Exhibit 1.1
11,250,000 AMERICAN DEPOSITARY SHARES
XXX ONLINE INC.
representing 900,000,000 Ordinary Shares
(par value HK$ . per Ordinary Share)
FORM OF INTERNATIONAL UNDERWRITING AGREEMENT
March [.], 2004
TABLE OF CONTENTS
1. Representations and Warranties ...................................... 5
2. Agreements to Sell and Purchase ..................................... 18
3. Terms of Public Offering. ........................................... 21
4. Payment and Delivery. ............................................... 21
5. Conditions to the Underwriters' Obligations. ........................ 24
6. Covenants of the Company ............................................ 28
7. Indemnity and Contribution .......................................... 32
8. Termination ......................................................... 35
9. Effectiveness; Defaulting Underwriters .............................. 36
10. Submission of Jurisdiction .......................................... 37
11. Currency ............................................................ 38
12. Notices ............................................................. 39
13. Successors .......................................................... 39
14. Counterparts ........................................................ 40
15. Applicable Law ...................................................... 40
16. Headings ............................................................ 40
17. Miscellaneous ....................................................... 40
i
March [.], 2004
Citigroup Global Markets Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Xxxxxx Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
As U.S. Representatives of the several U.S. Underwriters
Citigroup Global Markets Limited
c/o Citigroup Global Markets Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Xxxxxx Xxxxxxx & Co. International Limited
c/o Morgan Xxxxxxx Xxxx Xxxxxx Asia Limited
00xx Xxxxx, Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxx Xxxx.
As International Representatives of the several International Underwriters
Citigroup Global Markets Asia Limited
c/o Citigroup Global Markets Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Xxxxxx Xxxxxxx Xxxx Xxxxxx Asia Limited
00xx Xxxxx, Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxx Xxxx.
As Joint Global Coordinators
Dear Sirs and Mesdames:
XXX Online Inc. (the "Company"), an exempted company incorporated with
limited liability under the laws of the Cayman Islands, proposes to issue and
sell to the several underwriters named in Schedule I hereto (the "Underwriters")
an aggregate of 11,250,000
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American Depositary Shares, each representing 80 ordinary shares, par value HK$
[.] per share (each an "Ordinary Share") of the Company (the "Firm ADSs").
It is understood that, subject to the conditions hereinafter stated, (i)
5,625,000 Firm ADSs (the "U.S. Firm ADSs") will be sold to the several U.S.
Underwriters named in Schedule I hereto (the "U.S. Underwriters") in connection
with the offering and sale of such U.S. Firm ADSs in the United States and
Canada to United States or Canadian Persons (as defined below) (the "U.S.
Offering") and (ii) 5,625,000 Firm ADSs (the "International Firm ADSs") will be
sold to the several International Underwriters named in Schedule II hereto (the
"International Underwriters") in connection with the offering and sale of such
International Firm ADSs outside the United States and Canada, including to
professional and institutional investors in Hong Kong and a preferential offer
to certain qualifying shareholders of the XXX Group Limited (the "Qualified
Shareholders") of a reserved allocation of [.] Ordinary Shares (the "Reserved
Shares", referred to herein as the "Preferential Offering" collectively the
"International Offering"). Citigroup Global Markets Inc. and Xxxxxx Xxxxxxx &
Co. Incorporated shall act as representatives of the several U.S. Underwriters
(the "U.S. Representatives") and Citigroup Global Markets Limited and Xxxxxx
Xxxxxxx & Co. International Limited shall act as representatives of the several
International Underwriters (the "International Representatives"). The U.S.
Underwriters and the International Underwriters are hereinafter collectively
referred to as the "Underwriters". As used herein, "you" refers to the U.S.
Representatives and the International Representatives. As used herein, (A)
"United States or Canadian Person" shall mean any national or resident of the
United States or Canada, or any corporation, pension, profit-sharing or other
trust or other entity organized under the laws of the United States or Canada or
any political subdivision thereof (other than a branch located outside the
United States and Canada of any United States or Canadian Person), and shall
include any United States or Canadian branch of a person who is otherwise not a
United States or Canadian Person, (B) "United States" shall mean the United
States of America, its territories, its possessions and all areas subject to its
jurisdiction and (C) "Canada" shall mean Canada, its provinces, its territories
and all areas subject to its jurisdiction.
XXX Group Limited, the parent company of the Company (the "Parent
Company"), also proposes to issue and sell to the U.S. Underwriters and the
International Underwriters not more than an additional 1,875,000 American
Depositary Shares representing 150,000,000 Ordinary Shares of the Company (the
"Additional ADSs"), if and to the extent that the Joint Global Coordinators (as
defined below) shall have determined to exercise, on behalf of the Underwriters,
the right to purchase such Additional ADSs granted to the Underwriters in
Section 2(b) hereof. The Firm ADSs and the Additional ADSs are hereinafter
collectively referred to as the "ADSs".
Prior to the commencement of the U.S. Offering and the International
Offering, the Company has entered into an agreement dated March 1, 2004 (the
"Hong Kong Underwriting Agreement") providing for the public offering by the
Company for subscription in Hong Kong (the "Hong Kong Public Offering") of up to
an aggregate of 100,000,000 Ordinary Shares (the "Hong Kong Shares") through
arrangements with certain underwriters in Hong Kong (the "Hong Kong
Underwriters"), for whom Citigroup Global Markets Asia
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Limited and Xxxxxx Xxxxxxx Xxxx Xxxxxx Asia Limited are acting as
representatives (the "Hong Kong Representatives"). The Hong Kong Public
Offering, the U.S. Offering and the International Offering are collectively
referred to herein as the "Global Offering." Anything herein or therein to the
contrary notwithstanding, the respective closings under this Agreement and the
Hong Kong Underwriting Agreement are hereby made expressly conditional on one
another. This Agreement and the Hong Kong Underwriting Agreement are
collectively referred to herein as the "Underwriting Agreements". As described
in Section 2(a), (b) and (c), the Underwriters may, in their discretion, require
that Ordinary Shares in respect of ADSs sold in the International and U.S.
Offering (the "Offer Shares") be delivered in lieu of ADSs.
The Underwriters and the Hong Kong Underwriters (through their appointed
representatives) have entered into an agreement dated the date hereof (the
"Intersyndicate Agreement") providing, among other things, that Citigroup Global
Markets Asia Limited and Xxxxxx Xxxxxxx Xxxx Xxxxxx Asia Limited shall act as
the joint global coordinators (the " Joint Global Coordinators," and each a
"Global Coordinator") for the Global Offering and shall have the authority to
reallocate the ADSs, the Offer Shares and the Hong Kong Shares among the
underwriting syndicates. The Company hereby confirms the appointment of the
Joint Global Coordinators by the Underwriters and the Hong Kong Underwriters. It
is understood and agreed that the Joint Global Coordinators in their sole
discretion shall also have authority to allocate the Additional ADSs among the
U.S. Offering and the International Offering to cover any over-allotments.
Two forms of offering documents are to be used in connection with the
offering and sale of ADSs, one relating to the U.S. Offering (the "U.S.
Prospectus") and another relating to the International Offering (the
"International Prospectus"). The U.S. Prospectus will be identical to the
International Prospectus except for a substitute cover page. A separate form of
offering document (the "Hong Kong Prospectus") will be used in connection with
the Hong Kong Public Offering which will contain in all material respects the
same information as included in the U.S. Prospectus and International Prospectus
and certain supplemental pages.
The Company has filed with the United States Securities and Exchange
Commission (the "Commission") (i) a registration statement on Form F-1
(Commission file number 333-112800) and a related preliminary U.S. Prospectus
relating to the registration of the Offer Shares and the offering thereof in the
form of ADSs under the United States Securities Act of 1933, as amended (the
"Securities Act"), (ii) a registration statement on Form F-6 (Commission file
number 333- 112817) relating to the offering and sale of the registration of the
ADSs under the Securities Act and (iii) a registration statement on Form 8-A
(Commission file number [.]) relating to the registration of the Offer Shares
and the ADSs under the United States Securities Exchange Act of 1934, as amended
(the "Exchange Act"). The registration statement on Form F-1 as amended at the
time it becomes effective, or, if a post-effective amendment is filed with
respect thereto, as amended by such post-effective amendment at the time of its
effectiveness, including in each case the information (if any) deemed to be part
of the registration statement at the time of effectiveness pursuant to Rule 430A
under the Securities Act, is hereinafter referred to as the "Registration
Statement", and the U.S. Prospectus and the International Prospectus in the
respective forms used to confirm the sales of ADSs and Offer
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Shares are hereinafter collectively referred to as the "Prospectus". If the
Company has filed an abbreviated registration statement to register additional
Offer Shares pursuant to Rule 462(b) under the Securities Act (the "Rule 462
Registration Statement"), then any reference to the "Registration Statement"
shall be deemed to refer to both the registration statement referred to above
(Commission file number 333-112800) and the Rule 462 Registration Statement, in
each case as amended from time to time. The registration statement on Form F-6,
at the time it becomes effective, or if a post-effective amendment is filed with
respect thereto, as amended by such post-effective amendment at the time of its
effectiveness, including in each case all exhibits thereto, is hereinafter
called the "ADS Registration Statement". The registration statement on Form 8-A,
at the time it becomes effective, or, if a post-effective amendment is filed
with respect thereto, as amended by such post-effective amendment at the time of
its effectiveness, including in each case all exhibits thereto, is hereinafter
called the "8-A Registration Statement".
The ADSs are to be issued pursuant to a deposit agreement dated [.] (the
"Deposit Agreement") among the Company, Citibank N.A., as depositary (the
"Depositary"), and all holders and beneficial owners of the ADSs evidenced by
American Depositary Receipts (the "ADRs") issued by the Depositary.
It is understood that the Parent Company, as part of the reorganization of
the Company, has completed a series of events and transactions as described in
the Prospectus including, among other things, (i) the transfer of certain core
Internet business entities to the Company and (ii) the entry into various
agreements with the Company and a number of its subsidiaries as set out in
Schedule III, and as in the Prospectus (each a "Reorganization Agreement" and
collectively the "Reorganization Agreements")(the "Reorganization Transaction").
In addition, it is understood that the Company, through a wholly-owned
subsidiary, has pursuant to a sale and purchase agreement with Cranwood Company
Limited ("Cranwood") (the "Acquisition Agreement",) acquired 100% of Puccini
International Limited ("Puccini"), which provides wireless interactive voice
response services through Beijing Lei Xxxx Xx Ji Network Technology Company
Limited (the "Acquisition Transaction"), as described in the Prospectus.
The Company conducts substantially all of its operations and generates
substantially all of its revenue through Beijing Lei Ting Wan Jun Network
Technology Limited ("Beijing Lei Ting"), Shenzhen Freenet Information Technology
Company Limited ("Shenzhen Freenet") and Beijing Lei Xxxx Xx Ji Network
Technology Limited ("Xx Xx Network") (individually referred to as an "Operating
Company" and collectively as the "Operating Companies"), each of which is owned
by citizens of the People's Republic of China ("PRC") and established in the
PRC, all as described in the Prospectus. In addition, the Company and/or its
wholly-owned subsidiaries have entered into a series of contractual arrangements
and agreements with these Operating Companies and/or their respective
shareholders as set out in Schedule IV, each such agreement referred to herein
individually as a "Corporate Agreement" and collectively as the "Corporate
Agreements".
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1. Representations and Warranties. Each of the Company and the Parent Company
jointly and severally represents and warrants to and agrees with each of the
Underwriters that:
(a) Each of the Registration Statement, the ADS Registration Statement
and the 8-A Registration Statement has become effective under the
Securities Act or the Exchange Act, as the case may be; no stop
order suspending the effectiveness of the Registration Statement
or the ADS Registration Statement is in effect; and no proceedings
for such purpose have been instituted, are pending before or, to
the best of the Parent Company or the Company's knowledge, are
threatened by the Commission.
(b) (i) Each of the Registration Statement, the ADS Registration
Statement and the 8-A Registration Statement when it became
effective, did not contain and, as amended or supplemented, if
applicable, will not contain, as of the effective date of any such
amendment or supplement, any 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, (ii) the
Registration Statement, the ADS Registration Statement and the
Prospectus (including preliminary forms thereof filed as part of
the Registration Statement as originally filed or as part of any
amendment therein, or filed pursuant to Rule 424 under the
Securities Act) comply and, as amended or supplemented, if
applicable, will comply in all material respects with the
Securities Act and the applicable rules and regulations of the
Commission thereunder (the "Securities Act Regulations"), (iii)
the 8-A Registration Statement complies and, as amended or
supplemented, if applicable, will comply in all material respects
with the Exchange Act and the applicable rules and regulations of
the Commission thereunder (the "Exchange Act Regulations") and
(iv) the Prospectus, as of its date and as of each Time of
Delivery (as defined below), does not contain (and preliminary
forms thereof did not contain) and, as amended or supplemented, if
applicable, will not contain, as of the applicable date of such
amendment or supplement, any untrue statement of a material fact
or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were
made, not misleading; except that the representations and
warranties set forth in this Section 1(b) do not apply to
statements or omissions in the Registration Statement or the
Prospectus based upon information relating to any Underwriter
furnished to the Company in writing by such Underwriter through a
Global Coordinator expressly for use therein.
(c) The Company's subsidiaries incorporated in the PRC are identified
in Schedule V (each a "PRC Subsidiary") and the Company has no
other direct or indirect subsidiaries or any other company in the
PRC (other than the Operating Companies) over which it has direct
or indirect effective control incorporated or operating in the
PRC. Each PRC Subsidiary has been duly established and is validly
existing under the laws of the PRC, and its business license is in
full force and effect. The Articles of Association of each PRC
Subsidiary comply with the
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requirements of applicable PRC law, including the PRC Company Law,
and are in full force and effect.
(d) Each Operating Company has been duly established and is validly
existing under the laws of the PRC, and its business license is in
full force and effect. The Articles of Association of each
Operating Company comply with the requirements of applicable PRC
law, including the PRC Company Law, and are in full force and
effect.
(e) None of the businesses, activities, agreements or commitments of
any PRC Subsidiary or Operating Company, current or past, is or
has been unauthorized or exceeds the business scope of its
respective business license except to the extent failure to be so
authorized or to operate within the business scope of its
respective business license would not have a material adverse
effect on the general affairs, management, shareholders' equity,
results of operations, position, financial or otherwise, or
prospects of the Company, the Subsidiaries, the PRC Subsidiaries
and the Operating Companies, taken as a whole (a "Material Adverse
Effect").
(f) Each PRC Subsidiary and Operating Company is a legal person with
limited liability and the liability of the Company or any other
equity investor in respect of equity interests held in each PRC
Subsidiary and Operating Company is limited to its investment
therein. All of the registered share capital of, or equity
interest in, each PRC Subsidiary and Operating Company have been
fully authorized and are validly issued, fully paid and
non-assessable and, in the case of each PRC Subsidiary, are owned
directly or indirectly by the Company, free and clear of all
liens, charges, restrictions upon voting or transfer or any other
encumbrances, equities or claims.
