any
governmental agency having jurisdiction over the Subsidiary and the Joint
Ventures or any of their properties;
(vii) No governmental authorization, approval or consent of or
filing with any governmental agency is required under PRC law for the
consummation by the Company of the transactions contemplated by this Agreement;
(viii) Except as described in the Registration Statement or the
Prospectus, the Subsidiary and the Joint Ventures have all necessary licenses,
consents, authorizations, approvals, orders, certificates and permits of and
from, and have made all declarations and filings with all governmental agencies
to own, lease, license and use their properties and assets and conduct their
business in the manner presently conducted and as described in the Prospectus
and by representatives of the Company. Except as described in the Prospectus,
neither the Company nor any of the Subsidiary and the Joint Ventures has any
reason to believe that the Ministry of Information Industries or any other
regulatory body is considering modifying, suspending or revoking any such
licenses, consents, authorizations, approvals, orders, certificates or permits
and each of the Company, Subsidiary and Joint Ventures is in compliance with the
provisions of all such licenses, consents, authorizations, approvals, orders,
certificates or permits in all material respects;
(ix) To the best of our knowledge, none of the Subsidiary and
the Joint Ventures is in violation of its constituent documents (including,
without limitation, the joint venture contract and articles of association) or
in default in the performance or observance of any material obligation,
agreement, covenant or condition contained in any indenture, mortgage, deed of
trust, loan, lease or other agreement or instrument to which it is a party or by
which it or any of its properties may be bound; the business and operations
conducted by the Subsidiary and the Joint Ventures are in compliance with any
PRC laws and regulations applicable to the Subsidiary and the Joint Ventures;
(x) PRC laws and regulations prohibit a foreign entity
(including any foreign investment enterprise established in the PRC) from
investment in, operation of or participation in the operation of
telecommunications services. After due inquiry, we have no legal basis to form
an opinion that any of the Company, the Subsidiary and the Joint Ventures
invests in, operates, or participates in the operation of any telecommunications
services in the PRC as prohibited by PRC laws and regulations;
(xi) All necessary licenses, approvals, certificates or permits
for the connection of products to telecommunications networks within the PRC
have been duly obtained for each of the products of the Company, the Subsidiary
and the Joint Ventures sold, distributed and marketed in the PRC for which such
licenses, approvals, certificates or permits are required, except such as
described in the Prospectus;
(xii) The statements set forth in the Prospectus under the
captions "Risk Factors," "Business" and "Management's Discussion and Analysis of
Financial Condition and
-24-
Results of Operations," to the extent such statements relate to matters of PRC
law or regulation or to the provisions of documents therein described, are fair
summaries of such matters and are correct in all material respects;
(xiii) 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 PRC or to any political subdivision or taxing
authority thereof or therein in connection with (i) the sale and delivery by the
Company of the Securities to or for the respective accounts of the Underwriters
or (ii) the sale and delivery outside the PRC by the Underwriters of the
Securities to the initial purchasers thereof in the manner contemplated in this
Agreement;
(xiv) The entering into, performance and enforcement of this
Agreement in accordance with its terms and conditions will not subject the
Underwriters to a requirement to be licensed or otherwise qualified to do
business in the PRC, nor will any Underwriter be deemed to be resident,
domiciled, carrying on business through an establishment or place in the PRC or
in breach of any laws or regulations of the PRC by reason of entering into,
performance or enforcement of this Agreement;
(xv) All dividends and other distributions declared and payable
upon the equity interests in the Subsidiary and the Joint Ventures 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 Statement 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 Statement and the Prospectus,
are otherwise free and clear of any other tax, withholding or deduction under
PRC law, in each case without the necessity of obtaining any governmental
approval or authorization in the PRC, except such as have been obtained;
(xvi) The 1995 Stock Plan, 1997 Stock Plan and the 2000 Employee
Stock Purchase Plan and the sale, issuance and grant of any securities
thereunder to the date hereof, to the extent applicable to employees of any of
the Subsidiary or the Joint Ventures, do not violate any provisions of the
foreign exchange laws and regulations of the PRC or any other applicable PRC
laws and regulations;
(xvii) Under the applicable PRC tax law, UTStarcom (China), Ltd.
