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UTSTARCOM, INC.
(a Delaware corporation)
8,000,000 Shares of Common Stock
PURCHASE AGREEMENT
Dated: _______ __, 2000
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TABLE OF CONTENTS
Page
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SECTION 1. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . .2
(a) Representations and Warranties by the Company . . . . . . . . . .3
(i) Compliance with Registration Requirements. . . . . . . .3
(ii) Independent Accountants. . . . . . . . . . . . . . . . .4
(iii) Financial Statements . . . . . . . . . . . . . . . . . .4
(iv) No Material Adverse Change in Business . . . . . . . . .5
(v) Good Standing of the Company . . . . . . . . . . . . . .5
(vi) Good Standing of Subsidiaries. . . . . . . . . . . . . .5
(vii) Good Standing of Joint Ventures. . . . . . . . . . . . .6
(viii) Capitalization . . . . . . . . . . . . . . . . . . . . .6
(ix) Authorization of Agreement . . . . . . . . . . . . . . .6
(x) Authorization and Description of Securities. . . . . . .6
(xi) Absence of Defaults and Conflicts. . . . . . . . . . . .7
(xii) Absence of Labor Dispute . . . . . . . . . . . . . . . .7
(xiii) Absence of Proceedings . . . . . . . . . . . . . . . . .8
(xiv) Accuracy of Exhibits . . . . . . . . . . . . . . . . . .8
(xv) Possession of Intellectual Property. . . . . . . . . . .8
(xvi) Absence of Further Requirements. . . . . . . . . . . . .8
(xvii) Possession of Licenses and Permits . . . . . . . . . . .9
(xviii) Title to Property. . . . . . . . . . . . . . . . . . . .9
(xix) Repatriation of Dividends and other Distributions. . . .9
(xx) PRC Taxes . . . . . . . . . . . . . . . . . . . . . . .10
(xxi) Taxes. . . . . . . . . . . . . . . . . . . . . . . . . 10
(xxii) [Sovereign Immunity. . . . . . . . . . . . . . . . . . 10
(xxiii) [Choice of Law . . . . . . . . . . . . . . . . . . . . 10
(xxiv) Compliance with Cuba Act . . . . . . . . . . . . . . . 11
(xxv) Investment Company Act . . . . . . . . . . . . . . . . 11
(xxvi) [Passive Foreign Investment Company. . . . . . . . . . 11
(xxvii) Environmental Laws . . . . . . . . . . . . . . . . . . 11
(xxviii) Year 2000. . . . . . . . . . . . . . . . . . . . . . . 12
(xxix) Foreign Corrupt Practices Act. . . . . . . . . . . . . 12
(xxx) Registration Rights. . . . . . . . . . . . . . . . . . 12
(b) Officer's Certificates. . . . . . . . . . . . . . . . . . . . . 12
SECTION 2. SALE AND DELIVERY TO UNDERWRITERS; CLOSING. . . . . . . . . . . 13
(a) Initial Securities . . . . . . . . . . . . . . . . . . . . . . 13
(b) Option Securities. . . . . . . . . . . . . . . . . . . . . . . .13
(c) Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
(d) 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 . . . . . . . . . . . 15
(f) Blue Sky Qualifications . . . . . . . . . . . . . . . . . . . . 16
(g) Rule 158. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(h) Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . .16
(i) Listing. . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
(j) Restriction on Sale of Securities . . . . . . . . . . . . . . . 16
(k) Reporting Requirements. . . . . . . . . . . . . . . . . . . . . 17
[(l) Compliance with NASD Rules. . . . . . . . . . . . . . . . . . . 17
[(m) Compliance with Rule 463. . . . . . . . . . . . . . . . . . . . 17
SECTION 4. PAYMENT AND EXPENSES. . . . . . . . . . . . . . . . . . . . . . 18
(a) Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(b) Termination of Agreement. . . . . . . . . . . . . . . . . . . . 18
SECTION 5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS . . . . . . . . . . . . 18
(a) Effectiveness of Registration Statement . . . . . . . . . . . . 18
(b) Opinion of Counsel for the Company. . . . . . . . . . . . . . . 19
(c) Opinion of PRC Counsel for the Company. . . .ERROR! BOOKMARK NOT DEFINED.
(d) Opinion of Counsel for the Underwriters . . . . . . . . . . . . 19
(e) Opinion of PRC Counsel for the Underwriters. . .ERROR! BOOKMARK NOT DEFINED.
(f) Officers' Certificate. . . . . . . . . . . . . . . . . . . . . .19
(g) Accountant's Comfort Letter . . . . . . . . . . . . . . . . . . 20
(h) Bring-down Comfort Letter . . . . . . . . . . . . . . . . . . . 20
(i) Approval of Listing . . . . . . . . . . . . . . . . . . . . . . 20
(j) No Objection. . . . . . . . . . . . . . . . . . . . . . . . . . .20
(k) Lock-up Agreements. . . . . . . . . . . . . . . . . . . . . . . .20
(l) Conditions to Purchase of Option Securities. . . . . . . . . . . 20
(m) Additional Documents . . . . . . . . . . . . . . . . . . . . . . 21
(n) Termination of Agreement . . . . . . . . . . . . . . . . . . . . 21
SECTION 6. INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . .22
(a) Indemnification of Underwriters . . . . . . . . . . . . . . . . .22
(b) Indemnification of Company, Directors and Officers . . . . . . . 23
(c) Actions against Parties; Notification. . . . . . . . . . . . . . 23
(d) Settlement without Consent if Failure to Reimburse . . . . . . . 24
[(e) Indemnification for Reserved Securities. . . . . . . . . . . . . 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 UNDERWRITERS . . . . . . . . . . 27
SECTION 11. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
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SECTION 12. PARTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 13. GOVERNING LAW AND TIME . . . . . . . . . . . . . . . . . . . . 28
SECTION 14. EFFECTS OF HEADINGS. . . . . . . . . . . . . . . . . . . . . . 28
SCHEDULES
Schedule A - List of Underwriters. . . . . . . . . . . . . .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)
8,000,000 Shares of Common Stock
(Par Value $.00125 Per Share)
PURCHASE AGREEMENT
_______ __, 2000
XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Banc of America Securities LLC
U.S. Bancorp Xxxxx Xxxxxxx Inc.
