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UTSTARCOM, INC.
(a Delaware corporation)
2,000,000 Shares of Common Stock
JAPANESE PURCHASE AGREEMENT
Dated: _______ __, 2000
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TABLE OF CONTENTS
Page
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SECTION 1. REPRESENTATIONS AND WARRANTIES.................................................3
(a) Representations and Warranties by the Company..................................3
(i) Compliance with Registration Requirements.............................3
(ii) Independent Accountants...............................................4
(iii) Financial Statements..................................................5
(iv) No Material Adverse Change in Business................................5
(v) Good Standing of the Company..........................................6
(vi) Good Standing of Subsidiaries.........................................6
(vii) Good Standing of Joint Ventures.......................................6
(viii) Capitalization........................................................7
(ix) Authorization of Agreements and Registration Statements...............7
(x) Authorization and Description of Securities...........................7
(xi) Absence of Defaults and Conflicts.....................................7
(xii) Absence of Labor Dispute..............................................8
(xiii) Absence of Proceedings................................................8
(xiv) Accuracy of Exhibits..................................................9
(xv) Possession of Intellectual Property...................................9
(xvi) Absence of Further Requirements.......................................9
(xvii) Possession of Licenses and Permits....................................9
(xviii) Title to Property....................................................10
(xix) Repatriation of Dividends and other Distributions....................10
(xx) PRC Taxes............................................................11
(xxi) Taxes................................................................11
(xxii) Sovereign Immunity...................................................11
(xxiii) Choice of Law........................................................11
(xxiv) Compliance with Cuba Act.............................................12
(xxv) Investment Company Act...............................................12
(xxvi) [Passive Foreign Investment Company..................................12
(xxvii) Environmental Laws...................................................12
(xxviii) Year 2000............................................................13
(xxix) Foreign Corrupt Practices Act........................................13
(xxx) Registration Rights..................................................13
(b) Officer's Certificates........................................................13
SECTION 2. SALE AND DELIVERY TO JAPANESE MANAGERS; CLOSING...............................13
(a) Japanese Securities...........................................................14
(b) Payment.......................................................................14
(c) Denominations; Registration...................................................14
SECTION 3. COVENANTS OF THE COMPANY......................................................14
(a) Compliance with Securities Regulations and Commission Requests................14
(b) Filing of Amendments..........................................................15
(c) Delivery of Registration Statements...........................................15
(d) Delivery of Prospectuses......................................................15
(e) Continued Compliance with Securities Laws.....................................16
(f) Blue Sky Qualifications.......................................................17
(g) Rule 158......................................................................17
(h) Use of Proceeds...............................................................17
(i) Listing.......................................................................17
(j) Restriction on Sale of Securities.............................................17
(k) Reporting Requirements........................................................18
(l) Compliance with NASD Rules....................................................18
(m) Compliance with Rule 463......................................................18
SECTION 4. PAYMENT AND EXPENSES..........................................................18
(a) Expenses......................................................................18
(b) Termination of Agreement......................................................19
SECTION 5. CONDITIONS OF JAPANESE MANAGERS' OBLIGATIONS..................................19
(a) Effectiveness of Registration Statements......................................19
(b) Opinion of Counsel for the Company............................................19
(c) Opinion of PRC Counsel for the Company........................................20
(d) Opinion of Japanese Counsel for the Company...................................20
(e) Opinion of Japanese Counsel for the Japanese Managers.........................20
(f) Opinion of Counsel for the Japanese Managers..................................20
(g) Officers' Certificate.........................................................20
(h) Accountant's Comfort Letter...................................................21
(i) Bring-down Comfort Letter.....................................................21
(j) Approval of Listing...........................................................21
(k) No Objection..................................................................21
(l) Lock-up Agreements............................................................21
(m) Purchase of Initial U.S. Securities...........................................21
(n) Additional Documents..........................................................21
(o) Termination of Agreement......................................................22
SECTION 6. INDEMNIFICATION...............................................................22
(a) Indemnification of Japanese Managers..........................................22
(b) Indemnification of Company, Directors and Officers............................23
(c) Actions against Parties; Notification.........................................23
(d) Settlement without Consent if Failure to Reimburse............................24
SECTION 7. CONTRIBUTION..................................................................24
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY................26
SECTION 9. TERMINATION OF AGREEMENT......................................................26
(a) Termination; General..........................................................26
(b) Liabilities...................................................................27
SECTION 10. DEFAULT BY ONE OR MORE OF THE JAPANESE MANAGERS..............................27
SECTION 11. NOTICES......................................................................27
SECTION 12. PARTIES......................................................................28
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SECTION 13. GOVERNING LAW AND TIME......................................................28
SECTION 14. EFFECTS OF HEADINGS.........................................................28
SCHEDULES
Schedule A - List of International Managers............................Sch A-1
Schedule B - Pricing Information.......................................Sch B-1
Schedule C - List of Persons subject to Lock-up........................Sch C-1
Schedule D - List of Joint Ventures and Ownership
Percentages of the Company...............................Sch D-1
EXHIBITS
Exhibit A-Form of Lock-up Letter...........................................A-1
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UTSTARCOM, INC.
(a Delaware corporation)
2,000,000 Shares of Common Stock
(Par Value $0.00125 Per Share)
JAPANESE PURCHASE AGREEMENT
_______ __, 2000
▇▇▇▇▇▇▇ ▇▇▇▇▇ JAPAN INCORPORATED
E*TRADE SECURITIES CO., LTD.
as Lead Managers of the several Japanese Managers
c/o Merrill ▇▇▇▇▇ Japan Incorporated
[Address]
Ladies and Gentlemen:
UTStarcom, Inc., a Delaware corporation (the "Company"), confirms its
agreement with ▇▇▇▇▇▇▇ ▇▇▇▇▇ Japan Incorporated ("▇▇▇▇▇▇▇ ▇▇▇▇▇") and each of
the other Japanese managers named in Schedule A hereto (collectively, the
"Japanese Managers", which term shall also include any underwriter
substituted as hereinafter provided in Section 10 hereof), for whom ▇▇▇▇▇▇▇
▇▇▇▇▇ Japan Incorporated and E*Trade Securities Co., Ltd., are acting as
representatives (in such capacity, the "Lead Managers"), with respect to the
issue and sale by the Company and the purchase by the Japanese Managers,
acting severally and not jointly, of the respective numbers of shares of
Common Stock, par value $0.00125 per share, of the Company ("Common Stock")
set forth in said Schedule A (the "Japanese Securities").
It is understood that the Company is concurrently entering into an
agreement dated the date hereof (the "Purchase Agreement") providing for the
offering by the Company of an aggregate of 8,000,000 shares of Common Stock
(the "Initial Shares") through arrangements with certain underwriters (the
"Underwriters") for which ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated,
Banc of America Securities LLC and U.S. Bancorp ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc. are acting
as representatives (the "Representatives") and the grant by the Company to
the Underwriters, acting severally and not jointly, of an option to purchase
all or any part of the Underwriters' pro rata portion of up to 1,500,000
additional shares of Common Stock solely to cover over-allotments, if any
(the "Option Shares"). The Initial Shares and the Option Shares are
hereinafter called the "Shares". It is understood that the Company is not
obligated to sell and the Japanese Managers are not obligated to purchase,
any Japanese Securities unless all of the Initial Shares are
contemporaneously purchased by the Underwriters. The Shares and the Japanese
Securities are hereinafter collectively called the "Securities".
The Japanese Managers and the Underwriters will concurrently enter
into an Intersyndicate Agreement of even date herewith (the "Intersyndicate
Agreement") providing for the coordination of certain transactions among the
Japanese Managers and the Underwriters under the direction of ▇▇▇▇▇▇▇ ▇▇▇▇▇ &
Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated (in such capacity,
the "Global Coordinator").
The Company understands that the Japanese Managers propose to make a
public offering of the Japanese Securities as soon as the Lead Managers deem
advisable after this Agreement has been executed and delivered.
The Company and the Underwriters agree that up to 500,000 shares of
the Initial Shares to be purchased by the Underwriters (the "Reserved
Securities") shall be reserved for sale by the Underwriters to certain
eligible employees and persons having business relationships with the
Company, as part of the distribution of the Securities by the Underwriters,
subject to the terms of the Purchase Agreement, the applicable rules,
regulations and interpretations of the National Association of Securities
Dealers, Inc. and all other applicable laws, rules and regulations. To the
extent that such Reserved Securities are not orally confirmed for purchase by
such eligible employees and persons having business relationships with the
Company by the end of the first business day after the date of the Purchase
Agreement, such Reserved Securities may be offered to the public as part of
the public offering contemplated hereby.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 333-93069) covering
the registration of the Securities under the Securities Act of 1933, as
amended (the "1933 Act"), including the related preliminary prospectus or
prospectuses. Promptly after execution and delivery of this Agreement, the
Company will either (i) prepare and file a prospectus in accordance with the
provisions of Rule 430A ("Rule 430A") of the rules and regulations of the
Commission under the 1933 Act (the "1933 Act Regulations") and paragraph (b)
of Rule 424 ("Rule 424(b)") of the 1933 Act Regulations or (ii) if the
Company has elected to rely upon Rule 434 ("Rule 434") of the 1933 Act
Regulations, prepare and file a term sheet (a "Term Sheet") in accordance
with the provisions of Rule 434 and Rule 424(b). One form of prospectus is to
be used in connection with the offering and sale of the Shares (the "Form of
Prospectus"). The information included in such prospectus or in such Term
Sheet, as the case may be, that was omitted from such registration statement
at the time it became effective but that is deemed to be part of such
registration statement at the time it became effective (a) pursuant to
paragraph (b) of Rule 430A is referred to as "Rule 430A Information" or (b)
pursuant to paragraph (d) of Rule 434 is referred to as "Rule 434
Information." The Form of Prospectus used before such registration statement
became effective, and any prospectus that omitted, as applicable, the Rule
430A Information or the Rule 434 Information, that was used after such
effectiveness and prior to the execution and delivery of the Purchase
Agreement, is herein called a "preliminary prospectus." Such registration
statement, including the exhibits thereto and schedules thereto at the time
it became effective and including the Rule 430A Information and the Rule 434
Information, as applicable, is herein called the "Registration Statement."