(g) Neither the Company nor any of its subsidiaries incorporated
outside the PRC as identified in Schedule VI (the "Subsidiaries"),
the PRC Subsidiaries or the Operating Companies has sustained,
since the date of the latest audited financial statements included
in the Prospectus, any material loss or interference with its
business from fire, explosion, flood or other calamity, whether or
not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, or any other development
reasonably likely to involve a prospective material adverse
change, in or affecting the business, properties, management,
shareholders' equity, results of operations, condition (financial
or otherwise), or prospects of the Company, the Subsidiaries, the
PRC Subsidiaries, and the Operating Companies, taken as a whole (a
"Material Adverse Change"), otherwise than as set forth or
contemplated in the Prospectus.
(h) None of the Company, the Subsidiaries, the PRC Subsidiaries or the
Operating Companies have any subsidiaries that have not been
disclosed in the Prospectus.
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(i) Since the date of the latest audited financial statements
included in the Prospectus, neither the Company nor any of the
Subsidiaries, the PRC Subsidiaries, or the Operating
Companies, has (i) entered into or assumed any material
contract, (ii) incurred any material liability (including any
contingent liability) or other obligation, (iii) acquired or
disposed of or agreed to acquire or dispose of any business or
asset material to the Company and the Subsidiaries, the PRC
Subsidiaries, or the Operating Companies, taken as a whole,
(iv) save for the 1,3000,000,000 Ordinary Shares purchased
from the Parent Company on January 16, 2004, purchased any of
its outstanding share capital, nor declared, paid or otherwise
made any dividend or distribution of any kind on its share
capital, (v) incurred or sustained any material change in its
share capital, short-term debt or long-term debt, (vi) entered
into any other transaction or arrangement for the acquisition
or establishment of a `significant subsidiary' (as defined in
Rule 1-02 of Regulation S-X) which is probable (as such term
is used in Rule 3-05 of Regulation S-X) or (vii) entered into
a letter of intent or memorandum of understanding (or
announced an intention to do so) relating to any matters
identified in clauses (i) through (vi) above, except in each
case to the extent described in the Prospectus.
(j) The Company has been duly incorporated and is validly existing
in good standing under the laws of the Cayman Islands, with
full legal right, power and authority (corporate and other) to
own, use, lease and operate its properties and conduct its
business in the manner presently conducted and as described in
the Prospectus and is duly qualified to transact business in
any jurisdiction in which it owns or leases properties or
conducts any business where such qualification is required, or
is subject to no material liability or disability by reason of
the failure to be so qualified in any such jurisdiction, and
the Memorandum of Association and Articles of Association of
the Company comply with the requirements of applicable Cayman
Islands law and are in full force and effect.
(k) Each of the Subsidiaries has been duly incorporated in its
jurisdiction of incorporation and is validly existing in good
standing under the laws of its respective jurisdiction, with
full legal right, power and authority (corporate and other) to
own, use, lease and operate its properties and conduct its
business in the manner presently conducted and as described in
the Prospectus and is duly qualified to transact business in
any jurisdiction in which it owns or leases properties or
conducts any business where such qualification is required, or
is subject to no material liability or disability by reason of
the failure to be so qualified in any such jurisdiction, and
the Memorandum of Association and Articles of Association of
each of the Subsidiaries comply with the requirements of the
applicable law and are in full force and effect.
(l) Each of the Company, the Subsidiaries, the PRC Subsidiaries
and the Operating Companies has valid title to, or valid
leasehold interests in, all of its material real properties
and assets disclosed in the Prospectus and valid title to all
material
7
personal properties and assets as owned by it, in each case
free and clear of liens, charges, encumbrances, equities,
claims, defects, options or restrictions, except such as are
described in the Prospectus or such as do not, individually or
in the aggregate, interfere with the uses made and proposed to
be made of such property by the Company and the relevant
Subsidiary, PRC Subsidiary or Operating Company, as the case
may be. Each lease to which the Company or any of the
Subsidiaries, any of the PRC Subsidiaries or any of the
Operating Companies is a party is legal, valid and binding,
enforceable in accordance with its terms against the other
parties thereto, and no material default (or event which with
notice or lapse of time, or both, would constitute a material
default) by the Company or any of the Subsidiaries, any of the
PRC Subsidiaries or any of the Operating Companies has
occurred and is continuing under any such lease. Each of the
Company, the Subsidiaries, the PRC Subsidiaries and the
Operating Companies has obtained all land use rights and
rights of way required to conduct its business, free and clear
of all encumbrances and defects except such as are described
in the Prospectus or such as are not material or do not
materially interfere with the use made and proposed to be made
of such property by the Company and the relevant Subsidiary,
PRC Subsidiary and Operating Company, as the case may be, and
all such land use rights and rights of way are legal, valid
and binding and enforceable in accordance with the terms of
their establishment.
(m) The Company has an authorized capitalization as set forth in
the Prospectus, and all of the issued share capital of the
Company has been duly authorized and is validly issued, fully
paid and non-assessable. There are no outstanding securities
issued by the Company convertible into or exchangeable for,
rights, warrants or options to acquire from the Company, or
obligations of the Company to issue, Ordinary Shares or any of
the share capital of the Company, except as described in the
Prospectus. There are no outstanding rights, warrants or
options to acquire, or instruments convertible into or
exchangeable for, any shares of share capital, or direct
interests in any Subsidiary, PRC Subsidiary or Operating
Company, other than as set forth in the Prospectus.
(n) The Offer Shares, Hong Kong Offer Shares and the Reserved
Shares to be issued and sold by the Company to the
Underwriters and the Qualified Shareholders hereunder and (in
the case of under subscription in the Hong Kong Public
Offering) under the Hong Kong Underwriting Agreement have been
duly and validly authorized, and when issued and delivered
against payment therefore pursuant to this Agreement and the
Hong Kong Underwriting Agreement will be duly and validly
issued and delivered and fully paid and non-assessable; the
descriptions of the Offer Shares, the ADSs representing such
Offer Shares, the Hong Kong Offer Shares and the Reserved
Shares contained in the Registration Statement and the
Prospectus are true and correct in all material respects; the
holders of outstanding shares of share capital of the Company
are not, and on the Closing Date (as defined below) and the
Second Time of Delivery (as defined below), if applicable,
will not, be entitled to preemptive or other similar rights to
8
acquire the Offer Shares or ADSs; the Offer Shares and the
Reserved Shares may be freely deposited by the Company with
the Depositary against issuance of ADRs evidencing ADSs; the
ADSs, the Offer Shares and the Reserved Shares are freely
transferable by the Company to or for the account of the
several Underwriters and Hong Kong Underwriters and (to the
extent described in the Prospectus) the initial purchasers
thereof; and there are no restrictions on subsequent transfers
of the Offer Shares, the ADSs or the Reserved Shares under the
laws of the Xxxxxx Xxxxxxx, XXX, Xxxx Xxxx xx xxx Xxxxxx
Xxxxxx.
(o) The ADSs have been approved for listing on the Nasdaq Stock
Market's National Market ("Nasdaq"), subject to notice of
issuance, and approval in principle has been obtained for the
listing of, and permission to deal in, the Ordinary Shares on
the Growth Enterprise Market of The Stock Exchange of Hong
Kong Limited ("GEM".)
(p) This Agreement and the Hong Kong Underwriting Agreement have
been duly authorized, executed and delivered by the Company
and each constitutes a legal, valid and binding instrument
enforceable against the Company in accordance with its terms.
(q) No consents, approvals, authorizations, orders, registrations,
clearances and qualifications of or with any national,
provincial, municipal, local, foreign or other governmental
authority, agency or body, any self-regulatory organization or
any court or other tribunal or any stock exchange authorities
(hereinafter referred to collectively as "Governmental
Agencies") having jurisdiction over the Company or any of the
Subsidiaries, the PRC Subsidiaries or the Operating Companies
or any of their properties (hereinafter referred to as
"Governmental Authorizations") are required for (i) the issue
and sale of the Offer Shares and ADSs being delivered at the
relevant Time of Delivery (as defined below) to be sold by the
Company under this Agreement and the Ordinary Shares to be
sold under the Hong Kong Underwriting Agreement, the deposit
of the Offer Shares being deposited with the Depositary
against issuance of the ADRs evidencing the ADSs under the
Deposit Agreement, the compliance by the Company with all of
the provisions of this Agreement, the Hong Kong Underwriting
Agreement and the Deposit Agreement, and the consummation by
the Company of the transactions contemplated herein and in the
Registration Statement as set forth in and contemplated by the
Prospectus, except (x) the registration of the Offer Shares
and the ADSs under the Securities Act, (y) such Governmental
Authorizations as have been obtained and are in full force and
effect and copies of which have been furnished to the Joint
Global Coordinators and (z) such Governmental Authorizations
as may be required by the state securities or Blue Sky laws or
any laws of the Cayman Islands, the British Virgin Islands,
Hong Kong, the PRC and the United States in connection with
the purchase and distribution of the Ordinary Offer Shares and
ADSs by or for the account of the Underwriters and (ii) the
execution and delivery by the Company of the Underwriting
Agreements and the
9
Deposit Agreement, except such Governmental Authorizations as
have been obtained and are in full force and effect and copies
of which have been furnished to the Joint Global Coordinators.
(r) The issue and sale of the Offer Shares and ADSs being
delivered at the relevant Time of Delivery (as defined below)
to be sold by the Company under this Agreement and the Hong
Kong Underwriting Agreement, the deposit of the Offer Shares
being deposited with the Depositary against issuance of the
ADRs evidencing the ADSs under the Deposit Agreement and the
compliance by the Company with all of the provisions of this
Agreement, the Hong Kong Underwriting Agreement and the
Deposit Agreement, and the consummation by the Company of the
transactions contemplated herein, therein and in the
Registration Statement, did not, and will not, (i) conflict
with or result in any breach or violation of any of the terms
or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement, note,
lease or other agreement or instrument binding upon the
Company and the Subsidiaries, the PRC Subsidiaries and the
Operating Companies, (ii) will not result in any violation of
the provisions of the Memorandum of Association, Articles of
Association or business licenses or other constitutional
documents of the Company or any of the Subsidiaries, any of
the PRC Subsidiaries or any of the Operating Companies or
(iii) any law or statute or any order, rule, regulation,
judgment, order or decree of any Governmental Agency having
jurisdiction over the Company or any of the Subsidiaries, any
of the PRC Subsidiaries or any of the Operating Companies or
any of their properties.
(s) The Deposit Agreement has been duly authorized, and when
executed and delivered by the Company, will constitute a valid
and legally binding agreement of the Company enforceable in
accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting
creditors' rights and to general equity principles; upon
issuance by the Depositary of ADRs evidencing ADSs against the
deposit of Offer Shares in respect thereof in accordance with
the provisions of the Deposit Agreement, such ADRs will be
duly and validly issued and the persons in whose names the
ADRs are registered will be entitled to the rights specified
therein and in the Deposit Agreement; and the descriptions of
the Deposit Agreement and the ADRs contained in the Prospectus
are true and correct in all material respects.
(t) The Company has not offered, sold or issued any shares of its
share capital during the six-month period preceding the
effective date of the Registration Statement, including any
sales pursuant to Rule 144A under, or Regulations D or S of,
the Securities Act.
(u) There are no legal, governmental or arbitral proceedings
(including, without limitation, any proceedings challenging
the effectiveness or validity of the Reorganization
Transaction) pending or, to the best of the Company and the
10
Parent Company's knowledge, threatened to which the Company,
any of the Subsidiaries, any of the PRC Subsidiaries or any of
the Operating Companies is a party or to which any of the
properties of the Company, any of the Subsidiaries, any of the
PRC Subsidiaries or any of the Operating Companies is subject
that are required to be described in the Registration
Statement or the Prospectus and that are not so described or
any statutes, regulations, contracts or other documents that
are required to be described in the Registration Statement or
the Prospectus or to be filed as exhibits to the Registration
Statement that are not described or filed as required that
might individually or in the aggregate reasonably result in a
Material Adverse Effect.
(v) Except as disclosed in the Prospectus, no material
relationships, direct or indirect, or transactions exists
between the Company, any of the Subsidiaries, any of the PRC
Subsidiaries or any of the Operating Companies on the one hand
and their respective affiliates, officers and directors or
their shareholders, customers or suppliers on the other hand
which are not disclosed or reflected in the Prospectus; and
the statements in the Prospectus in this regard are true and
correct in all material respects and do not omit anything
necessary to make such statements, in light of the
circumstances under which they are made, not misleading.
(w) The Company is not and, after giving effect to the offering
and sale of the Offer Shares and the ADSs and the application
of the proceeds thereof as described in the Prospectus, will
not be, an "investment company" as such term is defined in the
United States Investment Company Act of 1940, as amended.
(x) There are no contracts, agreements or understandings between
the Company and any person granting such person the right to
require the Company to file a registration statement under the
Securities Act with respect to any securities of the Company
or to require the Company to include such securities with the
Offer Shares and ADSs registered pursuant to the Registration
Statement.
(y) [Reserved]
(z) Except as described in the Prospectus or this Agreement, all
amounts payable by the Company in respect of the ADRs
evidencing the ADSs or the underlying Offer Shares or pursuant
to the Underwriting Agreements, including all dividends and
other distributions declared and payable in United States
dollars on the shares of share capital of the Company, shall
be made free and clear of and without deduction for or on
account of any withholding or other taxes imposed, assessed or
levied by the Government of the PRC, Hong Kong, the British
Virgin Islands or the Cayman Islands or any authority thereof
or therein (except such income taxes as may be imposed by the
Government of the PRC, Hong Kong, the British Virgin Islands
or the Cayman Islands on payments hereunder to any Underwriter
whose net income is subject to tax by the PRC, Hong Kong, the
British Virgin Islands or the Cayman Islands or withholding,
if any, with respect to any such income tax).
11
(aa) None of the Subsidiaries, the Operating Companies or the PRC
Subsidiaries are currently prohibited, directly or indirectly,
from paying any dividends or other distributions, or from
making any other distribution on the Subsidiaries', the PRC
Subsidiaries' or the Operating Companies' equity interest,
except as provided for in the Corporate Agreements or as
described in or contemplated by the Prospectus; all dividends
and other distributions declared and payable upon the equity
interests in the Subsidiaries, the PRC Subsidiaries and the
Operating Companies may be converted into foreign currency
that may be freely transferred out of the PRC, Hong Kong, the
British Virgin Islands or the Cayman Islands and all such
dividends and other distributions are not and, except as
disclosed in the Registration Statements and the Prospectus,
will not be subject to withholding or other taxes under the
laws and regulations of the PRC, Hong Kong, the British Virgin
Islands or the Cayman Islands and, except as disclosed in the
Registration Statements and the Prospectus, are otherwise free
and clear of any other tax, withholding or deduction in the
PRC, Hong Kong, the British Virgin Islands, or the Cayman
Islands in each case without the necessity of obtaining any
Governmental Authorization in the PRC, Hong Kong, the British
Virgin Islands or the Cayman Islands, except such as have been
obtained.