as Representatives of the several Underwriters
x/x Xxxxxxx Xxxxx & Xx.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxxx Xxxxx
Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
UTStarcom, Inc., a Delaware corporation (the "Company"), confirms its
agreement with Xxxxxxx Xxxxx & Co., Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated ("Xxxxxxx Xxxxx") and each of the other Underwriters named in
Schedule A hereto (collectively, the "Underwriters", which term shall also
include any underwriter substituted as hereinafter provided in Section 10
hereof), for whom Xxxxxxx Xxxxx, Banc of America Securities LLC and U.S.
Bancorp Xxxxx Xxxxxxx Inc. are acting as representatives (in such capacity,
the "Representatives"), with respect to the issue and sale by the Company and
the purchase by the Underwriters, acting severally and not jointly, of the
respective numbers of shares of Common Stock, par value $.00125 per share, of
the Company ("Common Stock") set forth in said Schedule A, and with respect
to the grant by the Company to the Underwriters, acting severally and not
jointly, of the option described in Section 2(b) hereof to purchase all or
any part of 1,500,000 additional shares of Common Stock to cover
over-allotments, if any. The aforesaid 8,000,000 shares of Common Stock (the
"Initial Securities") to be purchased by the Underwriters and all or any part
of the 1,500,000 shares of Common Stock subject to the option described in
Section 2(b) hereof (the "Option Securities") are hereinafter called,
collectively, the "Securities".
The Company understands that the Underwriters propose to make a public
offering of the Securities as soon as the Representatives deem advisable
after this Agreement has been executed and delivered.
The Company and the Underwriters agree that up to 500,000 shares of the
Securities 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
this 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 this 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- )
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). 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." Each 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 this 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 prospectus in the
form first furnished to the Underwriters for use in connection with the
offering of the Securities 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 the 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 deemed to
include the copy filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval system ("XXXXX").
SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) REPRESENTATIONS AND WARRANTIES BY THE COMPANY. The Company
represents and warrants to each Underwriter as of the date hereof, as of the
Closing Time referred to in Section
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2(c) hereof, and as of each Date of Delivery (if any) referred to in Section
2(b) hereof, and agrees with each Underwriter, as follows:
(i) COMPLIANCE WITH REGISTRATION REQUIREMENTS. Each of the
Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the 1933 Act and no
proceedings for that purpose have been instituted or are pending or, to
the knowledge of the Company, are contemplated by the Commission, and any
request on the part of the Commission for additional information has been
complied with.
At the respective times the Registration Statement, any Rule
462(b) Registration Statement and any post-effective amendments thereto
became effective and at the Closing Time (and, if any Option Securities
are purchased, at the Date of Delivery), the Registration Statement, the
Rule 462(b) Registration Statement and any amendments and supplements
thereto complied and will comply in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations and did not and
will not contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading [, and the Prospectus, any preliminary
prospectus 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
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 Securities are purchased, at the Date of
Delivery), included or will include an untrue statement of a material
fact or omitted or will omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under
which they were made, not misleading. 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 Prospectus made in reliance upon and in conformity with information
furnished to the Company in writing by any Underwriter through Xxxxxxx
Xxxxx expressly for use in the Registration Statement or Prospectus.
Each preliminary prospectus and the prospectus filed as part of
the Registration Statement as originally filed or as part of any
amendment thereto, or filed pursuant to Rule 424 under the 1933 Act,
complied when so filed in all material respects with the 1933 Act
Regulations and each preliminary prospectus and the Prospectus delivered
to the Underwriters for use in connection with this offering was
identical to the electronically transmitted copies thereof filed with the
Commission pursuant to XXXXX, except to the extent permitted by
Regulation S-T.
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(ii) INDEPENDENT ACCOUNTANTS. The accountants who certified
the financial statements and supporting schedules included in the
Registration Statement are independent public accountants as required by
the 1933 Act and the 1933 Act Regulations; each of the Company, its
subsidiaries and its Joint Ventures maintains a system of internal
accounting controls sufficient to provide reasonable assurance that (A)
transactions are executed in accordance with management's general or
specific authorizations; (B) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles ("GAAP") in China with a reconciliation to
GAAP in the United 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, 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
Statement and the Prospectus, together with the related schedules and
notes, present fairly the financial position of the Company and its
consolidated subsidiaries at the dates indicated and the statement of
operations, stockholders' equity and cash flows of the Company and its
consolidated subsidiaries for the periods specified; said financial
statements have been prepared in conformity with GAAP applied on a
consistent basis throughout the periods involved. The supporting
schedules included in the Registration Statement present fairly in
accordance with GAAP the information required to be stated therein. The
selected financial data and the summary financial information included in
the Prospectus present fairly the information shown therein and have been
compiled on a basis consistent with that of the audited financial
statements included in the Registration Statement. [The pro forma
financial statements and the related notes thereto included in the
Registration Statement and the Prospectus 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
Statement and the Prospectus, except as otherwise stated therein,
(A) there has been no material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospects
of the Company, its subsidiaries and its Joint Ventures (as defined
below) considered as one enterprise, whether or not arising in the
ordinary course of business (a "Material Adverse Effect"), (B) there have
been no transactions entered into by the Company, any of its subsidiaries
or any of its Joint Ventures, other than those in the ordinary course of
4
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 Prospectus and to enter into and perform its obligations
under this Agreement; and the Company is duly qualified as a foreign
corporation to transact business and is in good standing in each other
jurisdiction in which such qualification is required, whether by reason
of the ownership or leasing of property or the conduct of business,
except where the failure so to qualify or to be in good standing would
not result in a Material Adverse Effect.