is entitled to exemption from enterprise income tax for a period of three years
(1997-1999) and reduction at the rate of 7.5% for the following three years
(2000-2002); UTStarcom (Hangzhou) Telecommunication Co, Ltd. is entitled to
exemption from enterprise income tax for a period of two years (1995-1996) and
reduction at the rate of 7.5% for the following three years (1997-1999);
Guangdong UTStarcom Telecom Co., Ltd. is entitled to exemption from enterprise
income tax for its first two profit-making years and reduction at the rate of
15% for the following three years; and Hangzhou Nantian Starcom Communication
Equipment Co., Ltd. is entitled to reduction of enterprise income tax at the
rate of 7.5% for a period of three years (1998-2000); to the best of our
knowledge, we are not aware of any event or circumstance which may result in
such rates being invalid or ineffective or capable of being revoked;
-25-
(xviii) Insofar as matters of the law of the PRC are concerned,
the Registration Statement and the filing of the Registration Statement with the
Commission has been duly authorized by and on behalf of the Company, and the
Registration Statement has been executed pursuant to such authorization by or on
behalf of the Company;
(xix) Although we do not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus, except for those referred to in the
opinion in subsection (xii) of this opinion, nothing has come to our attention
that led us to believe that, as of its effective date, the Registration
Statement or any further amendment thereto made by the Company prior to the
later date of the Closing Time and the last Date of Delivery (other than the
financial statements, as to which we need express no opinion) contained an
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein, insofar as
they relate to matters of PRC laws and regulations and the provisions of the
documents entered into by each of the Company, the Subsidiary and the Joint
Ventures in connection with the business conducted by each of them in the PRC,
not misleading or that, as of its date, the Prospectus or any further amendment
or supplement thereto made by the Company prior to the later date of the Closing
Time and the last Date of Delivery (other than the financial statements and
related schedules therein, as to which we need express no opinion) contained an
untrue statement of a material fact or omitted to state a material fact
necessary to make the statements therein, insofar as they relate to matters of
PRC laws and regulations and the provisions of the documents entered into by
each of the Company, the Subsidiary and the Joint Ventures in connection with
the business conducted by each of them in the PRC, in the light of the
circumstances under which they were made, not misleading or that, as of the
later date of the Closing Time and the last Date of Delivery, the Registration
Statement, the Prospectus or any further amendment or supplement thereto made by
the Company prior to such date (other than the financial statements and related
schedules therein as to which we need express no opinion) contains an untrue
statement of a material fact or omits to state a material fact necessary to make
the statements therein, insofar as they relate to matters of PRC laws and
regulations and the provisions of the documents entered into by each of the
Company, the Subsidiary and the Joint Ventures in connection with the business
conducted by each of them in the PRC, in the light of the circumstances under
which they were made, not misleading;
(xx) Except as described in the Prospectus, insofar as matters
of PRC laws and regulations are concerned, each of the Company, the Subsidiary
and the Joint Ventures owns, possesses, or otherwise has the right to use, and
has made all necessary registration and applications with all governmental
agencies to own, possess and use, the Intellectual Property necessary to carry
on the business currently operated by it or presently employed by it and as
described in the Prospectus, and to the best of our knowledge, has not received
any notice of infringement or conflict with asserted rights of others with
respect to any such intellectual property rights that, if determined adversely
to the Company or any of the Subsidiary or any of the Joint Ventures, would
individually or in the aggregate have a Material Adverse Effect.
(d) Opinion of Counsel for the Selling Stockholders. At Closing Time,
the Representatives shall have received the favorable opinions (drafts of such
opinions are attached as
-26-
Exhibit C hereto), dated as of Closing Time, of (i) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇, Professional Corporation, counsel for Messrs. ▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇,
Hong ▇▇▇▇▇ ▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, (ii) ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for Softbank
Ventures, Inc., and (iii) [Stable Gain Counsel], counsel for Stable Gain
International Limited, all of which shall be in form and substance satisfactory
to the Representatives and counsel for the Underwriters, together with signed or
reproduced copies of such letter for each of the other Underwriters to the
effect that:
(i) No filing with, or consent, approval, authorization,
license, order, registration, qualification or decree of, any court or
governmental authority or agency, domestic or foreign (other than the issuance
of the order of the Commission declaring the Registration Statement effective
and such authorizations, approvals or consents as may be necessary under state
securities laws or the National Association of Securities Dealers, Inc., as to
which such counsel need express no opinion), is necessary or required to be
obtained by any of the Selling Stockholders for the performance by each Selling
Stockholder of its obligations under this Agreement or in the Power of Attorney
and Custody Agreement, or in connection with the offer, sale or delivery of the
Securities.
(ii) Each Power of Attorney and Custody Agreement has been duly
executed and delivered by the respective Selling Stockholder named therein and
constitutes the legal, valid and binding agreement of such Selling Stockholder.
(iii) This Agreement has been duly authorized, executed and
delivered by or on behalf of each Selling Stockholder.
(iv) The Attorneys-in-Fact have been duly authorized by each
Selling Stockholder to deliver the Securities on behalf of each Selling
Stockholder in accordance with the terms of this Agreement.
(v) To each counsel's knowledge, the execution, delivery and
performance of this Agreement and the Power of Attorney and Custody Agreement
and the sale and delivery of the Securities and the consummation of the
transactions contemplated in this Agreement and in the Registration Statement
and compliance by the relevant Selling Stockholder with each such Selling
Stockholder's obligations under this Agreement do not and will not result in any
violation of the provisions of the charter or by-laws of each relevant Selling
Stockholder, if applicable, or any law, administrative regulation, judgment or
order of any governmental agency or body or any administrative or court decree
having jurisdiction over any such Selling Stockholder or any of its properties.
(vi) Upon delivery of and payment for the Securities to be sold
by each of the Selling Stockholders as contemplated in this Agreement, each of
the Underwriters will be the registered owner of such Securities purchased by it
from such Selling Stockholder, free of any adverse claim, assuming the
Underwriters purchase such Securities for value, in good faith and without
notice of any adverse claim, as such terms are defined in the Uniform Commercial
Code in effect in the State of California.
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(e) Opinion of Counsel for the Underwriters. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of Closing
Time, of ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for the Underwriters, in form and
substance satisfactory to the Representatives, together with signed or
reproduced copies of such letter for each of the other Underwriters, and such
counsel shall have received or been permitted access to such papers and
information as they may reasonably request to enable them to give such opinion.