(bb) The Company, each of the Subsidiaries, each of the PRC
Subsidiaries and each of the Operating Companies maintain a
system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in
accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to
permit preparation of consolidated financial statements of the
Company, the Subsidiaries, the PRC Subsidiaries and the
Operating Companies in conformity with generally accepted
accounting principles in the United States ("U.S. GAAP") and
to maintain asset accountability, (iii) access to assets is
permitted only in accordance with management's general or
specific authorization and (iv) the recorded accountability
for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any
differences.
(cc) Each of the Company and the Subsidiaries, the PRC Subsidiaries
and the Operating Companies own or have valid licenses in full
force and effect or otherwise have the legal right to use, or
can acquire on reasonable terms, all material patents, patent
rights, licenses, inventions, know-how (including trade
secrets and other unpatented and/or unpatentable proprietary
or confidential information, systems of procedures),
trademarks, service marks and trade names (including the
"Xxx.xxx" name and logo) currently employed by them in
connection with the business currently operated by them and
none of the Company or any of the Subsidiaries, the PRC
Subsidiaries or the Operating Companies, whether knowingly or
unknowingly, is infringing, has infringed or has received any
notice of infringement of or conflict with the asserted rights
of others with respect to any of the foregoing which,
individually or in the aggregate,
12
if the subject of any unfavorable decision, ruling or finding,
would result in any Material Adverse Change.
(dd) The Company is not a Passive Foreign Investment Company
("PFIC") within the meaning of Section 1297(a) of the United
States Internal Revenue Code of 1986, as amended, and the
Company has no plan or intention to conduct its business in a
manner that would reasonably be expected to result in the
Company becoming a PFIC in the future.
(ee) The audited consolidated financial statements (and the notes
thereto) of the Company, the Subsidiaries, the PRC
Subsidiaries and the Operating Companies included in the
Prospectus present fairly, in all material respects, the
financial position of the Company on a consolidated basis as
of the dates indicated, and the results of operations and the
cash flows for the periods specified in conformity with U.S.
GAAP; and PricewaterhouseCoopers, who have expressed an
opinion on the financial statements of the Company and the
financial statements of Xx Xx Network, based on their audits,
are independent auditors with respect to the Company within
the meaning of the Securities Act, the Exchange Act and the
applicable rules and regulations of the Commission thereunder.
(ff) The unaudited pro forma consolidated statements of operations
included in the Registration Statement and the Prospectus (the
"proforma financial statements") are presented in accordance
with Article 11 of Regulation S-X; and the assumptions used in
preparing the pro forma financial statements provide a
reasonable basis for presenting the significant effects
directly attributable to the transactions or events described
therein, the related pro forma adjustments give appropriate
effect to those assumptions, and the pro forma columns therein
reflect the proper application of those adjustments to the
corresponding historical financial statements.
(gg) Each of the Company, the Subsidiaries, the PRC Subsidiaries
and the Operating Companies have filed with all appropriate
taxing authorities all income, franchise or other tax returns
required to be filed through the date hereof except for those
income, franchise or other tax returns that the failure to
file will not have a Material Adverse Effect, and no tax
deficiency has been determined adversely to the Company, the
Subsidiaries, the PRC Subsidiaries or the Operating Companies
which has had (nor does the Company, the Subsidiaries, the PRC
Subsidiaries or the Operating Companies have any knowledge of
any tax deficiency which, if determined adversely to the
Company, the Subsidiaries, the PRC Subsidiaries or the
Operating Companies, might individually or in the aggregate
have) a Material Adverse Effect.
(hh) Except as disclosed in the Prospectus, no material 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 or any of the Subsidiaries, the PRC
13
Subsidiaries or the Operating Companies to the PRC, Hong Kong,
the British Virgin Islands or the Cayman Islands or any
political subdivision or taxing authority thereof or therein
in connection with (i) the creation, allotment and issuance of
the Ordinary Shares, (ii) the deposit of the Offer Shares by
the Company with the Depositary against the issuance of ADRs
evidencing ADSs, (iii) the sale and delivery by the Company of
the Offer Shares and the ADSs to or for the respective
accounts of the several Underwriters and the Hong Kong
Underwriters, as the case may be, in the manner contemplated
in this Agreement and in the Hong Kong Underwriting Agreement,
(iv) the execution and delivery of this Agreement, the Hong
Kong Underwriting Agreement and the Deposit Agreement, (v) the
sale and delivery outside Hong Kong by the several
Underwriters or within Hong Kong by the Hong Kong Underwriters
of the ADSs and the Offer Shares, respectively, to the initial
purchasers thereof in the manner contemplated in the
Prospectus or the Hong Kong Prospectus, as the case may be.
(ii) The description of the Reorganization Transaction and the
Corporate Agreements as set forth in the Prospectus is true
and correct in all material respects. The Reorganization
Transaction has been completed and effected prior to the date
hereof and constitutes a binding and irrevocable transaction
completed by the parties to the Reorganization Agreements.
Each of the Reorganization Agreements and Corporate Agreements
have been effected prior to the date hereof in compliance with
all applicable national, provincial, municipal and local laws,
except for such non-compliance that would not, individually or
in the aggregate, have a Material Adverse Effect, and
constitutes a binding transaction completed by the parties to
the Reorganization Agreements and Corporate Agreements. Each
of the Reorganization Agreements and Corporate Agreements has
been duly authorized, executed and delivered by the Company
and each of the Subsidiaries, PRC Subsidiaries and Operating
Companies that is a party to such agreement prior to the date
hereof and each Reorganization Agreement and Corporate
Agreement constitutes a valid and legally binding agreement of
the Company and each of the Subsidiaries, PRC Subsidiaries and
Operating Companies that is a party and such agreement is
enforceable in accordance with its terms subject, as to
enforceability, to bankruptcy, insolvency, reorganization,
moratorium and similar laws of general applicability relating
to or affecting creditors' rights and to general equity
principles.
(jj) The Reorganization Transaction and the Corporate Agreements
and the consummation thereof and the execution and the
delivery by the Company and each of the Subsidiaries and each
of the PRC Subsidiaries, as the case may be, of each
Reorganization Agreement and Corporate Agreement to which it
is a party and the performance of their respective obligations
thereunder did not, does not and will not conflict with, or
result in a breach or violation of, any of the terms, or
provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement, note, lease or other
agreement or instrument to which any of the Company, the
Subsidiaries and the PRC Subsidiaries is a party to or by
which it is
14
bound or to which any of its property or assets is subject, that
singly or in the aggregate, is material to any of the Company, the
Subsidiaries, and the PRC Subsidiaries and such actions did not,
and will not, result in any violation of the provisions of (x) the
Articles of Association or business licenses or other constitutive
documents of any of the Company, the Subsidiaries or the PRC
Subsidiaries or (y) any law or statute or any order, rule,
regulation, judgment, order or decree of any Governmental Agency
having jurisdiction over any of them or any of their properties,
except, in the case of clause (y) above, for such violations which
would not, individually or in the aggregate (A) have a Material
Adverse Effect or (B) affect the valid and binding nature of the
Reorganization Transaction, any Reorganization Agreement or any
Corporate Agreement. Except as disclosed in the Prospectus and
except for certain regulatory approvals to be obtained in relation
to (a) the transfer of the interest held by XXX.XXX (China)
Investment Limited in Cernet Information Technology Company
Limited, (b) the transfer of the interest held by Shenzhen Freenet
in Cernet Online Company Limited and (c) the transfer of the
interest held by Shenzhen Freenet in Guangzhou Hong Xiang
Audio-Video Production Company Limited, each of the regulatory
approvals associated with (a), (b) and (c) herein which XXX.XXX
(China) Investment Limited and Shenzhen Freenet expect to receive
in the normal course, all consents, approvals, authorizations,
orders, registrations and qualifications required in all relevant
jurisdictions in connection with the Reorganization Transaction,
Reorganization Agreements and Corporate Agreements and the
execution, delivery and performance of the Reorganization
Agreements and Corporate Agreements have been made or obtained
(including, without limitation (i) all actions necessary for the
approval of the Reorganization Transaction and Corporate
Agreements by any Governmental Agency and (ii) third parties under
joint venture agreements, bank loans, guarantees and other
contracts material to the Company, the Subsidiaries and PRC
Subsidiaries taken as a whole, if the consent of such third party
is necessary to be obtained), and no such consent, approval,
authorization, order, registration or qualification has been
withdrawn or is subject to any condition precedent which has not
been fulfilled or performed, except for such consents, approvals,
authorizations, orders, registrations and qualifications that the
failure to make or obtain would not have a Material Adverse
Effect.
(kk) Other than the Reorganization Agreements, there are no other
material documents or agreements, written or oral, that have been
entered into by the Company and any of the Subsidiaries, any of
the PRC Subsidiaries or any of the Operating Companies in
connection with the Reorganization Transaction which have not been
previously provided, or made available, to the Underwriters and,
to the extent material to the Company, disclosed in the
Prospectus.
(ll) The description of the Acquisition Transaction set forth in the
Prospectus is true and correct in all material respects. The
Acquisition Transaction has been effected prior to the date hereof
in compliance with all applicable national,
15
provincial, municipal and local laws. The Acquisition Transaction
constitutes a binding and irrevocable transaction completed by the
parties to the Acquisition Agreement. The Acquisition Agreement
has been duly authorized, executed and delivered by the Company
and the Subsidiary that is a party to such agreement prior to the
date hereof and the Acquisition Agreement constitutes a valid and
legally binding agreement of the Company and the Subsidiary that
is a party to such agreement enforceable in accordance with its
terms subject, as to enforceability, to bankruptcy, insolvency,
reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to
general equity principles, and the consummation thereof and the
execution and the delivery of the Acquisition Agreement by the
Company and the Subsidiary that is a party to such agreement and
the performance of their respective obligations thereunder does
not and will not conflict with, or result in a breach or violation
of, any of the terms, or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement,
note, lease or other agreement or instrument to which the Company
and the relevant Subsidiary is a party or by which it is bound or
to which any of its property or assets is subject, that singly or
in the aggregate, is material to the Company and the relevant
Subsidiary, and such actions did not, and will not, result in any
violation of the provisions of (x) the Articles of Association or
business licenses or other constitutive documents of the Company
or the relevant Subsidiary or (y) any law or statute or any order,
rule, regulation, judgment, order or decree of any Governmental
Agency having jurisdiction over any of them or any of their
properties, except, in the case of clause (y) above, for such
violations which would not, individually or in the aggregate (A)
have a Material Adverse Effect or (B) affect the valid and binding
nature of the Acquisition Transaction or the Acquisition
Agreement. Other than the Acquisition Agreement, there are no
other material documents or agreements, written or oral, that have
been entered into by the Company and any of the Subsidiaries, any
of the PRC Subsidiaries or any of the Operating Companies in
connection with the Acquisition Transaction which have not been
previously provided, or made available, to the Underwriters and,
to the extent material to the Company, disclosed in the
Prospectus.
(mm) There are no contracts or documents (including any related party
agreements and material contracts) that are required to be
described in the Registration Statement or the Prospectus or to be
filed as exhibits thereto that have not been so described and
filed as required.
(nn) Except as disclosed in the Prospectus, each of the Company, the
Subsidiaries, the PRC Subsidiaries and Operating Companies has all
necessary licenses, consents, authorizations, approvals, orders,
certificates and permits of and from, and has made all necessary
declarations and filings with, all Governmental Agencies to
conduct its business in the manner described in the Prospectus
except to the extent that not having such licenses, consents,
authorizations, approvals, orders, certificates or permits and not
making such declarations and filings would not
16
have a Material Adverse Effect, and such licenses, consents,
authorizations, approvals, orders, certificates or permits contain
no materially burdensome restrictions or conditions not described
in the Registration Statement or the Prospectus. Neither the
Company, any of the Subsidiaries, any of the PRC Subsidiaries nor
any of the Operating Companies has received any notice of
proceedings relating to the revocation or modification of any such
licenses, consents, authorizations, approvals, orders,
certificates or permits which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would have
a Material Adverse Effect. The Company does not have any
reasonable basis to believe that the PRC Ministry of Information
Industry ("MII") or any other regulatory body is proposing to
modify, suspend or revoke any such licenses, consents,
authorizations, approvals, orders, certificates or permits, and
each of the Company and the Subsidiaries, the PRC Subsidiaries and
the Operating Companies is in compliance with the provisions of
all such licenses, consents, authorizations, approvals, orders,
certificates or permits in all material respects.
(oo) None of the Company, the Subsidiaries, the PRC Subsidiaries and
the Operating Companies nor any of their properties, assets or
revenues are entitled to any right of immunity on the grounds of
sovereignty from any legal action, suit or proceeding, from
set-off or counterclaim, from the jurisdiction of any court, from
services of process, from attachment prior 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. The irrevocable and unconditional waiver and agreement
of the Company in this Agreement, the Hong Kong Underwriting
Agreement and the Deposit Agreement not to plead or claim any such
immunity in any legal action, suit or proceeding based on this
Agreement, the Hong Kong Underwriting Agreement and the Deposit
Agreement is valid and binding under the laws of the PRC, Hong
Kong, the British Virgin Islands and the Cayman Islands.
(pp) The description set forth in the Prospectus in the section
captioned "Management's Discussion and Analysis of Financial
Condition and Results of Operation - Critical Accounting Policies"
of (i) the accounting policies which the Company believes are the
most important in the portrayal of the Company's financial
condition and results of operations and which require management's
most difficult, subjective or complex judgments ("critical
accounting policies") and (ii) the judgments and uncertainties
affecting the application of critical accounting policies.
(qq) The description set forth in the Prospectus in the section
captioned "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Liquidity and Capital
Resources" of (i) all material trends, demands, commitments,
events, uncertainties and risks, and the potential effects
thereof, that the Company believes would materially affect
liquidity and are reasonably likely to occur and (ii) all
off-balance sheet transactions, arrangements,
17
and obligations, including, without limitation, relationships with
unconsolidated entities that are contractually limited to narrow
activities that facilitate the transfer of or access to assets by
the Company or any of the Subsidiaries, PRC Subsidiaries and
Operating Companies such as structured finance entities and
special purpose entities (collectively, "off-balance
arrangements") that are reasonably likely to have a material
effect on the liquidity of the Company and the Subsidiaries, PRC
Subsidiaries and Operating Companies taken as a whole, or the
availability thereof or the requirements of the Company and the
Subsidiaries, PRC Subsidiaries and Operating Companies for capital
resources is true and correct in all material respects. As used
herein in this Section 1(mmm), the phrase "reasonably likely"
refers to a disclosure threshold lower than "more likely than
not".