(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 Prospectus and is duly
qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct
of business, except where the failure so to qualify or to be in good
standing would not result in a Material Adverse Effect; except as
otherwise disclosed in the Registration Statement, all of the issued and
outstanding capital stock of 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 Prospectus.
All registered capital required to be paid by each of the Company and the
5
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 caption "Capitalization" (except for
subsequent issuances, if any, pursuant to this Agreement, pursuant to
reservations, agreements or employee benefit plans referred to in the
Prospectus or pursuant to the exercise of convertible securities,
warrants or options referred to in the Prospectus). The shares of issued
and outstanding capital stock 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 AGREEMENT AND REGISTRATION STATEMENT.
This Agreement has been duly authorized, executed and delivered by the
Company. The Registration Statement and the Prospectus and the filing of
the Registration Statement and the Prospectus with the Commission have
been duly authorized by and on behalf of the Company, and the
Registration Statement has been duly signed by and on behalf of the
Company pursuant to such authorization.
(x) AUTHORIZATION AND DESCRIPTION OF SECURITIES. The
Securities have been duly authorized for issuance and sale to the
Underwriters pursuant to this Agreement and, when issued and delivered by
the Company pursuant to this Agreement against payment of the
consideration set forth herein, will be validly issued and fully paid and
non-assessable; the Common Stock conforms to all statements relating
thereto contained in the Prospectus 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;
6
and the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated herein and in the
Registration Statement (including the issuance and sale of the Securities
and the use of the proceeds from the sale of the Securities as described
in the Prospectus under the caption "Use of Proceeds") and compliance by
the Company with its obligations hereunder have been duly authorized by
all necessary corporate action and do not and will not, whether with or
without the giving of notice or passage of time or both, conflict with or
constitute a breach of, or default or Repayment Event (as defined below)
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any subsidiary
or any Joint Venture pursuant to, the Agreements and Instruments (except
for such conflicts, breaches or defaults or liens, charges or
encumbrances that would not result in a Material Adverse Effect), nor
will such action result in any violation of the provisions of the
articles, charter, by-laws or joint venture contract of the Company or
any subsidiary or any Joint Venture or any applicable law, statute, rule,
regulation, judgment, order, writ or decree 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 Statement (other than as disclosed therein), or which
might reasonably be expected to result in a Material Adverse Effect, or
which might reasonably be expected to materially and adversely affect the
properties or assets thereof or the consummation of the transactions
contemplated in this Agreement or the performance by the Company of its
obligations hereunder; the aggregate of all pending legal or governmental
proceedings to which the Company or any subsidiary is a party or of which
any of their respective property or assets is the subject which are not
described in the Registration Statement, including ordinary routine
litigation incidental to the business, could not reasonably be expected
to result in a Material Adverse Effect.
(xiv) ACCURACY OF EXHIBITS. There are no contracts or
documents which are required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits thereto which have
not been so described and filed as required.
7
(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 (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 hereunder or the consummation of the transactions
contemplated by this 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 [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
8
subsidiaries and its Joint Ventures and good title to all other
properties owned by them, in each case, free and clear of all mortgages,
pledges, liens, security interests, claims, restrictions or encumbrances
of any kind except such as (a) are described in the Prospectus or (b) do
not, singly or in the aggregate, materially affect the value of such
property and do not interfere with the use made and proposed to be made
of such property by the Company or any of its subsidiaries or any of its
Joint Ventures; and all of the leases and subleases material to the
business of the Company, its subsidiaries and its Joint Ventures,
considered as one enterprise, and under which the Company or any of its
subsidiaries or any of its Joint Ventures holds properties described in
the Prospectus, are in full force and effect, and neither the Company nor
any subsidiary or any Joint Venture has any notice of any material claim
of any sort that has been asserted by anyone adverse to the rights of the
Company or any subsidiary or any Joint Venture under any of the leases or
subleases mentioned above, or affecting or questioning the rights of the
Company or such subsidiary or such Joint Venture to the continued
possession of the leased or subleased premises under any such lease or
sublease.
(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 Statement and the
Prospectus, all such dividends and distributions will not be subject to
withholding or other taxes under the laws and regulations of the PRC and
are otherwise free and clear of any other tax, withholding or deduction
in the PRC and may be so paid without the necessity of obtaining any
governmental authorization, whether local, provincial or national, in the
PRC.
(xx) PRC TAXES. Other than as described in the Prospectus,
no stamp or other issuance or transfer taxes or duties and no capital
gains, income, withholding or other taxes are payable by or on behalf of
the Company to the PRC or any political subdivision or taxing authority
thereof or therein in connection with the issuance, sale and delivery of
the Securities or the execution, delivery and performance of this
Agreement. No stamp or other issuance or transfer taxes or duties and no
capital gains, income or withholding or other taxes are payable by or on
behalf of the Underwriters to the PRC or any political subdivision or
taxing authority thereof or therein in connection with the issuance, sale
and delivery of the Securities to the Underwriters or by the Underwriters
to the initial purchasers thereof, or the execution, delivery and
performance of this Agreement.