Any registration statement filed pursuant to Rule 462(b) of the 1933 Act
Regulations is herein referred to as the "Rule 462(b) Registration
Statement," and after such filing the term "Registration Statement" shall
include the Rule 462(b) Registration Statement. The final Form of Prospectus
in the form first furnished to the Underwriters for use in connection with
the offering of the Shares is herein called the "Prospectus" If Rule 434 is
relied on, the term "Prospectus" shall refer to the preliminary Prospectus
dated ___, 2000, together with the Term Sheet, and all references in this
Agreement to the date of such Prospectus shall mean the date of the Term
Sheet. For purposes of this Agreement, all references to the Registration
Statement, any preliminary prospectus, the Prospectus or any Term Sheet or
any amendment or supplement to any of the foregoing shall be
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deemed to include the copy filed with the Commission pursuant to its
Electronic Data Gathering, Analysis and Retrieval system ("▇▇▇▇▇").
The Company has filed with the Director General of the Kanto Finance
Bureau of Japan (the "Director General") a registration statement covering
the registration of the Japanese Securities to be offered in Japan by the
Japanese Managers, and any amendments or supplements thereto under the
Securities and Exchange Law of Japan, as amended (the "Japanese Securities
and Exchange Law"). Promptly after execution and delivery of this Agreement,
the Company will prepare and file a further amendment to such registration
statement with the Director General (such securities registration statement
and all such amendments thereto are referred to as the "Japanese Registration
Statement" and together with the Registration Statement, the "Registration
Statements"). A second form of prospectus is to be used in connection with
the offering and sale of the Japanese Securities. A preliminary prospectus
and any supplements thereto, used for such purpose prior to the effectiveness
of the registration under the Japanese Registration Statement pursuant to the
Japanese Securities and Exchange Law, are referred to as the "Japanese
preliminary prospectus", and, together with a supplement to such Japanese
preliminary prospectus to be used after such effectiveness, are collectively
referred to as the "Japanese Prospectus" and, together with the Prospectus,
the "Prospectuses".
SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) REPRESENTATIONS AND WARRANTIES BY THE COMPANY. The Company
represents and warrants to each Japanese Manager as of the date hereof and,
as of the Closing Time referred to in Section 2(b) hereof, and agrees with
each Japanese Manager, as follows:
(i) COMPLIANCE WITH REGISTRATION REQUIREMENTS. Each of the
Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the 1933 Act and no
proceedings for that purpose have been instituted or are pending or, to
the knowledge of the Company, are contemplated by the Commission, and any
request on the part of the Commission for additional information has been
complied with.
At the respective times the Registration Statement, any Rule
462(b) Registration Statement and any post-effective amendments thereto
became effective and at the Closing Time (and, if any Option Shares are
purchased, at the date of delivery for such shares), the Registration
Statement, the Rule 462(b) Registration Statement and any amendments and
supplements thereto complied and will comply in all material respects
with the requirements of the 1933 Act and the 1933 Act Regulations and
did not and will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading [, and the Prospectus, any
preliminary prospectuses and any supplement thereto or prospectus wrapper
prepared in connection therewith, at their respective times of issuance
and at the Closing Time, complied and will comply in all material
respects with any applicable laws or regulations of foreign jurisdictions
in which the Prospectus and such preliminary prospectus, as amended or
supplemented, if applicable, are distributed in connection with the offer
and sale of Reserved Securities]. Neither the Prospectus nor any
amendments or
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supplements thereto (including any prospectus wrapper), at the time the
Prospectus or any such amendment or supplement was issued and at the
Closing Time (and, if any Option Shares are purchased, at the date of
delivery for such shares), included or will include an untrue statement
of a material fact or omitted or will omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. If Rule 434
is used, the Company will comply with the requirements of Rule 434 and
the Prospectus shall not be "materially different", as such term is
used in Rule 434, from the prospectus included in the Registration
Statement at the time it became effective. The representations and
warranties in this subsection shall not apply to statements in or
omissions from the Registration Statement or the Prospectus made in
reliance upon and in conformity with information furnished to the Company
in writing by any Japanese Manager through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for
use in the Registration Statement or the Japanese Prospectus.
Each preliminary prospectus and the prospectus filed as part of
the Registration Statement as originally filed or as part of any
amendment thereto, or filed pursuant to Rule 424 under the 1933 Act,
complied when so filed in all material respects with the 1933 Act
Regulations and each preliminary prospectus and the Prospectus was
identical to the electronically transmitted copies thereof filed with
the Commission pursuant to ▇▇▇▇▇, except to the extent permitted by
Regulation S-T.
At the respective times the registration under the Japanese
Registration Statement become effective, the Japanese Prospectus was
issued and at the Closing Time, each of the Japanese Registration
Statement and the Japanese Prospectus complied and will comply in all
material respects with the requirements of the Japanese Securities and
Exchange Law and the cabinet orders and ministerial ordinances and other
rules and regulations thereunder and did not and will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statement therein
not misleading. The representations and warranties in this subsection
shall not apply to statements in or omissions from the Japanese
Registration Statement or the Japanese Prospectus made in reliance upon
and in conformity with information furnished to the Company in writing
by any Japanese Manager through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the
Japanese Registration Statement or the Japanese Prospectus.
(ii) INDEPENDENT ACCOUNTANTS. The accountants who certified
the financial statements and supporting schedules included in the
Registration Statements are independent public accountants as required by
the 1933 Act and the 1933 Act Regulations; each of the Company, its
subsidiaries and its Joint Ventures maintains a system of internal
accounting controls sufficient to provide reasonable assurance that (A)
transactions are executed in accordance with management's general or
specific authorizations; (B) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles ("GAAP") in China with a reconciliation to
GAAP in the United Sates; (C) access to assets is permitted only in
accordance with management's general or specific authorization; (D) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate actions taken with respect to any
differences; and (E) each of the Company, its subsidiaries and its Joint
Ventures has made and kept books,
4
records and accounts which, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of assets of such entity and
provide a sufficient basis for the preparation of combined financial
statements in accordance with Chinese GAAP, with a reconciliation
thereof to U.S. GAAP.
(iii) FINANCIAL STATEMENTS. The financial statements
[(including any separate financial statements for any subsidiary or any
Joint Venture (as defined below) of the Company other than the Company
and its consolidated subsidiaries)] included in the Registration
Statements and the Prospectuses, together with the related schedules and
notes, present fairly the financial position of the Company and its
consolidated subsidiaries at the dates indicated and the statement of
operations, stockholders' equity and cash flows of the Company and its
consolidated subsidiaries for the periods specified; said financial
statements have been prepared in conformity with GAAP applied on a
consistent basis throughout the periods involved. The supporting
schedules included in the Registration Statements present fairly in
accordance with GAAP the information required to be stated therein. The
selected financial data and the summary financial information included
in the Prospectuses present fairly the information shown therein and
have been compiled on a basis consistent with that of the audited
financial statements included in the Registration Statements. [The pro
forma financial statements and the related notes thereto included in the
Registration Statements and the Prospectuses present fairly the
information shown therein, have been prepared in accordance with the
Commission's rules and guidelines with respect to pro forma financial
statements and have been properly compiled on the bases described
therein, and the assumptions used in the preparation thereof are
reasonable and the adjustments used therein are appropriate to give
effect to the transactions and circumstances referred to therein.]
(iv) NO MATERIAL ADVERSE CHANGE IN BUSINESS. Since the
respective dates as of which information is given in the Registration
Statements and the Prospectuses, except as otherwise stated therein,
(A) there has been no material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospects
of the Company, its subsidiaries and its Joint Ventures (as defined
below) considered as one enterprise, whether or not arising in the
ordinary course of business (a "Material Adverse Effect"), (B) there have
been no transactions entered into by the Company, any of its subsidiaries
or any of its Joint Ventures, other than those in the ordinary course of
business, which are material with respect to the Company, its
subsidiaries and its Joint Ventures considered as one enterprise, and
(C) there has been no dividend or distribution of any kind declared, paid
or made by the Company on any class of its capital stock at any time.