(rr) To the best of the Company's knowledge, none of the Company, the
Subsidiaries, the PRC Subsidiaries and the Operating Companies, or
any of their respective officers, directors, supervisors,
managers, agents or employees have, directly or indirectly made or
authorized any contribution, payment or gift of funds, or property
to any official, employee or agent of any governmental agency,
authority or instrumentality in the PRC, Hong Kong, the Cayman
Islands or the British Virgin Islands or any other jurisdiction
where either the payment or gift or the purpose of such
contribution payment or gift was, is, or would, after the
registration of the Offer Shares and ADSs under the Exchange Act
be prohibited under applicable law, rule or regulation of any
relevant locality, including but not limited to, the U.S. Foreign
Corrupt Practices Act of 1977, as amended, or the rules and
regulations promulgated thereunder.
(ss) None of the Company, the Subsidiaries, the PRC Subsidiaries and
the Operating Companies and the businesses or entities operated or
owned by the Company and the Subsidiaries, the PRC Subsidiaries
and the Operating Companies, nor to the best of the Company's
knowledge, any of their respective directors (as identified in the
Prospectus), directly or indirectly, own any interest exceeding 5%
of the total issued share capital of, hold any directorships or
management positions in, or are a party to any material
transaction with any entity that competes with the Company, the
Subsidiaries, the PRC Subsidiaries or the Operating Companies
except as described in the Prospectus.
2. Agreements to Sell and Purchase.
(a) The Company hereby agrees to sell to the several Underwriters, and
each Underwriter, upon the basis of the representations and
warranties herein contained, but subject to the conditions
hereinafter stated, agrees, severally and not jointly, to purchase
from the Company the respective numbers of Firm ADSs set forth in
Schedule I and Schedule II hereto opposite its name at $ [.] per
ADS (the "ADS Purchase Price"). The Underwriters may, in their
discretion, require
18
that Offer Shares be delivered in lieu of such Firm ADSs. The
purchase price per Offer Share shall be Hong Kong $[.] (the "Share
Purchase Price", and with the ADS Purchase Price, the "Purchase
Price"). The Purchase Price represents the public offering price
of $[.] per ADS and Hong Kong $[.] per Offer Share, less an
underwriting commission of [.] (the "Underwriting Discount and
Commission"). An amount equal to a 1% brokerage fee, a 0.005%
transaction levy, a 0.002% investor compensation levy and a 0.005%
Hong Kong Stock Exchange trading fee of the price to be paid by
public investors in the Hong Kong Public Offering per Share
(collectively, the "HKSE transaction levy") or any other relevant
levies or fees payable on Offer Shares underlying the ADSs or
Offer Shares delivered in lieu of ADSs pursuant to Section 2(c)
below in the U.S. Offering and the International Offering shall be
paid by the Company and the Company hereby authorizes the
Underwriters to deduct an amount equal to such HKSE transaction
levy from the proceeds of the U.S. Offering and International
Offering and to pay such amount to the Hong Kong Stock Exchange
(the "HKSE").
(b) On the basis of the representations and warranties contained in
this Agreement, and subject to its terms and conditions, the
Parent Company agrees to sell to the U.S. and International
Underwriters the Additional ADSs, and such Underwriters shall have
a one-time right to purchase, severally and not jointly, up to
1,875,000 Additional ADSs at the ADS Purchase Price (or, in the
event that the Joint Global Coordinators request that Offer Shares
be delivered in lieu of such Additional ADSs, at the Share
Purchase Price). An amount equal to the HKSE transaction levy or
any other relevant levies or fees payable on Offer Shares
underlying the Additional ADSs or Offer Shares delivered in lieu
of Additional ADSs shall be paid by the Parent Company and the
Parent Company hereby authorizes the Underwriters to deduct an
amount equal to such HKSE transaction levy from the amount payable
to the Parent Company in consideration of such Additional ADSs and
to pay such amount to the HKSE. If the Joint Global Coordinators,
on behalf of the Underwriters, elect to exercise such option, the
Joint Global Coordinators shall so notify the Parent Company in
writing not later than 30 days after the date of the commencement
of trading of the Hong Kong Shares, which notice shall specify the
number of Additional ADSs to be purchased by the Underwriters and
the date on which such ADSs are to be purchased. Such date may be
the same as the Closing Date (as defined below) or, unless the
Joint Global Coordinators and the Parent Company otherwise agree
in writing, not earlier than two nor later than ten business days
after the date of such notice. Additional ADSs may be purchased as
provided in Section 2 hereof solely for the purpose of covering
over-allotments made in connection with the Global Offering of the
Firm ADSs. If any Additional ADSs are to be purchased, each
Underwriter agrees, severally and not jointly, to purchase the
number of Additional ADSs (subject to such adjustments to
eliminate fractional shares as the Joint Global Coordinators may
determine) that bears the same proportion to the total number of
Additional ADSs allocated to the International Offering or the
U.S. Offering, as the case may be, to
19
be purchased as the number of Firm ADSs set forth opposite the
name of such Underwriter in Schedule I or Schedule II, as the case
may be, bears to the total number of Firm ADSs. The Joint Global
Coordinators in their sole discretion shall have the authority (i)
to exercise the over-allotment option on behalf of the
Underwriters and (ii) to allocate the Additional ADSs among the
U.S. Offering and the International Offering to cover any
over-allotments.
(c) As noted in Section 2(a) and 2(b) above, the Underwriters or, in
the case of Additional ADSs, the Joint Global Coordinators, may,
in their discretion, require that Offer Shares be delivered in
lieu of Firm ADSs or Additional ADSs at the Share Purchase Price
which is expressed in Hong Kong dollars. The parties hereto agree
and acknowledge that the price for each Ordinary Share to be
offered in the Hong Kong Public Offering to be paid by public
investors in Hong Kong, will, inclusive of the HKSE transaction
levy and subject to any necessary rounding, be the same as the
price per Offer Share in the U.S. Offering and the International
Offering.
(d) Pursuant to the Intersyndicate Agreement, the Joint Global
Coordinators shall have the discretion to reallocate additional
Offer Shares to the Hong Kong Public Offering from the U.S.
Offering and International Offering. Offer Shares reallocated to
the Hong Kong Public Offering pursuant to the above sentence are
hereunder referred to as the "Reallocated Shares". In any event of
a reallocation, the number of ADSs offered in the U.S. Offering
and International Offering will be correspondingly reduced in such
manner as the Joint Global Coordinators, in their sole discretion,
deem appropriate. Reallocated Shares shall be delivered to the
investors in the Hong Kong Public Offering in the same manner and
at the same time as Hong Kong Shares originally included in the
Hong Kong Public Offering (and shall be subject to such pro-ration
and allocation mechanisms as are set forth in the Hong Kong
Underwriting Agreement).
(e) In consideration for the underwriting obligations expressed
herein, an amount equal to the aggregate Underwriting Discount and
Commission on any Reallocated Shares (calculated in accordance
with the per Offer Share or per ADS Underwriting Discounts and
Commissions set forth in Section 2(a) of this Agreement), shall be
withheld by the Underwriters from the amount otherwise payable
hereunder to the Company in respect of the ADSs and the Offer
Shares as if the relevant ADSs or Offer Shares had been sold to
the Underwriters at the relevant Purchase Price hereunder. The
Joint Global Coordinators shall be entitled to the selling
concession portion of the applicable Underwriting Discount and
Commission on such Reallocated Shares and, notwithstanding any
provision herein to the contrary, the Underwriters shall have no
obligation to the Company with respect to the Reallocated Shares.
The Joint Global Coordinators shall direct the receiving bank in
the Hong Kong Public Offering to remit to the Company the full
amount paid by investors in the Hong Kong Public Offering for the
Reallocated Shares (which remittance shall not include the
aggregate applicable
20
brokerage fee and HKSE transaction levy with respect to such
Reallocated Shares, which amount will be paid out in accordance
with the provisions of the Hong Kong Underwriting Agreement).
(f) It is understood and agreed that if a Hong Kong Offer
Under-Subscription (as defined in the Hong Kong Underwriting
Agreement) shall occur, the Joint Global Coordinators may
reallocate all or some of the Hong Kong Shares to one or more of
the Underwriters in such amounts as the Joint Global Coordinators
and each such Underwriter may agree, whereupon such Underwriter
will become obliged to pay the Share Purchase Price payable
hereunder for such Hong Kong Shares to the Company; provided that
the Underwriting Discount and Commission with respect to such
reallocated Hong Kong Shares (calculated in accordance with the
per Ordinary Share or per ADS Underwriting Discount and Commission
set forth in Section 2(a) of this Agreement) shall be withheld by
the Joint Global Coordinators (on behalf of the relevant
Underwriters) before such payment is made.
(g) It is understood and agreed by the parties hereto that the
Underwriters may satisfy their obligations to purchase any or all
of the ADSs or Offer Shares hereunder by procuring on behalf of
the Company purchasers for the ADSs and/or Offer Shares,
respectively.
3. Terms of Public Offering. The Company is advised by the Joint Global
Coordinators that the Underwriters propose to make a public offering of their
respective portions of the ADSs as soon after the Registration Statement, the
ADS Registration Statement, the 8-A Registration Statement and this Agreement
have become effective as in the judgment of the Joint Global Coordinators is
advisable, upon the terms set forth in the Prospectus. The Company is further
advised by the Joint Global Coordinators that the ADSs are to be offered to the
public initially at US$[.] an ADS (the "ADS Public Offering Price") and the
Offer Shares are to be offered to investors initially at HK$[.] per Offer Share
(the "Share Public Offering Price", and together with the ADS Public Offering
Price, the "Public Offering Price") and to certain dealers selected by the Joint
Global Coordinators at a price that represents a concession not in excess of
US$[.] an ADS and HK$[.] per Offer Share under the Public Offering Price, and
that any Underwriter may allow, and such dealers may reallow, a concession, not
in excess of US$[.] an ADS and HK$[.] per Offer Share, to any Underwriter or to
certain other dealers.
4. Payment and Delivery.
(a) With respect to all or a portion of the ADSs to be purchased and
sold hereunder at each Time of Delivery (as defined below), the
Joint Global Coordinators, on behalf of the several Underwriters,
may elect to have Offer Shares allotted and delivered and paid for
hereunder in lieu of, and in satisfaction of, the Company's
obligations to sell to the several Underwriters, and the several
Underwriters' obligations to purchase, ADSs. Preliminary notice of
such election shall be given
21
by the Joint Global Coordinators to the Company at least
forty-eight (48) hours prior to such Time of Delivery of Offer
Shares in Hong Kong (the "Notification Time"). Final notice of
such election shall be given by the Joint Global Coordinators to
the Company at least twenty-four (24) hours prior to such Time of
Delivery of Offer Shares in Hong Kong. The number of Offer Shares
to be allotted and purchased as a result of the making of such
election shall be adjusted by the Joint Global Coordinators so as
to eliminate any fractional ADSs.
(b) If an election has been made in accordance with Section 4(a)
above, the Offer Shares to be purchased by or allotted at the
direction of each Underwriter hereunder shall be delivered in such
authorized denominations and registered in such names as the Joint
Global Coordinators may request upon notice to the Company prior
to the Notification Time, and shall be delivered by the Company to
the Joint Global Coordinators, through the facilities of the Hong
Kong Securities Clearing Company Limited ("HKSCC"), for the
account of such Underwriter or as such Underwriter, or the Joint
Global Coordinators on its behalf, may direct, against payment by
or on behalf of such Underwriter of the purchase price therefore
by wire transfer (or, to the extent HKSCC procedures permit,
official bank check or checks), payable to the order of the
Company, in Hong Kong dollars or U.S. dollars, at the discretion
of the Joint Global Coordinators, in immediately available funds
at the Time of Delivery specified in Section 4(e) and 4(f) below.
The Company will cause the certificates representing the Offer
Shares to be made available for checking at least twenty-four (24)
hours prior to each Time of Delivery with respect thereto at the
office of HKSCC. Delivery by the Company of the Offer Shares will
be made by book-entry transfer in the Company's registry at HKSCC
to an account or accounts specified by the Joint Global
Coordinators, in such respective portions as the Joint Global
Coordinators may designate, upon notice given to the Company at or
prior to the Notification Time.
(c) The ADSs to be delivered hereunder (other than with respect to the
ADSs elected to be delivered as Ordinary Shares in accordance with
Section 4(a)) shall be delivered by depositing the requisite
number of Offer Shares through the facilities of the HKSCC for the
account of Citibank N.A. against delivery of a copy of a letter
confirming that the Joint Global Coordinators have given
irrevocable instructions to their correspondent banks in New York
to make the wire transfer of payment of the aggregate Purchase
Price for such ADSs at the Time of Delivery specified in Sections
4(e) and 4(f) below. The ADSs to be purchased by each Underwriter
hereunder, in definitive form, and in such authorized
denominations and registered in such names as the Joint Global
Coordinators may request upon notice to the Company prior to the
Notification Time, shall be delivered by or on behalf of the
Company to the Joint Global Coordinators through the facilities of
The Depositary Trust Company ("DTC"), for the account of such
Underwriter, against payment by or on behalf of such Underwriter
of the Purchase Price therefore by wire transfer through the
Federal Wire System in Xxx Xxxx xx
00
Xxxxxx Xxxxxx dollars, in immediately available funds, to the
Company's account (which shall be designated to the Joint Global
Coordinators by the Company prior to the Notification Time) at the
Time of Delivery of the ADSs in New York specified in Section 4(e) and
4(f) below. The Company will cause the certificate or certificates in
global form representing the ADSs to be made available for checking at
least twenty-four (24) hours prior to each Time of Delivery of ADSs in
New York with respect thereto at the office of DTC or its designated
custodian (the "Designated Office".)
(d) The time and date of the deliveries and payments described in Section
4(b) and (c) above shall be (i) with respect to the Offer Shares
delivered pursuant to Section 4(b), 9:00 a.m., Hong Kong time, (ii)
with respect to the Offer Shares underlying the ADSs (but not payment
for the ADSs which is dealt with in sub-paragraph (iii) below) to be
delivered under Section 4(c), 9:00 a.m., Hong Kong time and (iii) in
the case of the ADSs delivered pursuant to Section 4(c) above, 9:00
a.m., New York City time, in each case on March [.] 2004 ?or such
other time and date as the Joint Global Coordinators and the Company
may agree upon in writing. At 9:00 a.m., Hong Kong time on March [.],
2004, (x) the Joint Global Coordinators shall provide the Company with
copies of irrevocable instructions to their correspondent banks in
each of New York and Hong Kong to make the wire transfer of payment
for the ADSs and the Offer Shares, respectively, and (y) the Company
shall provide the Joint Global Coordinators with copies of irrevocable
instructions to HKSCC regarding the delivery of the Offer Shares and
the Offer Shares underlying the ADSs, respectively, as provided in
Section 4(b) and Section 4(c) above.