(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
9
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.
(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 enforce judgments of U.S. courts obtained
against the Company to enforce this Agreement, provided that the judgment
(A) was not obtained by fraud; (B) was final and conclusive; (C) in the
opinion of the relevant PRC court after the review of such judgment
pursuant to international treaties concluded or acceded to by the PRC
government or in accordance with the principle of reciprocity, or
otherwise in accordance with the Civil Procedure Law of the PRC, did not
contradict the basic principles of PRC law; (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 herein contemplated and the
application of the net proceeds therefrom as described in the Prospectus
will not be, an "investment company" or an entity "controlled" by an
"investment company" as such terms are defined in the Investment Company
Act of 1940, as amended (the "1940 Act").
(xxvi) [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 Statement and except as would not, singly or in the
aggregate, result in a Material Adverse Effect, (A) neither the Company
nor any of its subsidiaries 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,
10
"Hazardous Materials") or to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Hazardous
Materials (collectively, "Environmental Laws"), (B) the Company, its
subsidiaries, and 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 Statement 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 Representatives or to counsel for the Underwriters shall be deemed a
representation and warranty by the Company to each Underwriter as to the matters
covered thereby.
11
SECTION 2. SALE AND DELIVERY TO UNDERWRITERS; CLOSING. (a) INITIAL
SECURITIES. On the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the
Company agrees to sell to each Underwriter, severally and not jointly, and
each Underwriter, severally and not jointly, agrees to purchase from the
Company, at the price per share set forth in Schedule B, the number of
Initial Securities set forth in Schedule A opposite the name of such
Underwriter, plus any additional number of Initial Securities which such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof.
(b) OPTION SECURITIES. In addition, on the basis of the
representations and warranties herein contained and subject to the terms and
conditions herein set forth, the Company hereby grants an option to the
Underwriters, severally and not jointly, to purchase up to an additional
1,500,000 shares of Common Stock at the price per share set forth in Schedule
B, less an amount per share equal to any dividends or distributions declared
by the Company and payable on the Initial Securities but not payable on the
Option Securities. The option hereby granted will expire 30 days after the
date hereof and may be exercised in whole or in part from time to time only
for the purpose of covering over-allotments which may be made in connection
with the offering and distribution of the Initial Securities upon notice by
the Representatives to the Company setting forth the number of Option
Securities as to which the several Underwriters are then exercising the
option and the time and date of payment and delivery for such Option
Securities. Any such time and date of delivery (a "Date of Delivery") shall
be determined by the Representatives, but shall not be later than seven full
business days after the exercise of said option, nor in any event prior to
the Closing Time, as hereinafter defined. If the option is exercised as to
all or any portion of the Option Securities, each of the Underwriters, acting
severally and not jointly, will purchase that proportion of the total number
of Option Securities then being purchased which the number of Initial
Securities set forth in Schedule A opposite the name of such Underwriter
bears to the total number of Initial Securities, subject in each case to such
adjustments as the Representatives in their discretion shall make to
eliminate any sales or purchases of fractional shares.
(c) PAYMENT. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of
Shearman & Sterling, 0000 Xx Xxxxxx Xxxx, Xxxxx Xxxx, Xxxxxxxxxx 00000, or at
such other place as shall be agreed upon by the Representatives 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 Representatives and the Company (such
time and date of payment and delivery being herein called "Closing Time").
In addition, in the event that any or all of the Option Securities are
purchased by the Underwriters, payment of the purchase price for, and
delivery of certificates for, such Option Securities shall be made at the
above-mentioned offices, or at such other place as shall be agreed upon by
the Representatives and the Company, on each Date of Delivery as specified in
the notice from the Representatives to the Company.
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery
to the Representatives for the
12
respective accounts of the Underwriters of certificates for the Securities to
be purchased by them. It is understood that each Underwriter has authorized
the Representatives, for its account, to accept delivery of, receipt for, and
make payment of the purchase price for, the Initial Securities and the Option
Securities, if any, which it has agreed to purchase. Xxxxxxx Xxxxx,
individually and not as representative of the Underwriters, may (but shall
not be obligated to) make payment of the purchase price for the Initial
Securities or the Option Securities, if any, to be purchased by any
Underwriter whose funds have not been received by the Closing Time or the
relevant Date of Delivery, as the case may be, but such payment shall not
relieve such Underwriter from its obligations hereunder.
(d) DENOMINATIONS; REGISTRATION. Certificates for the Initial
Securities and the Option Securities, if any, shall be in such denominations
and registered in such names as the Representatives may request in writing at
least one full business day before the Closing Time or the relevant Date of
Delivery, as the case may be. The certificates for the Initial Securities
and the Option Securities, if any, will be made available for examination and
packaging by the Representatives in The City of New York not later than 10:00
A.M. (Eastern time) on the business day prior to the Closing Time or the
relevant Date of Delivery, as the case may be.
SECTION 3. COVENANTS OF THE COMPANY. The Company covenants with each
Underwriter as follows:
(a) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION REQUESTS.
The Company, subject to Section 3(b), will comply with the requirements of
Rule 430A or Rule 434, as applicable, and will notify the Representatives
immediately, and confirm the notice in writing, (i) when any post-effective
amendment to the Registration Statement shall become effective, or any
supplement to the Prospectus or any amended Prospectus shall have been filed,
(ii) of the receipt of any comments from the Commission, (iii) of any request
by the Commission for any amendment to the Registration Statement or any
amendment or supplement to the Prospectus or for additional information, and
(iv) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing or
suspending the use of any preliminary prospectus, or of the suspension of the
qualification of the Securities for offering or sale in any jurisdiction, or
of the initiation or threatening of any proceedings for any of such purposes.