(v) GOOD STANDING OF THE COMPANY. The Company has been duly
organized and is validly existing as a corporation in good standing under
the laws of the State of Delaware and has corporate power and authority
to own, lease and operate its properties and to conduct its business as
described in the Prospectuses and to enter into and perform its
obligations under this Agreement and the Purchase Agreement; and the
Company is duly qualified as a foreign corporation to transact business
and is in good standing in each other jurisdiction in which such
qualification is required, whether by reason of the
5
ownership or leasing of property or the conduct of business, except
where the failure so to qualify or to be in good standing would not
result in a Material Adverse Effect.
(vi) GOOD STANDING OF SUBSIDIARIES. Each of ________,
________ and ________ (each a "U.S. Subsidiary") and ________ and
________ (each a "PRC Subsidiary" and, together with the U.S.
Subsidiaries, the "Subsidiaries") has been duly organized and is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has corporate power and authority to
own, lease and operate its properties and to conduct its business as
currently conducted and as described in the Prospectuses and is duly
qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct
of business, except where the failure so to qualify or to be in good
standing would not result in a Material Adverse Effect; except as
otherwise disclosed in the Registration Statements, all of the issued and
outstanding capital stock of each such Subsidiary has been duly
authorized and validly issued, is fully paid and non-assessable and is
owned by the Company, directly or through subsidiaries, free and clear of
any security interest, mortgage, pledge, lien, encumbrance, claim or
equity; none of the outstanding shares of capital stock of any Subsidiary
was issued in violation of the preemptive or similar rights of any
securityholder of such Subsidiary. The Company does not have any
subsidiaries which are not Subsidiaries.
(vii) GOOD STANDING OF JOINT VENTURES. Each of ______,
________ and _______ (each a "Joint Venture" and, together, the "Joint
Ventures") has been duly organized and is validly existing as a limited
liability company in good standing under the laws of the People's
Republic of China (the "PRC"), and its business license is in full force
and effect; the joint venture contract, the articles of association and
other corporate formation documents of each of the above entities comply
with the requirements of PRC law and are in full force and effect. The
Company owns, directly or through subsidiaries, an interest in the Joint
Ventures which ownership percentage of the Company is listed in Schedule
D hereto. Each Joint Venture has the power and authority under the laws
of the PRC to own, lease and operate its assets and properties in
accordance with the terms of its joint venture contract and its articles
of association and to conduct its business as currently conducted, as
specified in its business license and as described in the Prospectuses.
All registered capital required to be paid by each of the Company and the
Chinese partner has been paid in full to each Joint Venture under the
joint venture contract and the articles of association for such Joint
Venture. All of the equity interests of the Joint Ventures have been
duly and validly authorized and issued, are fully paid and
non-assessable, and are owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equity. The liability of the Company with
respect to its equity interest in each of the PRC Subsidiaries and the
Joint Ventures is limited to its investments therein. The Company and
its Subsidiaries do not hold an interest in any joint venture or similar
entity or contractual arrangement that is not a Joint Venture.
(viii) CAPITALIZATION. The authorized, issued and outstanding
capital stock of the Company is as set forth in the Prospectus in the
column entitled "Actual" under the
6
caption "Capitalization" and in the Japanese Prospectus in "Part
II-V-1.-(1) Total Number of Shares" (except for subsequent issuances,
if any, pursuant to this Agreement, pursuant to reservations,
agreements or employee benefit plans referred to in the Prospectuses
or pursuant to the exercise of convertible securities, warrants or
options referred to in the Prospectuses). The shares of issued and
outstanding capital stock of the Company have been duly authorized and
validly issued and are fully paid and non-assessable; none of the
outstanding shares of capital stock of the Company was issued in
violation of the preemptive or other similar rights of any
securityholder of the Company.
(ix) AUTHORIZATION OF AGREEMENTS AND REGISTRATION STATEMENTS.
This Agreement and the Purchase Agreement have been duly authorized,
executed and delivered by the Company. The Registration Statements and
the Prospectuses, the filing of the Registration Statement and the
Prospectus with the Commission and the filing of the Japanese
Registration Statement with the Director General have been duly
authorized by and on behalf of the Company, and the Registration
Statements have been duly signed by and on behalf of the Company pursuant
to such authorization.
(x) AUTHORIZATION AND DESCRIPTION OF SECURITIES. The
Securities to be purchased by the Japanese Managers and the Underwriters
have been duly authorized for issuance and sale to the Japanese Managers
pursuant to this Agreement and to the Underwriters pursuant to the
Purchase Agreement and, when issued and delivered by the Company pursuant
to this Agreement and the Purchase Agreement, respectively, against
payment of the consideration set forth herein and the Purchase Agreement,
respectively, will be validly issued, fully paid and non-assessable; the
Common Stock conforms to all statements relating thereto contained in the
Prospectuses and such description conforms to the rights set forth in the
instruments defining the same; no holder of the Securities will be
subject to personal liability by reason of being such a holder; and the
issuance of the Securities is not subject to the preemptive or other
similar rights of any securityholder of the Company.
(xi) ABSENCE OF DEFAULTS AND CONFLICTS. Neither the Company
nor any of its subsidiaries or Joint Ventures is in violation of its
articles, charter, by-laws or joint venture contract or in default in the
performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, deed of trust,
loan or credit agreement, note, lease or other agreement or instrument to
which the Company or any of its subsidiaries or any of its Joint Ventures
is a party or by which it or any of them may be bound, or to which any of
the property or assets of the Company or any subsidiary or any Joint
Venture is subject (collectively, "Agreements and Instruments") except
for such defaults that would not result in a Material Adverse Effect; and
the execution, delivery and performance of this Agreement and the
Purchase Agreement and the consummation of the transactions contemplated
in this Agreement, the Purchase Agreement, and the Registration
Statements (including the issuance and sale of the Securities and the use
of the proceeds from the sale of the Securities as described in the
Prospectuses under the caption "Use of Proceeds") and compliance by the
Company with its obligations under this Agreement and the Purchase
Agreement have been duly authorized by all necessary corporate action and
do not and will not, whether
7
with or without the giving of notice or passage of time or both,
conflict with or constitute a breach of, or default or Repayment Event
(as defined below) under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the
Company or any subsidiary or any Joint Venture pursuant to, the
Agreements and Instruments (except for such conflicts, breaches or
defaults or liens, charges or encumbrances that would not result in a
Material Adverse Effect), nor will such action result in any violation
of the provisions of the articles, charter, by-laws or joint venture
contract of the Company or any subsidiary or any Joint Venture or any
applicable law, statute, rule, regulation, judgment, order, writ or
decree of any government, government instrumentality or court, domestic
or foreign, having jurisdiction over the Company or any subsidiary or any
Joint Venture or any of their assets, properties or operations. As used
herein, a "Repayment Event" means any event or condition which gives the
holder of any note, debenture or other evidence of indebtedness (or any
person acting on such holder's behalf) the right to require the
repurchase, redemption or repayment of all or a portion of such
indebtedness by the Company or any subsidiary or any Joint Venture.
(xii) ABSENCE OF LABOR DISPUTE. No labor dispute with the
employees of the Company or any subsidiary or any Joint Venture exists
or, to the knowledge of the Company, is imminent, and the Company is not
aware of any existing or imminent labor disturbance by the employees of
any of its or any subsidiary's or any Joint Venture's principal
suppliers, manufacturers, customers or contractors, which, in either
case, may reasonably be expected to result in a Material Adverse Effect.
(xiii) ABSENCE OF PROCEEDINGS. There is no action, suit,
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or, to the
knowledge of the Company, threatened, against or affecting the Company or
any subsidiary or any Joint Venture, which is required to be disclosed in
the Registration Statements (other than as disclosed therein), or which
might reasonably be expected to result in a Material Adverse Effect, or
which might reasonably be expected to materially and adversely affect the
properties or assets thereof or the consummation of the transactions
contemplated in this Agreement and the Purchase Agreement or the
performance by the Company of its obligations hereunder; the aggregate of
all pending legal or governmental proceedings to which the Company or any
subsidiary is a party or of which any of their respective property or
assets is the subject which are not described in the Registration
Statements, including ordinary routine litigation incidental to the
business, could not reasonably be expected to result in a Material
Adverse Effect.
(xiv) ACCURACY OF EXHIBITS. There are no contracts or
documents which are required to be described in the Registration
Statements or the Prospectuses or to be filed as exhibits thereto which
have not been so described and filed as required.
(xv) POSSESSION OF INTELLECTUAL PROPERTY. The Company, its
subsidiaries and its Joint Ventures own or possess, or can acquire on
reasonable terms, adequate patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks, trade names or other intellectual
property
8
(collectively, "Intellectual Property") necessary to carry on the
business now operated by them, and neither the Company nor any of its
subsidiaries or any of its Joint Ventures has received any notice or is
otherwise aware of any infringement of or conflict with asserted rights
of others with respect to any Intellectual Property or of any facts or
circumstances which would render any Intellectual Property invalid or
inadequate to protect the interest of the Company or any of its
subsidiaries or any of its Joint Ventures therein, and which infringement
or conflict (if the subject of any unfavorable decision, ruling or
finding) or invalidity or inadequacy, singly or in the aggregate, would
result in a Material Adverse Effect.