23
(e) The time and date of delivery and payment with respect to the
Additional ADSs, shall be 9:00 a.m. Hong Kong time, in the case of
Additional ADSs delivered in the form of Offer Shares and Offer Shares
underlying Additional ADSs, and 9:00 a.m. New York City time, in the
case of Additional ADSs, in each case on the date specified by the
Joint Global Coordinators in the written notice given by the Joint
Global Coordinators of the election to purchase such Additional ADSs
or such other time and date as the Global Coordinators and the Company
may agree upon in writing. Such times and dates for deliveries of, and
payment for, the Firm ADSs whether in the form of Offer Shares or
ADSs, is herein called the "First Time of Delivery", such times and
dates for delivery of, and payment for, the Additional ADSs, whether
in the form of Offer Shares or ADSs, if not the First Time of
Delivery, is herein called the "Second Time of Delivery," and each
such time and date for delivery and payment is herein called a "Time
of Delivery".
(g) The documents to be delivered by or on behalf of the parties hereto
pursuant to this Agreement will be delivered on March [.], 2004, or
such other date as the Joint Global Coordinators may determine at
their sole discretion (the "Closing Date") at or prior to [.] a.m.
Hong Kong time, or such other time as the Joint Global Coordinators
may determine at their sole discretion (the "Closing Time") and on the
Second Time of Delivery (if any), in each case at the offices of
Milbank, Tweed, Xxxxxx & XxXxxx at 3007 Xxxxxxxxx Xxxxx, 00 Xxxxxx
Xxxx, Xxxxxxx, Xxxx Xxxx (the "Closing Location"). A meeting will be
held at the Closing Location at [.] p.m., Hong Kong time, on the
Business Day next preceding the Closing Date or the Second Time of
Delivery, as the case may be, at which meeting the final drafts of the
documents to be delivered pursuant to the preceding sentence and the
cross receipt of the ADSs will be available for review by the parties
hereto.
5. Conditions to the Underwriters' Obligations. The obligations of the Company
to sell the Firm ADSs to the Underwriters and the several obligations of the
Underwriters hereunder are subject to the condition that each of the
Registration Statement, the ADS Registration Statement and the 8-A Registration
Statement shall have become effective not later than the date (New York City
time) hereof.
The several obligations of the Underwriters are subject to the accuracy of
the representations and warranties of the Company made herein at the date
hereof, the Closing Date and each Time of Delivery, to the accuracy of the
statements of officers of the Company made pursuant to the provisions hereof at
the date hereof, the Closing Date and each Time of Delivery, to the performance
by the Company of its obligations hereunder and the following further
conditions; provided, however, that with respect to the First Time of Delivery,
the latest time for the Underwriters hereunder to exercise their discretion with
respect to the conditions set forth in this Section 5 shall be [.]:
24
(a) Subsequent to the execution and delivery of this Agreement and prior
to the Closing Date there shall not have occurred any change, or any
development involving a Material Adverse Change, or in the condition,
financial, economic or political, of the PRC or Hong Kong from that
described in the Registration Statement and the Prospectus (exclusive
of any amendments or supplements thereto subsequent to the date of
this Agreement) that, in the judgment of the Joint Global
Coordinators, is material and adverse and that makes it, in the
judgment of the Joint Global Coordinators, impracticable to market and
sell the ADSs on the terms and in the manner contemplated in the
Prospectus.
(b) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer
of the Company acceptable to the Joint Global Coordinators, to the
effect set forth in Section 5(a) above and to the effect that the
representations and warranties of the Company contained in this
Agreement are true and correct as of the Closing Date, that the
Company has complied with all of the agreements and satisfied all of
the conditions on its part to be performed or satisfied hereunder on
or before the Closing Date.
(c) The Underwriters shall have received on the Closing Date an opinion of
Xxxxxxxx & Xxxxxxxx LLP, United States counsel for the Company, dated
the Closing Date, in form and substance satisfactory to the Joint
Global Coordinators, in respect of such matters as may be reasonably
requested by the Joint Global Coordinators, a form of which is
attached hereto as Exhibit A.
(d) The Underwriters shall have received on the Closing Date an opinion of
Freshfields Bruckhaus Xxxxxxxx, Hong Kong counsel for the Company,
dated the Closing Date, in form and substance satisfactory to the
Joint Global Coordinators, in respect of such matters as may be
reasonably requested by the Joint Global Coordinators, a form of which
is attached hereto as Exhibit B.
(e) The Underwriters shall have received on the Closing Date an opinion of
Commerce & Finance Law Offices, PRC counsel for the Company, dated the
Closing Date, in form and substance satisfactory to the Joint Global
Coordinators, in respect of such matters as may be reasonably
requested by the Joint Global Coordinators, a form of which is
attached hereto as Exhibit C.
(f) The Underwriters shall have received on the Closing Date an opinion of
Xxxxxx and Xxxxxx Asia, Cayman Islands counsel for the Company, dated
the Closing Date, in respect of such matters as may be reasonably
requested by the Joint Global Coordinators, a form of which is
attached hereto as Exhibit D.
(g) The Underwriters shall have received on the Closing Date an opinion of
Sidley Xxxxxx Xxxxx & Xxxx LLP, counsel for the Depositary, dated the
Closing Date,
25
in respect of such matters as may be reasonably requested by the Joint
Global Coordinators, a form of which is attached hereto as Exhibit E.
The opinions by Xxxxxxxx & Xxxxxxxx LLP, described in Section 5(c)
above, Freshfields Bruckhaus Xxxxxxxx, described in Section 5(d)
above, Commerce & Finance Law Office, described in Section 5(e) above,
and Xxxxxx and Xxxxxx Asia, described in Section 5(f) above, shall be
rendered to the Underwriters at the request of the Company and shall
so state therein, and the Company shall have furnished such counsel
with any documents and information as they may reasonably request to
enable them to pass upon such matters.
(h) The Underwriters shall have received on the Closing Date an opinion of
Milbank, Tweed, Xxxxxx & XxXxxx LLP, United States counsel for the
Underwriters, dated the Closing Date, in respect of such matters as
reasonably requested by the Joint Global Coordinators. In rendering
the foregoing opinion, Milbank, Tweed, Xxxxxx & XxXxxx may rely, as to
matters governed by PRC law, upon the opinion of Haiwen & Partners
referred to below and, in respect of matters relating to Hong Kong
law, Milbank, Tweed, Xxxxxx & XxXxxx may refer the Underwriters to the
legal opinion of Xxxxxxx & Xxxxxxx referred to below.
(i) The Underwriters shall have received on the Closing Date an opinion of
Xxxxxxx & Xxxxxxx, Hong Kong counsel for the Underwriters, dated the
Closing Date, in respect of such matters as reasonably requested by
the Joint Global Coordinators, a form of which is attached hereto as
Exhibit B.
(j) The Underwriters shall have received on the Closing Date an opinion of
Haiwen & Partners, PRC counsel for the Underwriters, dated the Closing
Date, in respect of such matters as reasonably requested by the Joint
Global Coordinators, a form of which is attached hereto as Exhibit C.
(k) (i) The Parent Company shall have executed and delivered to the Joint
Global Coordinators at such Time of Delivery a "Lock-Up" Letter dated
as of or prior to the Closing Date in the form of Exhibit F hereto or
otherwise satisfactory to the Joint Global Coordinators relating to
sales and certain other dispositions of shares of share capital or
options to purchase shares or certain other securities, (ii) the
Company shall have executed and delivered to the Joint Global
Coordinators a written undertaking in such form as satisfactory to the
Joint Global Coordinators stating that the Company will not, and will
procure that its affiliates will not, release Cranwood from its
obligations under the sale and purchase agreement for Puccini
International Limited dated September 25, 2003 for a period of six
months following the date of listing of the Hong Kong Shares without
the prior consent of the Joint Global Coordinators.
26
(l) The Company and the Depositary shall have executed and delivered, at
such Time of Delivery, the Deposit Agreement, and the Deposit
Agreement shall be in full force and effect.
(m) The Depositary shall have delivered to the Joint Global Coordinators,
at such Time of Delivery, certificates satisfactory to the Joint
Global Coordinators evidencing the deposit with it of the Offer Shares
being so deposited against issuance of ADRs evidencing the ADSs to be
delivered by the Company at such Time of Delivery, and the execution,
countersignature (if applicable), issuance and deliver of ADRs
evidencing such ADSs pursuant to the Deposit Agreement and such other
matters thereto as the Joint Global Coordinators may reasonably
require.
(n) The ADSs shall have been approved for listing on Nasdaq, subject only
to official notice of issuance. The Hong Kong Shares shall have been
approved in principle for listing on GEM.
(o) The Hong Kong Underwriting Agreement shall have been executed by the
parties thereto and shall have become unconditional (except with
respect to the unconditionality of this Agreement) and not have been
terminated and the Hong Kong Public Offering contemplated by the Hong
Kong Underwriting Agreement shall have become unconditional and shall
be closing substantially concurrently with the closing contemplated
hereunder.
(p) The Joint Global Coordinators shall have received such other documents
and certificates as reasonably requested by the Joint Global
Coordinators or its counsel, and the Company shall have furnished such
counsel with any documents and information as they may reasonably
request to enable them to pass upon such matters in their legal
opinions referred to above in Section 5(h), (i) and (j) above.
(q) Arrangements satisfactory to the Joint Global Coordinators shall have
been made for the concurrent payment, deduction and reimbursement out
of the proceeds of the Global Offering (i) to the Global Coordinator
and the Underwriters of all fees and expenses contemplated to be
concurrently paid or reimbursed by the Company to the Joint Global
Coordinators and the Underwriters hereunder and (ii) to the HKSE of
all required aggregate transaction levies payable on Offer Shares
underlying the ADSs sold hereunder, Offer Shares delivered in lieu of
ADSs hereunder and Offer Shares sold under the Hong Kong Underwriting
Agreement.
(r) The Underwriters shall have received, on each of the date hereof and
the Closing Date, a letter dated the date hereof or the Closing Date,
as the case may be, in form and substance satisfactory to the
Underwriters, from PricewaterhouseCoopers, independent auditors,
containing statements and information of the type ordinarily included
in accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial
27
information contained in the Registration Statement and the
Prospectus; provided that the letter delivered on the Closing Date
shall use a "cut-off date" not earlier than the date hereof.
(s) Prior to the Closing Date, no stop order suspending the effectiveness
of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or, to the
knowledge of the Company or the Underwriters, shall be contemplated by
the Commission.
If any of the conditions specified in this Section 5 shall not have
been fulfilled when and as required herein, or if any of the certificates,
opinions, written statements or letters furnished to the U.S. Representatives
and the International Representatives pursuant to this Section shall not be in
all respects satisfactory in form and substance to the Joint Global Coordinators
and their U.S. counsel, all obligations of the Underwriters hereunder may be
cancelled by the Joint Global Coordinators at, or at any time prior to, the
Closing Date. Notice of such cancellation shall be given to the Company in
writing, or by telephone, telex or telegraph, confirmed in writing.
The several obligations of the U.S. Underwriters and the International
Underwriters to purchase Additional ADSs hereunder are subject to the delivery
to the Joint Global Coordinators on each Time of Delivery of such documents as
they may reasonably request with respect to the good standing of the Company,
the due authorization and issuance of the Additional ADSs and other matters
related to the issuance of the Additional ADSs.
6. Covenants of the Company. In further consideration of the agreements of the
Underwriters herein contained, the Company and the Parent Company covenant for
the benefit of each Underwriter as follows:
(a) to furnish to the Joint Global Coordinators, without charge, [.]
signed copies of the Registration Statement (including exhibits
thereto) and to furnish to each other Underwriter, without charge, a
conformed copy of the Registration Statement (without exhibits
thereto) and to furnish to the Joint Global Coordinators in New York
City, without charge, prior to [.] a.m. New York City time, and in
Hong Kong, prior to [.] p.m. Hong Kong time, on the business day next
succeeding the date of this Agreement and during the period mentioned
in Sections 6(c) and 6(d) below, as many copies of the Prospectus and
any supplements and amendments thereto or to the Registration
Statement as the Joint Global Coordinators may reasonably request.
(b) before amending or supplementing the Registration Statement or the
Prospectus, to furnish to the Joint Global Coordinators a copy of each
such proposed amendment or supplement and not to file any such
proposed amendment or supplement to which the Joint Global
Coordinators reasonably object, and to file with the Commission within
the applicable period specified in Rule 424(b) under the Securities
Act any prospectus required to be filed pursuant to such Rule.
28
(c) if a Rule 462(b) Registration Statement is required to be filed with
respect to the Additional ADSs and the underlying Additional Shares,
to furnish to the Joint Global Coordinators a copy of such Rule 462(b)
Registration Statement as promptly as possible after the filing
thereof.
(d) if, at any time, a prospectus relating to the ADSs or Ordinary Shares
is required by law to be delivered in connection with sales by an
Underwriter or dealer, any event shall occur or condition exist as a
result of which it is necessary to amend or supplement the Prospectus
in order to make the statements therein, in the light of the
circumstances when the Prospectus is delivered to a purchaser, not
misleading, or if, in the opinion of counsel for the Underwriters, it
is necessary to amend or supplement the Prospectus to comply with
applicable law, forthwith notify the Underwriters and to prepare, file
with the Commission and furnish, at its own expense to the
Underwriters and to the dealers (whose names and addresses the Joint
Global Coordinators will furnish to the Company) to which ADSs may
have been sold by the Underwriters and to any other dealers upon
request, either amendments or supplements to the Prospectus so that
the statements in the Prospectus as so amended or supplemented, will
not, in the light of the circumstances when the Prospectus is
delivered to a purchaser, be misleading or so that the Prospectus, as
amended or supplemented, will comply with law.
(e) to advise the Joint Global Coordinators, promptly after the Company
receives notice thereof, of the issuance by the Commission of any stop
order or of any order preventing or suspending the use of the
Prospectus, of the suspension of the qualification of the Offer Shares
or the ADSs for offering and sale in any jurisdiction, of the
initiation or threatening of any proceeding for any such purpose, or
of any request by the Commission for the amending or supplementing of
the Registration Statement or Prospectus or for additional
information; and, in the event of the issuance of any stop order or of
any order preventing or suspending the use of the Prospectus or
suspending any such qualification, promptly use its best efforts to
obtain the withdrawal of such order.
(f) to endeavor to qualify the Offer Shares or ADSs for offering and sale
under the foreign laws of such jurisdictions as the Joint Global
Coordinators shall reasonably request, maintain such qualifications in
effect so long as required for the distribution of the Offer Shares or
ADSs and to pay all expenses (including reasonable fees and
disbursements of counsel) in connection with such qualification and in
connection with any review of the offering of the ADSs or the Offer
Shares by the National Association of Securities Dealers, Inc.
("NASD").
(g) to make generally available to the Company's security holders and to
the Joint Global Coordinators as soon as practicable an earnings
statement covering the twelve-month period ending [.], 2004 that
satisfies the provisions of Section 11(a) of the Securities Act and
the rules and regulations of the Commission thereunder.
