EXHIBIT 1.1
Xinhua Finance Media Limited
23,076,923 American Depositary Shares
Representing
46,153,846 Common Shares
(Par Value US$0.001 Per Share)
Underwriting Agreement
[March 8], 2007
▇.▇. ▇▇▇▇▇▇ Securities Inc.
UBS AG
as Representatives of the
several Underwriters listed
in Schedule 1 hereto
c/o ▇.▇. ▇▇▇▇▇▇ Securities Inc.
addressStreet277 ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
c/o UBS AG
52/F, Two International Finance Centre
▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇
Ladies and Gentlemen:
Xinhua Finance Media Limited, an exempted company limited by shares
incorporated under the laws of the Cayman Islands (the "Company"), proposes to
issue and sell to the several Underwriters listed in Schedule 1 hereto (the
"Underwriters"), for whom you are acting as representatives (the
"Representatives"), an aggregate of 17,307,923 American Depositary Shares
("ADSs"), representing 34,615,846 common shares, par value US$0.001 per share,
of the Company (the "Common Shares") and, at the option of the Underwriters, up
to 3,230,538 additional ADSs, representing 6,461,076 Common Shares of the
Company. The shareholders of the Company named in Schedule 2 hereto (the
"Selling Shareholders") propose to sell to the Underwriters an aggregate of
5,769,000 ADSs representing 11,538,000 Common Shares. At the option of the
Underwriters, [name of Selling Shareholder(s)] propose(s) to sell up to 231,000
ADSs representing 462,000 Common Shares. The aggregate of 23,076,923 ADSs
representing 46,153,846 Common Shares to be sold by the Company and the Selling
Shareholders is herein called the "Firm ADSs", and the aggregate of 3,461,538
ADSs representing 6,923,076 Common Shares to be sold by the Company and the
applicable Selling Shareholder(s) is herein called the "Optional ADSs." The Firm
ADSs and the Optional ADSs that the Underwriters elect to purchase pursuant to
Section 2 hereof are herein collectively called the "ADSs." The Common Shares
represented by the Firm ADSs are hereinafter called the "Firm Shares" and the
Common Shares represented by the Optional ADSs are hereafter called the
"Optional Shares" and the Firm Shares and the Optional Shares are herein
collectively called the "Shares."
The Company hereby acknowledges that, in connection with the proposed
offering of the ADSs, it has requested UBS Financial Services Inc.
("UBS-FinSvc"), and UBS-FinSvc has agreed, to administer a directed share
program (the "Directed Share Program") under which up to 1,153,846 Firm ADSs, or
approximately 5% of the Firm ADSs to be purchased by the Underwriters (the
"Reserved ADSs"), shall be reserved for sale by UBS-FinSvc at the initial public
offering price to the Company's directors, officers, employees and associates
(the "Directed Share Participants") as part of the distribution of the ADSs by
the Underwriters, subject to the terms of this Underwriting Agreement (this
"Agreement"), the applicable rules, regulations and interpretations of the
National Association of Securities Dealers, Inc. (the "NASD") and all other
applicable laws, rules and regulations. The number of ADSs available for sale to
the general public will be reduced to the extent that Directed Share
Participants purchase Reserved ADSs. The Underwriters may offer any Reserved
ADSs not purchased by Directed Share Participants to the general public on the
same basis as the other ADSs being issued and sold hereunder. The Company has
supplied UBS-FinSvc with the names, addresses and telephone numbers of the
individuals or other entities which the Company has designated to be
participants in the Directed Share Program. It is understood that any number of
those so designated to participate in the Directed Share Program may decline to
do so.
The ADSs are to be issued pursuant to a deposit agreement (the "Deposit
Agreement"), dated as of _____, 2007, among the Company, The Bank of New York,
as depositary (the "Depositary"), and owners and beneficial owners from time to
time of the ADSs. Each ADS will initially represent the right to receive two
Common Shares deposited pursuant to the Deposit Agreement.
It is understood by all the parties that the Underwriters are offering ADSs
in the United States and internationally outside of the People's Republic of
China
2
(the "PRC", which, for purposes of this Agreement, excludes Taiwan, The Hong
Kong Special Administrative Region and The Macau Special Administrative Region).
Accordingly, it is agreed as follows:
1. Registration Statement. The Company has prepared and filed with the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended, and the rules and regulations of the Commission thereunder
(collectively, the "Securities Act"), a registration statement (File No.
______________) including a prospectus, relating to the Shares and the ADSs.
Such registration statement, as amended at the time it becomes effective,
including the information, if any, deemed pursuant to Rule 430A under the
Securities Act to be part of the registration statement at the time of its
effectiveness ("Rule 430 Information"), is referred to herein as the
"Registration Statement"; and as used herein, the term "Preliminary Prospectus"
means each prospectus included in such registration statement (and any
amendments thereto) before it becomes effective, any prospectus filed with the
Commission pursuant to Rule 424(a) under the Securities Act and the prospectus
included in the Registration Statement at the time of its effectiveness that
omits Rule 430 Information, and the term "Prospectus" means the prospectus in
the form first used (or made available upon request of purchasers pursuant to
Rule 173 under the Securities Act) in connection with confirmation of sales of
the ADSs. If the Company has filed an abbreviated registration statement
pursuant to Rule 462(b) under the Securities Act (the "Rule 462 Registration
Statement"), then any reference herein to the term "Registration Statement"
shall be deemed to include such Rule 462 Registration Statement.
At or prior to the time when sales of the ADSs were first made (the "Time
of Sale"), the Company had prepared the following information (collectively
[with the pricing information set forth on Annex A] [if pricing info will be
provided orally], the "Time of Sale Information"), a Preliminary Prospectus
dated February 21, 2007, and each "free-writing prospectus" (as defined pursuant
to Rule 405 under the Securities Act) listed on Annex A hereto.
2. Purchase of the ADSs by the Underwriters.
(a) The Company and each Selling Shareholder agree, severally and not
jointly, to sell the Firm ADSs to the several Underwriters as provided in
this Agreement, and each Underwriter, on the basis of the representations,
warranties and agreements set forth herein and subject to the conditions
set forth herein, agrees, severally and not jointly, to purchase from the
Company and each Selling Shareholder the respective number of Firm ADSs set
forth opposite such Underwriter's
3
name in Schedule 1 hereto at a price per ADS (the "Purchase Price") of
$_______.
In addition, the Company and [name of Selling Shareholder(s)] agree,
severally and not jointly, to sell the Optional ADSs to the several
Underwriters as provided in this Agreement for the sole purpose of covering
overallotments and/or effecting stabilization transactions in the sale of
the Firm ADSs, and the Underwriters, on the basis of the representations,
warranties and agreements set forth herein and subject to the conditions
set forth herein, shall have the option to purchase, severally and not
jointly, from the Company and such applicable Selling Shareholder(s) the
Optional ADSs at the Purchase Price.
If any Optional ADSs are to be purchased, the number of Optional ADSs
to be purchased by each Underwriter shall be the number of Optional ADSs
which bears the same ratio to the aggregate number of Optional ADSs being
purchased as the number of Firm ADSs set forth opposite the name of such
Underwriter in Schedule 1 hereto (or such number increased as set forth in
Section 9 hereof) bears to the aggregate number of Firm ADSs being
purchased from the Company and such applicable Selling Shareholder(s) by
the several Underwriters, subject, however, to such adjustments to
eliminate any fractional ADSs as the Representatives in their sole
discretion shall make.
The Underwriters may exercise the option to purchase the Optional ADSs
at any time in whole, or from time to time in part, on or before the
thirtieth day following the date of this Agreement, by written notice from
the Representatives to the Company and/or the applicable Selling
Shareholder(s). Such notice shall set forth the aggregate number of
Optional ADSs as to which the option is being exercised and the date and
time when the Optional ADSs are to be delivered and paid for which may be
the same date and time as the Closing Date (as hereinafter defined) but
shall not be earlier than the Closing Date nor later than the tenth full
business day (as hereinafter defined) after the date of such notice (unless
such time and date are postponed in accordance with the provisions of
Section 9 hereof). Any such notice shall be given at least two business
days prior to the date and time of delivery specified therein.
(b) The Company understands that the Underwriters intend to make a
public offering of the ADSs as soon as practicable after the effectiveness
of the Registration Statement as in the judgment of the Representatives is
advisable, and initially to offer the ADSs on the terms set forth in the
Prospectus. The Company acknowledges and agrees that the Underwriters may
offer and sell ADSs to or through any affiliate of an
4
Underwriter and that any such affiliate may offer and sell ADSs purchased
by it to or through any Underwriter.
(c) Payment for the ADSs shall be made by wire transfer in immediately
available funds to the account specified by (x) the Company (with respect
to Shares sold to the Underwriters by the Company and Dragon Era Group) or
(y) by each of Patriarch Partners Media Holdings, LLC ("Patriarch
Partners") and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Family Trust (with respect to Shares sold
to the Underwriters by such Selling Shareholder), in either case to the
Representatives in the case of the Firm ADSs, at the offices of ▇▇▇▇▇ ▇▇▇▇
& ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇ Club Building, 3A Chater Road,
Central, Hong Kong (the "Closing Location") at 9:00 A.M. New York City time
on [March 13], 2007, or at such other time or place on the same or such
other date, not later than the fifth business day thereafter, as the
Representatives and the Company may agree upon in writing or, in the case
of the Optional ADSs, on the date and at the time and place specified by
the Representatives in the written notice of the Underwriters' election to
purchase such Optional ADSs but not later than, 2007 [+10 days after
expiration of the 30-day period] (but in no event less than 2 business days
after of notice of exercise). The time and date of such payment for the
Firm ADSs is referred to herein as the "Closing Date" and the time and date
for such payment for the Optional ADSs, if other than the Closing Date, is
herein referred to as the "Additional Closing Date".
Payment for the ADSs to be purchased on the Closing Date or the
Additional Closing Date, as the case may be, shall be made against delivery
to the Representatives for the respective accounts of the several
Underwriters of American Depositary Receipts ("ADRs") representing the ADSs
to be purchased on such date in definitive form registered in such names
and in such denominations as the Representatives shall request in writing
not later than two full business days prior to the Closing Date or the
Additional Closing Date, as the case may be, with any transfer taxes
payable in connection with the sale of the ADSs duly paid by the Company or
the applicable Selling Shareholder. The specimen of the ADRs representing
the ADSs will be made available for inspection and packaging by the
Representatives at the Closing Location not later than 1:00 P.M., Hong
Kong time, on the business day prior to the Closing Date or the Additional
Closing Date, as the case may be.
(d) The Company and each Selling Shareholder acknowledge and agree
that the Underwriters are acting solely in the capacity of an arm's-length
contractual counterparty to the Company and each Selling Shareholder with
respect to the offering of ADSs contemplated hereby (including in
connection with determining the terms of the offering) and
5
not as a financial advisor or a fiduciary to, or an agent of, the Company,
the Selling Shareholders or any other person. Additionally, neither each
Representative nor any other Underwriter is advising the Company, the
Selling Shareholders or any other person as to any legal, tax, investment,
accounting or regulatory matters in any jurisdiction. The Company and each
Selling Shareholder shall consult with their own advisors concerning such
matters and shall be responsible for making their own independent
investigation and appraisal of the transactions contemplated hereby, and
the Underwriters shall have no responsibility or liability to the Company
and the Selling Shareholders with respect thereto. Any review by the
Underwriters of the Company, the transactions contemplated hereby or other
matters relating to such transactions will be performed solely for the
benefit of the Underwriters and shall not be on behalf of the Company or
the Selling Shareholders.
3. Representations and Warranties of the Company and the Selling
Shareholders. The Company and the Selling Shareholder named in Schedule 3 hereto
(the "Affiliate Selling Shareholder") represent and warrant to each Underwriter
that:
(a) Preliminary Prospectus. No order preventing or suspending the use
of any Preliminary Prospectus has been issued by the Commission, and each
Preliminary Prospectus, at the time of filing thereof, complied in all
material respects with the Securities Act and did not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided that the Company makes no representation and warranty with respect
to any statements or omissions made in reliance upon and in conformity with
information relating to any Underwriter furnished to the Company in writing
by such Underwriter through the Representatives expressly for use in any
Preliminary Prospectus.
(b) Time of Sale Information. The Time of Sale Information, at the
Time of Sale did not, and at the Closing Date and as of the Additional
Closing Date, as the case may be, will not, contain any untrue statement of
a material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading; provided that the Company makes no
representation and warranty with respect to any statements or omissions
made in reliance upon and in conformity with information relating to any
Underwriter furnished to the Company in writing by such Underwriter through
the Representatives expressly for use in such Time of Sale Information. No
statement of material fact included in the Prospectus has been omitted from
the Time of Sale Information and no statement of
6
material fact included in the Time of Sale Information that is required to
be included in the Prospectus has been omitted therefrom.
(c) Issuer Free Writing Prospectus. Other than the Preliminary
Prospectus and the Prospectus, the Company (including its agents and
representatives, other than the Underwriters in their capacity as such) has
not made, used, prepared, authorized, approved or referred to and will not
prepare, make, use, authorize, approve or refer to any "written
communication" (as defined in Rule 405 under the Securities Act) that
constitutes an offer to sell or solicitation of an offer to buy the ADSs
(each such communication by the Company or its agents and representatives
(other than a communication referred to in clause (i) below) an "Issuer
Free Writing Prospectus") other than (i) any document not constituting a
prospectus pursuant to Section 2(a)(10)(a) of the Securities Act or Rule
134 under the Securities Act or (ii) the documents listed on Annex A hereto
and other written communications approved in writing in advance by the
Representatives. Each such Issuer Free Writing Prospectus complied in all
material respects with the Securities Act, has been filed in accordance
with the Securities Act (to the extent required thereby) and, when taken
together with the Preliminary Prospectus accompanying, or delivered prior
to delivery of, such Issuer Free Writing Prospectus, did not, and at the
Closing Date and as of the Additional Closing Date, as the case may be,
will not, contain any untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided that the Company makes no representation and warranty with respect
to any statements or omissions made in each such Issuer Free Writing
Prospectus in reliance upon and in conformity with information relating to
any Underwriter furnished to the Company in writing by such Underwriter
through the Representatives expressly for use in any Issuer Free Writing
Prospectus.
(d) Registration Statement and Prospectus. The Registration Statement
has been declared effective by the Commission. No order suspending the
effectiveness of the Registration Statement has been issued by the
Commission and no proceeding for that purpose or pursuant to Section 8A of
the Securities Act against the Company or related to the offering has been
initiated or, to the knowledge of the Company after due inquiry, threatened
by the Commission; as of the applicable effective date of the Registration
Statement and any amendment or supplement thereto, the Registration
Statement complied and will comply in all material respects with the
Securities Act, and did not and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein not
misleading; and as of the date of the Prospectus and any amendment or
7
supplement thereto and as of the Closing Date and as of the Additional
Closing Date, as the case may be, the Prospectus will not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided that the Company makes no representation and warranty
with respect to any statements or omissions made in reliance upon and in
conformity with information relating to any Underwriter furnished to the
Company in writing by such Underwriter through the Representatives
expressly for use in the Registration Statement and the Prospectus and any
amendment or supplement thereto.
(e) Form F-6. A registration statement on Form F-6 (File No.
___-_____) in respect of the ADSs has been filed with the Commission; such
registration statement in the form heretofore delivered to the
Representatives and, excluding exhibits, to the Representatives for each of
the other Underwriters, has been declared effective by the Commission in
such form; no other document with respect to such registration statement
has heretofore been filed with the Commission; no stop order suspending the
effectiveness of such registration statement has been issued and no
proceeding for that purpose has been initiated or, to the knowledge of the
Company after due inquiry, threatened by the Commission (the various parts
of such registration statement, including all exhibits thereto, each as
amended at the time such part of the registration statement became
effective, being hereinafter called the "ADS Registration Statement"); and
the ADS Registration Statement when it became effective conformed, and any
further amendments thereto will conform, in all material respects to the
requirements of the Securities Act and the rules and regulations of the
Commission thereunder, and did not, as of the applicable effective date,
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.
(f) Form 8-A. A registration statement on Form 8-A (File No.