The Company will promptly effect the filings necessary pursuant to Rule
424(b) and will take such steps as it deems necessary to ascertain promptly
whether the form of prospectus transmitted for filing under Rule 424(b) was
received for filing by the Commission and, in the event that it was not, it
will promptly file such prospectus. The Company will make every reasonable
effort to prevent the issuance of any stop order and, if any stop order is
issued, to obtain the lifting thereof at the earliest possible moment.
(b) FILING OF AMENDMENTS. The Company will give the
Representatives notice of its intention to file or prepare any amendment to
the Registration Statement (including any filing under Rule 462(b)), any Term
Sheet or any amendment, supplement or revision to either the prospectus
included in the Registration Statement at the time it became effective or the
Prospectus, and will furnish the Representatives with copies of any such
documents a reasonable amount of time prior to such proposed filing or use,
as the case may be, and will not file or use any such document to which the
Representatives or counsel for the Underwriters shall object.
13
(c) DELIVERY OF REGISTRATION STATEMENTS. The Company has furnished
or will deliver to the Representatives and counsel for the Underwriters,
without charge, signed copies of the Registration Statement as originally
filed and of each amendment thereto (including exhibits filed therewith or
incorporated by reference therein) and signed copies of all consents and
certificates of experts, and will also deliver to the Representatives,
without charge, a conformed copy of the Registration Statement as originally
filed and of each amendment thereto (without exhibits) for each of the
Underwriters. The copies of the Registration Statement and each amendment
thereto furnished to the Underwriters will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to XXXXX,
except to the extent permitted by Regulation S-T.
(d) DELIVERY OF PROSPECTUSES. The Company has delivered to each
Underwriter, without charge, as many copies of each preliminary prospectus as
such Underwriter reasonably requested, and the Company hereby consents to the
use of such copies for purposes permitted by the 1933 Act. The Company will
furnish to each Underwriter, without charge, during the period when the
Prospectus is required to be delivered under the 1933 Act or the Securities
Exchange Act of 1934, as amended (the "1934 Act"), such number of copies of
the Prospectus (as amended or supplemented) as such Underwriter may
reasonably request. The Prospectus and any amendments or supplements thereto
furnished to the Underwriters will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to XXXXX,
except to the extent permitted by Regulation S-T.
(e) CONTINUED COMPLIANCE WITH SECURITIES LAWS. The Company will
comply with the 1933 Act and the 1933 Act Regulations so as to permit the
completion of the distribution of the Securities as contemplated in this
Agreement and in the Prospectus. If at any time when a prospectus is
required by the 1933 Act to be delivered in connection with sales of the
Securities, any event shall occur or condition shall exist as a result of
which it is necessary, in the opinion of counsel for the Underwriters or for
the Company, to amend the Registration Statement or amend or supplement the
Prospectus in order that the Prospectus will not include any untrue
statements of a material fact or omit to state a material fact necessary in
order to make the statements therein not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser, or if it
shall be necessary, in the opinion of such counsel, at any such time to amend
the Registration Statement or amend or supplement the Prospectus in order to
comply with the requirements of the 1933 Act or the 1933 Act Regulations, the
Company will promptly prepare and file with the Commission, subject to
Section 3(b), such amendment or supplement as may be necessary to correct
such statement or omission or to make the Registration Statement or the
Prospectus comply with such requirements, and the Company will furnish to the
Underwriters such number of copies of such amendment or supplement as the
Underwriters may reasonably request.
(f) BLUE SKY QUALIFICATIONS. The Company will use its best
efforts, in cooperation with the Underwriters, to qualify the Securities for
offering and sale under the applicable securities laws of such states and
other jurisdictions (domestic or foreign) as the Representatives may
designate and to maintain such qualifications in effect for a period of not
less than one year from the later of the effective date of the Registration
Statement and any Rule 462(b) Registration Statement; provided, however, that
the Company shall not be obligated to file any general consent to service of
process or to qualify as a foreign corporation or as a dealer in securities
in
14
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
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 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
Prospectus under "Use of Proceeds".
(i) LISTING. The Company will use its best efforts to effect and
maintain the quotation of the Securities on the Nasdaq National Market and
will file with the Nasdaq National Market all documents and notices required
by the Nasdaq National Market of companies that have securities that are
traded in the over-the-counter market and quotations for which are reported
by the Nasdaq National Market.
(j) RESTRICTION ON SALE OF SECURITIES. During a period of 180 days
from the date of the Prospectus, the Company will not, without the prior
written consent of Xxxxxxx Xxxxx, (i) directly or indirectly, offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase or
otherwise transfer or dispose of any share of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock or file any
registration statement under the 1933 Act with respect to any of the
foregoing or (ii) enter into any swap or any 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.
Notwithstanding the foregoing, such restrictions shall not apply to (A)
shares of the Common Stock disposed of by the undersigned as bona fide gifts
provided that the donee thereof agrees in writing to be bound by the
provisions hereof; (B) a pledge of shares of the Common Stock by the
undersigned for the purposes of securing a loan or similar obligation from
the Company to the holder; (C) the exercise of outstanding stock options
issued under the Company's stock option plan, provided that the shares of
Common Stock issued upon exercise of said options shall be subject to the
restrictions set forth herein; (D) shares of the Common Stock distributed to
partners, members or stockholders of the undersigned, provided that each
distributee agrees in writing to be bound by the provisions hereof; and (E)
shares of the Common Stock purchased in the public market by the undersigned
in the public offering of the Securities or after the date of the public
offering of the Securities.