29
(h) to deposit the Offer Shares with the Depositary and to comply with all
other terms of the Deposit Agreement so that ADRs evidencing ADSs will
be executed, issued and, if applicable, countersigned by the
Depositary and delivered to the several Underwriters on the Closing
Date or the Second Time of Delivery, as the case may be.
(i) to apply the net proceeds from the sale of the ADSs and the Offer
Shares pursuant to the Global Offerings as set forth under the caption
"Use of Proceeds" in the Prospectus.
(j) that, without the prior written consent of the Joint Global
Coordinators on behalf of the Underwriters, the Company will not,
during the period commencing on the date hereof and ending six months
after the date of the Prospectus (the "Lock-Up Period") (i) issue,
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, lend or otherwise transfer or dispose
of, directly or indirectly, any of its Ordinary Shares (directly or in
the form of ADSs) or any securities convertible into or exercisable or
exchangeable for, or that represent the right to receive, such
Ordinary Shares or ADSs or (ii) enter into any swap or other
arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of such Ordinary Shares or ADSs,
whether any such transaction described in clause (i) or (ii) above is
to be settled by delivery of share capital or such other securities,
in cash or otherwise or publicly announce an intention to effect any
such transactions. The foregoing sentence shall not apply to (i) the
Offer Shares or ADSs to be sold hereunder or pursuant to the Hong Kong
Public Offering, (ii) the issuance by the Company of ADSs or Offer
Shares upon the exercise of an option or a warrant or the conversion
of a security outstanding on the date hereof of which the Underwriters
have been advised, or (iii) the grant of any option pursuant to a
share option plan that has been adopted prior to the date of this
Prospectus of which the underwriters have been advised. It is
understood that the Parent Company has agreed to similar restrictions
as those set forth above for a period of six (6) months pursuant to a
separate lock-up agreement as described in Section 5(k).
(k) to indemnify and hold the Underwriters harmless against any
documentary, stamp or similar issuance or transfer taxes, duties or
fees, including any interest and penalties, payable in the PRC, Hong
Kong, the British Virgin Islands and the Cayman Islands which are or
may be required to be paid in or in connection with the creation,
allotment, issuance, offer and distribution of the Offer Shares or the
ADSs and the execution and delivery of this Agreement and the Deposit
Agreement. In addition, the Company agrees to indemnify and hold the
Underwriters harmless against any HKSE transaction levy or brokerage
fee which may be required to be paid in connection with the issuance
of the Offer Shares underlying the ADSs to be purchased hereunder and
under the Hong Kong
30
Underwriting Agreement (whether delivered in the form of Offer
Shares or ADSs) and the listing of the Offer Shares on GEM.
(l) whether or not the transactions contemplated in this Agreement
or the Hong Kong Underwriting Agreement are consummated or
this Agreement or the Hong Kong Underwriting Agreement is
terminated, unless otherwise agreed in writing between the
Joint Global Coordinators and the Company, to pay or cause to
be paid (directly or by reimbursement to the Joint Global
Coordinators or Underwriters) all expenses incident to the
performance of its obligations under this Agreement and the
Hong Kong Underwriting Agreement, including, but not limited
to: (i) the preparation, issuance and delivery of share
certificates representing the Offer Shares and ADRs evidencing
the ADSs, including printing and engraving fees, (ii) the
fees, disbursements and expenses of the Company's counsel and
the Company's accountants and appraisers and valuators of the
Company's assets in connection with the transactions
contemplated hereby and all other fees, costs or expenses
arising in connection with the preparation and filing of the
Registration Statement, the ADS Registration Statement, any
preliminary prospectus, the Prospectus and the Hong Kong
Prospectus (including the initial application fee for listing
on GEM, if any), and amendments and supplements to any of the
foregoing, including all printing, graphic and document
production, and translation costs associated therewith, and
the mailing and delivering of copies thereof to the
Underwriters and dealers, in quantities hereinabove specified,
(iii) all costs and expenses related to the transfer and
delivery of the Offer Shares and the ADSs to the Underwriters,
including any HKSE transaction levy and other share transfer
or other taxes and any brokerage fee payable thereon, (iv) the
cost of printing or producing any foreign legal investment
memorandum in connection with the offering and sale of the
Offer Shares or ADSs under foreign securities laws and all
expenses in connection with the qualification of the Offer
Shares or ADSs for offering and sale under foreign securities
laws as provided in Section 6(f) hereof, including filing fees
and the reasonable fees and disbursements of counsel for the
Underwriters in connection with such qualification and in
connection with preparation of any required legal investment
memorandum, (v) all fees and expenses of the Depositary which
the Company has agreed to pay pursuant to the Deposit
Agreement and the costs and charges of the Custodian and any
transfer agent or registrar, (vi) all filing fees and the
reasonable fees and disbursements of counsel to the
Underwriters incurred in connection with the review and
qualification of the offering of the Offer Shares or ADSs by
the NASD, (vii) all fees and expenses in connection with the
preparation and filing of the 8-A Registration Statement
relating to the Offer Shares or ADSs and all costs and
expenses incident to listing the ADSs on Nasdaq and the Offer
Shares on GEM, (viii) all fees and expenses of the
Underwriters' U.S., Hong Kong and PRC legal counsel, (ix) all
costs and expenses incurred in connection with any "road show"
or video or other presentations to investors undertaken in
connection with the marketing of the offering of the Offer
Shares or ADSs, including, without limitation, expenses
associated with the production of road show slides and
31
graphics, fees and expenses of any consultants engaged in
connection with the road show presentations with the prior
approval of the Company, travel and lodging expenses of the
representatives and officers of the Company and any such
consultants, and the cost of any aircraft chartered in
connection with the road show, and (x) all other costs and
expenses incident to the performance by the Company of its
obligations hereunder for which provision is not otherwise
made in this Section 6(l).
(m) not to take, directly or indirectly, any action designed to or
that would constitute or that might reasonably be expected to
cause or result in, under the Exchange Act or otherwise,
stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Offer
Shares or the ADSs.
7. Indemnity and Contribution.
(a) The Company and the Parent Company jointly and severally agree
to indemnify and hold harmless each Underwriter, each
affiliate of an Underwriter selling underwritten ADSs or Offer
Shares on behalf of an Underwriter (a "Selling Affiliate"),
and each person, if any, who controls any Underwriter within
the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any and all
losses, claims, damages and liabilities (including, without
limitation, any legal or other expenses reasonably incurred in
connection with defending or investigating any such action or
claim) caused by any untrue statement or alleged untrue
statement of a material fact contained in the Registration
Statement or the ADS Registration Statement, or any amendment
thereof or supplement thereto, any preliminary prospectus or
the Prospectus (as amended or supplemented if the Company
shall have furnished any amendments or supplements thereto),
or caused by any omission or alleged omission to state therein
a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as
such losses, claims, damages or liabilities are caused by any
such untrue statement or omission or alleged untrue statement
or omission based upon information relating to any Underwriter
furnished to the Company in writing by such Underwriter
through the Joint Global Coordinators expressly for use
therein. This indemnity agreement will be in addition to any
liability which the Company may otherwise have.
(b) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its
officers who sign the Registration Statement and each person,
if any, who controls the Company within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange
Act to the same extent as the foregoing indemnity from the
Company to such Underwriter, but only with reference to
information relating to such Underwriter furnished to the
Company in writing by such Underwriter through the Joint
Global Coordinators expressly for use in the Registration
Statement or ADS Registration
32
Statement, any preliminary prospectus, the Prospectus or any
amendments or supplements thereto.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in
respect of which indemnity may be sought pursuant to Section
7(a) or 7(b), such person (the "indemnified party") shall
promptly notify the person against whom such indemnity may be
sought (the "indemnifying party") in writing but the failure
so to notify the indemnifying party (i) will not relieve it
from liability under Section 7(a) or 7(b) above unless and to
the extent it did not otherwise learn of such action and such
failure results in the forfeiture by the indemnifying party of
substantial rights and defenses and (ii) will not, in any
event, relieve the indemnification obligation provided in
Section 7(a) or 7(b) above.
(d) The indemnifying party, upon request of the indemnified party,
shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any
others the indemnifying party may designate in such proceeding
and shall pay the fees and disbursements of such counsel
related to such proceeding. In any such proceeding, any
indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at
the expense of such indemnified party unless (i) the use of
counsel chosen by the indemnifying party to represent the
indemnified party would present such counsel with a conflict
of interest, (ii) the actual or potential defendants in, or
targets of, any such action include both the indemnified party
and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be legal defenses
available to it and/or other indemnified parties which are
different from or additional to those available to the
indemnifying party, (iii) the indemnifying party shall not
have employed counsel reasonably satisfactory to the
indemnified party to represent the indemnified party within a
reasonable time after notice of the institution of such action
or (iv) the indemnifying party shall authorize the indemnified
party to employ separate counsel at the expense of the
indemnifying party. It is understood that the indemnifying
party shall not, in respect of the legal expenses of any
indemnified party in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees
and expenses of more than one separate firm (in addition to
any local counsel) for all such indemnified parties and that
all such fees and expenses shall be reimbursed as they are
incurred. Such firm shall be designated in writing by the
Joint Global Coordinators, in the case of parties indemnified
pursuant to Section 7(a), and by the Company, in the case of
parties indemnified pursuant to Section 7(b). The indemnifying
party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing
sentence, if at any time an indemnified party shall have
requested an
33
indemnifying party to reimburse the indemnified party for fees
and expenses of counsel as contemplated by the second and
third sentences of this paragraph, the indemnifying party
agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such
settlement is entered into more than 30 days after receipt by
such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the indemnified
party in accordance with such request prior to the date of
such settlement. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any
settlement or compromise or consent to the entry of any
judgment with respect to any pending or threatened proceeding
in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by
such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all
liability on claims that are the subject matter of such
proceeding.
(e) To the extent the indemnification provided for in Section 7(a)
or 7(b) is unavailable to an indemnified party or insufficient
in respect of any losses, claims, damages or liabilities
referred to therein, then each indemnifying party under such
paragraph, in lieu of indemnifying such indemnified party
thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims,
damages or liabilities (i) in such proportion as is
appropriate to reflect the relative benefits received by the
Company on the one hand and the Underwriters on the other hand
from the offering of the ADSs (or Offer Shares in the event of
an election by the Underwriters to receive Offer Shares in
lieu of ADSs) or (ii) if the allocation provided by clause
7(d)(i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative
benefits referred to in clause 7(d)(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 that resulted in such losses, claims,
damages or liabilities, 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 ADSs (or Offer
Shares in the event of an election by the Underwriters to
receive Offer Shares in lieu of ADSs) shall be deemed to be in
the same respective proportions as the net proceeds from the
offering of the ADSs (or Offer Shares in the event of an
election by the Underwriters to receive Offer Shares in lieu
of ADSs) (before deducting expenses) received by the Company
and the total Underwriting Discount and Commission received by
the Underwriters, in each case as set forth in the table on
the cover of the Prospectus, bear to the aggregate Public
Offering Price of the ADSs (or Offer Shares in the event of an
election by the Underwriters to receive Offer Shares in lieu
of ADSs). 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 the untrue or
alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to
information supplied by the Company or by the Underwriters and
the
34
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Underwriters' respective obligations to contribute
pursuant to this Section 7 are several, in proportion to the
respective number of ADSs (or Offer Shares in the event of an
election by the Underwriters to receive Offer Shares in lieu
of ADSs) they have purchased hereunder, and not joint.
(f) The Company and the Underwriters agree that it would not be
just or 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 that does not take account
of the equitable considerations referred to in Section 7(e).
The amount paid or payable by an indemnified party as a result
of the losses, claims, damages and liabilities referred to in
the immediately preceding paragraph shall be deemed to
include, subject to the limitations set forth above, any legal
or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such
action or claim. 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 ADSs (or Offer Shares in the event of an election by
the Underwriters to receive Offer Shares in lieu of ADSs)
underwritten by such Underwriter exceeds the amount of any
damages that such Underwriter has otherwise been required to
pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 7
are not exclusive and shall not limit any rights or remedies
which may otherwise be available to any indemnified party at
law or in equity.
(g) The indemnity and contribution provisions contained in this
Section 7 and the representations, warranties and other
statements of the Company contained in this Agreement shall
remain operative and in full force and effect regardless of
(i) any termination of this Agreement, (ii) any investigation
made by or on behalf of any Underwriter or any person
controlling any Underwriter or by or on behalf of the Company,
its officers or directors or any person controlling the
Company and (iii) acceptance of and payment for any of the
ADSs (or Offer Shares in the event of an election by the
Underwriters to receive Offer Shares in lieu of ADSs).
8. Termination. This Agreement shall be subject to termination by notice
given by the Joint Global Coordinators to the Company, if (a) after the
execution and delivery of this Agreement and prior to the Closing Date (i)
trading generally shall have been suspended or materially limited on or by, as
the case may be, any of the NYSE, the Nasdaq National Market or the HKSE, (ii)
trading of any securities of the Company or the Parent Company shall have been
suspended or materially limited on any such exchange or over-the-counter market,
or minimum or maximum prices for trading shall have been fixed, or maximum
ranges for prices have been
35
required by any such exchange or by any such system or by order of the
Commission, the NASD or any other government authority, (iii) a material
disruption in commercial banking or securities settlement, payment or clearance
services in the United States, Hong Kong or the European Union shall have
occurred, (iv) a change or development involving a prospective change in the
existing financial, political, economic or regulatory conditions of the PRC,
Hong Kong or the United States (including the imposition of, or a material
change in, exchange controls, currency exchange rates or taxation, including any
transfer taxes, duties or withholding taxes affecting the ADSs or the Offer
Shares, or foreign investment regulations) shall have occurred, (v) any new
restriction materially adversely affecting the ability of the Underwriters to
distribute the ADSs or the Offer Shares, as the case may be, shall have become
effective, (vi) a general moratorium on commercial banking activities shall have
been declared by either Federal or New York State authorities, in Hong Kong by
the Hong Kong authorities or in the PRC by the PRC authorities or (vii) there
shall have occurred any outbreak or escalation of hostilities or any change in
financial markets, currency exchange rates or controls or any calamity or crisis
that, in the judgement of the Joint Global Coordinators, is material and adverse
and (b) in the case of any of the events specified in clause 8(a) above, such
event, singly or together with any other such event, makes it, in the judgement
of the Joint Global Coordinators, impractical or inadvisable to proceed with the
offer, sale or delivery, or to enforce contracts for sale, of the ADSs or the
Offer Shares, as the case may be, on the terms and in the manner contemplated in
the Prospectus.
9. Effectiveness; Defaulting Underwriters. This Agreement shall become
effective upon the later of (i) execution and delivery hereof by the parties
hereto and (ii) release of notification of the effectiveness of the Registration
Statement and the ADS Registration Statement by the Commission.