____-_____) in respect of the registration of the Shares and the ADSs under
the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act"),
has been filed with the Commission; such registration statement in the form
heretofore delivered to you and, excluding exhibits, to you for each of the
other Underwriters, has been declared effective by the Commission in such
form; no other document with respect to such registration statement has
heretofore been filed with the Commission; no stop order suspending the
effectiveness of such registration statement has been issued and no
proceeding for that purpose has been initiated or, to the knowledge of the
Company after due inquiry, threatened by the Commission (the various parts
of such registration statement, including all
8
exhibits thereto, each as amended at the time such part of the registration
statement became effective, being hereinafter called the "Form 8-A
Registration Statement"); and the Form 8-A Registration Statement when it
became effective conformed, and any further amendments thereto will
conform, in all material respects to the requirements of the Exchange Act
and the rules and regulations of the Commission thereunder, and did not and
will not, as of the applicable effective date, 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.
(g) Financial Statements. The financial statements and the related
notes thereto of the Company and its consolidated subsidiaries included in
the Registration Statement, the Time of Sale Information and the Prospectus
comply in all material respects with the applicable requirements of the
Securities Act and the Exchange Act, as applicable, and present fairly in
all material respects the financial position of the Company and its
subsidiaries as of the dates indicated and the results of their operations
and the changes in their cash flows for the periods specified; such
financial statements have been prepared in conformity with United States
generally accepted accounting principles applied on a consistent basis
throughout the periods covered thereby; and the other financial information
included in the Registration Statement, the Time of Sale Information and
the Prospectus has been derived from the accounting records of the Company
and its subsidiaries and presents fairly in all material respects the
information shown thereby; and the pro forma financial information and the
related notes thereto included in the Registration Statement, the Time of
Sale Information and the Prospectus have been prepared in accordance with
the applicable requirements of the Securities Act and the Exchange Act, as
applicable, and the assumptions underlying such pro forma financial
information are reasonable and are set forth in the Registration Statement,
the Time of Sale Information and the Prospectus; there are no financial
statements (historical or pro forma) that are required to be included in
the Registration Statement, any Preliminary Prospectus or the Prospectus
that are not included as required; and the Company and its subsidiaries do
not have any material liabilities or obligations, direct or contingent
(including any off-balance sheet obligations), not described in the
Registration Statement (excluding the exhibits thereto), the Time of Sale
Information and the Prospectus.
(h) No Material Adverse Change. Since the date of the most recent
financial statements of the Company included in the Registration Statement,
the Time of Sale Information and the Prospectus, (i) there has not been any
change in the capital stock or long-term debt of the Company or any of its
subsidiaries, or any dividend or distribution of any kind declared, set
aside for payment, paid or made by the Company on any
9
class of capital stock, or any material adverse change, or any development
involving a prospective material adverse change, in or affecting the
business, properties, management, financial position, shareholders' equity,
results of operations or prospects of the Company and its subsidiaries
taken as a whole; (ii) neither the Company nor any of its subsidiaries has
entered into any transaction or agreement that is material to the Company
and its subsidiaries taken as a whole or incurred any liability or
obligation, direct or contingent, that is material to the Company and its
subsidiaries taken as a whole; and (iii) neither the Company nor any of its
subsidiaries has sustained any material loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor disturbance or dispute or any
action, order or decree of any court or arbitrator or governmental or
regulatory authority, except in each case as otherwise disclosed in the
Registration Statement, the Time of Sale Information and the Prospectus.
(i) Organization and Good Standing. The Company and each of its
subsidiaries have been duly organized and are validly existing and in good
standing under the laws of their respective jurisdictions of organization,
are duly qualified to do business and are in good standing in each
jurisdiction in which their respective ownership or lease of property or
the conduct of their respective businesses requires such qualification, and
have all power and authority necessary to own or hold their respective
properties and to conduct the businesses in which they are engaged, except
where the failure to be so qualified and be in good standing or to have
such power or authority would not, individually or in the aggregate, have a
material adverse effect on the business, properties, management, financial
position, shareholders' equity, results of operations or prospects of the
Company and its subsidiaries, taken as a whole (a "Material Adverse
Effect"). The constitutive documents of each subsidiary comply with the
requirements of applicable law in its jurisdiction of incorporation and are
in full force and effect. The Company does not own or control, directly or
indirectly, any corporation, association or other entity other than the
subsidiaries listed in Exhibit 21 to the Registration Statement, except as
otherwise disclosed in the Registration Statement, the Time of Sale
Information and the Prospectus. The Memorandum and Articles of Association
of the Company comply with the requirements of applicable Cayman Islands
law and are in full force and effect.
(j) Capitalization. The Company has an authorized capitalization as
set forth in the Registration Statement, the Time of Sale Information and
the Prospectus under the heading "Capitalization"; all the outstanding
shares of capital stock of the Company have been duly and validly
authorized and issued and are fully paid and non-assessable and are not
subject to any preemptive or similar rights; except as described in
10
or expressly contemplated by the Registration Statement, the Time of Sale
Information and the Prospectus, there are no outstanding rights (including,
without limitation, preemptive rights), warrants or options to acquire, or
instruments convertible into or exchangeable for, any shares of capital
stock or other equity interest in the Company or any of its subsidiaries,
or any contract, commitment, agreement, understanding or arrangement of any
kind relating to the issuance of any capital stock of the Company or any
such subsidiary, any such convertible or exchangeable securities or any
such rights, warrants or options; the capital stock of the Company conforms
in all material respects to the description thereof contained in the
Registration Statement, the Time of Sale Information and the Prospectus;
and all the outstanding shares of capital stock or other equity interests
of each subsidiary of the Company have been duly and validly authorized and
issued, are fully paid and non-assessable and, except as disclosed in the
Registration Statement, the Time of Sale Information and the Prospectus,
all the shares of capital stock or other equity interests of each
subsidiary directly or indirectly owned by the Company are free and clear
of any lien, charge, encumbrance, security interest, restriction on voting
or transfer or any other claim of any third party; the Shares, when issued
and delivered against payment thereof, may be freely deposited by the
Company and the Selling Shareholders with the Depositary against issuance
of ADRs evidencing ADSs; the ADSs, when issued and delivered against
payment thereof, will be freely transferable by the Company and the Selling
Shareholders to or for the account of the several Underwriters and (to the
extent described in the Prospectus) the initial purchasers thereof; and
there are no restrictions on subsequent transfers of the ADSs under the
laws of the Cayman Islands, the PRC or the United States except as
described in the Prospectus under "Description of Share Capital",
"Description of American Depositary Shares" and "Shares Eligible for Future
Sale".
(k) The Shares. The Shares have been duly authorized by the Company
and, when issued and delivered and paid for as provided herein, will be
duly and validly issued and will be fully paid and non-assessable and will
conform to the descriptions thereof in the Time of Sale Information and the
Prospectus; and the issuance of the Shares is not subject to any preemptive
or similar rights.
(l) Due Authorization. The Company has full right, power and authority
to execute and deliver this Agreement and the Deposit Agreement
(collectively, the "Transaction Documents") and to perform its obligations
hereunder and thereunder; and all action required to be taken for the due
and proper authorization, execution and delivery by it of each of the
Transaction Documents and the consummation by it of the transactions
contemplated thereby has been duly and validly taken.
11
(m) Underwriting Agreement. This Agreement has been duly authorized,
executed and delivered by the Company.
(n) Deposit Agreement. The Deposit Agreement has been duly authorized
by the Company and, when duly executed and delivered in accordance with its
terms by each of the parties thereto, will constitute a valid and legally
binding agreement of the Company enforceable against the Company in
accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws of general applicability relating to or affecting creditors' rights or
by equitable principles relating to enforceability (regardless of whether
such enforceability is considered in a proceeding in equity or at law).
Upon due execution and delivery by the Depositary of ADRs evidencing ADSs
and the deposit of Shares in respect thereof in accordance with the
provisions of the Deposit Agreement, such ADRs will be duly and validly
issued and the persons in whose names the ADRs are registered will be
entitled to the rights specified therein and in the Deposit Agreement; and
the Deposit Agreement and the ADRs conform in all material respects to the
descriptions thereof contained in the Prospectus.
(o) Descriptions of the Transaction Documents. The descriptions of
each Transaction Document contained in the Registration Statement, the Time
of Sale Information and the Prospectus summarize such Transaction Document
in all material respects.
(p) No Violation or Default. Neither the Company nor any of its
subsidiaries is (i) in violation of its charter or by-laws or similar
organizational documents; (ii) in default, and no event has occurred that,
with notice or lapse of time or both, would constitute such a default, in
the due performance or observance of any term, covenant or condition
contained in any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries
is bound or to which any of the property or assets of the Company or any of
its subsidiaries is subject; or (iii) except as disclosed in the
Registration Statement, the Time of Sale Information and the Prospectus, in
violation of any law or statute or any judgment, order, rule or regulation
of any court or arbitrator or governmental or regulatory authority; except
in the case of clauses (ii) and (iii) above, for any such default or
violation that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(q) No Conflicts. The issue and sale of the Shares to be sold by the
Company hereunder and the deposit of the Shares being deposited with the
Depositary against issuance of the ADRs evidencing the ADSs and the
12
compliance by the Company with all of the provisions of this Agreement and
the Deposit Agreement and the consummation of the transactions herein and
therein contemplated will not (i) 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 to which the Company or any of its subsidiaries is
a party or by which the Company or any of its subsidiaries is bound or to
which any of the property or assets of the Company or any of its
subsidiaries is subject, (ii) result in any violation of the provisions of
the articles of association, business license or other constituent
documents of the Company or any of its subsidiaries or (iii) result in any
violation of any statute or any order, rule or regulation of any
governmental agency having jurisdiction over the Company or any of its
subsidiaries or any of their properties, except, in the case of clauses (i)
and (iii) above, for any such conflict, breach or violation that would not,
individually or in the aggregate, have a Material Adverse Effect.
(r) No Consents Required. Except as disclosed in the Registration
Statement, the Time of Sale Information and the Prospectus, no consent,
approval, authorization, order, registration or qualification of or with
any governmental agency is required for the issue and sale of the Shares or
the ADSs, for the deposit of the Shares being deposited with the Depositary
against issuance of the ADRs evidencing the ADSs to be delivered or the
consummation by the Company of the transactions contemplated by this
Agreement and the Deposit Agreement, except (x) the registration under the
Securities Act and the Exchange Act of the Shares and the ADSs and approval
of the ADSs for quotation on the National Association of Securities Dealers
Automated Quotations Global Market System ("Nasdaq Global Market"), (y)
such governmental authorizations as have been duly obtained and are in full
force and effect and copies of which have been furnished to you and (z)
such governmental authorizations as may be required under applicable state
securities or Blue Sky laws, the rules of the NASD or any laws of
jurisdictions outside the Cayman Islands and the United States in
connection with the purchase and distribution of the Shares and ADSs by or
for the respective account of the several Underwriters.
(s) Legal Proceedings. Except as described in the Registration
Statement, the Time of Sale Information and the Prospectus, there are no
legal, governmental or regulatory investigations, actions, suits or
proceedings pending to which the Company or any of its subsidiaries is or
may be a party or to which any property of the Company or any of its
subsidiaries is or may be the subject that, in the aggregate, if determined
adversely to the Company or any of its subsidiaries, would have a Material
Adverse Effect or materially and adversely affect the Company's ability to
13
perform its obligations under this Agreement; to the knowledge of the
Company, no such investigations, actions, suits or proceedings are
threatened or contemplated by any governmental or regulatory authority or
threatened by others; and (i) there are no current or pending legal,
governmental or regulatory actions, suits or proceedings that are required
under the Securities Act to be described in the Registration Statement that
are not so described in the Registration Statement, the Time of Sale
Information and the Prospectus and (ii) there are no statutes, regulations
or contracts or other documents that are required under the Securities Act
to be filed as exhibits to the Registration Statement or described in the
Registration Statement or the Prospectus that are not so filed as exhibits
to the Registration Statement or described in the Registration Statement,
the Time of Sale Information and the Prospectus. The statements set forth
in the Prospectus under the caption "Business--Legal Proceedings", insofar
as they purport to summarize the facts and status of pending or threatened
legal proceedings involving the Company or its subsidiaries, are true and
accurate in all material respects, and nothing has been omitted from such
statements which would make the same misleading in any material respect.
(t) Independent Accountants. Deloitte Touche Tohmatsu, which has
certified certain financial statements of the Company and its subsidiaries,
is an independent registered public accounting firm with respect to the
Company and its subsidiaries within the applicable rules and regulations
adopted by the Commission and the Public Company Accounting Oversight Board
(United States) and as required by the Securities Act.
(u) Title to Real and Personal Property. The Company and its
subsidiaries have good and marketable title in fee simple (in the case of
real property) to, or have valid rights to lease or otherwise use, all
items of real and personal property that are material to the respective
businesses of the Company and its subsidiaries, in each case free and clear
of all liens, encumbrances, claims and defects and imperfections of title
except those that (i) do not materially interfere with the use made and
proposed to be made of such property and buildings by the Company and its
subsidiaries, (ii) could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect or (iii) are disclosed in the
Registration Statement, the Time of Sale Information and the Prospectus.
(v) Title to Intellectual Property. The Company and its subsidiaries
own or possess adequate rights to use all material patents, patent
applications, trademarks, service marks, trade names, trademark
registrations, service ▇▇▇▇ registrations, copyrights, licenses and
know-how (including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures) necessary
14
for the conduct of their respective businesses; and, to the knowledge of
the Company after due inquiry, the conduct of their respective businesses
will not conflict in any material respect with any such rights of others,
and the Company and its subsidiaries have not received any notice of any
claim of infringement or conflict with any such rights of others, except
where such conflict, claim or infringement would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse
Effect.
(w) No Undisclosed Relationships. No relationship, direct or indirect,
exists between or among the Company or any of its subsidiaries, on the one
hand, and the directors, officers, shareholders, customers or suppliers of
the Company or any of its subsidiaries, on the other, that is required by
the Securities Act to be described in the Registration Statement and the
Prospectus and that is not so described in such documents and in the Time
of Sale Information.
(x) Investment Company Act. The Company is not, and after giving
effect to the offering and sale of the Shares and ADSs and the application
of the proceeds thereof as described in the Registration Statement, the
Time of Sale Information and the Prospectus will not be, required to
register as an "investment company" or an entity "controlled" by an
"investment company" within the meaning of the Investment Company Act of
1940, as amended, and the rules and regulations of the Commission
thereunder (collectively, "Investment Company Act").
(y) Taxes. The Company and its subsidiaries have paid all taxes
required to be paid and filed with all appropriate taxing authorities all
income, franchise or other tax returns required to be filed through the
date hereof, except where the failure to do so would not reasonably be
expected, individually or in the aggregate, have a Material Adverse Effect;
and except as otherwise disclosed in the Registration Statement, the Time
of Sale Information and the Prospectus, there is no tax deficiency that has
been, or could reasonably be expected to be, asserted against the Company
or any of its subsidiaries or any of their respective properties or assets.
(z) Licenses and Permits. Except as disclosed in the Registration
Statement, the Time of Sale Information and the Prospectus, (i) the Company
and its subsidiaries possess all licenses, certificates, permits and other
authorizations issued by, and have made all declarations and filings with,
the appropriate domestic or foreign governmental or regulatory authorities
that are necessary for the ownership or lease of their respective
properties or the conduct of their respective businesses as described in
the Registration Statement, the Time of Sale Information and the
Prospectus; (ii) the Company and its subsidiaries are each in compliance in
all material respects with the terms and conditions of all
15
such licenses, consents, certificates, authorizations, approvals, orders
and permits; (iii) all of such licenses, consents, certificates,
authorizations, approvals, orders and permits are valid and in full force
and effect; (iv) none of such licenses, consents, certificates,
authorizations, approvals, orders and permits contains any materially
burdensome restrictions or conditions not described in the Prospectus; and
(v) neither the Company nor any of its subsidiaries has received notice of
any revocation or modification of any such license, certificate, permit or
authorization or has any reason to believe that any such license,
certificate, permit or authorization will not be renewed in the ordinary
course.
(aa) No Labor Disputes. No labor disturbance by or dispute with
employees of the Company or any of its subsidiaries exists or, to the
knowledge of the Company after due inquiry, is contemplated or threatened
and the Company is not aware of any existing or imminent labor disturbance
by, or dispute with, the employees of any of its or its subsidiaries'
principal suppliers, contractors or customers, except as would not
reasonably be expected to have a Material Adverse Effect.