(f) Officers' Certificate. At Closing Time, there shall not have
been, since the date hereof or since the respective dates as of which
information is given in the Prospectus, any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company, its subsidiaries and its Joint Ventures
considered as one enterprise, whether or not arising in ordinary course of
business, and the Representatives shall have received a certificate of the
President or a Vice President of the Company and of the chief financial or chief
accounting officer of the Company, dated as of Closing Time, to the effect that
(i) there has been no such material adverse change, (ii) the representations and
warranties in Section 1(a) hereof are true and correct in all material respects
with the same force and effect as though expressly made at and as of Closing
Time, (iii) the Company has complied in all material respects with all
agreements and satisfied in all material respects all conditions on its part to
be performed or satisfied at or prior to Closing Time and (iv) to the knowledge
of such officers, based on due inquiry, no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceedings
for that purpose have been instituted by the Commission.
(g) Certificate of Selling Stockholders. At Closing Time, the
Representatives shall have received a certificate of the Attorneys-in-Fact on
behalf of each Selling Stockholder, dated as of Closing Time, to the effect that
(i) the representations and warranties of each Selling Stockholder contained in
Section 1(b) hereof are true and correct in all respects with the same force and
effect as though expressly made at and as of Closing Time and (ii) each Selling
Stockholder has complied in all material respects with all agreements and all
conditions on its part to be performed under this Agreement at or prior to
Closing Time.
(h) Accountant's Comfort Letter. At the time of the execution of this
Agreement, the Representatives shall have received from PricewaterhouseCoopers
LLP a letter dated such date, in form and substance satisfactory to the
Representatives, together with signed or reproduced copies of such letter for
each of the other Underwriters containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial information contained
in the Registration Statement and the Prospectus.
(i) Bring-down Comfort Letter. At Closing Time, the Representatives
shall have received from PricewaterhouseCoopers LLP a letter, dated as of
Closing Time, to the effect that they reaffirm the statements made in the letter
furnished pursuant to subsection (h) of this Section, except that the specified
date referred to shall be a date not more than three business days prior to
Closing Time.
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(j) Approval of Listing. At Closing Time, the Securities shall have
been approved for inclusion in the Nasdaq National Market, subject only to
official notice of issuance.
(k) No Objection. The NASD has confirmed that it has not raised any
objection with respect to the fairness and reasonableness of the underwriting
terms and arrangements.
(l) Lock-up Agreements. At the date this Agreement, the
Representatives shall have received an agreement substantially in the form of
Exhibit D or E hereto, depending on the type of lock-up to be signed as
specified opposite the person's name in Schedule D hereto, in form and substance
satisfactory to the Representatives, signed by the persons listed on Schedule D
hereto.
(m) Conditions to Purchase of Option Securities. In the event that
the Underwriters exercise their option provided in Section 2(b) hereof to
purchase all or any portion of the Option Securities, the representations and
warranties of the Company contained herein and the statements in any
certificates furnished by the Company or any subsidiary of the Company hereunder
shall be true and correct in all material respects as of each Date of Delivery
and, at the relevant Date of Delivery, the Representatives shall have received:
(i) Officers' Certificate. A certificate, dated such Date of
Delivery, of the President or a Vice President of the Company and of the chief
financial or chief accounting officer of the Company confirming that the
certificate delivered at the Closing Time pursuant to Section 5(f) hereof
remains true and correct as of such Date of Delivery;
(ii) Opinion of Counsel for the Company. The favorable opinion
of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Professional Corporation, counsel for the
Company, dated such Date of Delivery, relating to the Option Securities to be
purchased on such Date of Delivery and otherwise to the same effect as the
opinion required by Section 5(b) hereof.
(iii) Opinion of PRC Counsel for the Company. The favorable
opinion of ▇▇▇ ▇▇ Law Offices, PRC counsel for the Company, dated such Date of
Delivery, relating to the Option Securities to be purchased on such Date of
Delivery and otherwise to the same effect as the opinion required by Section
5(c) hereof.
(iv) Opinion of Counsel for the Underwriters. The favorable
opinion of ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for the Underwriters, dated such Date
of Delivery, relating to the Option Securities to be proposed on such Date of
Delivery and otherwise to the same effect as the opinion required Section 5(e)
hereof.
(v) Bring-down Comfort Letter. A letter from
PricewaterhouseCoopers LLP, in form and substance satisfactory to the
Representatives and dated such Date of Delivery, substantially in the same form
and substance as the letter furnished to the Representatives pursuant to Section
5(h) hereof, except that the "specified date" in the letter furnished pursuant
to this paragraph shall be a date not more than five days prior to such Date of
Delivery.
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(n) Additional Documents. At Closing Time and at each Date of
Delivery, counsel for the Underwriters shall have been furnished with such
documents and opinions as they may require for the purpose of enabling them to
pass upon the issuance and sale of the Securities as herein contemplated, or in
order to evidence the accuracy of any of the representations or warranties, or
the fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Company in connection with the issuance and sale of the Securities
as herein contemplated shall be satisfactory in form and substance to the
Representatives and counsel for the Underwriters.
(o) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled, this
Agreement, or, in the case of any condition to the purchase of Option
Securities, on a Date of Delivery which is after the Closing Time, the
obligations of the several Underwriters to purchase the relevant Option
Securities, may be terminated by the Representatives by notice to the Company at
any time at or prior to Closing Time or such date of Delivery, as the case may
be, and such termination shall be without liability of any party to any other
party except as provided in Section 4 and except that Sections 1, 6, 7 and 8
shall survive any such termination and remain in full force and effect.
SECTION 6. Indemnification.