(a) If, on the Closing Date, any one or more of the Underwriters
shall fail or refuse to purchase ADSs that it has or they have
agreed to purchase hereunder on such date, and the aggregate
number of ADSs which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase is not
more than one-tenth of the aggregate number of the ADSs to be
purchased on such date, the other Underwriters shall be
obligated severally in the proportions that the number of Firm
ADSs set forth opposite their respective names in Schedule I
or Schedule II bears to the aggregate number of Firm ADSs set
forth opposite the names of all such non-defaulting
Underwriters, or in such other proportions as the Joint Global
Coordinators may specify, to purchase the ADSs which such
defaulting Underwriter or Underwriters agreed but failed or
refused to purchase on such date; provided that in no event
shall the number of ADSs that any Underwriter has agreed to
purchase pursuant to this Agreement be increased pursuant to
this Section 9 by an amount in excess of one-ninth of such
number of ADSs without the written consent of such
Underwriter. If, on the Closing Date, any Underwriter or
Underwriters shall fail or refuse to purchase Firm ADSs and
the aggregate number of Firm ADSs with respect to which such
default occurs is more than one-tenth of the aggregate number
of Firm ADSs to be purchased, and arrangements satisfactory to
the Joint Global Coordinators and the Company for the purchase
of such Firm ADSs are not made within 36 hours after such
default,
36
this Agreement shall terminate without liability on the part
of any non-defaulting Underwriter or the Company. In any such
case either the Joint Global Coordinators or the Company shall
have the right to postpone the Closing Date, but in no event
for longer than seven days, in order that the required
changes, if any, in the Registration Statement and in the
Prospectus or in any other documents or arrangements may be
effected. If, on the Second Time of Delivery, any Underwriter
or Underwriters shall fail or refuse to purchase Additional
ADSs and the aggregate number of Additional ADSs which such
defaulting Underwriter or Underwriters agreed but failed or
refused to purchase is not more than one-tenth of the
aggregate number of the Additional ADSs to be purchased on
such date, the other Underwriters shall be obligated severally
in the proportions that the number of Firm ADSs set forth
opposite their respective names in Schedule I or Schedule II
bears to the aggregate number of Firm ADSs set forth opposite
the names of all such non-defaulting Underwriters, or in such
other proportions as the Joint Global Coordinators may
specify, to purchase the Additional ADSs which such defaulting
Underwriter or Underwriters agreed but failed or refused to
purchase on such date; provided that in no event shall the
number of Additional ADSs that any Underwriter has agreed to
purchase pursuant to this Agreement be increased pursuant to
this Section 9 by an amount in excess of one-ninth of such
number of Additional ADSs without the written consent of such
Underwriter. If, on the Closing Date, any Underwriter or
Underwriters shall fail or refuse to purchase such Additional
ADSs and the aggregate number of Additional ADSs with respect
to which such default occurs is more than one-tenth of the
aggregate number of Additional ADSs to be purchased, the
non-defaulting Underwriters shall have the option to (i)
terminate their obligation hereunder to purchase Additional
ADSs or (ii) purchase not less than the number of Additional
ADSs that such non-defaulting Underwriters would have been
obligated to purchase in the absence of such default. Any
action taken under this paragraph shall not relieve any
defaulting Underwriter from liability in respect of any
default of such Underwriter under this Agreement.
(b) If this Agreement shall be terminated by the Underwriters, or
any of them, because of any failure or refusal on the part of
the Company to comply with the terms or to fulfill any of the
conditions of this Agreement, or if for any reason the Company
shall be unable to perform its obligations under this
Agreement, the Company will reimburse the Underwriters or such
Underwriters as have so terminated this Agreement with respect
to themselves, severally, for all out-of-pocket expenses
(including the fees and disbursements of their counsel)
reasonably incurred by such Underwriters in connection with
this Agreement or the Global Offering contemplated hereunder.
10. Submission of Jurisdiction.
(a) The Company and each of the Joint Global Coordinators
irrevocably agree that any legal suit, action or proceeding
brought by any Global Coordinator,
37
Underwriter or by any Selling Affiliate or by any person who
controls any Underwriter arising out of or relating to this
Agreement or the transactions contemplated hereby may be
instituted in any United States state or Federal Court in the
Borough of Manhattan, the City of New York and irrevocably
waives, to the fullest extent permitted by law, any objection
which it may now or hereafter have to the laying of the venue
of any such suit, action or proceeding and any claim that any
such proceeding brought in such a court has been brought in an
inconvenient forum, and irrevocably submits to the
non-exclusive jurisdiction of any such court in any such suit,
action or proceeding. The Company agrees that a final judgment
in any such suit, action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law in accordance with
applicable law. Subject to restrictions under applicable laws,
the Company hereby irrevocably waives any right to invoke the
jurisdiction of any court in, or by virtue of the laws of, the
Xxxxxx Xxxxxxx, xxx Xxxxxxx Xxxxxx Xxxxxxx, Xxxx Xxxx or the
PRC.
(b) The Company has appointed CT Corporation System, 000 Xxxxxx
Xxxxxx, Xxx Xxxx, XX00000 (the "Process Agent"), as its
authorized agent to receive on its behalf service of copies of
the summons and complaints and any other process which may be
served in any suit, action or proceeding arising out of or
relating to this Agreement or the transactions contemplated
hereby brought in any state or Federal Court sitting in the
Borough of Manhattan, the City of New York. Such appointment
shall be irrevocable. Such service may be made by delivering a
copy of such process to the Company in care of the Process
Agent at the address specified above for the Process Agent and
obtaining a receipt therefor, and the Company hereby
irrevocably authorizes and directs such Process Agent to
accept such service on its behalf. The Company represents and
warrants that the Process Agent has agreed to act as said
agent for service of process, and agrees that service of
process in such manner upon the Process Agent shall be deemed
in every respect effective service of process upon the Company
in any such suit, action or proceeding.
(c) The Company, in respect of itself and its properties and
revenues (and, to the extent it may lawfully do so, in respect
of the Subsidiaries, the PRC Subsidiaries, the Operating
Companies and their properties and revenues), expressly and
irrevocably waives, any right of immunity to jurisdiction to
which it or they may otherwise be entitled or become entitled,
on the grounds of sovereignty or otherwise (including any
immunity from the jurisdiction of any court or from service of
process or from attachment prior to judgment or in aid of
execution or otherwise) or claim thereto which may now or
hereafter exist, and agrees not to assert any such right or
claim in any legal action, suit or proceeding arising out of
or based on this Agreement or the transactions contemplated
hereby which is instituted in any state or Federal Court
sitting in the Borough of Manhattan, the City of New York or
any other competent court in Hong Kong, the PRC, the British
Virgin Islands and the Cayman Islands.
38
11. Currency. If for the purposes of obtaining judgment in any court it is
necessary to convert a sum due hereunder into any currency other than United
States dollars, the parties hereto agree, to the fullest extent that they
effectively may do so, that the rate of exchange used shall be the rate at
which, in accordance with normal banking procedures, the Joint Global
Coordinators could purchase United States dollars with such other currency in
The City of New York on the business day preceding that on which final judgment
is given. The obligation of the Company in respect of any sum due from it to any
Underwriter (including the Joint Global Coordinators) shall, notwithstanding any
judgment in a currency other than United States dollars, not be discharged until
the first business day, following actual receipt by such Underwriter of any sum
adjudged to be so due in such other currency, on which (and only to the extent
that) such Underwriter may in accordance with normal banking procedures purchase
United States dollars with such other currency. If the United States dollars so
purchased are less than the sum originally due to such Underwriter hereunder,
the Company agrees, as a separate obligation and notwithstanding any such
judgment, to indemnify such Underwriter against such loss. If the United States
dollars so purchased are greater than the sum originally due to such Underwriter
hereunder, such Underwriter agrees to pay to the Company an amount equal to the
excess of the United States dollars so purchased (based on amounts actually
received) over the sum originally due to such Underwriter hereunder.
12. Notices.
(a) In all dealings hereunder, the Joint Global Coordinators shall
act on behalf of each of the Underwriters, and the parties
hereto shall be entitled to act and rely upon any statement,
request, notice or agreement on behalf of any Underwriter made
or given by the Joint Global Coordinators on behalf of the
Underwriters as the representatives of the several
Underwriters.
(b) All statements, requests, notices and agreements hereunder
shall be in writing, and if to the Underwriters shall be
sufficient in all respects if delivered or sent by registered
mail, or by telex or facsimile transmission promptly confirmed
by a writing delivered or sent by registered mail, to the
Joint Global Coordinators, in care of (i) Citigroup Global
Markets Asia Limited, 00/X, Xxxxx Xxxxxxxx Xxxxxx, Xxxxxxx,
Xxxx Xxxx, Xxxxxxxxx: Xx. Xxxxx Xxxxxx (Facsimile No. (852
2501-8191) and (ii) Xxxxxx Xxxxxxx Xxxx Xxxxxx Asia Limited,
00/X, Xxxxx Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxx Xxxx, Xxxxxxxxx:
Mr. Xxxxxx Xxxxxx (Facsimile No. (000) 0000-0000), if to the
Company shall be sufficient in all respects if delivered or
sent by registered mail, or by telex or facsimile transmission
promptly confirmed by a writing delivered or sent by
registered mail, to the Company at 0/xx/ Xxxxx, Xxxxx X0,
Xxxxxxxx Xxxxx, Xx. 0 Xxxx Xxxxx Xx Xxxxxx, Xxxxxxx, Xxxxx
00000, Attention: Xx. Xxxxx Xxxxxxx (Facsimile No. (8610)
8518-5555), with a copy to XXX Group Limited, 00/xx/ Xxxxx,
Xxx Xxxxxx, 00 Xxxxx'x Xxxx Xxxxxxx, Xxxx Xxxx, Attention:
Xxxxxx Xxx (Facsimile No. (000) 0000 0000) provided, however,
that any notice to any Underwriter pursuant to Section 7(c)
hereof shall be delivered or sent by mail, telex, or facsimile
transmission to such Underwriter
39
at its address, which address will be supplied to the Company
by the Joint Global Coordinators on request.
13. Successors. This Agreement shall be binding upon, and inure solely to
the benefit of, the several Underwriters and the Company and, to the extent
provided in Section 7 hereof, any Selling Affiliate, the officers and directors
of the Company and each person who controls the Company or any Underwriter and
their respective heirs, executors, administrators, successors and assigns, and
no other person shall acquire or have any right under or by virtue of this
Agreement. No purchaser of any of the ADSs from any Underwriter shall be deemed
a successor or assign by reason merely or such purchase.
14. Counterparts. This Agreement may be signed in two or more counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
15. Applicable Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.
16. Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
17. Miscellaneous. Time shall be of the essence of this Agreement. The term
"business day", as used herein, shall mean any day when the Commission's office
in Washington, D.C., is open for business and which is a day on which Nasdaq is
open for trading.
40
Very truly yours,
XXX ONLINE INC.
By:____________________________
Name:
Title:
XXX Group Limited
By:____________________________
Name:
Title:
Accepted as of the date hereof
CITIGROUP GLOBAL MARKETS INC.
XXXXXX XXXXXXX & CO. INCORPORATED
Acting severally on behalf
of themselves and the
several U.S. Underwriters named
in Schedule I hereto.
By: CITIGROUP GLOBAL MARKETS INC.
By:__________________________
Name:
Title:
41
CITIGROUP GLOBAL MARKETS LIMITED
XXXXXX XXXXXXX & CO. INTERNATIONAL LIMITED
Acting severally on behalf
of themselves and the several
International Underwriters named
in Schedule II hereto.
By: CITIGROUP GLOBAL MARKETS LIMITED
By:__________________________
Name:
Title:
CITIGROUP GLOBAL MARKETS ASIA LIMITED,
as Global Coordinator
By:__________________________
Name:
Title:
XXXXXX XXXXXXX XXXX XXXXXX ASIA LIMITED,
as Global Coordinator
By:__________________________
Name:
Title:
42
SCHEDULE I
Number of Firm ADSs
U.S. Underwriters To Be Purchased
Citigroup Global Markets Inc.
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxx Xxxxxxx & Co.
Cazenove Incorporated
Credit Lyonnais Securities (USA) Inc.
Deutsche Bank Securities Inc.
UOB Asia (Hong Kong) Limited
---------------
Sub total .......
---------------
43
SCHEDULE II
Number of Firm ADSs
International Underwriters To Be Purchased
Citigroup Global Markets Limited
Xxxxxx Xxxxxxx & Co. International Limited
Xxxxx Xxxxxxx & Co.
Cazenove Asia Limited
CLSA Limited
Deutsche Bank AG, Hong Kong Branch
UOB Asia (Hong Kong) Limited
---------------
Sub total .....
---------------
---------------
Total .........
===============
44
SCHEDULE III
REORGANIZATION AGREEMENTS
1. A restructuring agreement dated September 20, 2003 entered
into between XXX Group Limited, our Company and Rich Wealth,
pursuant to which XXX Group Limited and Rich Wealth agreed to
transfer to our Company their 100% interest in the issued
share capital of Lahiji and Laurstinus, and Advanced Internet
Services, respectively.
2. An instrument of transfer dated September 20, 2003 entered
into between XXX Group Limited and us under which XXX Group
Limited transferred to us one share in Lahiji in consideration
of the issue by us of one share of US$1.00 in our capital to
XXX Group Limited.
3. A share transfer agreement dated June 17, 2002 entered into
between XXX.XXX International Limited ("XXX Xxxxxxxxxxxxx")
and XXX.XXX (China), pursuant to which XXX Xxxxxxxxxxxxx
agreed to transfer all of its shareholding in Shanghai Super
Channel to XXX.XXX (China).
4. An instrument of transfer dated September 20, 2003 entered
into between Rich Wealth and us under which Rich Wealth
transferred to us 9,999,999 shares in Advance Internet
Services in consideration of the issue by us of one share of
US$1.00 in our capital to Rich Wealth.
5. An instrument of transfer dated September 20, 2003 entered
into between XXX Nominees Limited (as trustee of Rich Wealth)
and Lahiji (as our trustee) pursuant to which XXX Nominees
Limited transferred to Lahiji, for no consideration, one share
in Advance Internet Services.
6. An instrument of transfer dated September 20, 2003 entered
into between XXX Group Limited and us under which XXX Group
Limited transferred to us one shares in Laurstinus in
consideration of the issue by us of one share of US$1.00 in
our capital to XXX Group Limited.
7. An equity transfer agreement dated November 25, 2002 with
respect to the transfer of 70% equity interests in Shenzhen
Freenet from Mr. Xxxx Xxx Lei to Xx. Xxxx Xxx Xxxx.
8. An equity transfer agreement dated April 30, 2003 entered into
between Redsail Yuxiang, Beijing San Jin and Beijing Lei Ting
with respect to the acquisition of 60% of the equity interest
in Redsail as amended by an agreement dated May 30, 2003
entered into between the same parties.
9. An equity transfer agreement dated September 25, 2003 entered
into among Great Wall Computer Software and Systems Co., Ltd.