(bb) Compliance with Environmental Laws. (i) The Company and its
subsidiaries (x) are in compliance with any and all applicable federal,
state, local and foreign laws, rules, regulations, requirements, decisions
and orders relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants (collectively, "Environmental Laws"); (y) have received and
are in compliance with all permits, licenses, certificates or other
authorizations or approvals required of them under applicable Environmental
Laws to conduct their respective businesses; and (z) have not received
notice of any actual or potential liability for the investigation or
remediation of any disposal or release of hazardous or toxic substances or
wastes, pollutants or contaminants, and (ii) there are no costs or
liabilities associated with Environmental Laws (including, without
limitation, any capital or operating expenditures required for clean-up,
closure of properties or compliance with Environmental Laws or any permit,
license or approval, any related constraints on operating activities and
any potential liabilities to third parties) of or relating to the Company
or its subsidiaries, except in the case of each of clauses (i)(x) and
(i)(y) above, for any failure to comply or failure to receive required
permits, licenses, certificates or other authorizations or approvals as
would not, individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect.
(cc) Disclosure Controls. The Company and its subsidiaries maintain a
system of "disclosure controls and procedures" (as defined in Rule
13a-15(e) of the Exchange Act) that is designed to ensure that
16
information required to be disclosed by the Company in reports that it
files or submits under the Exchange Act is recorded, processed, summarized
and reported within the time periods specified in the Commission's rules
and forms, including controls and procedures designed to ensure that such
information is accumulated and communicated to the Company's management as
appropriate to allow timely decisions regarding required disclosure.
(dd) Accounting Controls. Except as disclosed in the Registration
Statement, the Time of Sale Information and the Prospectus, there are no
material weaknesses in the Company's internal controls.
(ee) No Unlawful Payments. Neither the Company nor any of its
subsidiaries nor, to the knowledge of the Company after due inquiry, any
director, officer, agent, employee or other person associated with or
acting on behalf of the Company or any of its subsidiaries has (i) used or
authorized any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expense relating to political activity;
(ii) made or authorized any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds;
(iii) violated or is in violation of any provision of the Foreign Corrupt
Practices Act of 1977; or (iv) made or authorized any bribe, rebate,
payoff, influence payment, kickback or other unlawful payment.
(ff) Compliance with Money Laundering Laws. The operations of the
Company and its subsidiaries are and have been conducted at all times in
compliance with applicable financial recordkeeping and reporting
requirements of the Currency and Foreign Transactions Reporting Act of
1970, as amended, the money laundering statutes of all jurisdictions, the
rules and regulations thereunder and any related or similar rules,
regulations or guidelines, issued, administered or enforced by any
governmental agency (collectively, the "Money Laundering Laws") and no
action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company or any of its
subsidiaries with respect to the Money Laundering Laws is pending or
threatened.
(gg) Compliance with OFAC. None of the Company, or, to the knowledge
of the Company after due inquiry, any of its subsidiaries or any director,
officer, agent, employee or affiliate of the Company or any of its
subsidiaries is currently subject to any U.S. sanctions administered by the
Office of Foreign Assets Control of the U.S. Department of the Treasury
("OFAC"). The Company will not directly or indirectly use the proceeds of
the offering of the Shares hereunder, or lend, contribute or otherwise make
available such proceeds to any subsidiary, joint venture partner or
17
other person or entity, for the purpose of financing the activities of any
person currently subject to any U.S. sanctions administered by OFAC.
Neither the execution of this Agreement nor the performance of any
transactions contemplated herein would cause the Company or any of its
subsidiaries, any of the Underwriters or any of their affiliates (as
defined in Rule 501(b) of Regulation D under the Securities Act), or any of
the Company's or the Underwriters' advisors to violate any U.S. sanctions
administered by OFAC applicable to such person, except as would not
reasonably be expected to have a Material Adverse Effect.
(hh) No Restrictions on Subsidiaries. No subsidiary of the Company is
currently prohibited, directly or indirectly, under any agreement or other
instrument to which it is a party or is subject, from paying any dividends
to the Company, from making any other distribution on such subsidiary's
capital stock, from repaying to the Company any loans or advances to such
subsidiary from the Company or from transferring any of such subsidiary's
properties or assets to the Company or any other subsidiary of the Company.
(i) All dividends and other distributions declared and payable on the
shares in the capital of Upper Step Holdings Limited, Accord Group
Investments Limited and Xinhua Finance Advertising Limited may under the
current laws and regulations of the British Virgin Islands be paid to the
Company, and all such dividends and other distributions will not be subject
to withholding or other taxes under the laws and regulations of the British
Virgin Islands and are otherwise free and clear of any other tax,
withholding or deduction in the British Virgin Islands and without the
necessity of obtaining any Governmental Authorization in the British Virgin
Islands. All such dividends and other distributions may be converted into
foreign currency that may be freely transferred out of the British
Virgin Islands. (ii) All dividends and other distributions declared and
payable on the shares in the capital of EconWorld Media Limited may under
the current laws and regulations of Hong Kong be paid to the Company, and
all such dividends and other distributions will not be subject to
withholding or other taxes under the laws and regulations of Hong Kong and
are otherwise free and clear of any other tax, withholding or deduction in
Hong Kong and without the necessity of obtaining any Governmental
Authorization in Hong Kong. All such dividends and other distributions may
be converted into foreign currency that may be freely transferred out of
Hong Kong.
(ii) No Broker's Fees. Neither the Company nor any of its subsidiaries
is a party to any contract, agreement or understanding with any person
(other than this Agreement), including with ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and Sino
Investment Holdings Limited, that would give rise to a valid claim against
the Company or any of its subsidiaries or any Underwriter for a
18
brokerage commission, finder's fee or like payment in connection with the
offering and sale of the Shares.
(jj) No Registration Rights. Except as disclosed in the Registration
Statement, the Time of Sale Information and the Prospectus, there are no
contracts, agreements or understandings between the Company and any person
granting such person the right to require the Company to file a
registration statement under the Securities Act with respect to any
securities of the Company owned or to be owned by such person or to require
the Company to include such securities in the securities registered
pursuant to the Registration Statement, the ADS Registration Statement or
in any securities being registered pursuant to any other registration
statement filed by the Company under the Securities Act.
(kk) No Stabilization. The Company has not taken, directly or
indirectly, any action designed to or that could reasonably be expected to
cause or result in any stabilization or manipulation of the price of the
Shares.
(ll) Forward-Looking Statements. No forward-looking statement (within
the meaning of Section 27A of the Securities Act and Section 21E of the
Exchange Act) contained in the Registration Statement, the Time of Sale
Information and the Prospectus has been made or reaffirmed without a
reasonable basis or has been disclosed other than in good faith.
(mm) Statistical and Market Data. Nothing has come to the attention of
the Company that has caused the Company to believe that the statistical and
market-related data included in the Registration Statement, the Time of
Sale Information and the Prospectus is not based on or derived from sources
that are reliable and accurate in all material respects and the Company has
obtained the written consent to the use of such data from such sources to
the extent required.
(nn) ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act. There is and has been no failure on the part
of the Company or any of the Company's directors or officers, in their
capacities as such, to comply, to the extent applicable, with any provision
of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the rules and regulations promulgated
in connection therewith (the "▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act"), including Section 402
related to loans.
(oo) Status under the Securities Act. The Company is not an ineligible
issuer as defined under the Securities Act, at the times specified in the
Securities Act in connection with the offering of the Shares. The
19
Company has paid the registration fee for this offering pursuant to Rule
456(b)(1) under the Securities Act or will pay such fees within the time
period required by such rule (without giving effect to the proviso therein)
and in any event prior to the Closing Date.
(pp) Restructuring Agreements. (i) The description of each of the
agreements described under the caption "Corporate Structure----Our
Corporate Structure and Contractual Arrangements" in the Prospectus
(collectively, the "Restructuring Agreements") to which certain
subsidiaries of the Company (the "PRC Subsidiaries"), the companies named
in Schedule 4 hereto (the "PRC VIEs") and the shareholders of the PRC VIEs,
are parties is true and correct in all material respects. The PRC
Subsidiaries, the PRC VIEs and the shareholders of the PRC VIEs have the
legal right, power and authority (corporate and other, as the case may be)
to enter into and perform their respective obligations under the
Restructuring Agreements and have taken all necessary corporate action to
authorize the execution, delivery and performance of, and have authorized,
executed and delivered, each of the Restructuring Agreements to which such
PRC Subsidiaries, PRC VIEs and shareholders of the PRC VIEs are parties;
and each of the Restructuring Agreements constitutes a valid and legally
binding obligation of the parties thereto, enforceable in accordance with
its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws of
general applicability affecting creditors' rights or by equitable
principles relating to enforceability (regardless of whether such
enforceability is considered in equity or at law).
(ii) The execution and delivery by the PRC Subsidiaries, the PRC
VIEs or the shareholders of the PRC VIEs of, and the performance by
the PRC Subsidiaries, the PRC VIEs or the shareholders of the PRC VIEs
of their respective obligations under, each of the Restructuring
Agreements and the consummation by the PRC Subsidiaries of the
transactions contemplated therein will not: (A) conflict with or
result in a breach or violation of any of the terms or provisions of,
or constitute a default under, any indenture, mortgage, deed of trust,
lease, loan agreement or other agreement or instrument to which the
Company, the PRC Subsidiaries, the PRC VIEs or the shareholders of the
PRC VIEs, as the case may be, are a party or by which the Company, the
PRC Subsidiaries, the PRC VIEs or the shareholders of the PRC VIEs are
bound or to which any of the properties or assets of the Company, the
PRC Subsidiaries, the PRC VIEs or the shareholders of the PRC VIEs are
subject; (B) result in any violation of the provisions of the articles
of association or business license of the Company, the PRC
20
Subsidiaries or the PRC VIEs, as the case may be; and (C) will not
result in any violation of any PRC statute or any order, rule or
regulation of any PRC governmental agency having jurisdiction over the
Company, the PRC Subsidiaries, the PRC VIEs or the shareholders of the
PRC VIEs or any of their properties, except in the case of clauses (A)
and (C) above, for any such conflict, breach, default or violation
that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(iii) Except for the failure to register the pledge under certain
equity pledge agreements with the relevant registration authorities,
which has been disclosed in the Prospectus, each of the Restructuring
Agreements is in proper legal form under the laws of the PRC for the
enforcement thereof against either the PRC Subsidiaries, the PRC VIEs
or the shareholders of the PRC VIEs, as the case may be, in the PRC
without further action by the PRC Subsidiaries, the PRC VIEs or the
shareholders of the PRC VIEs, as the case may be; and to ensure the
legality, validity, enforceability or admissibility in evidence of
each of the Restructuring Agreements in the PRC, it is not necessary
that any such document be filed or recorded with any court or other
authority in the PRC or that any stamp or similar tax be paid on or in
respect of any of the Restructuring Agreements, provided, however, any
exercise by any PRC Subsidiary of its rights under certain equity
purchase option agreement will be subject to the approval or
registration of certain PRC governmental agencies under applicable PRC
laws.
(iv) The Company possesses, directly or indirectly, the power to
direct or cause the direction of the management and policies of such
PRC VIEs, through its rights to authorize representatives of the
shareholders of the PRC VIEs to exercise their voting rights.
(qq) Dividends. All dividends and other distributions declared and
payable on the Shares of the Company may under the current laws and
regulations of the Cayman Islands be paid to the Depositary in U.S. dollars
or any other currency that may be converted into foreign currency, which
may be freely transferred out of the Cayman Islands, and all such dividends
and other distributions will not be subject to withholding or other taxes
under the laws and regulations of the Cayman Islands and are otherwise free
and clear of any other tax, withholding or deduction in the Cayman Islands
and without the necessity of obtaining any consents, approvals,
authorizations, permissions, orders, registrations, filings,
21
exemptions, waivers, endorsements, licenses, annual inspections, clearances
and qualifications of a governmental agency having jurisdiction over the
Company or any of its subsidiaries or any of their properties or any stock
exchange authorities (hereinafter referred to as "Governmental
Authorizations") in the Cayman Islands.
(rr) Nasdaq Approval. ADSs have been approved for listing on Nasdaq
Global Market, subject to notice of issuance.
(ss) No Commodity Contracts. None of the Company or any of its
subsidiaries is engaged in any trading activities involving commodity
contracts or other trading contracts which are not currently traded on a
securities or commodities exchange and for which the market value cannot be
determined.
(tt) Transfer Taxes. Other than as set forth in the Registration
Statement, the Time of Sale Information and 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 Underwriters
to the government of the Cayman Islands, the British Virgin Islands or the
PRC, or any political subdivision or taxing authority thereof or therein in
connection with (i) the deposit with the Depositary of Shares by the
Company and the Selling Shareholders against the issuance of ADRs
evidencing ADSs, (ii) the sale and delivery by the Company and the Selling
Shareholders of the Shares and the ADSs to or for the respective accounts
of the several Underwriters or (iii) the sale and delivery outside the
Cayman Islands by the several Underwriters of the Shares and ADSs to the
initial purchasers thereof in the manner contemplated by this Agreement.
(uu) No Sale, Issuance or Distribution of Shares. Except as
disclosed in the Registration Statement, the Time of Sale Information and
the Prospectus, the Company has not sold, issued or distributed any shares
during the six-month period preceding the date hereof, including any sales
pursuant to Rule 144A, Regulation D or Regulation S of the Securities Act,
other than shares issued pursuant to employee benefit plans, qualified
stock option plans or other employee compensation plans or pursuant to
outstanding options, rights or warrants.
(vv) Foreign Private Issuer. The Company is a "foreign
confidentialinformationexposureTagType5private issuer" within the meaning
of Rule 405 under the Securities Act.
(ww) Transaction Agreements under Cayman Law. Each of this Agreement
and the Deposit Agreement is in proper form to be enforceable against the
Company in the Cayman Islands in accordance with its terms;
22
to ensure the legality, validity, enforceability or admissibility into
evidence in the Cayman Islands of this Agreement or the Deposit Agreement,
it is not necessary that this Agreement or the Deposit Agreement be filed
or recorded with any court or other authority in the Cayman Islands (other
than court filings in the normal course of proceedings) or that any stamp
or similar tax (other than nominal stamp duty if this Agreement and the
Deposit Agreement are executed in or brought into the Cayman Islands) in
the Cayman Islands be paid on or in respect of this Agreement, the Deposit
Agreement or any other documents to be furnished hereunder.
(xx) PFIC. The Company believes that it should not be treated as a
passive foreign investment company, as defined under Section 1297 of the
Internal Revenue Code of 1986, as amended, for its current taxable year
ending December 31, 2007 or for the foreseeable future.
(yy) No Undisclosed Material Indebtedness or Arrangements. Except as
disclosed in the Registration Statement, the Time of Sale Information and
the Prospectus, no material indebtedness (actual or contingent) and no
material contract or arrangement is outstanding between the Company or any
of its subsidiaries and any director or executive officer of the Company or
any of its subsidiaries or any person connected with such director or
executive officer (including his/her spouse, infant children, any company
or undertaking in which he/she holds a controlling interest); there are no
material relationships or transactions between the Company or any of its
subsidiaries on the one hand and its affiliates, officers and directors or
their shareholders, customers or suppliers on the other hand, which,
although required to be disclosed, are not disclosed in the Prospectus.
(zz) No Undisclosed Benefits. Except as disclosed in the Registration
Statement, the Time of Sale Information and the Prospectus, the Company has
no material obligation to provide retirement, death or disability benefits
to any of the present or past employees of the Company or any of its
subsidiaries, or to any other person.
(aaa) Critical Accounting Policies. The section entitled "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Critical Accounting Policies" in the Prospectus truly,
accurately and completely in all material respects describes: (i)
accounting policies which the Company believes are the most important in
the portrayal of the Company's financial condition and results of
operations and which require management's most difficult, subjective or
complex judgments ("Critical Accounting Policies"); (ii) judgments and
uncertainties affecting the application of Critical Accounting Policies;
and
23
(iii) the likelihood that materially different amounts would be reported
under different conditions or using different assumptions; and the
Company's board of directors and management have reviewed and agreed with
the selection, application and disclosure of Critical Accounting Policies
and have consulted with the Company's independent registered public
accounting firm with regard to such disclosure.
(bbb) Liquidity and Capital Resources. The section entitled
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources" in the Prospectus accurately
and fully describes: (i) all material trends, demands, commitments, events,
uncertainties and risks, and the potential effects thereof, that the
Company believes would materially affect liquidity and are reasonably
likely to occur. The section entitled "Management's Discussion and Analysis
of Financial Condition and Results of Operations--Off-balance sheet
commitments and arrangements" in the Prospectus accurately and fully
describes in all material respects all off-balance sheet transactions,
arrangements and obligations, including, without limitation, relationships
with unconsolidated entities that are contractually limited to narrow
activities that facilitate the transfer of or access to assets by the
Company or its subsidiaries, such as structured finance entities and
special purpose entities (collectively, "off-balance sheet arrangements")
that are reasonably likely to have a material effect on the liquidity of
the Company or its subsidiaries or the availability thereof or the
requirements of the Company or its subsidiaries for capital resources. As
used herein in this subsection the phrase "reasonably likely" refers to a
disclosure threshold lower than "more likely than not".