(k) REPORTING REQUIREMENTS. The Company, during the period when
the Prospectus is 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.
15
(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.
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 Registration Statement (including
financial statements and exhibits) as originally filed and of each amendment
thereto, (ii) the preparation, printing and delivery to the Underwriters of
this Agreement, any Agreement among Underwriters and such other documents as
may be required in connection with the offering, purchase, sale, issuance or
delivery of the Securities, (iii) the preparation, issuance and delivery of
the certificates for the Securities to the Underwriters, including any stock
or other transfer taxes and any stamp or other duties payable upon the sale,
issuance or delivery of the Securities to the Underwriters, (iv) the fees and
disbursements of the Company's counsel, accountants and other advisors, (v)
the qualification of the Securities under securities laws in accordance with
the provisions of Section 3(f) hereof, including filing fees and the
reasonable fees and disbursements of counsel for the Underwriters in
connection therewith and in connection with the preparation of the Blue Sky
Survey and any supplement thereto, (vi) the printing and delivery to the
Underwriters of copies of each preliminary prospectus, any Term Sheets and of
the Prospectus and any amendments or supplements thereto, (vii) the
preparation, printing and delivery to the Underwriters of copies of the Blue
Sky Survey and any supplement thereto, (viii) the fees and expenses of any
transfer agent or registrar for the Securities, (ix) the filing fees incident
to, and the reasonable fees and disbursements of counsel to the Underwriters
in connection with, the review by the NASD of the terms of the sale of the
Securities, (x) the fees and expenses incurred in connection with the
inclusion of the Securities in the Nasdaq National Market, and (xi) all costs
and expenses of the Underwriters, including the fees and disbursements of
counsel for the Underwriters, in connection with matters related to the
Reserved Securities which are designated by the Company for sale to employees
and others having a business relationship with the Company.
(b) TERMINATION OF AGREEMENT. If this Agreement is terminated by
the Representatives in accordance with the provisions of Section 5 or Section
9(a)(i) hereof, the Company shall reimburse the Underwriters for all of their
out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Underwriters.
16
SECTION 5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations
of the several Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company 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 STATEMENT. 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
Underwriters. 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 rely upon Rule 434, a Term Sheet shall have been
filed with the Commission in accordance with Rule 424(b).
(b) OPINION OF COUNSEL FOR THE COMPANY. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of
Closing Time, of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation,
counsel for the Company, in form and substance satisfactory to the
Representatives and counsel for the Underwriters, together with signed or
reproduced copies of such letter for each of the other Underwriters.
(c) OPINION OF PRC COUNSEL FOR THE COMPANY. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of
Closing Time, of Xxx Xx Law Offices, PRC counsel for the Company, in form and
substance satisfactory to the Representatives and counsel for the
Underwriters, together with signed or reproduced copies of such letter for
each of the other Underwriters.
(d) OPINION OF COUNSEL FOR THE UNDERWRITERS. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of
Closing Time, of Shearman & Sterling, counsel for the Underwriters, in form
and substance satisfactory to the Representatives, together with signed or
reproduced copies of such letter for each of the other Underwriters, and such
counsel shall have received or been permitted access to such papers and
information as they may reasonably request to enable them to give such
opinion.
(e) OFFICERS' CERTIFICATE. At Closing Time, there shall not have
been, since the date hereof or since the respective dates as of which
information is given in the Prospectus, any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company, its subsidiaries and its Joint Ventures
considered as one enterprise, whether or not arising in the ordinary course
of business, and the Representatives shall have received a certificate of the
President or a Vice President of the Company and of the chief financial or
chief accounting officer of the Company, dated as of Closing Time, to the
effect that (i) there has been no such material adverse change, (ii) the
representations and warranties in Section 1(a) hereof are true and correct
with the same force and
17
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 has been issued
and no proceedings for that purpose have been instituted or are pending or
are contemplated by the Commission.
(f) ACCOUNTANT'S COMFORT LETTER. At the time of the execution of
this Agreement, the Representatives shall have received from
PricewaterhouseCoopers LLP a letter dated such date, in form and substance
satisfactory to the Representatives, together with signed or reproduced
copies of such letter for each of the other Underwriters containing
statements and information of the type ordinarily included in accountants'
"comfort letters" to underwriters with respect to the financial statements
and certain financial information contained in the Registration Statement and
the Prospectus.
(g) BRING-DOWN COMFORT LETTER. At Closing Time, the
Representatives shall have received from PricewaterhouseCoopers LLP a letter,
dated as of Closing Time, to the effect that they reaffirm the statements
made in the letter furnished pursuant to subsection (e) of this Section,
except that the specified date referred to shall be a date not more than
three business days prior to Closing Time.
(h) 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.
(i) 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.
(j) LOCK-UP AGREEMENTS. At the date of this Agreement, the
Representatives shall have received an agreement substantially in the form of
Exhibit A hereto, in form and substance satisfactory to the Representatives,
signed by each officer, director and stockholder of the Company.
(k) CONDITIONS TO PURCHASE OF OPTION SECURITIES. In the event
that the Underwriters exercise their option provided in Section 2(b) hereof
to purchase all or any portion of the Option Securities, the representations
and warranties of the Company contained herein and the statements in any
certificates furnished by the Company or any subsidiary of the Company
hereunder shall be true and correct as of each Date of Delivery and, at the
relevant Date of Delivery, the Representatives shall have received:
(i) OFFICERS' CERTIFICATE. A certificate, dated such Date
of Delivery, of the President or a Vice President of the Company and of
the chief financial or chief accounting officer of the Company confirming
that the certificate delivered at the Closing Time pursuant to
Section 5(d) hereof remains true and correct as of such Date of Delivery.