(xvi) ABSENCE OF FURTHER REQUIREMENTS. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency
is necessary or required for the performance by the Company of its
obligations hereunder, in connection with the offering, issuance or sale
of the Securities under this Agreement and the Purchase Agreement or the
consummation of the transactions contemplated by this Agreement and the
Purchase Agreement, except (i) such as have been already obtained or as
may be required under the 1933 Act or the 1933 Act Regulations or state
securities laws or the Japanese Securities and Exchange Law [and (ii)
such as have been obtained under the laws and regulations of
jurisdictions outside the United States in which the Reserved Securities
are offered].
(xvii) POSSESSION OF LICENSES and PERMITS. The Company, its
subsidiaries and its Joint Ventures possess such permits, licenses,
approvals, consents and other authorizations (collectively, "Governmental
Licenses") issued by the appropriate federal, state, local or foreign
regulatory agencies or bodies (including the PRC State Council, the PRC
Ministry of Information Industry, the State Development and Planning
Commission, the [CSRC], the Ministry of Foreign Trade and Economic
Cooperation, the Ministry of Land and Resources, the State Administration
of Foreign Exchange, the General Administration of Customs, the relevant
Posts and Telecommunications Administrations ("PTA") and the relevant
Price Bureaus) necessary to conduct the business now operated by them;
the Company, its subsidiaries and its Joint Ventures are in compliance
with the terms and conditions of all such Governmental Licenses, except
where the failure so to comply would not, singly or in the aggregate,
have a Material Adverse Effect; all of the Governmental Licenses are
valid and in full force and effect, except when the invalidity of such
Governmental Licenses or the failure of such Governmental Licenses to be
in full force and effect would not have a Material Adverse Effect; and
neither the Company nor any of its subsidiaries or any of its Joint
Ventures has received any notice of proceedings relating to the
revocation, suspension or modification of any such Governmental Licenses
which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would result in a Material Adverse Effect.
(xviii) TITLE TO PROPERTY. The Company, its subsidiaries and
its Joint Ventures have good and marketable title to all real property
owned by the Company, its subsidiaries and its Joint Ventures and good
title to all other properties owned by them, in each case, free and clear
of all mortgages, pledges, liens, security interests, claims,
restrictions or encumbrances of any kind except such as (a) are described
in the Prospectuses or (b) do not, singly or in the aggregate, materially
affect the value of such
9
property and do not interfere with the use made and proposed to be made
of such property by the Company or any of its subsidiaries or any of
its Joint Ventures; and all of the leases and subleases material to the
business of the Company, its subsidiaries and its Joint Ventures,
considered as one enterprise, and under which the Company or any of its
subsidiaries or any of its Joint Ventures holds properties described in
the Prospectuses, are in full force and effect, and neither the Company
nor any subsidiary or any Joint Venture has any notice of any material
claim of any sort that has been asserted by anyone adverse to the
rights of the Company or any subsidiary or any Joint Venture under any
of the leases or subleases mentioned above, or affecting or questioning
the rights of the Company or such subsidiary or such Joint Venture to
the continued possession of the leased or subleased premises under any
such lease or sublease.
(xix) REPATRIATION OF DIVIDENDS AND OTHER DISTRIBUTIONS. All
dividends and other distributions declared and payable on the equity or
other interests in the PRC Subsidiaries or the Joint Ventures may, under
the laws and regulations of the PRC, be paid to the Company and may be
converted into foreign currency that may be freely transferred out of the
PRC, and except as disclosed in the Registration Statements and the
Prospectuses, all such dividends and distributions will not be subject to
withholding or other taxes under the laws and regulations of the PRC and
are otherwise free and clear of any other tax, withholding or deduction
in the PRC and may be so paid without the necessity of obtaining any
governmental authorization, whether local, provincial or national, in the
PRC.
(xx) PRC TAXES. Other than as described in the Prospectuses,
no stamp or other issuance or transfer taxes or duties and no capital
gains, income, withholding or other taxes are payable by or on behalf of
the Company to the PRC or any political subdivision or taxing authority
thereof or therein in connection with the issuance, sale and delivery of
the Securities or the execution, delivery and performance of this
Agreement and the Purchase Agreement. No stamp or other issuance or
transfer taxes or duties and no capital gains, income or withholding or
other taxes are payable by or on behalf of the Underwriters or the
Japanese Managers to the PRC or any political subdivision or taxing
authority thereof or therein in connection with the issuance, sale and
delivery of the Securities to the Underwriters and the Japanese Managers
or by the Underwriters and the Japanese Managers to the initial
purchasers thereof, or the execution, delivery and performance of this
Agreement and the Purchase Agreement.
(xxi) TAXES. The Company, its subsidiaries and the Joint
Ventures have filed all reports or filings required thereof for taxation
purposes, including those required by the PRC or any political
subdivision thereof.
(xxii) SOVEREIGN IMMUNITY. Under the laws of the PRC, neither
the Company nor any of its subsidiaries or any of its Joint Ventures, or
any of their properties, assets or revenues are entitled to any right of
immunity on the grounds of sovereignty from any legal action, suit or
proceeding, from set-off or counterclaim, from the jurisdiction of any
court, from service of process, from attachment to or in aid of execution
of judgment or from other legal process or proceeding for the giving of
any relief or for the enforcement of any judgment.
10
(xxiii) CHOICE OF LAW. Under the laws of the PRC, the courts of
the PRC recognize and give effect to the choice of law provisions set
forth in this Agreement and the Purchase Agreement and enforce judgments
of U.S. courts obtained against the Company to enforce this Agreement and
the Purchase Agreement, provided that the judgment (A) was not obtained
by fraud; (B) was final and conclusive; (C) in the opinion of the
relevant PRC court after the review of such judgment pursuant to
international treaties concluded or acceded to by the PRC government or
in accordance with the principle of reciprocity, or otherwise in
accordance with the Civil Procedure Law of the PRC, did not contradict
the basic principles of PRC law; (D) in the opinion of the relevant PRC
court after its review of such judgment pursuant to international
treaties concluded or acceded to by the PRC government or in accordance
with the principle of reciprocity, or otherwise in accordance with the
Civil Procedure Law of the PRC, did not violate state sovereignty,
security or public interest; and (E) was for a definite sum of money.
(xxiv) COMPLIANCE WITH CUBA ACT. The Company has complied
with, and is and will be in compliance with, the provisions of that
certain Florida act relating to disclosure of doing business with Cuba,
codified as Section 517.075 of the Florida statutes, and the rules and
regulations thereunder (collectively, the "Cuba Act") or is exempt
therefrom.
(xxv) INVESTMENT COMPANY ACT. The Company is not, and upon
the issuance and sale of the Securities as contemplated in this Agreement
and the Purchase Agreement and the application of the net proceeds
therefrom as described in the Prospectuses will not be, an "investment
company" or an entity "controlled" by an "investment company" as such
terms are defined in the Investment Company Act of 1940, as amended (the
"1940 Act").
(xxvi) [PASSIVE FOREIGN INVESTMENT COMPANY. The Company is not
a Passive Foreign Investment Company within the meaning of Section 1296
of the United States Internal Revenue Code of 1986, as amended, and the
Company believes that the Securities should not be treated as stock of a
Passive Foreign Investment Company for United States federal income tax
purposes.]
(xxvii) ENVIRONMENTAL LAWS. Except as described in the
Registration Statements and except as would not, singly or in the
aggregate, result in a Material Adverse Effect, (A) neither the Company
nor any of its subsidiaries or any of its Joint Ventures is in violation
of any federal, state, local or foreign statute, law, rule, regulation,
ordinance, code, policy or rule of common law or any judicial or
administrative interpretation thereof, including any judicial or
administrative order, consent, decree or judgment, relating to pollution
or protection of human health, the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or
subsurface strata) or wildlife, including, without limitation, laws and
regulations relating to the release or threatened release of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous substances,
petroleum or petroleum products (collectively, "Hazardous Materials") or
to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials (collectively,
11
"Environmental Laws"), (B) the Company, its subsidiaries, and its Joint
Ventures have all permits, authorizations and approvals required under
any applicable Environmental Laws and are each in compliance with their
requirements, (C) there are no pending or threatened administrative,
regulatory or judicial actions, suits, demands, demand letters, claims,
liens, notices of noncompliance or violation, investigation or
proceedings relating to any Environmental Law against the Company or any
of its subsidiaries or any of its Joint Ventures and (D) there are no
events or circumstances that might reasonably be expected to form the
basis of an order for clean-up or remediation, or an action, suit or
proceeding by any private party or governmental body or agency, against
or affecting the Company or any of its subsidiaries or any of its Joint
Ventures relating to Hazardous Materials or any Environmental Laws.
(xxviii) YEAR 2000. [The Company has reviewed its operations and
those of its subsidiaries and any of its Joint Ventures, as well as those
of any third parties with which the Company or any of its subsidiaries or
any of its Joint Ventures has a material relationship, to evaluate the
extent to which the business or operations of the Company or any of its
subsidiaries or any of its Joint Ventures will be effected by the Year
2000 Problem (as defined below). As a result of such review, the Company
has no reason to believe, and does not believe, that the Year 2000
Problem will have a Material Adverse Effect or result in any material
loss or interference with the business or operations of the Company, any
of its subsidiaries or any of its Joint Ventures. The "Year 2000
Problem" as used herein means any significant risk that computer hardware
or software used in the receipt, transmission, processing, manipulation,
storage, retrieval, retransmission or other utilization of dates or in
the operation of mechanical or electrical systems of any kind will not,
in the case of dates or time periods occurring after December 31, 1999,
function at least as effectively as in the case of dates or time periods
occurring prior to January 1, 2000.]