(ccc) Action against the Company. Under the laws of the Cayman
Islands, no holder of ADRs evidencing ADSs issued pursuant to the Deposit
Agreement shall be entitled, except under the terms of the Deposit
Agreement, to seek enforcement of its rights through the Depositary or its
nominee registered as representative of the holders of the ADRs in a direct
suit, action or proceeding against the Company.
(ddd) No Reduction from Amounts Payable. All amounts payable by the
Company under this Agreement shall be made free and clear of and without
deduction for or on account of any taxes imposed, assessed or levied by the
Cayman Islands or any authority thereof or therein, nor are any taxes
imposed in the Cayman Islands on, or by virtue of the execution or delivery
of, such documents.
(eee) Loan Arrangements. The Company has provided or made available to
you true, correct, and complete copies of all documentation pertaining to
any extension of credit in the form of a personal loan made,
24
directly of indirectly, by the Company or any of its subsidiaries to any
director or executive officer of the Company; and since December 31, 2006,
the Company has not, directly or indirectly, including through any of its
subsidiaries: (i) extended credit, arranged to extend credit, or renewed
any extension of credit, in the form of a personal loan, to or for any
director or executive officer of the Company, or to or for any family
member or affiliate of any director or executive officer of the Company; or
(ii) made any material modification, including any renewal thereof, to any
term of any personal loan to any director or executive officer of the
Company, or any family member or affiliate of any director or executive
officer, which loan was outstanding on December 31, 2006, in either case,
that (x) is outstanding on the date hereof and (y) constitutes a violation
of any applicable law or regulation.
(fff) Choice of Law. The courts of the Cayman Islands recognize and
give effect to the choice of law provisions set forth in Section 14 hereof
and will enforce judgments of U.S. courts obtained against the Company in
connection with this Agreement under which a sum of money is payable (other
than a sum of money payable in respect of multiple damages, taxes or other
charges of a like nature or in respect of a fine or other penalty) and
would give a judgment based thereon provided that (a) such courts had
proper jurisdiction over the parties subject to such judgment; (b) such
courts did not contravene the rules of natural justice of the Cayman
Islands; (c) such judgment was not obtained by fraud; (d) the enforcement
of the judgment would not be contrary to the public policy of the Cayman
Islands; (e) no new admissible evidence relevant to the action is submitted
prior to the rendering of the judgment by the courts of the Cayman Islands;
and (f) there is due compliance with the correct procedures under the laws
of the Cayman Islands.
(ggg) Corporate Structure and Related Party Transactions. The
descriptions of the events and transactions set forth in the Prospectus
under the captions "Corporate Structure", "Arrangements with Partners and
Suppliers" and "Related Party Transactions" are true, accurate, and
complete in all material respects.
(hhh) Merger or Consolidations. Except as disclosed in the
Registration Statement, the Time of Sale Information and the Prospectus,
neither the Company nor any of its subsidiaries has entered into any
memorandum of understanding, letter of intent, definitive agreement or any
similar agreements with respect to a merger or consolidation or a material
acquisition or disposition of assets, technologies, business units or
businesses.
25
(iii) Directed Share Program. (i) The Registration Statement, the Time
of Sale Information and the Prospectus comply, and any further amendments
or supplements thereto will comply, with any applicable laws or regulations
of foreign jurisdictions in which the Prospectus or any Preliminary
Prospectus, as amended or supplemented, if applicable, are distributed in
connection with the Directed Share Program; (ii) no approval,
authorization, consent or order of or filing with any governmental or
regulatory commission, board, body, authority or agency, other than those
heretofore obtained, is required in connection with the offering of the
Reserved Shares in any jurisdiction where the Reserved ADSs are being
offered; and (iii) the Company has not offered, or caused the Underwriters
to offer, any offered Reserved ADSs to any person pursuant to the Directed
Share Program with the specific intent to unlawfully influence (A) a
customer or supplier of the Company to alter the customer's or supplier's
level or type of business with the Company or (B) a trade journalist or
publication to write or publish favorable information about the Company or
its products or services.
(jjj) Termination of Contracts Described in the Time of Sale
Information. Neither the Company nor any of its subsidiaries has sent or
received any communication regarding termination of, or intent not to
renew, any of the material contracts or agreements referred to or described
in the Preliminary Prospectus, the Time of Sale Information, or any Issuer
Free Writing Prospectus, or referred to or described in, or filed as an
exhibit to, the Registration Statement, and no such termination or
non-renewal has been threatened by the Company or any of its subsidiaries,
to the knowledge of the Company after due inquiry, by any other party to
any such contract or agreement.
(kkk) Personal Liability of Shareholders and ADS holders. No holder of
any of the Shares or the ADSs after the consummation of the transactions
contemplated by this Agreement or the Deposit Agreement is or will be
subject to any personal liability in respect of any liability of the
Company by virtue only of its holding of any such Shares or ADSs; and
except as set forth in the Registration Statement, the Time of Sale
Information and the Prospectus, there are no limitations on the rights of
holders of the Shares or the ADSs who are not PRC residents to hold, vote
or transfer their securities.
(lll) Compliance with PRC Regulations. Except as disclosed in the
Registration Statement, the Time of Sale Information and the Prospectus,
each of the Company and its subsidiaries that were incorporated outside of
the PRC has taken, or is in the process of taking, all reasonable steps to
comply with, and to ensure compliance by each of its shareholders, option
holders, directors, officers, employees and
26
Directed Share Participants that is, or is directly or indirectly owned or
controlled by, a PRC resident or citizen with any applicable rules and
regulations of the relevant PRC government agencies (including but not
limited to the Ministry of Commerce, the National Development and Reform
Commission and the State Administration of Foreign Exchange) relating to
overseas investment by PRC residents and citizens (the "PRC Overseas
Investment and Listing Regulations"), including, without limitation,
requesting each shareholder, option holder, director, officer, employee and
Participant that is, or is directly or indirectly owned or controlled by, a
PRC resident or citizen to complete any registration and other procedures
required under applicable PRC Overseas Investment and Listing Regulations.
(mmm) PRC Mergers and Acquisitions Rules. The Company is aware of and
has been advised as to the content of the Rules on Mergers and Acquisitions
of Domestic Enterprises by Foreign Investors (the "PRC Mergers and
Acquisition Rules") jointly promulgated by the Ministry of Commerce, the
State Assets Supervision and Administration Commission, the State Tax
Administration, the State Administration of Industry and Commerce, the
China Securities Regulatory Commission (the "CSRC") and the State
Administration of Foreign Exchange of the PRC on August 8, 2006, including
the relevant provisions thereof which purport to require offshore special
purpose entities formed for listing purposes and controlled directly or
indirectly by PRC companies or individuals, to obtain the approval of the
CSRC prior to the listing and trading of their securities on an overseas
stock exchange. The Company has received legal advice specifically with
respect to the PRC Mergers and Acquisitions Rules from its PRC counsel and
the Company understands such legal advice. The Company has fully
communicated such legal advice from its PRC counsel to each of its
directors who signed the Registration Statement and each director has
confirmed that he or she understands such legal advice. Except as disclosed
in the Registration Statement, the Time of Sale Information and the
Prospectus, the issuance and sale of the Shares and the ADSs, the listing
and trading of the ADSs on Nasdaq Global Market or the consummation of the
transactions contemplated by this Agreement and the Deposit Agreement is
not and will not be, as of the date hereof or at Closing Date or the
Additional Closing Date, as the case may be, adversely affected by the PRC
Mergers and Acquisitions Rules or any official clarifications, guidance,
interpretations or implementation rules in connection with or related to
the PRC Mergers and Acquisitions Rules (collectively, the "PRC Mergers and
Acquisitions Rules and Related Clarifications").
(nnn) Composition of the Board of Directors. Except as disclosed in
the Registration Statement, the Time of Sale Information and
27
the Prospectus, since the filing of the Registration Statement with the
Commission, there has been no change to the composition of the board of
directors of the Company or the composition of the executive officers of
the Company.
(ooo) Residence and Domicile of Underwriters. None of the Underwriters
will be deemed to be resident, domiciled, carrying on business or subject
to taxation in the Cayman Islands, the British Virgin Islands or the PRC
solely by reason of its execution, delivery, performance or enforcement of,
or the consummation of any transaction contemplated by, this Agreement, the
Deposit Agreement or any other document furnished hereunder or thereunder.
(ppp) Compliance with Tax Exemption Laws and Regulations. Each of the
Company's subsidiaries is in compliance with all material requirements
under all applicable PRC laws and regulations to qualify for their
exemptions from enterprise income tax (the "Tax Exemptions") as described
in the Prospectus, and the actual operations and business activities of
each of the Company's subsidiaries are sufficient to meet the
qualifications for their Tax Exemptions. No submissions made to any PRC
government authority in connection with obtaining their Tax Exemptions
contained any misstatement or omission that would have affected the
granting of their Tax Exemptions. None of the Company's subsidiaries has
received notice of any deficiency in their respective applications for
their Tax Exemptions, and the Company is not aware, to their best
knowledge, of any reason why any of the Company's subsidiaries might not
qualify for, or be in compliance with the requirements for, their Tax
Exemptions.
(qqq) Affiliation. To the Company's knowledge, there are no
affiliations or associations between (i) any member of the NASD and (ii)
the Company or any of the Company's officers, directors or 5% or greater
security holders or any beneficial owner of the Company's unregistered
equity securities that were acquired at any time on or after the 180th day
immediately preceding the date the Registration Statement was initially
filed with the Commission, except as disclosed in the Registration
Statement (excluding the exhibits thereto), the Time of Sale Information
and the Prospectus.
Each Selling Shareholder severally and not jointly represents and warrants
as to and in respect of himself or itself to, and agrees with, each of the
Underwriters and the Company that:
(a) Organization and Good Standing. Such Selling Shareholder, if an
entity, has been duly organized and is validly existing as
28
a limited liability company or a limited partnership, as the case may be,
in good standing in its jurisdiction of formation.
(b) Due Authorization. All Governmental Authorizations required for
the deposit of the Shares being deposited by such Selling Shareholder with
the Depositary against issuance of the ADRs evidencing the ADSs to be
delivered at the Closing Date or the Additional Closing Date, as the case
may be, for the sale and delivery of the Shares and the ADSs to be sold by
such Selling Shareholder under this Agreement and for the execution and
delivery by such Selling Shareholder of this Agreement have been obtained
except for such Governmental Authorizations as may be required under state
securities or Blue Sky Laws; and such Selling Shareholder has full right,
power and authority (and, in the case of Patriarch Partners, limited
liability company power and authority) to enter into this Agreement and to
sell, assign, transfer and deliver the ADSs to be sold by such Selling
Shareholder under this Agreement.
(c) Custody Arrangement and Power of Attorney. Such Selling
Shareholder (other than Patriarch) has duly authorized, executed and
delivered a Custody Agreement (each, a "Custody Agreement"), in the form
heretofore furnished to you, and such Selling Shareholder (other than
Patriarch) has duly authorized, executed and delivered a Power of Attorney
(in the case of Patriarch Partners, a Limited Power of Attorney) (each, a
"Power of Attorney"), in the form heretofore furnished to you, or, in the
case of Patriarch, to JPMorgan Escrow Services (acting in the capacity as a
custodian under the custody Agreement), as custodian (the "Patriarch
Custodian").
(d) No Violation. The sale of the ADSs to be sold by such Selling
Shareholder hereunder, the deposit of the Shares by such Selling
Shareholder with the Depositary against issuance of the ADRs evidencing the
ADSs to be delivered by such Selling Shareholder at the Closing Date or
Additional Closing Date, as the case may be, and the compliance by such
Selling Shareholder with all of the provisions of this Agreement, its Power
of Attorney and its Custody Agreement and the consummation by such Selling
Shareholder of the transactions herein and therein contemplated will not
(i) 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 to which such Selling
Shareholder is a party or by which such Selling Shareholder is bound or to
which any of the property or assets of such Selling Shareholder is subject,
(ii) result in any violation of the provisions of the articles of
association, partnership agreement, or certificate of formation or limited
liability company agreement (or similar organization
29
instruments with different names) of such Selling Shareholder if such
Selling Shareholder is an entity, or (iii) result in any violation of any
statute or any order, rule or regulation of any governmental agency having
jurisdiction over such Selling Shareholder or the property of such Selling
Shareholder, except in the case of clauses (i) and (iii) above, for any
such breach, default or violation that would not, individually or in the
aggregate, have a material adverse effect on the ability of such Selling
Shareholder to consummate the transactions contemplated by this Agreement.
(e) Good and Valid Title. Such Selling Shareholder (other than
Patriarch) has, and immediately prior to the Closing Date or the Additional
Closing Date, as the case may be, such Selling Shareholder will have, good
and valid title to the Shares to be represented by the ADSs to be sold by
such Selling Shareholder hereunder at the Closing Date or the Additional
Closing Date, as the case may be (or, in the case of Patriarch Partners,
has, and immediately prior to the Closing Date or the Additional Closing
Date, as the case may be, will have, good and valid title to the Company's
convertible preferred shares, par value US$0.001 per share, that will upon
consummation of the sale of Firm ADSs or Optional ADSs, as the case may be,
convert into Common Shares that will be represented by ADSs to be sold by
Patriarch Partners hereunder on the Closing Date or Additional Closing
Date, as the case may be). Such Shares, convertible preferred shares or
Common Shares, as the case may be, shall be free and clear of all liens,
encumbrances, equities or claims (other than any restrictions on transfer
imposed by U.S. securities laws); and, upon delivery of the ADSs
representing such Shares and payment therefor pursuant hereto, good and
valid title to such ADSs in accordance with the Deposit Agreement, free and
clear of all liens, encumbrances, equities or claims (other than any
restrictions on transfer imposed by U.S. securities laws), will pass to the
several Underwriters.
(f) No Stabilization. Neither such Selling Shareholder nor any of its
controlled affiliates, nor any person acting on its or their behalf and at
their instruction has taken or will take, directly or indirectly, any
action which is designed to or which has constituted or which is reasonably
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
Shares or the ADSs; provided, however, that this representation and
warranty shall not apply to anything done or to be done by or on behalf of
the Underwriters.
(g) Preliminary Prospectus. To the extent (if at all) that any
statements or omissions made in any Preliminary Prospectus are made in
reliance upon and in conformity with written information furnished to the
Company by such Selling Shareholder expressly for use therein, such
30
Preliminary Prospectus, at the time of filing thereof, complied in all
material respects with the Securities Act and did not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
(h) Issuer Free Writing Prospectus. To the extent (if at all) that any
statement or omissions made in an Issuer Free Writing prospectus are made
in reliance upon and in conformity with written information furnished to
the Company by such Selling Shareholder expressly for use therein, such
Issuer Free Writing Prospectus complied in all material respects with the
Securities Act, has been filed in accordance with the Securities Act (to
the extent required thereby) and, when taken together with the Preliminary
Prospectus accompanying, or delivered prior to delivery of, such Issuer
Free Writing Prospectus, did not, and at the Closing Date and as of the
Additional Closing Date, as the case may be, will not, contain any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(i) Executive Officers. In the case of a Selling Shareholder who is
controlled by an executive officer or a director of the Company, such
Selling Shareholder has reviewed the Registration Statement, the Time of
Sale Information, the Prospectus and the representations and warranties of
the Company contained in Section 3 hereof and has no reason to believe that
such representations and warranties are not true or correct in all material
respects. It is understood and agreed that Patriarch Partners is not making
the foregoing representations and warranties.
(j) Validity of Agreement. This Agreement has been duly authorized,
executed and delivered by such Selling Shareholder.
(k) No Brokerage Commission. Other than this Agreement, there are no
contracts, agreements or understandings between such Selling Shareholder
and any person that would give rise to a valid claim against any
Underwriter for a brokerage commission, finder's fee or other like payment
in connection with the offer and sale of the Shares and the ADSs.