(ii) OPINION OF COUNSEL FOR THE COMPANY. The favorable
opinion of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx Professional Corporation,
counsel for the Company, dated such Date of Delivery, relating to the
Option Securities to be purchased on such Date of
18
Delivery and otherwise to the same effect as the opinion required by
Section 5(b)(1) hereof.
(iii) OPINION OF PRC COUNSEL FOR THE COMPANY. The favorable
opinion of Xxx Xx Law Offices, PRC counsel for the Company, dated such
Date of Delivery, relating to the Option Securities to be purchased on
such Date of Delivery and otherwise to the same effect as the opinion
required by Section 5(b)(2) hereof.
(iv) OPINION OF COUNSEL FOR THE UNDERWRITERS. The favorable
opinion of Shearman & Sterling, counsel for the Underwriters, dated such
Date of Delivery, relating to the Option Securities to be purchased on
such Date of Delivery and otherwise to the same effect as the opinion
required by Section 5(c)(1) hereof.
(v) [OPINION OF PRC COUNSEL FOR THE UNDERWRITERS. The
favorable opinion of Commerce & Finance Law Offices, counsel for the
Underwriters, dated such Date of Delivery, relating to the Option
Securities to be purchased on such Date of Delivery and otherwise to the
same effect as the opinion required by Section 5(c)(2) hereof.]
(vi) BRING-DOWN COMFORT LETTER. A letter from
PricewaterhouseCoopers LLP, in form and substance satisfactory to the
Representatives and dated such Date of Delivery, substantially in the
same form and substance as the letter furnished to the Representatives
pursuant to Section 5(f) hereof, except that the "specified date" in the
letter furnished pursuant to this paragraph shall be a date not more than
five days prior to such Date of Delivery.
(l) ADDITIONAL DOCUMENTS. At Closing Time and at each Date of
Delivery, counsel for the Underwriters shall have been furnished with such
documents and opinions as they may require for the purpose of enabling them
to pass upon the issuance and sale of the Securities as herein contemplated,
or in order to evidence the accuracy of any of the representations or
warranties, or the fulfillment of any of the conditions, herein contained;
and all proceedings taken by the Company in connection with the issuance and
sale of the Securities as herein contemplated shall be satisfactory in form
and substance to the Representatives and counsel for the Underwriters.
(m) TERMINATION OF AGREEMENT. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled,
this Agreement, or, in the case of any condition to the purchase of Option
Securities, on a Date of Delivery which is after the Closing Time, the
obligations of the several Underwriters to purchase the relevant Option
Securities, may be terminated by the Representatives by notice to the Company
at any time at or prior to Closing Time or such Date of Delivery, as the case
may be, and such termination shall be without liability of any party to any
other party except as provided in Section 4 and except that Sections 1, 6, 7
and 8 shall survive any such termination and remain in full force and effect.
19
SECTION 6. INDEMNIFICATION.
(a) INDEMNIFICATION OF UNDERWRITERS. The Company agrees to indemnify
and hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto), including the Rule 430A Information
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 prospectus or the Prospectus (or any
amendment or supplement thereto), or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading;
[(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, 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 Prospectus or preliminary
prospectus, 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
Xxxxxxx Xxxxx), reasonably incurred in investigating, preparing or
defending against any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, 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;
20
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 Underwriter through Xxxxxxx Xxxxx
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
Prospectus (or any amendment or supplement thereto).
(b) INDEMNIFICATION OF COMPANY, DIRECTORS AND OFFICERS. Each
Underwriter severally agrees to indemnify and hold harmless the Company, its
directors, each of its officers who signed the Registration Statement, and each
person, if any, who controls the Company within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act 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 Registration
Statement (or any amendment thereto), including the Rule 430A Information and
the Rule 434 Information, if applicable, or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by such Underwriter
through Xxxxxxx Xxxxx expressly for use in the Registration Statement (or any
amendment thereto) or such preliminary prospectus or the 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 Xxxxxxx
Xxxxx, 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 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)
21
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.
[(e) INDEMNIFICATION FOR RESERVED SECURITIES. In connection with the
offer and sale of the Reserved Securities, the Company agrees, promptly upon a
request in writing, to indemnify and hold harmless the Underwriters from and
against any and all losses, liabilities, claims, damages and expenses incurred
by them as a result of the failure of eligible employees and of the Company and
persons with a business relationship with the Company to pay for and accept
delivery of Reserved Securities which, by the end of the first business day
following the date of this Agreement, were subject to a properly confirmed
agreement to purchase.]
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 Underwriters on the other hand from the offering
of the Securities pursuant to this Agreement or (ii) if the allocation provided
by clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and of the
Underwriters 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
Underwriters on the other hand in connection with the offering of the
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses) received by
the Company and the total underwriting discount received by the Underwriters,
in each case as set forth on the cover of the 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 Underwriters
on the other hand shall be determined by reference to, among other things,
whether any such untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Underwriters and the parties' relative
22
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 Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of any such untrue or
alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 0000 Xxx) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company 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 Underwriters'
respective obligations to contribute pursuant to this Section 7 are several in
proportion to the number of Initial Securities set forth opposite their
respective names in Schedule A hereto and not joint.