---------------
(a) Indemnification of the Underwriters by the Company. The Company
agrees to indemnify and hold harmless each Underwriter and each person, if any,
who controls any Underwriter within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement (or
any amendment thereto), including the Rule 430A Information, or the omission or
alleged omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading or arising out of any
untrue statement or alleged untrue statement of a material fact included in any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim whatsoever
based upon any such untrue statement or omission, or any such alleged untrue
statement or omission; provided that (subject to Section 6(e) below) any such
settlement is effected with the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by ▇▇▇▇▇▇▇ ▇▇▇▇▇),
reasonably incurred in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any
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such untrue statement or omission, to the extent that any such expense is not
paid under (i) or (ii) above;
provided, however, that the indemnity agreement contained in this Section 6(a)
-------- -------
shall not apply to any loss, liability, claim, damage or expense to the extent
arising out of any untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with written information
furnished to the Company by any Underwriter through the Representatives
expressly for use in the Registration Statement (or any amendment thereto), the
Prospectus or any preliminary prospectus (or any amendments or supplement
thereto), including the Rule 430A Information.
(b) Indemnification of the Underwriters by the Selling Stockholders. (i)
Each Selling Stockholder referred to in Part A of Schedule B hereto severally
agrees to indemnify and hold harmless each Underwriter and each person, if any,
who controls any Underwriter within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act as follows:
(A) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement (or any
amendment thereto), including the Rule 430A Information, or the omission or
alleged omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading or arising out of any
untrue statement or alleged untrue statement of a material fact included in any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(B) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim whatsoever
based upon any such untrue statement or omission, or any such alleged untrue
statement or omission; provided that (subject to Section 6(e) below) any such
settlement is effected with the written consent of such Selling Stockholder; and
(C) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by ▇▇▇▇▇▇▇ ▇▇▇▇▇), reasonably
incurred in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue statement or
omission, to the extent that any such expense is not paid under (A) or (B)
above;
provided, however, that the indemnity agreement contained in this Section 6(b)
-------- -------
(i) shall not apply to any loss, liability, claim, damage or expense to the
extent arising out of any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with written
information furnished to the Company by any Underwriter through the
Representatives expressly for use in the Registration Statement (or any
amendment thereto), the Prospectus or any
-31-
preliminary prospectus (or any amendments or supplement thereto), including the
Rule 430A Information; and provided, further, that the liability under this
subsection of such Selling Stockholder shall be limited to an amount equal to
the aggregate net proceeds to such Selling Stockholder from the sale of
Securities sold by such Selling Stockholder hereunder.
(ii) Each Selling Stockholder referred to in Part B of Schedule B hereto
severally agrees to indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act as follows:
(A) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged untrue
statement of a material fact pertaining to such Selling Stockholder or the
Securities to be offered and sold by such Selling Stockholder hereunder
contained in the Registration Statement (or any amendment thereto), including
the Rule 430A Information, or the omission or alleged omission therefrom of a
material fact pertaining to such Selling Stockholder or the Securities to be
offered and sold by such Selling Stockholder hereunder required to be stated
therein or necessary to make the statements therein not misleading or arising
out of any untrue statement or alleged untrue statement of a material fact
pertaining to such Selling Stockholder or the Securities to be offered and sold
by such Selling Stockholder hereunder included in any preliminary prospectus or
the Prospectus (or any amendment or supplement thereto), or the omission or
alleged omission therefrom of a material fact pertaining to such Selling
Stockholder or the Securities to be offered and sold by such Selling Stockholder
hereunder necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(B) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim whatsoever
based upon any such untrue statement or omission, or any such alleged untrue
statement or omission; provided that (subject to Section 6(e) below) any such
settlement is effected with the written consent of such Selling Stockholder; and
(C) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by ▇▇▇▇▇▇▇ ▇▇▇▇▇), reasonably
incurred in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue statement or
omission, to the extent that any such expense is not paid under (A) or (B)
above;
provided, however, that the indemnity agreement contained in this Section
-------- -------
6(b)(ii) shall not apply to any loss, liability, claim, damage or expense to the
extent arising out of any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with written
information furnished to the Company by any Underwriter through the
Representatives expressly for use in the Registration Statement (or any
amendment thereto), the Prospectus or any preliminary prospectus (or any
amendments or supplement thereto), including the Rule 430A Information; and
provided, further, that the liability under this subsection of such Selling
-32-
Stockholder shall be limited to an amount equal to the aggregate net proceeds to
such Selling Stockholder from the sale of Securities sold by such Selling
Stockholder hereunder.
(c) Indemnification of the Company, Directors, Officers and Selling
Stockholders. Each Underwriter severally agrees to indemnify and hold harmless
the Company, its directors, each of its officers who signed the Registration
Statement, and each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act and each Selling
Stockholder and each person, if any, who controls any Selling Stockholder within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act against
any and all loss, liability, claim, damage and expense described in the
indemnity contained in subsections (a) and (b) of this Section, as incurred, but
only with respect to untrue statements or omissions, or alleged untrue
statements or omissions made in the Registration Statement (or any amendment
thereto), the Prospectus or any preliminary prospectus (or any amendments or
supplement thereto), including the Rule 430A Information, in reliance upon and
in conformity with written information furnished to the Company by such
Underwriter through the Representatives expressly for use in the Registration
Statement (or any amendment thereto), the Prospectus or any preliminary
prospectus (or any amendments or supplement thereto), including the Rule 430A
Information.