(xxix) FOREIGN CORRUPT PRACTICES ACT. Neither the Company, any
of its subsidiaries or any of its Joint Ventures nor any officer,
director, employee or agent thereof or any stockholder thereof acting on
behalf of the Company or any of its subsidiaries or any of its Joint
Ventures, has done any act or authorized, directed or participated in any
act, in violation of any provision of the United States Foreign Corrupt
Practices Act of 1977, as amended, applicable to such entity or person.
(xxx) REGISTRATION RIGHTS. There are no persons with
registration rights or other similar rights to have any securities
registered pursuant to the Registration Statements or otherwise
registered by the Company under the 1933 Act.
(b) OFFICER'S CERTIFICATES. Any certificate signed by any officer
of the Company or any of its subsidiaries or any of its Joint Ventures
delivered to the Global Coordinator, the Lead Managers or to counsel for the
Japanese Managers shall be deemed a representation and warranty by the
Company to each Japanese Manager as to the matters covered thereby.
SECTION 2. SALE AND DELIVERY TO JAPANESE MANAGERS; CLOSING. (a)
JAPANESE SECURITIES. On the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth,
the Company agrees to sell to each Japanese Manager,
12
severally and not jointly, and each Japanese Manager, severally and not
jointly, agrees to purchase from the Company, at the price per share set
forth in Schedule B, the number of Japanese Securities set forth in Schedule
A opposite the name of such Japanese Manager, plus any additional number of
Japanese Securities which such Japanese Manager may become obligated to
purchase pursuant to the provisions of Section 10 hereof.
(b) PAYMENT. Payment of the purchase price for, and delivery of
certificates for, Japanese Securities shall be made at the offices of
Shearman & Sterling, ▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at
such other place as shall be agreed upon by the Global Coordinator and the
Company, at 7:00 A.M. (California time) on the third (fourth, if the pricing
occurs after 4:30 P.M. (Eastern time) on any given day) business day after
the date hereof (unless postponed in accordance with the provisions of
Section 10), or such other time not later than ten business days after such
date as shall be agreed upon by the Global Coordinator and the Company (such
time and date of payment and delivery being herein called "Closing Time").
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery
to the Lead Managers for the respective accounts of the Japanese Managers of
certificates for the Japanese Securities to be purchased by them. It is
understood that each Japanese Manager has authorized the Lead Managers, for
its account, to accept delivery of, receipt for, and make payment of the
purchase price for, the Japanese Securities which it has agreed to purchase.
▇▇▇▇▇▇▇ ▇▇▇▇▇, individually and not as representative of the Japanese
Managers, may (but shall not be obligated to) make payment of the purchase
price for the Japanese Securities to be purchased by any Japanese Manager
whose funds have not been received by the Closing but such payment shall not
relieve such Japanese Manager from its obligations hereunder.
(c) DENOMINATIONS; REGISTRATION. Certificates for the Japanese
Securities shall be in such denominations and registered in such names as the
Lead Managers may request in writing at least one full business day before
the Closing Time. The certificates for the Japanese Securities will be made
available for examination and packaging by the Lead Managers in The City of
New York not later than 10:00 A.M. (Eastern time) on the business day prior
to the Closing Time.
SECTION 3. COVENANTS OF THE COMPANY. The Company covenants with each
Japanese Manager as follows:
(a) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION REQUESTS.
The Company, subject to Section 3(b), will comply with the requirements of
Rule 430A or Rule 434, as applicable, and will notify the Global Coordinator
immediately, and confirm the notice in writing, (i) when any post-effective
amendment to the Registration Statement shall become effective, or any
supplement to the Prospectus or any amended Prospectus shall have been filed,
(ii) of the receipt of any comments from the Commission, (iii) of any request
by the Commission for any amendment to the Registration Statement or any
amendment or supplement to the Prospectus or for additional information, and
(iv) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing or
suspending the use of any preliminary prospectus, or of the suspension of the
qualification of the Securities for offering or sale in any jurisdiction, or
of the initiation or threatening of any
13
proceedings for any of such purposes. The Company will promptly effect the
filings necessary pursuant to Rule 424(b) and will take such steps as it
deems necessary to ascertain promptly whether the form of prospectus
transmitted for filing under Rule 424(b) was received for filing by the
Commission and, in the event that it was not, it will promptly file such
prospectus. The Company will make every reasonable effort to prevent the
issuance of any stop order and, if any stop order is issued, to obtain the
lifting thereof at the earliest possible moment.
The Company will notify the Global Coordinator immediately, and
confirm the notice in writing, (i) of any request by or the receipt of
correspondence from the Director General and (ii) of the issuance by the
Director General of any notice of hearing from which may result an order
requiring the filing of an amendment or supplement to the Japanese
Registration Statement (whether as originally filed or amended) or an order
suspending the effectiveness of the registration under the Japanese
Registration Statement. In the event that any such order shall have been
issued, the Company will make every reasonable effort to promptly file such
amendment to the Japanese Registration Statement as is necessary for the
Director General to terminate such suspension order or otherwise use its best
efforts to obtain such termination.
(b) FILING OF AMENDMENTS. The Company will give the Global
Coordinator notice of its intention to file or prepare any amendment or
supplement to the Registration Statements (including any filing under Rule
462(b)), any Term Sheet or any amendment, supplement or revision to either
the prospectus included in the Registration Statements at the time of
effectiveness or the Prospectuses, and will furnish the Global Coordinator
with copies of any such documents a reasonable amount of time prior to such
proposed filing or use, as the case may be, and will not file or use any such
document to which the Global Coordinator or counsel for the Japanese Managers
shall object.
(c) DELIVERY OF REGISTRATION STATEMENTS. The Company has furnished
or will deliver to the Lead Managers and counsel for the Japanese Managers,
without charge, signed copies of the Japanese Registration Statement as
originally filed and of each amendment thereto (including exhibits filed
therewith or incorporated by reference therein) and signed copies of all
consents and certificates of experts, and will also deliver to the Lead
Managers, without charge, a conformed copy of the Japanese Registration
Statement as originally filed and of each amendment thereto (without
exhibits) for each of the Japanese Managers.
(d) DELIVERY OF PROSPECTUSES. The Company has delivered to each
Japanese Manager, without charge, as many copies of each Japanese preliminary
prospectus as such Japanese Manager reasonably requested, and the Company
hereby consents to the use of such copies for purposes permitted by the 1933
Act. The Company will furnish to each Japanese Manager, without charge, such
number of copies of the Japanese Prospectus (as amended or supplemented) as
such Japanese Manager may reasonably request.
(e) CONTINUED COMPLIANCE WITH SECURITIES LAWS. The Company will
comply with the 1933 Act and the 1933 Act Regulations so as to permit the
completion of the distribution of the Securities as contemplated in the
Purchase Agreement and in the Prospectus. If at any time when a prospectus
is required by the 1933 Act to be delivered in connection with sales of the
Securities, any event shall occur or condition shall exist as a result of
which it is necessary, in the opinion of counsel for the Underwriters or for
the Company, to amend the Registration
14
Statement or amend or supplement the Prospectus in order that the Prospectus
will not include any untrue statements of a material fact or omit to state a
material fact necessary in order to make the statements therein not
misleading in the light of the circumstances existing at the time it is
delivered to a purchaser, or if it shall be necessary, in the opinion of such
counsel, at any such time to amend the Registration Statement or amend or
supplement the Prospectus in order to comply with the requirements of the
1933 Act or the 1933 Act Regulations, the Company will promptly prepare and
file with the Commission, subject to Section 3(b), such amendment or
supplement as may be necessary to correct such statement or omission or to
make the Registration Statement or the Prospectus comply with such
requirements, and the Company will furnish to the Japanese Managers such
number of copies of such amendment or supplement as the Japanese Managers may
reasonably request.
If the delivery of a prospectus is required under the Japanese
Securities and Exchange Law in connection with the offering or sale of the
Japanese Securities at any time prior to the expiration of three months after
the date on which the registration under the Japanese Registration Statement
becomes effective, and if at such time any event shall occur or condition
shall exist as a result of which it is necessary, in the opinion of counsel
for the Japanese Managers or for the Company, to amend or supplement the
Japanese Registration Statement or the Japanese Prospectus in order that the
Japanese Prospectus will not include any untrue statements of a material fact
or omit to state a material fact required to be stated therein or necessary
to make the statements therein, when such Japanese Prospectus is delivered to
a purchaser, not misleading, or, if for any other reason it shall be
necessary during such period to amend or supplement the Japanese Registration
Statement or the Japanese Prospectus in order to comply with the Japanese
Securities and Exchange Law, the Company will promptly notify the Lead
Managers and upon the request of the Lead Managers, prepare and furnish
without charge to the Japanese Managers, as many copies as the Lead Managers
may reasonably request of such amendment or supplement to the Japanese
Prospectus which will correct such statement or omission or effect such
compliance [and file such amended or supplemented Registration Statement or
Prospectus, as the case may be].