(l) Selling Shareholder Obligations. The Shares represented by the
certificates to be held in custody for such Selling Shareholder by the
Custodian for the Depositary pursuant to the Custody Agreement and the
Power of Attorney are subject to the interests of the Underwriters under
this Agreement; the arrangements made by such Selling Shareholder for such
custody and the appointment by such Selling Shareholder of the
Attorneys-in-Fact by the Power of Attorney are to that extent irrevocable;
31
the obligations of such Selling Shareholder under this Agreement shall not
be terminated by operation of law, whether by the death or incapacity of
any individual Selling Shareholder or, in the case of an estate or trust,
by the death or incapacity of any executor or trustee or the termination of
such estate or trust, or in the case of a partnership, limited liability
company or corporation, by the dissolution of such partnership, limited
liability company or corporation, or by the occurrence of any other event;
and if any individual Selling Shareholder or any such executor or trustee
should die or become incapacitated, or if any such estate or trust should
be terminated, or if any such partnership or corporation should be
dissolved, or if any other such event should occur, before the delivery of
the Shares hereunder, certificates representing the Shares shall be
delivered by or on behalf of such Selling Shareholder in accordance with
the terms and conditions of this Agreement, the Custody Agreement and the
Power of Attorney and actions taken by the Attorneys-in-Fact pursuant to
the Power of Attorney shall be as valid as if such death, incapacity,
termination, dissolution or other event had not occurred, regardless of
whether or not the Custodian, the Attorneys-in-Fact, or any of them, shall
have received notice of such death, incapacity, termination, dissolution or
other event. It is understood and agreed that Patriarch is not making the
foregoing representations and warranties in this paragraph (l).
(m) Transfer Form. A transfer form, duly endorsed in blank by such
Selling Shareholder, has been placed in custody with the Custodian for the
purpose of effecting delivery hereunder of such Selling Shareholder's
Shares underlying the ADSs to be sold under this Agreement, subject to the
terms of the Custody Agreement.
(n) No Affiliation with NASD Member. There are no affiliations or
associations between any member of the NASD and such Selling Stockholder,
except as disclosed in the Registration Statement (excluding the exhibits
thereto), the Time of Sale Information and the Prospectus or as set forth
in a questionnaire completed by such Selling Shareholder and delivered to
you prior to the date of this Agreement; none of the proceeds received by
such Selling Shareholder from the sale of the Shares to be sold by such
Selling Shareholder pursuant to this Agreement will be paid to a member of
the NASD or any affiliate of (or person "associated with," as such terms
are used in the Rules of the NASD) such member.
4. Further Agreements of the Company and the Selling Shareholders. The
Company covenants and agrees with each Underwriter that:
(a) Required Filings. The Company will file the final Prospectus with
the Commission within the time periods specified by Rule
32
424(b) and Rule 430A, 430B or 430C under the Securities Act, will file any
Issuer Free Writing Prospectus to the extent required by Rule 433 under the
Securities Act; and the Company will furnish copies of the Prospectus and
each Issuer Free Writing Prospectus (to the extent not previously
delivered) to the Underwriters in Hong Kong prior to 10:00 A.M., Hong Kong
time, on the business day next succeeding the date of this Agreement in
such quantities as the Representatives may reasonably request.
(b) Qualification of ADSs. The Company will promptly, from time to
time, take such action as you may reasonably request to qualify the ADSs
for offering and sale under the securities laws of such jurisdictions as
you may request and comply with such laws so as to permit the continuance
of sales and dealings therein in such jurisdictions for as long as may be
necessary to complete the distribution of the ADSs; provided that, in
connection therewith the Company shall not be required to qualify as a
foreign corporation or to file a general consent to service of process in
any jurisdiction.
(c) Delivery of Documents. The Company will deliver, without charge,
(i) to the Representatives, two signed copies of the Registration Statement
as originally filed and each amendment thereto, in each case including all
exhibits and consents filed therewith; and (ii) to each Underwriter, (A) a
conformed copy of the Registration Statement as originally filed and each
amendment thereto (without exhibits) and (B) during the Prospectus Delivery
Period (as defined below), as many copies of the Prospectus (including all
amendments and supplements thereto) and each Issuer Free Writing Prospectus
as the Representatives may reasonably request. As used herein, the term
"Prospectus Delivery Period" means such period of time after the first date
of the public offering of the Shares as in the opinion of counsel for the
Underwriters a prospectus relating to the Shares is required by law to be
delivered (or required to be delivered but for Rule 172 under the
Securities Act) in connection with sales of the Shares by any Underwriter
or dealer.
(d) Amendments or Supplements, Issuer Free Writing Prospectuses.
Before preparing, using, authorizing, approving, referring to or filing any
Issuer Free Writing Prospectus, and before filing any amendment or
supplement to the Registration Statement or the Prospectus, the Company
will furnish to the Representatives and counsel for the Underwriters a copy
of the proposed Issuer Free Writing Prospectus, amendment or supplement for
review and will not prepare, use, authorize, approve, refer to or file any
such Issuer Free Writing Prospectus or file any such proposed amendment or
supplement to which the Representatives reasonably object.
33
(e) Notice to the Representatives. The Company will advise the
Representatives promptly, and confirm such advice in writing, (i) when the
Registration Statement has become effective; (ii) when any amendment to the
Registration Statement has been filed or becomes effective; (iii) when any
supplement to the Prospectus or any Issuer Free Writing Prospectus or any
amendment to the Prospectus has been filed; (iv) of any request by the
Commission for any amendment to the Registration Statement or any amendment
or supplement to the Prospectus or the receipt of any comments from the
Commission relating to the Registration Statement or any other request by
the Commission for any additional information; (v) of the issuance by the
Commission of any order suspending the effectiveness of the Registration
Statement or preventing or suspending the use of any Preliminary Prospectus
or the Prospectus or the initiation or threatening of any proceeding for
that purpose or pursuant to Section 8A of the Securities Act; (vi) of the
occurrence of any event within the Prospectus Delivery Period as a result
of which the Prospectus, the Time of Sale Information or any Issuer Free
Writing Prospectus as then amended or supplemented would include any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in
the light of the circumstances existing when the Prospectus, the Time of
Sale Information or any such Issuer Free Writing Prospectus is delivered to
a purchaser, not misleading; and (vii) of the receipt by the Company of any
notice with respect to any suspension of the qualification of the Shares
for offer and sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose; and the Company will use its best efforts
to prevent the issuance of any such order suspending the effectiveness of
the Registration Statement, preventing or suspending the use of any
Preliminary Prospectus or the Prospectus or suspending any such
qualification of the Shares and, if any such order is issued, will obtain
as soon as possible the withdrawal thereof.
(f) Ongoing Compliance. (1) If during the Prospectus Delivery Period
(i) any event shall occur or condition shall exist as a result of which the
Prospectus as then amended or supplemented would include any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements therein, in
the light of the circumstances existing when the Prospectus is delivered to
a purchaser, not misleading or (ii) it is necessary to amend or supplement
the Prospectus to comply with law, the Company will immediately notify the
Underwriters thereof and forthwith prepare and, subject to paragraph (c)
above, file with the Commission and furnish to the Underwriters and to such
dealers as the Representatives may designate, such amendments or
supplements to the Prospectus as may be necessary
34
so that the statements in the Prospectus as so amended or supplemented will
not, in the light of the circumstances existing when the Prospectus is
delivered to a purchaser, be misleading or so that the Prospectus will
comply with law and (2) if at any time prior to the Closing Date (i) any
event shall occur or condition shall exist as a result of which the Time of
Sale Information as then amended or supplemented would include any untrue
statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the circumstances,
not misleading or (ii) it is necessary to amend or supplement the Time of
Sale Information to comply with law, the Company will immediately notify
the Underwriters thereof and forthwith prepare and, subject to paragraph
(c) above, file with the Commission (to the extent required) and furnish to
the Underwriters and to such dealers as the Representatives may designate,
such amendments or supplements to the Time of Sale Information as may be
necessary so that the statements in the Time of Sale Information as so
amended or supplemented will not, in the light of the circumstances, be
misleading or so that the Time of Sale Information will comply with law.
(g) Blue Sky Compliance. The Company will qualify the Shares for offer
and sale under the securities or Blue Sky laws of such jurisdictions as the
Representatives shall reasonably request and will continue such
qualifications in effect so long as required for distribution of the
Shares; provided that the Company shall not be required to (i) qualify as a
foreign corporation or other entity or as a dealer in securities in any
such jurisdiction where it would not otherwise be required to so qualify,
(ii) file any general consent to service of process in any such
jurisdiction or (iii) subject itself to taxation in any such jurisdiction
if it is not otherwise so subject.
(h) Earning Statement. The Company will make generally available to
its security holders and the Representatives as soon as practicable an
earning statement that satisfies the provisions of Section 11(a) of the
Securities Act and Rule 158 of the Commission promulgated thereunder
covering a period of at least twelve months beginning with the first fiscal
quarter of the Company occurring after the "effective date" (as defined in
Rule 158) of the Registration Statement.
(i) Lock-up. For a period of 180 days after the date hereof, the
Company will not (i) issue, offer, pledge, announce the intention to sell,
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, directly or indirectly, any
shares of Common Shares or ADSs, or any securities convertible into or
exercisable or exchangeable for Common Shares or ADSs, or (ii) enter into
any swap
35
or other agreement that transfers, in whole or in part, any of the economic
consequences of ownership of the Common Shares, whether any such
transaction described in clause (i) or (ii) above is to be settled by
delivery of Common Shares or ADSs or such other securities, in cash or
otherwise, without the prior written consents of the Representatives, other
than (a) the ADSs to be sold hereunder, (b) any Common Shares of the
Company issued upon the exercise of options granted under existing employee
stock option plans or employee stock option agreements, provided that
holders of not less than 75,000 options shall have executed "lock-up"
agreements, each substantially in the form of Exhibit A hereto, (c) any
Common Shares that are required to be issued by the Company pursuant to
existing employment contracts, (d) any granting of stock options or other
awards under existing employee stock option plans, provided that such
options or awards will not be issued during the 30-day period from the date
hereof and the vesting period shall be at least 180 days from the date
hereof, (e) the filing of any registration statement on Form S-8 relating
to any Common Shares that have been or may be issued pursuant to clause (b)
above, (f) the issuance of Common Shares upon conversion of the Company's
convertible preferred shares and loans to Patriarch Partners immediately
prior to or concurrent with the consummation of this offering, provided
that the Common Shares so issued are subject to the Selling Shareholders'
"lock-up" provision in Section 3(a) and, (g) the issuance of securities of
the Company in connection with acquisitions made by the Company, provided
that (x) the total value in the aggregate of such securities issued in
connection with acquisitions shall be less than US$25,000,000 (determined
based on the market value on the date of issuance), (y) such securities
will not be issued during the 30-day period from the date hereof, and (z)
the transferee of those securities shall agree to hold and not dispose of
those securities for a period of 180 days from the date hereof.
Notwithstanding the foregoing, if (1) during the last 17 days of the
180-day restricted period, the Company issues an earnings release or
material news or a material event relating to the Company occurs; or (2)
prior to the expiration of the 180-day restricted period, the Company
announces that it will release earnings results during the 16-day period
beginning on the last day of the 180-day period, the restrictions imposed
by this section shall continue to apply until the expiration of the 18-day
period beginning on the issuance of the earnings release or the occurrence
of the material news or material event.
(j) Use of Proceeds. The Company will apply the net proceeds from the
sale of the Shares as described in the Registration Statement, the Time of
Sale Information and the Prospectus under the heading "Use of Proceeds".
36
(k) No Stabilization. The Company will not take, directly or
indirectly, any action designed to or that could reasonably be expected to
cause or result in any stabilization or manipulation of the price of the
Shares.
(l) Exchange Listing. The Company will use its best efforts to list
the ADSs on the Nasdaq Global Market.
(m) Reports. During a period of five years from the effective date of
the Registration Statement, the Company will furnish to the
Representatives, as soon as they are available, copies of all reports or
other communications (financial or other) furnished to holders of the
Shares, and copies of any reports and financial statements furnished to or
filed with the Commission or any national securities exchange or automatic
quotation system; provided, however, that if such reports, communications
or financial statements are available on ▇▇▇▇▇ or on the Company's website,
the Company only needs to notify the Representatives as soon as they are
available.
(n) Record Retention. The Company will, pursuant to reasonable
procedures developed in good faith, retain copies of each Issuer Free
Writing Prospectus that is not filed with the Commission in accordance with
Rule 433 under the Securities Act.
(o) Filings. The Company will file with the Commission such reports as
may be required by Rule 463 under the Securities Act.
(p) Deposit of Shares. The Company will, prior to the Closing Date or
the Additional Closing Date, as the case may be, deposit the Shares with
the Depositary in accordance with the provisions of the Deposit Agreement
and otherwise comply with the Deposit Agreement so that ADRs evidencing
ADSs will be executed (and, if applicable, countersigned) and issued by the
Depositary against receipt of such Shares and delivered to the Underwriters
at the Closing Date or the Additional Closing Date, as the case may be.
(q) Nasdaq. The Company will include for quotation of the ADSs on
Nasdaq Global Market.
(r) 462(b) Registration Statement. If the Company elects to rely upon
Rule 462(b), the Company shall file a Rule 462(b) Registration Statement
with the Commission in compliance with Rule 462(b) by 10:00 P.M.,
Washington, D.C. time, on the date of this Agreement, and the Company shall
at the time of filing either pay to the Commission the filing fee for the
Rule 462(b) Registration Statement or give irrevocable
37
instructions for the payment of such fee pursuant to Rule 111(b) under the
Securities Act.
(s) License. Upon request of any Underwriter, the Company will
furnish, or cause to be furnished, to such Underwriter an electronic
version of the Company's trademarks, servicemarks and corporate logo for
use on the website, if any, operated by such Underwriter for the purpose of
facilitating the offering of the Shares (the "License"); provided, however,
that the License shall be used solely for the purpose described above, is
granted without any fee and may not be assigned or transferred.
(t) Transfer Taxes. The Company will indemnify and hold each
Underwriter harmless against any documentary, stamp or similar issuance or
transfer taxes, duties or fees and any transaction levies, commissions or
brokerage charges imposed by the government of the Cayman Islands, the
British Virgin Islands or the PRC, or any political subdivisions or tax
authority thereof or therein, including any interest and penalties, which
are or may be required to be paid in connection with the creation,
allotment, issuance, offer and distribution of the Shares and ADSs to be
sold by the Company and the execution and delivery of this Agreement and
the Deposit Agreement.
(u) NASD. In connection with the Directed Share Program, the Company
will ensure that the Reserved ADSs will be restricted to the extent
required by the NASD or the NASD rules from sale, transfer, assignment,
pledge or hypothecation for a period of three months following the date of
the effectiveness of the Registration Statement; the Underwriters will
notify the Company as to which Directed Share Participants will need to be
so restricted; the Company will direct the Depositary to place stop
transfer restrictions upon such securities for such period of time.
(v) Judgment and Approval. The Company agrees that (i) it will not
attempt to avoid any judgment obtained by it or denied to it in a court of
competent jurisdiction outside the Cayman Islands; (ii) following the
consummation of the offering of the ADSs, it will use its best efforts to
obtain and maintain all approvals required in the Cayman Islands to pay and
remit outside the Cayman Islands all dividends declared by the Company and
payable on the Common Shares, if any; and (iii) it will use its best
efforts to obtain and maintain all approvals required in the Cayman Islands
for the Company to acquire sufficient foreign exchange for the payment of
dividends, if any, and all other relevant purposes.
(w) Directed Share Compliance. The Company will cause each Directed
Share Participant that subscribes for US$100,000 or more of
38
Shares to execute a lock-up agreement in the form of Exhibit A hereto and
otherwise to cause the Reserved ADSs to be restricted from sale, transfer,
assignment, pledge or hypothecation to such extent as may be required by
the NASD and its rules, and to direct the transfer agent to place stop
transfer restrictions upon such Reserved ADSs during the lock-up period as
provided by the lock-up agreement or any such longer period of time as may
be required by the NASD and its rules; and to comply with all applicable
securities and other laws, rules and regulations in each jurisdiction in
which the Reserved ADSs are offered in connection with the Directed Share
Program.
(x) Forms W-8BEN. In order to document the Underwriters' compliance
with the reporting and withholding provisions of U.S. federal income tax
law with respect to the transactions herein contemplated, the Company will
deliver to you prior to or on the Closing Date a properly completed and
executed United States Treasury Department Forms W-8BEN or (or other
applicable form or statement specified by Treasury Department regulations).