(d) Actions Against Parties. Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to subsections (a) and
(b) above, counsel to the indemnified parties shall be selected by ▇▇▇▇▇▇▇
▇▇▇▇▇, and, in the case of parties indemnified pursuant to Section 6(c) above,
counsel to the indemnified parties shall be selected by the Company. An
indemnifying party may participate at its own expense in the defense of any such
action; provided, however, that counsel to the indemnifying party shall not
-------- -------
(except with the consent of the indemnified party) also be counsel to the
indemnified party. In no event shall the indemnifying parties be liable for fees
and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever in
respect of which indemnification or contribution could be sought under this
Section 6 or Section 7 hereof (whether or not the indemnified parties are actual
or potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all liability
arising out of such litigation, investigation, proceeding or claim 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 any indemnified party.
-33-
(e) Settlement Without Consent If Failure to Reimburse. If at any
time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by Sections 6(a)(ii), 6(b)(i)(B) and 6(b)(ii)(B) above
effected without its written consent if (i) such settlement is entered into more
than 45 days after receipt by such indemnifying party of the aforesaid request,
(ii) such indemnifying party shall have received notice of the terms of such
settlement at least 30 days prior to such settlement being entered into and
(iii) such indemnifying party shall not have reimbursed such indemnified party
in accordance with such request prior to the date of such settlement.
(f) Other Agreements with Respect to Indemnification. The
provisions of this Section shall not affect any agreement among the Company and
the Selling Stockholders with respect to indemnification.
SECTION 7. Contribution. If the indemnification provided for in Section 6
hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Selling Stockholders on the one hand and the Underwriters on the other hand from
the offering of the Securities pursuant to this Agreement or (ii) if the
allocation provided by clause (i) 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 and the
Selling Stockholders on the one hand and of the Underwriters on the other hand
in connection with the statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
The relative benefits received by the Company and the Selling Stockholders
on the one hand and the Underwriters on the other hand in connection with the
offering of the Securities pursuant to this Agreement shall be deemed to be in
the same respective proportions as the total net proceeds from the offering of
the Securities pursuant to this Agreement (before deducting expenses) received
by the Company and the Selling Stockholders and the total underwriting discount
received by the Underwriters, in each case as set forth on the cover of the
Prospectus, bear to the aggregate public offering price of the Securities as set
forth on such cover.
The relative fault of the Company and the Selling Stockholders on the one
hand and the Underwriters on the other hand shall be determined by reference to,
among other things, whether any such untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company or the Selling Stockholders or by the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
The Company, the Selling Stockholders and the Underwriters agree that it
would not be just and equitable if contribution pursuant to this Section 7 were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation
-34-
which does not take account of the equitable considerations referred to above in
this Section 7. The aggregate amount of losses, liabilities, claims, damages and
expenses incurred by an indemnified party and referred to above in this Section
7 shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the 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 any 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 ▇▇▇▇ ▇▇▇) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company or any
Selling Stockholder within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act shall have the same rights to contribution as the Company or
such Selling Stockholder, as the case may be. The Underwriters' respective
obligations to contribute pursuant to this Section 7 are several in proportion
to the number of Initial Securities set forth opposite their respective names in
Schedule A hereto and not joint.
SECTION 8. Representations, Warranties and Agreements to Survive Delivery.
--------------------------------------------------------------
All representations, warranties and agreements contained in this Agreement or in
certificates of officers of the Company or any of its subsidiaries or the
Selling Stockholders submitted pursuant hereto, shall remain operative and in
full force and effect, regardless of any investigation made by or on behalf of
any Underwriter or controlling person, or by or an behalf of the Company or the
Selling Stockholders, and shall survive delivery of the Securities to the
Underwriters.
SECTION 9. Termination of Agreement.
------------------------
(a) Termination; General. The Representatives may terminate this
Agreement, by notice to the Company and the Selling Stockholders, at any time at
or prior to Closing Time (i) if there has been, since the time of execution of
this Agreement or since the respective dates as of which information is given in
the Prospectus, any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company, its subsidiaries and its Joint Ventures considered as one enterprise,
whether or not arising in the ordinary course of business, or (ii) if there has
occurred any material adverse change in the financial markets in the United
States or China, any outbreak of hostilities or escalation thereof or other
-35-
calamity or crisis or any change or development involving a prospective change
in national or international political, financial or economic conditions, in
each case the effect of which is such as to make it, in the judgment of the
Representatives, impracticable to market the Securities or to enforce contracts
for the sale of the Securities, or (iii) if trading in any securities of the
Company has been suspended or materially limited by the Commission or the Nasdaq
National Market, or if trading generally on the American Stock Exchange or the
New York Stock Exchange or in the Nasdaq National Market has been suspended or
materially limited, or minimum or maximum prices for trading have been fixed, or
maximum ranges for prices have been required, by any of said exchanges or by
such system or by order of the Commission, the NASD or any governmental
authority, (iv) if a banking moratorium has been declared by Federal or New York
or PRC authorities, (v) if a change or development involving a prospective
change in United States or PRC taxation affecting the Company or the Securities
or the transfer thereof or the imposition of exchange controls by the United
States or any change or development involving a prospective change in the PRC
exchange controls would materially and adversely affect the financial markets or
the market for the Securities and other equity securities, or (vi) if the
outbreak or escalation of hostilities involving the United States or the PRC or
the declaration by the United States or the PRC of a national emergency or war
makes it impracticable or inadvisable to proceed with the public offering or the
delivery of the Securities being delivered at such Date of Delivery on the terms
and in the manner contemplated in this Agreement and the Prospectus, or (vii) if
the occurrence of any material adverse change in the existing financial,
political or economic conditions in the United States or the PRC or elsewhere
which, in the judgment of the Representatives would materially and adversely
affect the financial markets or the market for the Securities and other equity
securities.