The Company will comply with all the provisions, applicable to the
Company and shares of Common Stock of the Company, of the Japanese Securities
and Exchange Law and the cabinet orders and ministerial ordinances and other
rules and regulations thereunder (including the filing of securities reports
and other reports required thereunder) and all orders and guidances of the
Ministry of Finance of Japan issued thereunder.
(f) BLUE SKY QUALIFICATIONS. The Company will use its best
efforts, in cooperation with the Japanese Managers, to qualify the Japanese
Securities for offering and sale under the applicable securities laws of such
states and other jurisdictions (domestic or foreign) as the Global
Coordinator may designate and to maintain such qualifications in effect for a
period of not less than one year from the later of the effective date of the
Registration Statement and any Rule 462(b) Registration Statement; provided,
however, that the Company shall not be obligated to file any general consent
to service of process or to qualify as a foreign corporation or as a dealer
in securities in any jurisdiction in which it is not so qualified or to
subject itself to taxation in respect of doing business in any jurisdiction
in which it is not otherwise so subject. In each jurisdiction in which the
Securities have been so qualified, the Company will file such statements and
reports as may be required by the laws of such jurisdiction to continue such
qualification in
15
effect for a period of not less than one year from the effective date of the
Registration Statement and any Rule 462(b) Registration Statement.
(g) RULE 158. The Company will timely file such reports pursuant
to the Securities Exchange Act of 1934, as amended (the "1934 Act"), as are
necessary in order to make generally available to its securityholders as soon
as practicable an earnings statement for the purposes of, and to provide the
benefits contemplated by, the last paragraph of Section 11(a) of the 1933 Act.
(h) USE OF PROCEEDS. The Company will use the net proceeds
received by it from the sale of the Securities in the manner specified in the
Prospectuses under "Use of Proceeds".
(i) LISTING. The Company will use its best efforts to effect and
maintain the quotation of the Securities on the Nasdaq National Market and
will file with the Nasdaq National Market all documents and notices required
by the Nasdaq National Market of companies that have securities that are
traded in the over-the-counter market and quotations for which are reported
by the Nasdaq National Market.
(j) RESTRICTION ON SALE OF SECURITIES. During a period of 180 days
from the date of the Prospectuses, the Company will not, without the prior
written consent of the Global Coordinator, directly or indirectly, (i) offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant
to purchase or otherwise transfer or dispose of any share of Common Stock or
any securities convertible into or exercisable or exchangeable for Common
Stock or file any registration statement under the 1933 Act with respect to
any of the foregoing or (ii) enter into any swap or any other agreement or
any transaction that transfers, in whole or in part, directly or indirectly,
the economic consequence of ownership of the Common Stock, whether any such
swap or transaction described in clause (i) or (ii) above is to be settled by
delivery of Common Stock or such other securities, in cash or otherwise.
(k) REPORTING REQUIREMENTS. The Company, during the period when
the Prospectuses are required to be delivered under the 1933 Act or the 1934
Act, will file all documents required to be filed with the Commission
pursuant to the 1934 Act within the time periods required by the 1934 Act and
the rules and regulations of the Commission thereunder.
(l) COMPLIANCE WITH NASD RULES. The Company hereby agrees that it
will ensure that the Reserved Securities will be restricted as required by
the National Association of Securities Dealers, Inc. (the "NASD") or the NASD
rules from sale, transfer, assignment, pledge or hypothecation for a period
of three months following the date of this Agreement. The Underwriters will
notify the Company as to which persons will need to be so restricted. At the
request of the Underwriters, the Company will direct the transfer agent to
place a stop transfer restriction upon such securities for such period of
time. Should the Company release, or seek to release, from such restrictions
any of the Reserved Securities, the Company agrees to reimburse the
Underwriters for any reasonable expenses (including, without limitation,
legal expenses) they incur in connection with such release.
(m) COMPLIANCE WITH RULE 463. The Company will file with the
Commission such reports on Form SR as may be required pursuant to Rule 463 of
the 1933 Act Regulations.
16
SECTION 4. PAYMENT AND EXPENSES.
(a) EXPENSES. The Company will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
preparation, printing and filing of the Japanese Registration Statement
(including financial statements and exhibits) as originally filed and of each
amendment thereto, (ii) the preparation, printing and delivery to the
Underwriters of this Agreement, any Agreement among Managers and such other
documents as may be required in connection with the offering, purchase, sale,
issuance or delivery of the Japanese Securities, (iii) the preparation,
issuance and delivery of the certificates for the Japanese Securities to the
Japanese Managers, including any stock or other transfer taxes and any stamp
or other duties payable upon the sale, issuance or delivery of the Japanese
Securities to the Japanese Managers and the transfer of the Securities
between the Japanese Managers and the Underwriters, (iv) the fees and
disbursements of the Company's counsel, accountants and other advisors, (v)
the qualification of the Securities under securities laws in accordance with
the provisions of Section 3(f) hereof, including filing fees and the
reasonable fees and disbursements of counsel for the Underwriters in
connection therewith and in connection with the preparation of the Blue Sky
Survey and any supplement thereto, (vi) the printing and delivery to the
Underwriters of copies of each preliminary prospectus, any Term Sheets and of
the Prospectuses and any amendments or supplements thereto, (vii) the
preparation, printing and delivery to the Underwriters of copies of the Blue
Sky Survey and any supplement thereto, (viii) the fees and expenses of any
transfer agent or registrar for the Japanese Securities, (ix) the filing fees
incident to, and the reasonable fees and disbursements of counsel to the
Japanese Managers in connection with, the review by the NASD of the terms of
the sale of the Securities, (x) the fees and expenses incurred in connection
with the inclusion of the Japanese Securities in the Nasdaq National Market,
and (xi) all costs and expenses of the Japanese Managers.
(b) TERMINATION OF AGREEMENT. If this Agreement is terminated by
the Lead Managers in accordance with the provisions of Section 5 or Section
9(a)(i) hereof, the Company shall reimburse the Japanese Managers for all of
their out-of-pocket expenses, including the reasonable fees and disbursements
of counsel for the Japanese Managers.
SECTION 5. CONDITIONS OF JAPANESE MANAGERS' OBLIGATIONS. The
obligations of the several Japanese Managers hereunder are subject to the
accuracy of the representations and warranties of the Company contained in
Section 1 hereof or in certificates of any officer of the Company or any
subsidiary or any Joint Venture of the Company delivered pursuant to the
provisions hereof, to the performance by the Company of its covenants and
other obligations hereunder, and to the following further conditions:
(a) EFFECTIVENESS OF REGISTRATION STATEMENTS. The Registration
Statement, including any Rule 462(b) Registration Statement, has become
effective and at Closing Time no stop order suspending the effectiveness of
the Registration Statement shall have been issued under the 1933 Act or
proceedings therefor initiated or threatened by the Commission, and any
request on the part of the Commission for additional information shall have
been complied with to the reasonable satisfaction of counsel to the Japanese
Managers. A prospectus containing the Rule 430A Information shall have been
filed with the Commission in accordance with Rule 424(b) (or a post-effective
amendment providing such information shall have been filed and declared
effective in accordance with the requirements of Rule 430A) or, if the
Company has elected to
17
rely upon Rule 434, a Term Sheet shall have been filed with the Commission in
accordance with Rule 424(b).
The registration under the Japanese Registration Statement has become
effective and at the Closing Time, no notice of hearing, from which an order
suspending the effectiveness of such registration shall have been issued
under the Japanese Securities and Exchange Law, and any request on the part
of the Director General for additional information shall have been complied
with to the reasonable satisfaction of counsel to the Japanese Managers.
(b) OPINION OF COUNSEL FOR THE COMPANY. At Closing Time, the Lead
Managers shall have received the favorable opinion, dated as of Closing Time,
of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Professional Corporation, counsel for
the Company, in form and substance satisfactory to the Lead Managers and
counsel for the Japanese Managers, together with signed or reproduced copies
of such letter for each of the other Japanese Managers.
(c) OPINION OF PRC COUNSEL FOR THE COMPANY. At Closing Time, the
Lead Managers shall have received the favorable opinion, dated as of Closing
Time, of ▇▇▇ ▇▇ Law Offices, PRC counsel for the Company, in form and
substance satisfactory to the Lead Managers and counsel for the Japanese
Managers, together with signed or reproduced copies of such letter for each
of the other Japanese Managers.
(d) OPINION OF JAPANESE COUNSEL FOR THE COMPANY. At Closing Time,
the Lead Managers shall have received the favorable opinion, dated as of
Closing Time, of ________, Japanese counsel for the Company, in form and
substance satisfactory to the Lead Managers and counsel for the Japanese
Managers, together with signed or reproduced copies of such letter for each
of the other Japanese Managers.
(e) OPINION OF JAPANESE COUNSEL FOR THE JAPANESE MANAGERS. At
Closing Time, the Lead Managers shall have received the favorable opinion,
dated as of Closing Time, of Tomotsune Kimura & Mitomi, Japanese counsel for
the Japanese Managers, in form and substance satisfactory to the Lead
Managers, together with signed or reproduced copies of such letter for each
of the other Japanese Managers, and such counsel shall have received or been
permitted access to such papers and information as they may reasonably
request to enable them to give such opinion.