(y) Compliance with SAFE Rules and Regulations. The Company shall
comply with the any applicable rules and regulations of the State
Administration of Foreign Exchange (the "SAFE Rules and Regulations"), and
shall use its reasonable efforts to cause its directors, officers, option
holders and shareholders named in the Company's share register that are, or
that are directly or indirectly owned or controlled by, PRC residents or
PRC citizens, to comply with the SAFE Rules and Regulations applicable to
them in connection with the Company, including, without limitation,
requesting each shareholder named in the Company's share register, option
holder, director and officer that is, or is directly or indirectly owned or
controlled by, a PRC resident or PRC citizen to complete any registration
and other procedures required under applicable SAFE Rules and Regulations.
(z) Breach of Selling Commitment. In the event that any Selling
Shareholder breaches its commitment to sell ADSs pursuant to the terms of
this Underwriting Agreement, the Company will sell to the Underwriters
additional ADSs in the same number as the ADSs committed to be sold by such
Selling Shareholder pursuant the terms of this Underwriting Agreement but
not sold by such Selling Shareholder.
(aa) Interim Financial Statements. The Company will furnish to you as
early as practicable prior to the time of purchase and any additional time
of purchase, as the case may be, but not later than two business days prior
thereto, a copy of the latest available unaudited interim and monthly
consolidated financial statements, if any, of the Company and
39
the Subsidiaries which have been read by the Company's independent
registered public accountants, as stated in their letter to be furnished
pursuant to Section y5(f) hereof.
(bb) Accounting Controls. The Company and its subsidiaries shall
undertake measures to implement, by the time such systems are required by
the Exchange Act, systems of "internal control over financial reporting"
(as defined in Rule 13a-15(f) of the Exchange Act) that comply with the
requirements of the Exchange Act and have been designed by, or under the
supervision of, their respective principal executive and principal
financial officers, or persons performing similar functions, to provide
reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles, including, but
not limited to internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
asset accountability; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv)
the recorded accountability for assets is compared with the existing assets
at reasonable intervals and appropriate action is taken with respect to any
differences.
(cc) Compliance with Laws. The Company will comply with all applicable
securities laws, rules and regulations, including, without limitation, the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act, and to require the Company's directors and executive
officers, in their capacities as such, to comply with all applicable
securities laws, rules and regulations, including, without limitation, the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act.
Each of the Selling Shareholders severally and not jointly agrees with each
of the Underwriters that as to itself:
(a) Lock-up. For a period of 180 days after the date of the initial
public offering of the ADSs, not to, without the prior written consent of
the Representatives, (1) offer, pledge, announce the intention to sell,
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, directly or indirectly, any
ADSs or Common Shares or any securities convertible into or exercisable or
exchangeable for ADSs or Common Shares (including without limitation,
Common Shares which may be deemed to be beneficially owned with sole
disposition power by the undersigned in accordance with the rules and
regulations of the Securities and Exchange Commission and
40
securities which may be issued upon exercise of a stock option or warrant)
or (2) enter into any swap or other agreement that transfers, in whole or
in part, any of the economic consequences of ownership of the ADSs or
Common Shares, whether any such transaction described in clause (1) or (2)
above is to be settled by delivery of ADSs or Common Shares or such other
securities, in cash or otherwise. The foregoing restriction shall not apply
to the exercise of a stock option or warrant, provided, however, in any
such case, it shall be a condition to the exercise of stock option or
warrant that the Common Shares, ADSs or other securities so acquired are
subject to this section. Notwithstanding the foregoing, if (1) during the
last 17 days of the 180-day restricted period, the Company issues an
earnings release or material news or a material event relating to the
Company occurs; or (2) prior to the expiration of the 180-day restricted
period, the Company announces that it will release earnings results during
the 16-day period beginning on the last day of the 180-day period, the
restrictions imposed by this section shall continue to apply until the
expiration of the 18-day period beginning on the issuance of the earnings
release or the occurrence of the material news or material event.
Notwithstanding anything to the contrary herein, a transfer of Common
Shares or ADSs to an affiliate of the undersigned, a person who is directly
(or indirectly through one or more intermediaries) a stockholder, partner,
member or other owner of a Selling Shareholder or a family member as
defined in Rule 701 under the Securities Act of 1933 will not be subject to
this section, provided, however, that in any such case, it shall be a
condition to the transfer that the transferee execute an agreement with the
Representatives stating that the transferee is receiving and holding such
Common Shares or ADSs subject to the provisions of this section.
(b) Deposit of Shares. Prior to the Closing Date or Additional Closing
Date, to deposit, or cause to be deposited on their behalf, Shares with the
Depositary in accordance with the provisions of the Deposit Agreement.
(c) No Stabilization. Not to (and to cause its controlled affiliates
not to) take, directly or indirectly, any action which is designed to or
which constitutes or which is reasonably expected to cause or result in
stabilization or manipulation of the price of any security of the Company
or facilitate the sale or resale of the Shares or the ADSs.
(d) Transfer Taxes. To indemnify and hold each Underwriter harmless
against any documentary, stamp or similar issuance or transfer taxes,
duties or fees and any transaction levies, commissions or brokerage charges
imposed by the government of the Cayman Islands, the British Virgin Islands
or the PRC, or any political subdivision or taxing authority
41
thereof or therein, including any interest and penalties, which are or may
be required to be paid in connection with the deposit by such Selling
Shareholder of the Shares with the Depositary; provided, however, that such
Selling Shareholder shall not be responsible for any such taxes, duties,
fees, levies or charges that arise as a result of the distribution of the
Shares or ADSs by any Underwriters in a manner other than that which is
customary in such transactions.
(e) Forms W-8BEN, W-8IMY and W-9. In order to document the
Underwriters' compliance with the information reporting and backup
withholding provisions of U.S. federal income tax law with respect to the
transactions herein contemplated, such Selling Shareholder will deliver to
you prior to or at the Closing Date (as hereinafter defined) a properly
completed and executed United States Treasury Department Forms W-8BEN,
W-IMY or W-9 (or other applicable form or statement specified by Treasury
Department regulations).
(f) Timely Update. To advise the underwriters promptly, and if
requested by the underwriters, to confirm such advice in writing, so long
as a prospectus is required by the Securities Act to be delivered (whether
physically or through compliance with Rule 172 under the Securities Act or
any similar rule) in connection with any sale of ADSs or Shares, of any
change in information in the Registration Statement, the Time of Sale
Information and the Prospectus, if any, relating to such Selling
Stockholder.
(g) Delivery of Agreements. Prior to or concurrently with the
execution and delivery of this Agreement, to execute and deliver to the
Underwriters the Power of Attorney, Custody Agreement and (other than with
respect to Patriarch Partners) Lock-Up Agreement.
5. Conditions of Underwriters' Obligations. The obligation of each
Underwriter to purchase the Firm ADSs on the Closing Date or the Optional ADSs
on the Additional Closing Date, as the case may be as provided herein, is
subject to the performance by the Company of its covenants and other obligations
hereunder and to the following additional conditions:
(a) Registration Compliance; No Stop Order. No order suspending the
effectiveness of the Registration Statement shall be in effect, and no
proceeding for such purpose or pursuant to Section 8A under the Securities
Act shall be pending before or threatened by the Commission; the Prospectus
and each Issuer Free Writing Prospectus shall have been timely filed with
the Commission under the Securities Act (in the case of an Issuer Free
Writing Prospectus, to the extent required by Rule 433 under the Securities
Act) and in accordance with Section 4(a)
42
hereof; and all requests by the Commission for additional information shall
have been complied with to the reasonable satisfaction of the
Representatives.
(b) Representations and Warranties. The representations and warranties
of the Company and the Selling Shareholders contained herein shall be true
and correct on the date hereof and on and as of the Closing Date or the
Additional Closing Date, as the case may be; and the statements of the
Company and its officers made in any certificates delivered pursuant to
this Agreement shall be true and correct on and as of the Closing Date or
the Additional Closing Date, as the case may be.
(c) No Downgrade. Subsequent to the execution and delivery of this
Agreement, (i) no downgrading shall have occurred in the rating accorded to
any securities or preferred stock of or guaranteed by the Company or any of
its subsidiaries by any "nationally recognized statistical rating
organization", as such term is defined by the Commission for purposes of
Rule 436(g)(2) under the Securities Act and (ii) no such organization shall
have publicly announced that it has under surveillance or review, or has
changed its outlook with respect to, its rating of any securities or
preferred stock of or guaranteed by the Company or any of its subsidiaries
(other than an announcement with positive implications of a possible
upgrading).
(d) No Material Adverse Change. No event or condition of a type
described in Section 3(h) hereof shall have occurred or shall exist, which
event or condition is not described in the Time of Sale Information
(excluding any amendment or supplement thereto) and the Prospectus
(excluding any amendment or supplement thereto) and the effect of which in
the judgment of the Representatives make it impracticable or inadvisable to
proceed with the offering, sale or delivery of the Shares on the Closing
Date or the Additional Closing Date, as the case may be, on the terms and
in the manner contemplated by this Agreement, the Time of Sale Information
and the Prospectus.
(e) Officer's Certificate. The Representatives shall have received on
and as of the Closing Date or the Additional Closing Date, as the case may
be, a certificate of the chief financial officer or chief accounting
officer of the Company and one additional senior executive officer of the
Company who is satisfactory to the Representatives (i) confirming that such
officers have carefully reviewed the Registration Statement, the Time of
Sale Information and the Prospectus and the representations set forth in
Sections 3(b) and 3(d) hereof are true and correct, (ii) confirming that
the other representations and warranties of the Company in this Agreement
are true and correct and that the Company has
43
complied with all agreements and satisfied all conditions on its part to be
performed or satisfied hereunder at or prior to such Closing Date and (iii)
to the effect set forth in paragraphs (a), (c) and (d) above.
(f) Comfort Letters. On the date of this Agreement and on the Closing
Date or the Additional Closing Date, as the case may be, Deloitte Touche
Tohmatsu shall have furnished to the Representatives, at the request of the
Company, letters, dated the respective dates of delivery thereof and
addressed to the Underwriters, in form and substance reasonably
satisfactory to the Representatives, containing statements and information
of the type customarily included in accountants' "comfort letters" to
underwriters with respect to the financial statements and certain financial
information contained in the Registration Statement, the Time of Sale
Information and the Prospectus; provided that the letter delivered
on the Closing Date or the Additional Closing Date, as the case may be,
shall use a "cut-off" date no more than three business days prior to such
Closing Date or such Additional Closing Date, as the case may be.
(g) Opinion of United States Counsel for the Company and the Selling
Shareholders. The Representatives shall have received on and as of the
Closing Date or the Additional Closing Date, as the case may be, an opinion
of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, counsel for the Company and Dragon Era Group and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Family Trust, with respect to such matters as the
Representatives may reasonably request and in form and substance
satisfactory to the Representatives, and such counsel shall have received
such documents and information as they may reasonably request to enable
them to pass upon such matters.
(h) Opinion of United States Counsel for Patriarch Fund. The
Representatives shall have received on and as of the Closing Date or the
Additional Closing Date, as the case may be, an opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
counsel for Patriarch Fund, with respect to such matters as the
Representatives may reasonably request and in form and substance
satisfactory to the Representatives, and such counsel shall have received
such documents and information as they may reasonably request to enable
them to pass upon such matters.
(i) Opinion of United States Counsel for the Underwriters. The
Representatives shall have received on and as of the Closing Date or the
Additional Closing Date, as the case may be, an opinion of ▇▇▇▇▇ ▇▇▇▇ &
▇▇▇▇▇▇▇▇, counsel for the Underwriters, with respect to such matters as the
Representatives may reasonably request and in form attached as Exhibit A
hereto.
44
(j) Opinion of PRC Counsel for the Company. The Representatives shall
have received on and as of the date of the Preliminary Prospectus, the
Closing Date or the Additional Closing Date, as the case may be, an opinion
of Commerce & Finance Law Offices, counsel for the Company, with respect to
such matters as the Representatives may reasonably request and in form and
substance satisfactory to the Representatives, and such counsel shall have
received such documents and information as they may reasonably request to
enable them to pass upon such matters.
(k) Opinion of PRC Counsel for the Underwriters. The Representatives
shall have received on and as of the date of the Preliminary Prospectus,
the Closing Date or the Additional Closing Date, as the case may be, an
opinion of Jingtian & Gongcheng Associates, counsel for the Underwriters,
with respect to such matters as the Representatives may reasonably request
and in form and substance satisfactory to the Representatives, and such
counsel shall have received such documents and information as they may
reasonably request to enable them to pass upon such matters.
(l) Opinion of Cayman Islands Counsel for the Company. The
Representatives shall have received on and as of the Closing Date or the
Additional Closing Date, as the case may be, an opinion of ▇▇▇▇▇▇▇ ▇▇▇▇ &
▇▇▇▇▇▇▇, counsel for the Company, with respect to such matters as the
Representatives may reasonably request and in form and substance
satisfactory to the Representatives, and such counsel shall have received
such documents and information as they may reasonably request to enable
them to pass upon such matters.
(m) Opinion of British Virgin Islands Counsel for Subsidiaries.
The Representatives shall have received on and as of the Closing Date or
the Additional Closing Date, as the case may be, an opinion of ▇▇▇▇▇▇▇ ▇▇▇▇
& ▇▇▇▇▇▇▇, the British Virgin Islands counsel for Upper Step Holdings
Limited, Accord Group Investments Limited and Xinhua Finance Advertising
Limited, with respect to such matters as the Representatives may reasonably
request and in form and substance satisfactory to the Representatives, and
such counsel shall have received such documents and information as they may
reasonably request to enable them to pass upon such matters.
(n) Opinion of Hong Kong Counsel for Subsidiaries. The Representatives
shall have received on and as of the Closing Date or the Additional Closing
Date, as the case may be, an opinion of ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, the Hong Kong counsel for EconWorld Media Limited, with
respect to such matters as the Representatives may
45
reasonably request and in form and substance satisfactory to the
Representatives, and such counsel shall have received such documents and
information as they may reasonably request to enable them to pass upon such
matters.
(o) Opinion of Counsel for the Depositary. The Representatives shall
have received on and as of the Closing Date or the Additional Closing Date,
as the case may be, an opinion of ▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP, counsel for
the Depositary, with respect to such matters as the Representatives may
reasonably request and in form and substance satisfactory to the
Representatives, and such counsel shall have received such documents and
information as they may reasonably request to enable them to pass upon such
matters.
(p) No Legal Impediment to Issuance. No action shall have been taken
and no statute, rule, regulation or order shall have been enacted, adopted
or issued by any federal, state or foreign governmental or regulatory
authority that would, as of the Closing Date or the Additional Closing
Date, as the case may be, prevent the issuance or sale of the Shares; and
no injunction or order of any federal, state or foreign court shall have
been issued that would, as of the Closing Date or the Additional Closing
Date, as the case may be, prevent the issuance or sale of the Shares.
(q) Exchange Listing. The Shares to be delivered on the Closing Date
or Additional Closing Date, as the case may be, shall have been approved
for listing on the Nasdaq Global Market, subject to official notice of
issuance.
(r) Lock-up Agreements. The "lock-up" agreements, each substantially
in the form of Exhibit B hereto, between you and certain shareholders,
officers and directors of the Company relating to sales and certain other
dispositions of shares of Common Shares or ADSs or certain other
securities, delivered to you on or before the date hereof, shall be in full
force and effect on the Closing Date or Additional Closing Date, as the
case may be.
(s) Additional Documents. On or prior to the Closing Date or the
Additional Closing Date, as the case may be, the Company shall have
furnished to the Representatives such further certificates and documents as
the Representatives may reasonably request.
(t) Custody of Certificates. Certificates in negotiable form
representing all of the Shares underlying the ADSs to be sold by the
Company and each Selling Shareholder (other than Patriarch Partners)
46
hereunder will be placed in custody with the Hong Kong and Shanghai Banking
Corporation Limited, as custodian for the Depositary and certificates
representing all of the preferred shares that will automatically convert to
Common Shares to be represented by ADSs to be sold by Patriarch Partners
will be placed in custody with Hong Kong and Shanghai Banking Corporation
Limited, as custodian for the Depositary.
(u) Certificates at Closing Date. The Depositary shall have furnished
or caused to be furnished to you at the Closing Date or the Additional
Closing Date, as the case may be, certificates satisfactory to you
evidencing the deposit with it of the Shares being so deposited against
issuance of ADRs evidencing the ADSs to be delivered by the Company and the
Selling Shareholders at the Closing Date or the Additional Closing Date, as
the case may be, and the execution, countersignature (if applicable),
issuance and delivery of ADRs evidencing such ADSs pursuant to the Deposit
Agreement.