(b) Liabilities. If this Agreement is terminated pursuant to
this Section, such termination shall be without liability of any party to any
other party except as provided in Section 4 hereof, and provided further that
Sections 1, 6, 7 and 8 shall survive such termination and remain in full force
and effect.
SECTION 10. Default by One or More of the Underwriters. If one or more
------------------------------------------
of the Underwriters shall fail at Closing Time or a Date of Delivery to purchase
the Securities which it or they are obligated to purchase under this Agreement
(the "Defaulted Securities"), the Representatives shall have the right, within
24 hours thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, to purchase all, but not less than all, of the Defaulted
Securities in such amounts as may be agreed upon and upon the terms herein set
forth; if, however, the Representatives shall not have completed such
arrangements within such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10% of
the number of Securities to be purchased on such date, each of the non-
defaulting Underwriters shall be obligated, severally and not jointly, to
purchase the full amount thereof in the proportions that their respective
underwriting obligations hereunder bear to the underwriting obligations of all
non-defaulting Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the
number of Securities to be purchased on such date, this Agreement or, with
respect to any Date of Delivery which occurs
-36-
after the Closing Time, the obligation of the Underwriters to purchase and of
the Company to sell the Option Securities to be purchased and sold on such Date
of Delivery shall terminate without liability on the part of any non-defaulting
Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement or, in the case of a Date of Delivery which is after the Closing
Time, which does not result in a termination of the obligation of the
Underwriters to purchase and the Company to sell the relevant Option Securities,
as the case may be, either (i) the Representatives or (ii) the Company and a
majority in interest of the Selling Stockholders shall have the right to
postpone Closing Time or the relevant Date of Delivery, as the case may be, for
a period not exceeding seven days in order to effect any required changes in the
Registration Statement or Prospectus or in any other documents or arrangements.
As used herein, the term "Underwriter" includes any person substituted for an
Underwriter under this Section 10.
SECTION 11. Default by One or More of the Selling Stockholders or the
---------------------------------------------------------
Company.
-------
(a) If a Selling Stockholder shall fail at Closing Time or at a
Date of Delivery to sell and deliver the number of Securities which such Selling
Stockholder or Selling Stockholders are obligated to sell hereunder, and the
remaining Selling Stockholders do not exercise the right hereby granted to
increase, pro rata or otherwise, the number of Securities to be sold by them
hereunder to the total number to be sold by all Selling Stockholders as set
forth in Schedule B hereto, then the Underwriters may, at the option of the
Representatives, by notice from the Representatives to the Company and the non-
defaulting Selling Stockholders, either (i) terminate this Agreement without any
liability on the part of any non-defaulting party except that the provisions of
Sections 1, 4, 6, 7 and 8 shall remain in full force and effect or (ii) elect to
purchase the Securities which the non-defaulting Selling Stockholders and the
Company have agreed to sell hereunder. No action taken pursuant to this Section
11 shall relieve any Selling Stockholder so defaulting from liability, if any,
in respect of such default.
In the event of a default by any Selling Stockholder as referred to in this
Section 11, each of the Representatives, the Company and the non-defaulting
Selling Stockholders shall have the right to postpone Closing Time or Date of
Delivery for a period not exceeding seven days in order to effect any required
change in the Registration Statement or Prospectus or in any other documents or
arrangements.
(b) If the Company shall fail at Closing Time or at the Date of
Delivery to sell the number of Securities that it is obligated to sell
hereunder, then this Agreement shall terminate without any liability on the part
of any nondefaulting party; provided, however, that the provisions of Sections
-------- -------
1, 4, 6, 7 and 8 shall remain in full force and effect. No action taken
pursuant to this Section shall relieve the Company from liability, if any, in
respect of such default.
-37-
SECTION 12. Notices. All notices and other communications hereunder shall
-------
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representatives at ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, attention of Legal Department,
with a copy to the Representatives at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, attention of Legal Department; and notices to the
Company shall be directed to it at UTStarcom, Inc., ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, attention of ▇▇▇▇ ▇▇, with a copy to
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, attention of ▇▇▇▇▇▇ ▇▇▇▇▇; and notices to Messrs. ▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇,
Hong ▇▇▇▇▇ ▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ shall be directed to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, attention of ▇▇▇▇▇▇
▇▇▇▇▇; and notices to Softbank Ventures, Inc. shall be directed to ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, attention of ▇▇▇▇▇▇▇
▇▇▇▇▇; and notices to Stable Gain Limited International shall be directed to
[Stable Gain Counsel and address], attention of [Stable Gain attorney].
SECTION 13. Parties. This Agreement shall each inure to the benefit of and
-------
be binding upon the Underwriters, the Company and the Selling Stockholders and
their respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation, other
than the Underwriters, the Company and the Selling Stockholders and their
respective successors and the controlling persons and officers and directors
referred to in Sections 6 and 7 and their heirs and legal representatives any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any provision herein contained. This Agreement and all conditions and
provisions hereof are intended to be for the sole and exclusive benefit of the
Underwriters, the Company and the Selling Stockholders and their respective
successors, and said controlling persons and officers and directors and their
heirs and legal representatives, and for the benefit of no other person, firm or
corporation. No purchaser of Securities from any Underwriter shall be deemed to
be a successor by reason merely of such purchase.