(f) OPINION OF COUNSEL FOR THE JAPANESE MANAGERS. At Closing Time,
the Lead Managers shall have received the favorable opinion, dated as of
Closing Time, of Shearman & Sterling, counsel for the Japanese Managers, in
form and substance satisfactory to the Lead Managers, together with signed or
reproduced copies of such letter for each of the other Japanese Managers, and
such counsel shall have received or been permitted access to such papers and
information as they may reasonably request to enable them to give such
opinion.
(g) OFFICERS' CERTIFICATE. At Closing Time, there shall not have
been, since the date hereof or since the respective dates as of which
information is given in the Prospectuses, any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company, its subsidiaries and its Joint Ventures
considered as one enterprise, whether or not arising in the ordinary course
of business, and the Lead
18
Managers shall have received a certificate of the President or a Vice
President of the Company and of the chief financial or chief accounting
officer of the Company, dated as of Closing Time, to the effect that (i)
there has been no such material adverse change, (ii) the representations and
warranties in Section 1(a) hereof are true and correct with the same force
and effect as though expressly made at and as of Closing Time, (iii) the
Company has complied with all agreements and satisfied all conditions on its
part to be performed or satisfied at or prior to Closing Time, and (iv) no
stop order suspending the effectiveness of the Registration Statement or the
registration under the Japanese Registration Statement has been issued and no
proceedings for that purpose have been instituted or are pending or are
contemplated by the Commission or the Director General, as the case may be.
(h) ACCOUNTANT'S COMFORT LETTER. At the time of the execution of
this Agreement, the Lead Managers shall have received from
PricewaterhouseCoopers LLP a letter dated such date, in form and substance
satisfactory to the Lead Managers, together with signed or reproduced copies
of such letter for each of the other Japanese Managers containing statements
and information of the type ordinarily included in accountants' "comfort
letters" to Japanese Managers with respect to the financial statements and
certain financial information contained in the Registration Statements and
the Prospectuses.
(i) BRING-DOWN COMFORT LETTER. At Closing Time, the Lead Managers
shall have received from PricewaterhouseCoopers LLP a letter, dated as of
Closing Time, to the effect that they reaffirm the statements made in the
letter furnished pursuant to subsection (h) of this Section, except that the
specified date referred to shall be a date not more than three business days
prior to Closing Time.
(j) APPROVAL OF LISTING. At Closing Time, the Securities shall
have been approved for inclusion in the Nasdaq National Market, subject only
to official notice of issuance.
(k) NO OBJECTION. The NASD has confirmed that it has not raised
any objection with respect to the fairness and reasonableness of the
underwriting terms and arrangements.
(l) LOCK-UP AGREEMENTS. At the date of this Agreement, the Lead
Managers shall have received an agreement substantially in the form of Exhibit D
hereto, in form and substance satisfactory to the Lead Managers, signed by each
officer, director and stockholder of the Company.
(m) PURCHASE OF INITIAL U.S. SECURITIES. Contemporaneously with the
purchase by the Japanese Managers of Japanese Securities under this Agreement,
the Underwriters shall have purchased the Initial Shares under the Purchase
Agreement.
(n) ADDITIONAL DOCUMENTS. At Closing Time, counsel for the
Japanese Managers shall have been furnished with such documents and opinions
as they may require for the purpose of enabling them to pass upon the
issuance and sale of the Securities as herein contemplated, or in order to
evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Company in connection with the issuance and sale of the
Securities as herein contemplated shall be satisfactory in form and substance
to the Lead Managers and counsel for the Japanese Managers.
19
(o) TERMINATION OF AGREEMENT. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled,
this Agreement, may be terminated by the Lead Managers by notice to the
Company at any time at or prior to Closing Time, and such termination shall
be without liability of any party to any other party except as provided in
Section 4 and except that Sections 1, 6, 7 and 8 shall survive any such
termination and remain in full force and effect.
SECTION 6. INDEMNIFICATION.
(a) INDEMNIFICATION OF JAPANESE MANAGERS. The Company agrees to
indemnify and hold harmless each Japanese Manager and each person, if any,
who controls any Japanese Manager within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statements (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information, if applicable, or the omission
or alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading or
arising out of any untrue statement or alleged untrue statement of a
material fact included in any preliminary prospectuses or the
Prospectuses (or any amendment or supplement thereto), or the omission or
alleged omission therefrom of a material fact necessary in order to make
the statements therein, in the light of the circumstances under which
they were made, not misleading;
[(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of (A) the violation of any
applicable laws or regulations of foreign jurisdictions where Reserved
Securities have been offered and (B) any untrue statement or alleged
untrue statement of a material fact included in the supplement or
prospectus wrapper material distributed in _______, _______ and ________
in connection with the reservation and sale of the Reserved Securities to
eligible employees of the Company and persons having business
relationships with the Company or the omission or alleged omission
therefrom of a material fact necessary to make the statements therein,
when considered in conjunction with the Prospectuses or preliminary
prospectuses, not misleading;]
[(ii)] [(iii)] against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or of any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission [or in
connection with any violation of the nature referred to in Section
6(a)(ii)(A) hereof]; provided that (subject to Section 6(d) below) any
such settlement is effected with the written consent of the Company; and
[(iii)] [(iv)] against any and all expense whatsoever, as
incurred (including the fees and disbursements of counsel chosen by
▇▇▇▇▇▇▇ ▇▇▇▇▇), reasonably incurred in investigating, preparing or
defending against any litigation, or any investigation or
20
proceeding by any governmental agency or body, commenced or threatened,
or any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission [or in
connection with any violation of the nature referred to in Section
6(a)(ii)(A) hereof], to the extent that any such expense is not paid
under (i) [,] [or] (ii) [or (iii)] above;
PROVIDED, HOWEVER, that this indemnity agreement shall not apply
to any loss, liability, claim, damage or expense to the extent arising
out of any untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with written information
furnished to the Company by any Japanese Manager through ▇▇▇▇▇▇▇ ▇▇▇▇▇
expressly for use in the Registration Statement (or any amendment
thereto), including the Rule 430A Information and the Rule 434
Information, if applicable, or any preliminary prospectus or the
Prospectuses (or any amendment or supplement thereto).
(b) INDEMNIFICATION OF COMPANY, DIRECTORS AND OFFICERS. Each
Japanese Manager severally agrees to indemnify and hold harmless the Company,
its directors, each of its officers who signed the Japanese Registration
Statement, and each person, if any, who controls the Company within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act against
any and all loss, liability, claim, damage and expense described in the
indemnity contained in subsection (a) of this Section, as incurred, but only
with respect to untrue statements or omissions, or alleged untrue statements
or omissions, made in the Japanese Registration Statement (or any amendment
thereto), including the Rule 430A Information and the Rule 434 Information,
if applicable, or any preliminary Japanese prospectus or the Japanese
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by such Japanese
Manager through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the Japanese Registration
Statement (or any amendment thereto) or such preliminary Japanese prospectus
or the Japanese Prospectus (or any amendment or supplement thereto).
(c) ACTIONS AGAINST PARTIES; NOTIFICATION. Each indemnified party
shall give notice as promptly as reasonably practicable to each indemnifying
party of any action commenced against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party shall not
relieve such indemnifying party from any liability hereunder to the extent it
is not materially prejudiced as a result thereof and in any event shall not
relieve it from any liability which it may have otherwise than on account of
this indemnity agreement. In the case of parties indemnified pursuant to
Section 6(a) above, counsel to the indemnified parties shall be selected by
▇▇▇▇▇▇▇ ▇▇▇▇▇, and, in the case of parties indemnified pursuant to Section
6(b) above, counsel to the indemnified parties shall be selected by the
Company. An indemnifying party may participate at its own expense in the
defense of any such action; provided, however, that counsel to the
indemnifying party shall not (except with the consent of the indemnified
party) also be counsel to the indemnified party. In no event shall the
indemnifying parties be liable for fees and expenses of more than one counsel
(in addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar
or related actions in the same jurisdiction arising out of the same general
allegations or circumstances. No indemnifying party shall, without the prior
written consent of the indemnified parties, settle or compromise or consent
to the entry of any
21
judgment with respect to any litigation, or any investigation or proceeding
by any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be
sought under this Section 6 or Section 7 hereof (whether or not the
indemnified parties are actual or potential parties thereto), unless such
settlement, compromise or consent (i) includes an unconditional release of
each indemnified party from all liability arising out of suc litigation,
investigation, proceeding or claim and (ii) does not include a statement as
to or an admission of fault, culpability or a failure to act by or on behalf
of any indemnified party.
(d) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE. If at any
time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by Section 6(a) [(ii)] [(iii)] effected without its
written consent if (i) such settlement is entered into more than 45 days
after receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such settlement
at least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.