(v) Adverse Developments in PRC Mergers and Acquisitions Rules. There
shall not be any adverse legislative or regulatory developments related to
the PRC Mergers and Acquisitions Rules and Related Clarifications which in
the sole judgment of the Representatives would make it inadvisable or
impractical to proceed with the public offering or the delivery of the
Shares and the ADSs being delivered at the Closing Date or the Additional
Closing Date, as the case may be, on the terms and in the manner
contemplated in this Agreement.
(w) Compliance with Section 4(a). The Company shall have complied with
the provisions of Section 4(a) hereof with respect to the furnishing of
Prospectuses on the business day next succeeding the date of this
Agreement.
(x) Payment of Commission Fees. The Company has paid the required
Commission filing fees relating to the Shares and ADSs in such amount and
within the time frame provided in the Securities Act and the Rule 456(b)(1)
thereunder.
(y) No NASD Objection. The NASD shall not have raised any objection
with respect to the fairness or reasonableness of the underwriting, or
other arrangements of the transactions, contemplated hereby.
All opinions, letters, certificates and evidence mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriters.
47
6. Indemnification and Contribution.
(a) Indemnification of the Underwriters. The Company and the Affiliate
Selling Shareholder agree to severally and jointly indemnify and hold
harmless each Underwriter, its affiliates, directors and officers and each
person, if any, who controls such Underwriter within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act, from and
against any and all losses, claims, damages and liabilities (including,
without limitation, legal fees and other expenses incurred in connection
with any suit, action or proceeding or any claim asserted, as such fees and
expenses are incurred), joint or several, that arise out of, or are based
upon, (i) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement or caused by any omission or
alleged omission to state therein a material fact required to be stated
therein or necessary in order to make the statements therein, not
misleading, (ii) any untrue statement or alleged untrue statement of a
material fact contained in the Prospectus (or any amendment or supplement
thereto), any Issuer Free Writing Prospectus or any Time of Sale
Information (including any Time of Sale Information that has subsequently
been amended), or caused by any omission or alleged omission to state
therein a material fact necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading,
in each case except insofar as such losses, claims, damages or liabilities
arise out of, or are based upon, any untrue statement or omission or
alleged untrue statement or omission made in reliance upon and in
conformity with any information relating to any Underwriter furnished to
the Company in writing by such Underwriter through the Representatives
expressly for use therein, it being understood and agreed that the only
such information furnished by any Underwriter consists of the information
described as such in subsection (b) below, or (iii) the Directed Share
Program, except, with respect to this clause (iii), insofar as such loss,
damage, expense, liability or claim is finally judicially determined to
have resulted from the gross negligence or willful misconduct of the
Underwriters in conducting the Directed Share Program.
(b) Indemnification of the UBS-FinSvc. Without limitation of and in
addition to its obligations under the other paragraphs of this Section y6,
the Company and the Affiliate Selling Shareholder agree to indemnify,
defend and hold harmless UBS-FinSvc and its partners, directors and
officers, and any person who controls UBS-FinSvc within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, and the
successors and assigns of all of the foregoing persons, from and against
any loss, damage, expense, liability or claim (including the reasonable
cost of investigation) which, jointly or severally, UBS-FinSvc or any such
person may incur under the Securities Act, the Exchange Act,
48
the common law or otherwise, insofar as such loss, damage, expense,
liability or claim (1) arises out of or is based upon (A) any of the
matters referred to in clauses (i) through (iii) of the Section y6(a), or
(B) any untrue statement or alleged untrue statement of a material fact
contained in any material prepared by or on behalf or with the consent of
the Company for distribution to Directed Share Participants in connection
with the Directed Share Program or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; (2) is or was
caused by the failure of any Directed Share Participant to pay for and
accept delivery of Reserved ADSs that the Directed Share Participant has
agreed to purchase; or (3) otherwise arises out of or is based upon the
Directed Share Program, provided, however, that the Company and the
Affiliate Selling Shareholder shall not be responsible under this clause
(3) for any loss, damage, expense, liability or claim that is finally
judicially determined to have resulted from the gross negligence or willful
misconduct of UBS-FinSvc in conducting the Directed Share Program. Section
y6(e) shall apply equally to any proceeding brought against UBS-FinSvc or
any such person in respect of which indemnity may be sought against the
Company and the Affiliate Selling Shareholder pursuant to the immediately
preceding sentence, except that the Company and the Affiliate Selling
Shareholder shall be liable for the expenses of one separate counsel (in
addition to any local counsel) for UBS-FinSvc and any such person, separate
and in addition to counsel for the persons who may seek indemnification
pursuant to Section y6(a), in any such proceeding.
(c) Indemnification by the Selling Shareholders. Each of the Selling
Shareholders will, severally and not jointly, indemnify and hold harmless
each Underwriter against any damages that arise out of or are based upon an
untrue statement of a material fact contained in any Preliminary Prospectus
as of its date, the Registration Statement as of its effective date, the
ADS Registration Statement as of its effective date or the Prospectus as of
its date, or any amendment or supplement thereto, or arise out of or are
based upon the omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
in each case only to the extent that such untrue statement or omission is
relating to information such Selling Shareholder has provided to the
Company in writing expressly for use in any such Time of Sale Information,
Preliminary Prospectus, the Registration Statement, the ADS Registration
Statement or the Prospectus, as the case may be, and will reimburse each
Underwriter for any legal or other expenses reasonably incurred by such
Underwriter in connection with investigating or defending any such action
or claim as such expenses are incurred; provided, however, that the Selling
Shareholders shall not be liable in any
49
such case to the extent that any such damages that arise out of or are
based upon an untrue statement or omission made in any Preliminary
Prospectus, the Registration Statement, the ADS Registration Statement or
the Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by any
Underwriter through the Representatives expressly for use therein;
provided, further, however, that the cumulative aggregate obligation of
each Selling Shareholder under this Section y6(c) shall in no event exceed
the amount of net proceeds received by such Selling Shareholder from the
sale of the ADSs hereunder.
(d) Indemnification of the Company and the Selling Shareholders. Each
Underwriter agrees, severally and not jointly, to indemnify and hold
harmless the Company, the Selling Shareholders, the directors of the
Company, the officers of the Company who signed the Registration Statement,
the directors and officers of the Selling Shareholders and each person, if
any, who controls the Company or any Selling Shareholder within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act to
the same extent as the indemnity set forth in paragraph (a) above, but only
with respect to any losses, claims, damages or liabilities that arise out
of, or are based upon, any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with any
information relating to such Underwriter furnished to the Company in
writing by such Underwriter through the Representatives expressly for use
in the Registration Statement, the Prospectus (or any amendment or
supplement thereto), any Issuer Free Writing Prospectus or any Time of Sale
Information, it being understood and agreed upon that the only such
information furnished by any Underwriter consists of the following
information in the Prospectus furnished on behalf of each Underwriter: the
concession and reallowance figures appearing in the [third] paragraph under
the caption "Underwriting" and the information contained in the [thirteenth
and fourteenth] paragraphs under the caption "Underwriting".
(e) Notice and Procedures. If any suit, action, proceeding (including
any governmental or regulatory investigation), claim or demand shall be
brought or asserted against any person in respect of which indemnification
may be sought pursuant to either paragraph (a), (b), (c) or (d) above, such
person (the "Indemnified Person") shall promptly notify the person against
whom such indemnification may be sought (the "Indemnifying Person") in
writing; provided that the failure to notify the Indemnifying Person (other
than the Selling Shareholders) shall not relieve it from any liability that
it may have under this Section 6 except to the extent that it has been
materially prejudiced (through the forfeiture of substantive rights or
defenses) by such failure; and provided, further, that
50
solely with respect to the Selling Shareholders as an Indemnifying Person,
the failure to notify the Selling Shareholders as an Indemnifying Person
shall not relieve it from any liability that it may have under this Section
6 except to the extent that it has been prejudiced (through the forfeiture
of substantive rights or defenses) by such failure; and provided, further,
that the failure to notify the Indemnifying Person shall not relieve it
from any liability that it may have to an Indemnified Person otherwise than
under this Section 6. If any such proceeding shall be brought or asserted
against an Indemnified Person and it shall have notified the Indemnifying
Person thereof, the Indemnifying Person shall be entitled to participate in
such proceeding and, to the extent it shall wish, jointly with any other
Indemnifying Person similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to the Indemnified Person (who shall not,
without the consent of the Indemnified Person, be counsel to the
Indemnifying Person), and, after notice by the Indemnifying Person to such
Indemnified Person of its election so to assume the defense thereof, the
Indemnifying Person shall not be liable to such Indemnified Person under
this subsection for any legal expenses of other counsel or any other
expenses, in each case subsequently incurred by such Indemnified Person, in
connection with the defense thereof other than reasonable cost of
investigation. In any such proceeding, any Indemnified Person shall have
the right to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Person unless (i) the
Indemnifying Person and the Indemnified Person shall have mutually agreed
to the contrary or (ii) the Indemnifying Person has failed within a
reasonable time to retain counsel reasonably satisfactory to the
Indemnified Person. It is understood and agreed that the Indemnifying
Person shall not, in connection with any proceeding or related proceeding
in the same jurisdiction, be liable for the fees and expenses of more than
one separate firm (in addition to any local counsel) for all Indemnified
Persons (except as provided in Section 6(b)), and that all such fees and
expenses shall be paid or reimbursed as they are incurred. Any such
separate firm for any Underwriter, its affiliates, directors and officers
and any control persons of such Underwriter shall be designated in writing
by the Representatives and any such separate firm for the Company, its
directors, its officers who signed the Registration Statement and any
control persons of the Company shall be designated in writing by the
Company and any such separate firm for the Selling Shareholders shall be
designated by such Selling Shareholder. The Indemnifying Person shall not
be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment
for the plaintiff, the Indemnifying Person agrees to indemnify each
Indemnified Person from and against any loss or liability by reason of such
settlement or judgment pursuant to, and subject to any limitation
51
contained in, this Section 6. No Indemnifying Person shall, without the
written consent of the Indemnified Person, effect any settlement of any
pending or threatened proceeding in respect of which any Indemnified Person
is or could have been a party and indemnification could have been sought
hereunder by such Indemnified Person, unless such settlement (x) includes
an unconditional release of such Indemnified Person, in form and substance
reasonably satisfactory to such Indemnified Person, from all liability on
claims that are the subject matter of such proceeding and (y) does not
include any statement as to or any admission of fault, culpability or a
failure to act by or on behalf of any Indemnified Person.
(f) Contribution. If the indemnification provided for in paragraphs
(a), (b), (c) and (d) above is unavailable to an Indemnified Person or
insufficient in respect of any losses, claims, damages or liabilities
referred to therein, then each Indemnifying Person under such paragraph, in
lieu of indemnifying such Indemnified Person thereunder, shall, subject to
the further proviso in Section y6(c), contribute to the amount paid or
payable by such Indemnified Person as a result of such losses, claims,
damages or liabilities (i) in such proportion as is appropriate to reflect
the relative benefits received by the Company and the Selling Shareholders,
on the one hand, and the Underwriters, on the other, from the offering of
the Shares 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) but also
the relative fault of the Company and the Selling Shareholders, on the one
hand, and the Underwriters, on the other hand, in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Company and the Selling Shareholders, on
the one hand, and the Underwriters, on the other hand, shall be deemed to
be in the same respective proportions as the net proceeds (before deducting
expenses) received by the Company and the Selling Shareholders from the
sale of the Shares and the total underwriting discounts and commissions
received by the Underwriters in connection therewith, in each case as set
forth in the table on the cover of the Prospectus, bear to the aggregate
offering price of the Shares. The relative fault of the Company and the
Selling Shareholders, on the one hand, and the Underwriters, on the other
hand, shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied
by the Company or the Selling Shareholders or by the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission.
52
(g) Limitation on Liability. The Company, the Selling Shareholders and
the Underwriters agree that it would not be just and equitable if
contribution pursuant to this Section 6 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 that does not take account of
the equitable considerations referred to in paragraph (f) above. The amount
paid or payable by an Indemnified Person as a result of the losses, claims,
damages and liabilities referred to in paragraph (f) above shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such Indemnified Person in connection with
any such action or claim. Notwithstanding the provisions of this Section 6,
in no event shall an Underwriter be required to contribute any amount in
excess of the amount by which the total underwriting discounts and
commissions received by such Underwriter with respect to the offering of
the ADSs exceeds the amount of any damages that such Underwriter has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. The Underwriters' obligations to
contribute pursuant to this Section 6 are several in proportion to their
respective purchase obligations hereunder and not joint.
(h) Non-Exclusive Remedies. The remedies provided for in this Section
6 are not exclusive and shall not limit any rights or remedies which may
otherwise be available to any Indemnified Person at law or in equity.
7. Effectiveness of Agreement. This Agreement shall become effective upon
the execution and delivery hereof by the parties hereto.
8. Termination. This Agreement may be terminated in the absolute discretion
of the Representatives, by notice to the Company, if after the execution and
delivery of this Agreement and prior to the Closing Date or, in the case of the
Optional ADSs, prior to the Additional Closing Date (i) trading generally shall
have been suspended or materially limited on or by any of the New York Stock
Exchange, the American Stock Exchange, the NASD, the Chicago Board Options
Exchange, the Chicago Mercantile Exchange, the Chicago Board of Trade, the
Shanghai Stock Exchange or the Shenzhen Stock Exchange; (ii) trading of any
securities issued or guaranteed by the Company shall have been suspended on any
exchange or in any over-the-counter market; (iii) a general moratorium on
commercial banking activities shall have been declared by federal, New York
State or the PRC authorities; or (iv) there shall have occurred any outbreak or
escalation of hostilities or any change in financial markets or any calamity or
53
crisis, either within or outside the United States and the PRC, that, in the
judgment of the Representatives, is material and adverse and makes it
impracticable or inadvisable to proceed with the offering, sale or delivery of
the Shares or ADSs on the Closing Date or the Additional Closing Date, as the
case may be, on the terms and in the manner contemplated by this Agreement, the
Time of Sale Information and the Prospectus.
9. Defaulting Underwriter. (a) If, on the Closing Date or the Additional
Closing Date, as the case may be, any Underwriter defaults on its obligation to
purchase the ADSs that it has agreed to purchase hereunder on such date, the
non-defaulting Underwriters may in their discretion arrange for the purchase of
such ADSs by other persons satisfactory to the Company on the terms contained in
this Agreement. If, within 36 hours after any such default by any Underwriter,
the non-defaulting Underwriters do not arrange for the purchase of such ADSs,
then the Company shall be entitled to a further period of 36 hours within which
to procure other persons satisfactory to the non-defaulting Underwriters to
purchase such ADSs on such terms. If other persons become obligated or agree to
purchase the ADSs of a defaulting Underwriter, either the non-defaulting
Underwriters or the Company may postpone the Closing Date or the Additional
Closing Date, as the case may be, for up to five full business days in order to
effect any changes that in the opinion of counsel for the Company or counsel for
the Underwriters may be necessary in the Registration Statement and the
Prospectus or in any other document or arrangement, and the Company agrees to
promptly prepare any amendment or supplement to the Registration Statement and
the Prospectus that effects any such changes. As used in this Agreement, the
term "Underwriter" includes, for all purposes of this Agreement unless the
context otherwise requires, any person not listed in Schedule 1 hereto that,
pursuant to this Section 9, purchases ADSs that a defaulting Underwriter agreed
but failed to purchase.
(b) If, after giving effect to any arrangements for the purchase of
the ADSs of a defaulting Underwriter or Underwriters by the non-defaulting
Underwriters and the Company as provided in paragraph (a) above, the
aggregate number of ADSs that remain unpurchased on the Closing Date or the
Additional Closing Date, as the case may be, does not exceed one-eleventh
of the aggregate number of ADSs to be purchased on such date, then the
Company shall have the right to require each non-defaulting Underwriter to
purchase the number of ADSs that such Underwriter agreed to purchase
hereunder on such date plus such Underwriter's pro rata share (based on the
number of ADSs that such Underwriter agreed to purchase on such date) of
the ADSs of such defaulting Underwriter or Underwriters for which such
arrangements have not been made.
54
(c) If, after giving effect to any arrangements for the purchase of
the ADSs of a defaulting Underwriter or Underwriters by the non-defaulting
Underwriters and the Company as provided in paragraph (a) above, the
aggregate number of ADSs that remain unpurchased on the Closing Date or the
Additional Closing Date, as the case may be, exceeds one-eleventh of the
aggregate amount of ADSs to be purchased on such date, or if the Company
shall not exercise the right described in paragraph (b) above, then this
Agreement or, with respect to any Additional Closing Date, the obligation
of the Underwriters to purchase ADSs on the Additional Closing Date, as the
case may be, shall terminate without liability on the part of the
non-defaulting Underwriters. Any termination of this Agreement pursuant to
this Section 9 shall be without liability on the part of the Company,
except that the Company will continue to be liable for the payment of
expenses as set forth in Section 10 hereof and except that the provisions
of Section 6 hereof shall not terminate and shall remain in effect.