SECTION 14. Governing Law And Time. THIS AGREEMENT SHALL BE GOVERNED BY AND
----------------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EXCEPT AS
OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 15. The Headings. The Article and Section headings herein and the
------------
Table of Contents are for convenience only and shall not affect the construction
hereof.
-38-
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company and the Attorneys-in-Fact for
the Selling Stockholders a counterpart hereof, whereupon this instrument, along
with all counterparts, will become a binding agreement between the Underwriters,
the Company and the Selling Stockholders in accordance with its terms.
Very truly yours,
UTSTARCOM, INC.
By:
------------------------------------
Name:
Title:
SELLING STOCKHOLDERS
By:
-------------------------------------
Name:
Title:
By:
-------------------------------------
Name:
Title:
As Attorneys-in-Fact acting on behalf of
the Selling Stockholders named in
Schedule B hereto
-39-
CONFIRMED AND ACCEPTED,
as of the date first above written:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ &
▇▇▇▇▇ INCORPORATED
▇▇▇▇▇▇▇ ▇▇▇▇▇ BARNEY INC.
BANC OF AMERICA SECURITIES LLC
HSBC SECURITIES (USA) INC.
U.S. BANCORP ▇▇▇▇▇ ▇▇▇▇▇▇▇ INC.
By: ▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
By:
--------------------------------
Authorized Signatory
For themselves and as Representatives of the other Underwriters named in
Schedule A hereto.
-40-
SCHEDULE A
Number of
Initial
Name of Underwriter Securities
----------------------------------------------------------------------------- -----------
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated............................
▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc.
Banc of America Securities LLC...............................................
HSBC Securities (USA) Inc....................................................
U.S. Bancorp ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc............................................... ----------
Total..................................................................... 9,000,000
==========
Sch A-1
SCHEDULE B
Number of Maximum
Initial Number of
Securities to be Option Securities
Sold to Be Sold
---------------- -----------------
UTStarcom, Inc............................................ 6,050,000 1,350,000
Selling Stockholders:
Part A
------
▇▇▇▇▇▇▇▇ ▇▇▇▇.......................................... 1,375,739 0
▇▇▇▇ ▇▇................................................ 940,749 0
Hong ▇▇▇▇▇ ▇▇.......................................... 200,000 0
Softbank Ventures, Inc................................. 185,384 0
▇▇▇▇ ▇▇▇▇▇▇▇▇▇......................................... 100,000 0
Part B
------
Stable Gain International Limited...................... 148,128 0
--------- ---------
Total.............................................. 9,000,000 1,350,000
========= =========
Sch B-1
SCHEDULE C
UTSTARCOM, INC.
9,000,000 Shares of Common Stock
(Par Value $.00125 Per Share)
1. The public offering price per share for the Securities, determined as
provided in said Section 2, shall be $[ ].
2. The purchase price per share for the Securities to be paid by the
several Underwriters shall be $[ ], being an amount equal to the public
offering price set forth above less $[ ] per share; provided that the purchase
price per share for any Option Securities purchased upon the exercise of the
over-allotment option described in Section 2(b) shall be reduced by an amount
per share equal to any dividends or distributions declared by the Company and
payable on the Initial Securities but not payable on the Option Securities.
Sch C-1
SCHEDULE D
List of persons and entities
subject to lock-up
Name Type of Lock-up to Be Signed
-------------------------------------- -----------------------------------------
[Exhibit D or Exhibit E]
Sch D-1
SCHEDULE E
List of Joint Ventures and Ownership Percentages Held by the Company
% Owned
Joint Venture by Company
------------------------------------------------------------------- ------------------
Guangdong UTStarcom, Ltd.................................. 51%
Hangzhou UTStarcom, Ltd................................... 88%
Sch E-1
EXHIBIT A
Form of Opinion of Company's Counsel
A-1
EXHIBIT B
Form of Opinion of Company's PRC Counsel
B-1
EXHIBIT C
Forms of Opinion of Selling Stockholders' Counsel
C-1
EXHIBIT D
Form of Lock-up Agreement for Persons Who Do Not Have 10b5-1 Plans
June __, 2001
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
Banc of America Securities LLC
HSBC Securities (USA) Inc.
U.S. Bancorp ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc.
as Representatives of the several
Underwriters to be named in the
within-mentioned Purchase Agreement
▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Re: Proposed Public Offering by UTStarcom, Inc.
------------------------------------------
Ladies and Gentlemen:
The undersigned, a stockholder of UTStarcom, Inc., a Delaware corporation
(the "Company"), understands that ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce,
▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated ("▇▇▇▇▇▇▇ ▇▇▇▇▇") and other underwriters to be named
therein propose to enter into a Purchase Agreement (the "Purchase Agreement")
with the Company providing for the public offering (the "Offering") of shares of
the Company's common stock, par value $0.00125 per share (the "Common Stock").