SECTION 7. CONTRIBUTION. If the indemnification provided for in
Section 6 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims,
damages and expenses incurred by such indemnified party, as incurred, (i) in
such proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the Japanese Managers on the other hand
from the offering of the Japanese Securities pursuant to this Agreement or
(ii) if the allocation provided by clause (i) is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
Company on the one hand and of the Japanese Managers on the other hand in
connection with the statements or omissions[, or in connection with any
violation of the nature referred to in Section 6(a)(ii)(A) hereof,] which
resulted in such losses, liabilities, claims, damages or expenses, as well
as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the
Japanese Managers on the other hand in connection with the offering of the
Japanese Securities pursuant to this Agreement shall be deemed to be in the
same respective proportions as the total net proceeds from the offering of
the Japanese Securities pursuant to this Agreement (before deducting
expenses) received by the Company and the total underwriting discount
received by the Japanese Managers, in each case as set forth on the cover of
the Japanese Prospectus, or, if Rule 434 is used, the corresponding location
on the Term Sheet, bear to the aggregate initial public offering price of the
Securities as set forth on such cover.
The relative fault of the Company on the one hand and the Japanese
Managers on the other hand shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact
22
relates to information supplied by the Company or by the Japanese Managers
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission[or any violation
of the nature referred to in Section 6(a)(ii)(A) hereof].
The Company and the Japanese Managers agree that it would not be just
and equitable if contribution pursuant to this Section 7 were determined by
pro rata allocation (even if the Japanese Managers were treated as one entity
for such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to above in this Section 7.
The aggregate amount of losses, liabilities, claims, damages and expenses
incurred by an indemnified party and referred to above in this Section 7
shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Japanese Manager
shall be required to contribute any amount in excess of the amount by which
the total price at which the Securities underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages which
such Japanese Manager has otherwise been required to pay by reason of any
such untrue or alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the ▇▇▇▇ ▇▇▇) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls a
Japanese Manager within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act shall have the same rights to contribution as such
Japanese Manager, and each director of the Company, each officer of the
Company who signed the Registration Statements, and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act shall have the same rights to contribution as the
Company. The Japanese Managers' respective obligations to contribute
pursuant to this Section 7 are several in proportion to the number of Initial
Japanese Securities set forth opposite their respective names in Schedule A
hereto and not joint.
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company or any of its
subsidiaries submitted pursuant hereto, shall remain operative and in full
force and effect, regardless of any investigation made by or on behalf of any
Japanese Manager or controlling person, or by or on behalf of the Company,
and shall survive delivery of the Japanese Securities to the Japanese
Managers.
SECTION 9. TERMINATION OF AGREEMENT.
(a) TERMINATION; GENERAL. The Lead Managers may terminate this
Agreement, by notice to the Company, at any time at or prior to Closing Time
(i) if there has been, since the time of execution of this Agreement or since
the respective dates as of which information is given in the
23
Japanese Prospectus, any material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospects of
the Company, its subsidiaries and its Joint Ventures considered as one
enterprise, whether or not arising in the ordinary course of business, or
(ii) if there has occurred any material adverse change in the financial
markets in the United States or Japan or the international financial markets,
any outbreak of hostilities or escalation thereof or other calamity or crisis
or any change or development involving a prospective change in national or
international political, financial or economic conditions, in each case the
effect of which is such as to make it, in the judgment of the Lead Managers,
impracticable to market the Securities or to enforce contracts for the sale
of the Securities, or (iii) if trading in any securities of the Company has
been suspended or materially limited by the Commission or the Director
General or the Nasdaq National Market, or if trading generally on the
American Stock Exchange or the New York Stock Exchange or the Hong Kong Stock
Exchange or the [Japan Stock Exchange] or in the Nasdaq National Market has
been suspended or materially limited, or minimum or maximum prices for
trading have been fixed, or maximum ranges for prices have been required, by
any of said exchanges or by such system or by order of the Commission, the
NASD or any governmental authority, (iv) if a banking moratorium has been
declared by Federal or New York or Japanese or PRC authorities, (v) if a
change or development involving a prospective change in United States, Hong
Kong, Japanese or PRC taxation affecting the Company or the Securities or the
transfer thereof or the imposition of exchange controls by the United States
or Hong Kong or Japan or any change or development involving a prospective
change in the PRC exchange controls would materially and adversely affect the
financial markets or the market for the Securities and other equity
securities, or (vi) if the outbreak or escalation of hostilities involving
the United States, Hong Kong, Japan or the PRC or the declaration by the
United States, Hong Kong, Japan or the PRC of a national emergency or war
makes it impracticable or inadvisable to proceed with the public offering or
the delivery of the Securities on the terms and in the manner contemplated in
this Agreement, the Purchase Agreement and the Prospectuses, or (vii) if the
occurrence of any material adverse change in the existing financial,
political or economic conditions in the United States, Hong Kong, Japan or
the PRC or elsewhere which, in the judgment of the Lead Managers would
materially and adversely affect the financial markets or the market for the
Securities and other equity securities.
(b) LIABILITIES. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any
other party except as provided in Section 4 hereof, and provided further that
Sections 1, 6, 7 and 8 shall survive such termination and remain in full
force and effect.
SECTION 10. DEFAULT BY ONE OR MORE OF THE JAPANESE MANAGERS. If one
or more of the Japanese Managers shall fail at Closing Time to purchase the
Securities which it or they are obligated to purchase under this Agreement
(the "Defaulted Securities"), the Lead Managers shall have the right, within
24 hours thereafter, to make arrangements for one or more of the
non-defaulting Japanese Managers, or any other Japanese Managers, to purchase
all, but not less than all, of the Defaulted Securities in such amounts as
may be agreed upon and upon the terms herein set forth; if, however, the Lead
Managers shall not have completed such arrangements within such 24-hour
period, then:
(a) if the number of Defaulted Securities does not exceed
10% of the number of Japanese Securities to be purchased on such date,
each of the non-defaulting Japanese
24
Managers shall be obligated, severally and not jointly, to purchase the
full amount thereof in the proportions that their respective
underwriting obligations hereunder bear to the underwriting obligations
of all non-defaulting Japanese Managers, or
(b) if the number of Defaulted Securities exceeds 10% of the
number of Japanese Securities to be purchased on such date, this
Agreement shall terminate without liability on the part of any
non-defaulting Japanese Manager.
No action taken pursuant to this Section shall relieve any defaulting
Japanese Manager from liability in respect of its default.
[In the event of any such default which does not result in a termination
of this Agreement, either the Lead Managers or the Company shall have the right
to postpone Closing Time for a period not exceeding seven days in order to
effect any required changes in the Registration Statements or Prospectuses or in
any other documents or arrangements. As used herein, the term "Japanese
Manager" includes any person substituted for an Japanese Manager under this
Section 10.]
SECTION 11. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Japanese Managers shall be directed to the Lead Manager at
_________________________________________________________, attention of
_________, with a copy to the Lead Managers at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, attention of ________; and notices to
the Company shall be directed to it at __________, attention of _________.
SECTION 12. PARTIES. This Agreement shall each inure to the benefit
of and be binding upon the Japanese Managers and the Company and their
respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation, other
than the Japanese Managers and the Company and their respective successors
and the controlling persons and officers and directors referred to in
Sections 6 and 7 and their heirs and legal Lead Managers, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision herein contained. This Agreement and all conditions and provisions
hereof are intended to be for the sole and exclusive benefit of the Japanese
Managers and the Company and their respective successors, and said
controlling persons and officers and directors and their heirs and legal Lead
Managers, and for the benefit of no other person, firm or corporation. No
purchaser of Japanese Securities from any Japanese Manager shall be deemed to
be a successor by reason merely of such purchase.
SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
EXCEPT AS OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW
YORK CITY TIME.
SECTION 14. EFFECTS OF HEADINGS. The Article and Section headings
herein and the Table of Contents are for convenience only and shall not
affect the construction hereof.
25
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement between the Japanese Managers and the Company in accordance with
its terms.
Very truly yours,
UTSTARCOM, INC.
By__________________________________
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
▇▇▇▇▇▇▇ ▇▇▇▇▇ JAPAN INCORPORATED
E*TRADE SECURITIES CO., LTD.
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇ JAPAN INCORPORATED
By____________________________________
Authorized Signatory
For themselves and as Lead Managers of the other Japanese Managers.
26
SCHEDULE A
Number of
Name of Japanese Manager Janpanese Securities
------------------------ --------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇ JAPAN INCORPORATED...........................
E*TRADE SECURITIES CO., LTD................................
---------------
Total......................................................
===============
SCHEDULE B
UTSTARCOM, INC.
_________ Shares of Common Stock
(Par Value $0.00125 Per Share)
1. The initial public offering price per share for the
Securities, determined as provided in said Section 2, shall be $_______.
2. The purchase price per share for the Securities to be
paid by the several Japanese Managers shall be $_____, being an amount
equal to the initial public offering price set forth above less $_____
per share.
SCHEDULE C
List of persons and entities
subject to lock-up
[All directors and officers of the Company, all holders of at least 5% of the
Common Stock (or securities convertible or exercisable into common stock)
outstanding immediately prior to the offering, and holders of at least __% of
the Common Stock (or securities convertible or exercisable into common stock)
outstanding immediately prior to the offering.]
SCHEDULE D
List of Joint Ventures and Ownership Percentages of the Company
EXHIBIT A
Form of Lock-up Agreement