(d) Nothing contained herein shall relieve a defaulting Underwriter of
any liability it may have to the Company, the Selling Shareholders or any
non-defaulting Underwriter for damages caused by its default.
10. Payment of Expenses. (a) Whether or not the transactions
contemplated by this Agreement are consummated or this Agreement is
terminated, the Company will pay or cause to be paid all costs and expenses
incident to the performance of its obligations hereunder, including,
without limitation, (i) the costs incident to the authorization, issuance,
sale, preparation and delivery of the ADSs and any taxes payable in that
connection; (ii) the costs incident to the preparation, printing and filing
under the Securities Act of the Registration Statement, the Preliminary
Prospectus, any Issuer Free Writing Prospectus, any Time of Sale
Information and the Prospectus (including all exhibits, amendments and
supplements thereto) and the distribution thereof; (iii) the costs of
reproducing and distributing each of the Transaction Documents; (iv) the
fees and expenses of the Company's counsel and independent accountants; (v)
the fees and expenses incurred in connection with the registration or
qualification and determination of eligibility for investment of the ADSs
under the laws of such jurisdictions as the Representatives may designate
and the preparation, printing and distribution of a Blue Sky Memorandum
(including the related fees and expenses of counsel for the Underwriters);
(vi) the cost of preparing stock certificates; (vii) the costs and charges
of any transfer agent and any registrar; (viii) all expenses and
application fees incurred in connection with any filing with, and clearance
of the offering by, the NASD; (ix) all expenses incurred by the Company in
connection with any "road show" presentation to potential investors; and
(x) all expenses and application fees related to the listing of the ADSs on
the Nasdaq Global Market and (y) the fees and expenses of Patriarch
Partners' in
55
connection with this Agreement and the transactions contemplated hereby
(other than the underwriting discounts and commissions to be received by
the Underwriters in connection with the sale of ADS by Patriarch Partners
hereunder).
(b) If (i) this Agreement is terminated pursuant to Section 8, (ii)
the Company for any reason fails to tender the ADSs for delivery to the
Underwriters in accordance with this Agreement or (iii) the Underwriters
decline to purchase the ADSs for any reason permitted under this Agreement,
the Company agrees to reimburse the Underwriters for all out-of-pocket
costs and expenses (including the fees and expenses of their counsel)
reasonably incurred by the Underwriters in connection with this Agreement
and the offering contemplated hereby.
11. Persons Entitled to Benefit of Agreement. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
successors and the officers and directors and any controlling persons or any
other persons referred to in Section 6 hereof. Nothing in this Agreement is
intended to, or shall be construed to give, any other person any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision contained herein. No purchaser of ADSs from any Underwriter shall be
deemed to be a successor merely by reason of such purchase.
12. Survival. The respective indemnities, rights of contribution,
representations, warranties and agreements of the Company and the Underwriters
contained in this Agreement or made by or on behalf of the Company or the
Underwriters pursuant to this Agreement or any certificate delivered pursuant
hereto shall survive the delivery of and payment for the ADSs and shall remain
in full force and effect, regardless of any termination of this Agreement or any
investigation made by or on behalf of the Company or the Underwriters.
13. Certain Defined Terms. For purposes of this Agreement, (a) except where
otherwise expressly provided, the term "affiliate" has the meaning set forth in
Rule 405 under the Securities Act; (b) the term "business day" means any day
other than a day on which banks are permitted or required to be closed in Hong
Kong; and (c) the term "subsidiary" has the meaning set forth in Rule 405 under
the Securities Act.
14. Submission to Jurisdiction; Appointment of Agent for Service. (a) Each
of the Company and the Selling Shareholders, severally and not jointly,
irrevocably submits to the non-exclusive jurisdiction of any New York State or
United States Federal court sitting in The City of New York over any suit,
action or proceeding arising out of or relating to this Agreement, the Time of
Sale Information, the Prospectus, the Registration Statement, the ADS
Registration Statement or the offering of the ADSs. Each of the Company and the
Selling Shareholders irrevocably waives, to the fullest extent permitted by law,
any
56
objection which it may now or hereafter have to the laying of venue of any
such suit, action or proceeding brought in such a court and any claim that any
such suit, action or proceeding brought in such a court has been brought in an
inconvenient forum. To the extent that any of the Company or the Selling
Shareholders has or hereafter may acquire any immunity (on the grounds of
sovereignty or otherwise) from the jurisdiction of any court or from any legal
process with respect to itself or its property, each of the Company and such
Selling Shareholder, as applicable, irrevocably waives, to the fullest extent
permitted by law, such immunity in respect of any such suit, action or
proceeding.
(b) Each of the Company and Dragon Era Group, severally and not jointly,
hereby irrevocably appoints Law Debenture Corporate Services Inc. as its agent
for service of process in any suit, action or proceeding described in the
preceding paragraph and agrees that service of process in any such suit, action
or proceeding may be made upon it at the office of such agent. Each of the
Company and Dragon Era Group, severally and not jointly, waives, to the fullest
extent permitted by law, any other requirements of or objections to personal
jurisdiction with respect thereto. Each of the Company and Dragon Era Group,
severally and not jointly, represents and warrants that such agent has agreed to
act as its agent for service of process, and each of the Company and Dragon Era
Group agrees, severally and not jointly, to take any and all action, including
the filing of any and all documents and instruments, that may be necessary to
continue such appointment in full force and effect.
15. Judgment Currency. If for the purposes of obtaining judgment in any
court it is necessary to convert a sum due hereunder into any currency other
than United States dollars, the parties hereto agree, to the fullest extent
permitted by law, that the rate of exchange used shall be the rate at which in
accordance with normal banking procedures the Underwriters could purchase United
States dollars with such other currency in The City of New York on the business
day preceding that on which final judgment is given. The obligation of each of
the Company and the Selling Shareholder with respect to any sum due from it to
any Underwriter or any person controlling any Underwriter shall, notwithstanding
any judgment in a currency other than United States dollars, not be discharged
until the first business day following receipt by such Underwriter or
controlling person of any sum in such other currency, and only to the extent
that such Underwriter or controlling person may in accordance with normal
banking procedures purchase United States dollars with such other currency. If
the United States dollars so purchased are less than the sum originally due to
such Underwriter or controlling person hereunder, each of the Company and the
Selling Shareholder, severally and not jointly, agrees as a separate obligation
and notwithstanding any such judgment, to indemnify such Underwriter or
controlling person against such loss. If the United States dollars so purchased
are greater than the sum originally due to such Underwriter or controlling
person hereunder, such Underwriter or controlling person agrees to pay to the
Company or such Selling Shareholder, as
57
applicable, an amount equal to the excess of the dollars so purchased over
the sum originally due to such Underwriter or controlling person hereunder.
16. Miscellaneous. (a) Authority of the Representatives. Any action by
the Underwriters hereunder may be taken by the Representatives on behalf of
the Underwriters, and any such action taken by the Representatives shall be
binding upon the Underwriters.
(b) Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted and confirmed by any standard form of telecommunication.
Notices to the Underwriters shall be given to the Representatives:
c/o ▇.▇. ▇▇▇▇▇▇ Securities Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇ (fax: (▇▇▇) ▇▇▇-▇▇▇▇); Attention: Equity Syndicate
Desk
c/o UBS AG 52/F, Two International Finance Centre, ▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ (fax: (▇▇▇) ▇▇▇▇-▇▇▇▇); Attention:
Legal Department
Notices to the Company or any of the Selling Shareholders other than
Patriarch Partners Media Holdings, LLC shall be given to it at:
▇/▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇-▇▇▇▇, Tower ▇, ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇, ▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇ 200030, People's Republic of
China, (fax: (▇▇ ▇▇) ▇▇▇▇-▇▇▇▇); Attention: General Counsel
Notices to Patriarch shall be given to it at: [TBD]
(c) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
(d) Counterparts. This Agreement may be signed in counterparts
(which may include counterparts delivered by any standard form of
telecommunication), each of which shall be an original and all of
which together shall constitute one and the same instrument.
(e) Amendments or Waivers. No amendment or waiver of any
provision of this Agreement, nor any consent or approval to any
departure therefrom, shall in any event be effective unless the same
shall be in writing and signed by the parties hereto.
58
(f) Headings. The headings herein are included for convenience of
reference only and are not intended to be part of, or to affect the meaning
or interpretation of, this Agreement.
59
If the foregoing is in accordance with your understanding, please indicate
your acceptance of this Agreement by signing in the space provided below.
Very truly yours,
Xinhua Finance Media Limited
By:
----------------------------------
Name:
Title:
Patriarch Partners Media Holdings, LLC
Dragon Era Group
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Family Trust
By:
----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Attorney-In-Fact
Accepted: __________, 2007
▇.▇. ▇▇▇▇▇▇ SECURITIES INC.
By:
--------------------------------------------
Name:
Title:
60
UBS AG
By:
--------------------------------------------
Name:
Title:
By:
--------------------------------------------
Name:
Title:
For themselves and on behalf of the several Underwriters listed in Schedule 1
hereto.
61
Schedule 1
Underwriter Number of ADSs
----------- --------------
▇.▇. ▇▇▇▇▇▇ Securities Inc.
UBS AG
CIBC World Markets
▇▇ ▇▇▇▇▇▇▇▇▇ & Co
ABN AMRO Rothschild
Total
Sch-1-1
Schedule 2
-----------------------------------------------------------------------------------------------------
Name of Selling Shareholder Total Number of Firm ADSs to Number of Optional ADSs to be
be Sold Sold if Maximum Option
Exercised
-----------------------------------------------------------------------------------------------------
Patriarch Partners Media
Holdings, LLC
-----------------------------------------------------------------------------------------------------
Dragon Era Group
-----------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Family Trust
-----------------------------------------------------------------------------------------------------
Sch-2-1
Schedule 3
Dragon Era Group Limited
Sch-2-1
Schedule 4
Shanghai Yuan Zhi Advertising Co., Ltd.
Beijing Century Media Advertising Co., Ltd.
Guangzhou Jingshi Culture Intermediary Co., Ltd.
Beijing ▇▇▇▇▇ Advertising Co., Ltd.
Beijing Xintai Huade Advertising Co., Ltd.
Shenzhen Active Trinity Advertising Co., Ltd.
Annex-C-1
Annex A
A. TIME OF STATESTATESALE INFORMATION
[list each Issuer Free Writing Prospectus to be included in the Time of
Sale Information] [pricing term sheet]
[B. PRICING INFORMATION PROVIDED ORALLY BY UNDERWRITERS]
[set out key information included in script that will be used by
underwriters to confirm sales]
2
Exhibit A
FORM OF OPINION OF US COUNSEL FOR PATRIARCH FUND
[To come]
Exhibit-A-1
Exhibit B
FORM OF LOCK-UP AGREEMENT
[ ] __________, 2007
▇.▇. ▇▇▇▇▇▇ SECURITIES INC.
UBS AG
As Representatives of the Underwriters named in Schedule I to
the
Underwriting Agreement referred to below
c/o ▇.▇. ▇▇▇▇▇▇ Securities Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
c/o UBS AG
52/F, Two International Finance Centre
▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇
Re: XINHUA FINANCE MEDIA LIMITED -- PUBLIC OFFERING
Ladies and Gentlemen:
The undersigned understands that you, as Representatives of the several
Underwriters, propose to enter into an
Underwriting Agreement (the "
UNDERWRITING
AGREEMENT") with Xinhua Finance Media Limited, a company incorporated in the
Cayman Islands (the "COMPANY"), providing for the public offering (the "PUBLIC
OFFERING") by the several Underwriters named in Schedule I to the
Underwriting
Agreement (the "Underwriters"), of American Depositary Shares ("ADS")
representing common shares of the Company (the "COMMON SHARES"). Capitalized
terms used herein and not otherwise defined shall have the meanings set forth in
the
Underwriting Agreement.
In consideration of the Underwriters' agreement to purchase and make the
Public Offering of the ADSs, and for other good and valuable consideration
receipt of which is hereby acknowledged, the undersigned hereby agrees that,
without the prior written consent of the Representatives, the undersigned will
not, during the period ending 180 days after the date of the prospectus relating
to the Public Offering (the "PROSPECTUS"), (1) offer, pledge, announce the
intention to sell, sell, contract to sell, sell any option or contract to
purchase, purchase any
2
option or contract to sell, grant any option, right or warrant to purchase, or
otherwise transfer or dispose of, directly or indirectly, any ADSs or Common
Share or any securities convertible into or exercisable or exchangeable for ADS
or Common Share (including without limitation, Common Share which may be deemed
to be beneficially owned with sole disposition power by the undersigned in
accordance with the rules and regulations of the Securities and Exchange
Commission and securities which may be issued upon exercise of a stock option or
warrant) or (2) enter into any swap or other agreement that transfers, in whole
or in part, any of the economic consequences of ownership of the ADSs or Common
Share, whether any such transaction described in clause (1) or (2) above is to
be settled by delivery of ADS or Common Share or such other securities, in cash
or otherwise. The foregoing restriction shall not apply to the exercise of a
stock option or warrant, provided, however, in any such case, it shall be a
condition to the exercise of stock option or warrant that the Common Shares,
ADSs or other securities so acquired are subject to this Letter Agreement.
In addition, the undersigned agrees that, without the prior written consent
of the Representatives, it will not, during the period ending 180 days after the
date of the Prospectus, make any demand for or exercise any right with respect
to, the registration of any ADS or Common Share or any security convertible into
or exercisable or exchangeable for ADS or Common Shares[, except the Common
Shares in the form of ADSs to be sold by the undersigned as a selling
shareholder pursuant to the Underwriting Agreement]1. Notwithstanding the
foregoing, if (1) during the last 17 days of the 180-day restricted period, the
Company issues an earnings release or material news or a material event relating
to the Company occurs; or (2) prior to the expiration of the 180-day restricted
period, the Company announces that it will release earnings results during the
16-day period beginning on the last day of the 180-day period, the restrictions
imposed by this Letter Agreement shall continue to apply until the expiration of
the 18-day period beginning on the issuance of the earnings release or the
occurrence of the material news or material event.
Notwithstanding anything to the contrary herein, a transfer of Common
Shares or ADSs to an affiliate of the undersigned, a person who is directly (or
indirectly through one or more intermediaries) a stockholder, partner, member or
other owner of a Selling Shareholder or a family member as defined in Rule 701
under the Securities Act of 1933 will not be subject to this Letter Agreement,
provided, however, that in any such case, it shall be a condition to the
transfer that the transferee execute an agreement with the Representatives
stating that the transferee is receiving and holding such Common Shares or ADSs
subject to the provisions of this Letter Agreement.
-----------------------------------
(1) Only for the Selling Shareholders.
3
In furtherance of the foregoing, the Company, and any duly appointed
transfer agent for the registration or transfer of the securities described
herein, are hereby authorized to decline to make any transfer of securities if
such transfer would constitute a violation or breach of this Letter Agreement.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Letter Agreement. All authority
herein conferred or agreed to be conferred and any obligations of the
undersigned shall be binding upon the successors, assigns, heirs or personal
representatives of the undersigned.
The undersigned understands that, if the Underwriting Agreement does not
become effective, or if the Underwriting Agreement (other than the provisions
thereof which survive termination) shall terminate or be terminated prior to
payment for and delivery of the ADSs to be sold thereunder, the undersigned
shall be released from all obligations under this Letter Agreement.
The undersigned understands that the Underwriters are entering into the
Underwriting Agreement and proceeding with the Public Offering in reliance upon
this Letter Agreement.
4
This Letter Agreement shall be governed by and construed in accordance with
the laws of the State of
New York, without regard to the conflict of laws
principles thereof.
Very truly yours,
[NAME OF SHAREHOLDER]
By:
----------------------------------
Name:
Title:
Accepted as of the date first set forth
above:
▇.▇. ▇▇▇▇▇▇ SECURITIES INC.
UBS AG
Acting severally on behalf of themselves and the several
Underwriters named in Schedule I to the Underwriting Agreement
By: ▇.▇. ▇▇▇▇▇▇ SECURITIES INC.
By:
----------------------------------------
Name:
Title:
By: UBS AG
By:
----------------------------------------
Name:
Title:
By:
----------------------------------------
Name:
Title:
5