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company or any of its
subsidiaries submitted pursuant hereto, shall remain operative and in full force
and effect, regardless of any investigation made by or on behalf of any
Underwriter or controlling person, or by or on behalf of the Company, and shall
survive delivery of the Securities to the Underwriters.
SECTION 9. TERMINATION OF AGREEMENT.
(a) TERMINATION; GENERAL. The Representatives may terminate this
Agreement, by notice to the Company, at any time at or prior to Closing Time
(i) if there has been, since the time of execution of this Agreement or since
the respective dates as of which information is given in the Prospectus, any
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company, its
subsidiaries and its Joint
23
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 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
Representatives, impracticable to market the Securities or to enforce
contracts for the sale of the Securities, or (iii) if trading in any
securities of the Company has been suspended or materially limited by the
Commission or the Nasdaq National Market, or if trading generally on the
American Stock Exchange or the New York Stock Exchange or the Hong Kong Stock
Exchange or in the Nasdaq National Market has been suspended or materially
limited, or minimum or maximum prices for trading have been fixed, or maximum
ranges for prices have been required, by any of said exchanges or by such
system or by order of the Commission, the NASD or any governmental authority,
(iv) if a banking moratorium has been declared by Federal or New York or PRC
authorities, (v) if a change or development involving a prospective change in
United States, Hong Kong 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 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 or the PRC or the declaration by the
United States, Hong Kong or the PRC of a national emergency or war makes it
impracticable or inadvisable to proceed with the public offering or the
delivery of the Securities being delivered at such Date of Delivery on the
terms and in the manner contemplated in this Agreement and the Prospectus, or
(vii) if the occurrence of any material adverse change in the existing
financial, political or economic conditions in the United States, Hong Kong
or the PRC or elsewhere which, in the judgment of the Representatives would
materially and adversely affect the financial markets or the market for the
Securities and other equity securities.
(b) LIABILITIES. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 6, 7 and 8 shall survive such termination and remain in full force and
effect.
SECTION 10. DEFAULT BY ONE OR MORE OF THE UNDERWRITERS. If one or more
of the Underwriters shall fail at Closing Time or a Date of Delivery to purchase
the Securities which it or they are obligated to purchase under this Agreement
(the "Defaulted Securities"), the Representatives shall have the right, within
24 hours thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Defaulted Securities in such amounts as may be agreed upon and upon the
terms herein set forth; if, however, the Representatives shall not have
completed such arrangements within such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed
10% of the number of Securities to be purchased on such date, each of the
non-defaulting Underwriters shall be obligated, severally and not
jointly, to purchase the full amount thereof in the proportions that
their respective underwriting obligations hereunder bear to the
underwriting obligations of all non-defaulting Underwriters, or
24
(b) if the number of Defaulted Securities exceeds 10% of the
number of Securities to be purchased on such date, this Agreement or,
with respect to any Date of Delivery which occurs after the Closing Time,
the obligation of the Underwriters to purchase and of the Company to sell
the Option Securities to be purchased and sold on such Date of Delivery
shall terminate without liability on the part of any non-defaulting
Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination
of this Agreement or, in the case of a Date of Delivery which is after the
Closing Time, which does not result in a termination of the obligation of the
Underwriters to purchase and the Company to sell the relevant Option Securities,
as the case may be, either the Representatives or the Company shall have the
right to postpone Closing Time or the relevant Date of Delivery, as the case may
be, for a period not exceeding seven days in order to effect any required
changes in the Registration Statement or Prospectus or in any other documents or
arrangements. As used herein, the term "Underwriter" includes any person
substituted for an Underwriter under this Section 10.
SECTION 11. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representatives at Xxxxx Xxxxx, Xxxxx
Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000, attention of _________, with a
copy to the Representatives at 000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxxxx
Xxxxxxxxxx 00000, 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 Underwriters 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
Underwriters 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 representatives, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision herein contained. This
Agreement and all conditions and provisions hereof are intended to be for the
sole and exclusive benefit of the Underwriters and the Company and their
respective successors, and said controlling persons and officers and directors
and their heirs and legal representatives, and for the benefit of no other
person, firm or corporation. No purchaser of Securities from any Underwriter
shall be deemed to be a successor by reason merely of such purchase.
SECTION 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 Underwriters 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:
XXXXXXX XXXXX & CO.
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
BANC OF AMERICA SECURITIES LLC
U.S. BANCORP XXXXX XXXXXXX INC.
By: XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
By
--------------------------------
Authorized Signatory
For themselves and as Representatives of the other Underwriters named in
Schedule A hereto.
26
SCHEDULE A
NUMBER OF
NAME OF UNDERWRITER INITIAL SECURITIES
------------------- ------------------
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated. . . . . . . . . . . . . . . . . . . .
Banc of America Securities LLC. . . . . . . . . . . . . . . .
U.S. Bancorp Xxxxx Xxxxxxx Inc. . . . . . . . . . . . . . . .
_____
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . .
===========
Sch A-1
SCHEDULE B
UTSTARCOM, INC.
_________ SHARES OF COMMON STOCK
(PAR VALUE $.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 Underwriters shall be $_____, being an amount equal
to the initial public offering price set forth above less $_____ per
share; provided that the purchase price per share for any Option
Securities purchased upon the exercise of the over-allotment option
described in Section 2(b) shall be reduced by an amount per share equal
to any dividends or distributions declared by the Company and payable on
the initial Securities but not payable on the Option Securities.
Sch B-1
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.]
M-1
SCHEDULE D
LIST OF JOINT VENTURES AND OWNERSHIP PERCENTAGES OF THE COMPANY
M-2
EXHIBIT A
FORM OF LOCK-UP
M-3