In recognition of the benefit that such an offering will confer upon the
undersigned as a stockholder of the Company, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
undersigned agrees with each underwriter to be named in the Purchase Agreement
that, during a period of 90 days from the date of the Purchase Agreement, the
undersigned will not, without the prior written consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇,
directly or indirectly, (i) offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option to contact to sell, grant
any option, right or warrant for the sale of, or otherwise dispose of or
transfer any shares of the Company's Common Stock or any securities convertible
into or exchangeable or exercisable for Common Stock or any securities
convertible into or exchangeable or exercisable for Common Stock, whether now
owned or hereafter acquired by the undersigned or with respect to which the
undersigned has or hereafter acquires the power of
D-1
disposition, or file any registration statement under the Securities Act of
1933, as amended, with respect to any of the foregoing or (ii) enter into any
swap or any other agreement or any transaction that transfers, in whole or in
part, directly or indirectly, the economic consequence of ownership of the
Common Stock, whether any such swap or transaction is to be settled by delivery
of Common Stock or other securities, in cash or otherwise. Notwithstanding the
foregoing, such restrictions shall not apply to: (i) shares of Common Stock
disposed of by the undersigned as bona fide gifts, provided that the donee
thereof agrees in writing to be bound by the provisions hereof; (ii) a pledge of
shares of Common Stock by the undersigned for the purposes of securing a loan or
similar obligation from the Company to the holder; (iii) shares of Common Stock
distributed to partners, members or stockholders of the undersigned, provided
that each distributee agrees in wiring to be bound by the provisions hereof; and
(iv) shares of Common Stock purchased by the undersigned in the Offering or on
the Nasdaq National Market after the date of the Offering.
In furtherance of the foregoing, the undersigned hereby authorizes the
Company and its transfer agent and registrar to decline to make any transfer of
shares of Common Stock if such transfer would constitute a violation or breach
of this agreement.
[Remainder of page intentionally left blank]
D-2
This agreement shall be binding on the undersigned and their respective
successors, heirs, personal representatives and assigns of the undersigned.
Very truly yours,
_________________________________________
Name of stockholder or optionholder
Signature: ______________________________
Print Name: _____________________________
Title: __________________________________
Address: ________________________________
________________________________
________________________________
D-3
EXHIBIT E
Form of Lock-up Agreement for Persons Who Have 10b5-1 Plans
Dated as of June 19, 2001
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
Banc of America Securities LLC
HSBC Securities (USA) Inc.
U.S. Bancorp ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc.
as Representatives of the several
Underwriters to be named in the
within-mentioned Purchase Agreement
▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Re: Proposed Public Offering by UTStarcom, Inc.
------------------------------------------
Ladies and Gentlemen:
The undersigned, a stockholder of UTStarcom, Inc., a Delaware
corporation (the "Company"), understands that ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇
Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated ("▇▇▇▇▇▇▇ ▇▇▇▇▇") and other
underwriters to be named therein propose to enter into a Purchase Agreement (the
"Purchase Agreement") with the Company providing for the public offering (the
"Offering") of shares of the Company's common stock, par value $0.00125 per
share (the "Common Stock"). In recognition of the benefit that such an offering
will confer upon the undersigned as a stockholder of the Company, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the undersigned agrees with each underwriter to be named in the
Purchase Agreement that, during a period commencing on June 19, 2001 and ending
on the date 90 days after the date of the Purchase Agreement, the undersigned
will not, without the prior written consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇, directly or
indirectly, (i) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option to contact to sell, grant any option,
right or warrant for the sale of, or otherwise dispose of or transfer any shares
of the Company's Common Stock or any securities convertible into or exchangeable
or exercisable for Common Stock or any securities convertible into or
exchangeable or exercisable for Common Stock, whether now owned or hereafter
acquired by the undersigned or with respect to which the undersigned has or
hereafter acquires the power of disposition, or file any registration statement
E-1
under the Securities Act of 1933, as amended, with respect to any of the
foregoing or (ii) enter into any swap or any other agreement or any transaction
that transfers, in whole or in part, directly or indirectly, the economic
consequence of ownership of the Common Stock, whether any such swap or
transaction is to be settled by delivery of Common Stock or other securities, in
cash or otherwise. Notwithstanding the foregoing, such restrictions shall not
apply to: (i) shares of Common Stock disposed of by the undersigned as bona fide
gifts, provided that the donee thereof agrees in writing to be bound by the
provisions hereof; (ii) a pledge of shares of Common Stock by the undersigned
for the purposes of securing a loan or similar obligation from the Company to
the holder; (iii) shares of Common Stock distributed to partners, members or
stockholders of the undersigned, provided that each distributee agrees in wiring
to be bound by the provisions hereof; and (iv) shares of Common Stock purchased
by the undersigned in the Offering or on the Nasdaq National Market after the
date of the Offering. Notwithstanding the foregoing, beginning two weeks
following the date of the Purchase Agreement, the undersigned may sell his or
her shares of Common Stock that are subject to a contract that was adopted prior
to the date hereof under Rule 10b5-1 under the Securities and Exchange Act of
1934 (the "10b5-1 Plan"), a copy of which was previously provided to ▇▇▇▇▇▇▇
▇▇▇▇▇ or its counsel. In addition, beginning two weeks following the date of the
Purchase Agreement, the undersigned may sell his or her shares of Common Stock
that otherwise could have been sold pursuant to the 10b5-1 Plan, but for the
enumerated restrictions above, during the period beginning on June 19, 2001 and
ending on the date that is two weeks following the date of the Purchase
Agreement.
In furtherance of the foregoing, the undersigned hereby authorizes the
Company and its transfer agent and registrar to decline to make any transfer of
shares of Common Stock if such transfer would constitute a violation or breach
of this agreement.
[Remainder of page intentionally left blank]
E-2
This agreement shall be binding on the undersigned and their respective
successors, heirs, personal representatives and assigns of the undersigned.
Very truly yours,
_______________________________________
Name of stockholder or optionholder
Signature:_____________________________
Print Name:____________________________
Title:_________________________________
Address:_______________________________
_______________________________
_______________________________
E-3