("Great Wall Computer"), Great Wall Technology Company Ltd.
("Great Wall Technology"), XXX.XXX (China) and Shenzhen
Freenet, pursuant to which Great Wall Computer agreed to
transfer its 20% equity interest in GreaTom to Shenzhen
Freenet.
10. A supplemental agreement dated September 25, 2003 entered into
among XXX.XXX (China), Great Wall Technology and Shenzhen
Freenet,
45
supplementing the agreement dated January 2, 2001 in relation
to the establishment of GreaTom.
11. A media services agreement with XXX.XXX INTERNATIONAL LIMITED,
a wholly- owned subsidiary of XXX.XXX LIMITED, on September
26, 2003. Pursuant to this agreement, XXX.XXX INTERNATIONAL
LIMITED shall provide, and/or use reasonable endeavors to
procure the provision of certain media services.
12. An online media services agreement with XXX.XXX INTERNATIONAL
LIMITED, on September 26, 2003. Pursuant to this agreement, we
shall provide and/or procure the provision of certain online
media services.
13. An administrative services agreement with XXX.XXX
INTERNATIONAL LIMITED, on September 26, 2003. Pursuant to this
administrative services agreement, XXX.XXX INTERNATIONAL
LIMITED will provide or will use reasonable endeavours to
procure our parent company and its other subsidiaries to
provide us certain administrative services, including company
secretarial services, legal services and staff training
services.
14. An undertaking agreement dated February [.], 2004 entered into
between us and XXX Group Limited pursuant to which XXX Group
Limited undertakes to us not to demand repayment of the
amounts due to it under the separate loan agreements entered
into between XXX Group Limited and each of Laurstinus, Lahiji
and Advanced Internet Services dated September 21, 2003 except
in certain circumstances.
15. A deed of non-compete dated ., 2004 entered between us and XXX
Group Limited.
16. A deed of indemnity dated ., 2004 entered into by XXX Group
Limited and us for ourselves and as trustee for each of our
subsidiaries, under which XXX Group Limited has given certain
indemnities in favour of our Group containing, among other
things, an indemnity by XXX Group Limited that (a) XXX Group
Limited will bear all of the risks and (b) XXX Group Limited
will enjoy all of the rewards associated with the holding by
(i) XXX.XXX (China) of the 51% equity interest in Cernet
Information Technology Company Limited and (ii) Shenzhen
Freenet of the 37% equity interest in Beijing Cernet Online
Company Limited and the 50% equity interest in Guangzhou Hong
Xiang Audio-Video Production Company Limited.
46
SCHEDULE IV
CORPORATE AGREEMENTS
Loan Agreements
17. A loan agreement dated July 25, 2002 entered into between
Xxxxxx Gem, Mr. Xxxx Xxx Lei and Xx. Xxxx Xxx Xxxx,
pursuant to which Xxxxxx Gem provided Mr. Xxxx Xxx Lei and
Xx. Xxxx Xxx Xxxx a certain sum respectively, to be
invested exclusively in Xx Xx Network.
18. A loan agreement dated August 8, 2002 between Lahiji and
Xx. Xxxx Xxx Xxxx whereby Lahiji agreed to grant a loan to
Xx. Xxxx Xxx Xxxx for general working capital of Beijing
Lei Ting.
19. A loan agreement dated November 25, 2002 entered into by
Xx. Xxxx Xxx Xxxx with Advanced Internet Services and
Shenzhen Freenet pursuant to which, Advanced Internet
Services grants Xx. Xxxx Xxx Xxxx a loan facility, the
proceeds of which shall be used exclusively towards the
working capital of Shenzhen Freenet or Redsail. The first
advance is in the amount of RMB136.0 million (US$16.4
million), with RMB101.0 million (US$12.2 million) to be
used towards the working capital of Shenzhen Freenet, and
RMB35.0 million (US$4.2 million) to used as capital
injection into Redsail. Advanced Internet Services has a
right to demand payment of the loan at any time.
20. A loan agreement dated November 25, 2002 entered into by
Xx. Xxxx Xxx Xxxx with Shenzhen Freenet pursuant to which,
Xx. Xxxx Xxx Xxxx grants a loan facility to Shenzhen
Freenet, the proceeds of which shall be used exclusively
towards the working capital of Shenzhen Freenet or Redsail.
The first advance is in the amount of RMB136.0 million
(US$16.4 million), with RMB101.0 million (US$12.2 million)
to be used towards the working capital of Shenzhen Freenet,
and RMB35.0 million (US$4.2 million) to be used as capital
injection into Redsail.
21. A supplemental loan agreement dated September 26, 2003
entered into between Lahiji and Xx. Xxxx Xxx Xxxx whereby
Lahiji agreed to provide Xx. Xxxx Xxx Xxxx a long term loan
to be invested exclusively in Beijing Lei Ting, which is
supplemental to the loan agreement dated August 8, 2002
entered into between the same parties.
22. A supplemental loan agreement dated September 26, 2003
entered into between Advanced Internet Services and Xx.
Xxxx Xxx Xxxx whereby Advanced Internet Services agreed to
provide Xx. Xxxx Xxx Xxxx a long term loan to be invested
exclusively in Shenzhen Freenet, which is supplemental to
the loan agreement dated November 25, 2002 entered into
between the same parties.
23. A supplemental loan agreement dated September 26, 2003
entered into between Advanced Internet Services and Xx.
Xxxx Xxx Xxxx whereby the
47
loan amount owing from Xx. Xxxx Xxx Xxxx to Advanced
Internet Services was reduced from RMB105,722,947 (US$12.8
million) to RMB70,722,947 (US$8.5 million), which is
supplemental to the novation agreement made in relation to
the loan agreement dated September 26, 2003 between the
parties and Xx. Xxxxx Xxxx.
24. A loan agreement dated September 26, 2003 entered into
between Advanced Internet Services and Xx. Xxxxx Xxxx
whereby Advanced Internet Services agreed to provide Xx.
Xxxxx Xxxx x xxxx term loan to be invested exclusively in
Shenzhen Freenet.
25. A loan agreement dated September 21, 2003 entered into
between XXX Group Limited and Laurstinus.
26. A loan agreement dated September 21, 2003 entered into
between XXX Group Limited and Lahiji.
27. A loan agreement dated September 21, 2003 entered into
between XXX Group Limited and Advanced Internet Services.
Share Option and Equity Pledge Agreements
28. A sole exclusive right to purchase shares agreement dated
August 8, 2002 entered into among others, Lahiji, Xx. Xxxx
Xxx Xxxx and Mr. Xxxx Xxx Lei in relation to the sole
exclusive right for Lahiji to purchase entire equity
interest of Beijing Lei Ting.
29. An equity pledge agreement dated August 8, 2002 entered
into between Lahiji and Xx. Xxxx Xxx Xxxx whereby Xx. Xxxx
Xxx Xxxx agreed to pledge her entire equity interest in
Beijing Lei Ting to Lahiji.
30. An equity pledge agreement dated August 8, 2002 entered
into between Lahiji and Mr. Xxxx Xxx Lei whereby Mr. Xxxx
Xxx Lei agreed to pledge his entire equity interest in
Beijing Lei Ting to Lahiji.
31. A sole exclusive right to purchase shares agreement dated
November 25, 2002 entered into among others, Advanced
Internet Services, Mr. Sing Wang, Xx. Xxxx Peng, Mr. Xxxx
Xxx Lei and Xx. Xxxx Xxx Xxxx in relation to the sole
exclusive right for Advanced Internet Services to purchase
the entire equity interest of Shenzhen Freenet.
32. An equity pledge agreement dated November 25, 2002 entered
into between Advanced Internet Services and Xx. Xxxx Xxx
Xxxx whereby Xx. Xxxx Xxx Xxxx agreed to pledge her entire
equity interest in Shenzhen Freenet to Advanced Internet
Services.
33. An equity pledge agreement dated November 25, 2002 entered
into between Advanced Internet Services and Mr. Xxxx Xxx
Lei whereby Mr. Xxxx Xxx Lei agreed to pledge his entire
equity interest in Shenzhen Freenet to Advanced Internet
Services.
34. An equity pledge agreement dated July 25, 2003 entered into
between Redsail Yuxiang; Xx Xxxx Xxx Xxxx, Redsail and
Beijing Lei Ting in relation to the pledge of the 1,260,068
shares of XXX Group Limited by Redsail Yuxiang in favour of
Xxxxxx Xxx Xxxx xxx Xxxxxxx.
00
00. A supplemental equity pledge agreement dated September 26,
2003 entered into between Beijing Super Channel, Lahiji and
Xx. Xxxx Xxx Xxxx relating to the novation of all rights,
obligations and liabilities from Lahiji to Beijing Super
Channel, pursuant to the equity pledge agreement dated
August 8, 2002 entered into between Xx. Xxxx Xxx Xxxx and
Lahiji. Pursuant to the supplemental share pledge
agreement, Xx. Xxxx Xxx Xxxx pledges to Beijing Super
Channel all of her interest in Beijing Lei Ting to
guarantee the performance by Beijing Lei Ting of its
obligations under the exclusive technical and consulting
services agreement between Beijing Lei Ting and Beijing
Super Channel. The term of the agreement is from the date
of the registration of this supplemental share pledge with
the relevant PRC regulatory authority until the termination
or expiration of the exclusive technical and consulting
services agreement between Beijing Super Channel and
Beijing Lei Ting.
36. An equity pledge agreement dated September 26, 2003 entered
into between Beijing Super Channel and Mr. Xxxx Xxx Lei,
pursuant to which Mr. Xxxx Xxx Lei pledges to Beijing Super
Channel all of his interest in Beijing Lei Ting to
guarantee the performance by Beijing Lei Ting of its
obligations under the exclusive technical and consulting
services agreement between Beijing Lei Ting and Beijing
Super Channel. The term of the agreement is from the date
of the registration of this pledge with the relevant PRC
regulatory authority until the termination or expiration of
the exclusive technical and consulting services agreement
between Beijing Super Channel and Beijing Lei Ting.
37. An equity pledge agreement dated September 26, 2003 entered
into between Beijing Super Channel and Xx. Xxxxx Xxxx,
pursuant to which Xx. Xxxxx Xxxx pledges to Beijing Super
Channel all of his interest in Shenzhen Freenet to
guarantee the performance by Shenzhen Freenet of its
obligations under the exclusive technical and consulting
services agreement between Shenzhen Freenet and Beijing
Super Channel. The term of the agreement is from the date
of the registration of this pledge with the relevant PRC
regulatory authority until the termination or expiration of
the exclusive technical and consulting services agreement
between Beijing Super Channel and Shenzhen Freenet.
38. An equity pledge agreement dated September 26, 2003 entered
into between Beijing Super Channel and Xx. Xxxx Xxx Xxxx,
pursuant to which Xx. Xxxx Xxx Xxxx pledges to Beijing
Super Channel all of her interest in Shenzhen Freenet to
guarantee the performance by Shenzhen Freenet of its
obligations under the exclusive technical and consulting
services agreement between Shenzhen Freenet and Beijing
Super Channel. The term of the agreement is from the date
of the registration of this pledge with the relevant PRC
regulatory authority until the termination or expiration of
the exclusive technical and consulting services agreement
between Beijing Super Channel and Shenzhen Freenet.
49
39. An exclusive option agreement dated September 26, 2003
entered into between Xx. Xxxx Xxx Xxxx, Xxxxxx and Beijing
Lei Ting, pursuant to which Xx. Xxxx Xxx Xxxx granted
Lahiji an exclusive option to purchase all of her interest
in Beijing Lei Ting when permitted by PRC law. The term of
this agreement is 10 years from the date of execution.
40. An exclusive option agreement dated September 26, 2003
entered into between Mr. Xxxx Xxx Lei, Xxxxxx and Bejing
Lei Ting, pursuant to which Mr. Xxxx Xxx Lei granted Lahiji
an exclusive option to purchase all of his interest in
Bejing Lei Ting when permitted by PRC law. The term of this
agreement is 10 years from the date of execution.
41. An exclusive option agreement dated September 26, 2003
entered into between Xx. Xxxx Xxx Xxxx, Advanced Internet
Services and Shenzhen Freenet, pursuant to which Xx. Xxxx
Xxx Xxxx granted Advanced Internet Services an exclusive
option to purchase all of her interest in Shenzhen Freenet
when permitted by PRC law. The term of this agreement is 10
years from the date of execution.
42. An exclusive option agreement dated September 26, 2003
entered into between Xx. Xxxxx Xxxx, Advanced Internet
Services and Shenzhen Freenet, pursuant to which Xx. Xxxxx
Xxxx granted Advanced Internet Services an exclusive option
to purchase all of his interest in Shenzhen Freenet when
permitted by PRC law. The term of this agreement is 10
years from the date of execution.
43. An exclusive option agreement dated November 19, 2003
entered into between Puccini, Xx. Xxxx Xxx Xxxx and Xx Xx
Network pursuant to which Xx. Xxxx Xxx Xxxx granted Puccini
an exclusive option to purchase all her interests in Xx Xx
Network, when permitted by PRC law. The term of this
agreement in 10 years from the date of execution.
44. An exclusive option agreement dated November 19, 2003
entered into between Puccini, Mr. Xxxx Xxx Lei and Xx Xx
Network pursuant to which Mr. Xxxx Xxx Lei granted Puccini
an exclusive option to purchase all his interests in Xx Xx
Network when permitted by PRC law. The term of this
agreement is 10 years from the date of execution.
45. An equity pledge agreement dated November 19, 2003 entered
into between Puccini Network and Mr. Xxxx Xxx Lei pursuant
to which Mr. Xxxx Xxx Lei pledged to Puccini Network all
his interests in Xx Xx Network to guarantee the performance
by Xx Xx Network of its obligations under the exclusive
technical and consulting services agreement between Xx Xx
Network and Puccini Network. The term of the agreement is
from the date of the registration of this pledge with the
relevant PRC authority until the termination or expiration
of the exclusive technical and consulting services
agreement between Xx Xx Network and Puccini Network.
46. An equity pledge agreement dated November 19, 2003 entered
into between Puccini Network and Xx. Xxxx Xxx Xxxx pursuant
to which Xx. Xxxx Xxx Xxxx pledged to Puccini Network all
her interests in Xx Xx
50
Network to guarantee the performance by Xx Xx Network of
its obligations under the exclusive technical and
consulting services agreement between Xx Xx Network and
Puccini Network. The term of the agreement is from the date
of the registration of this pledge with the relevant PRC
authority until the termination or expiration of the
exclusive technical and consulting services agreement
between Xx Xx Network and Puccini Network.
47. A termination agreement dated September 26, 2003 entered
into between Lahiji and Mr. Xxxx Xxx Lei, with respect to
the termination of the share pledge agreement dated August
8, 2002 entered into between the same parties.
48. An undertaking agreement dated November 19, 2003 entered
into between Puccini and Xx. Xxxx Xxx Xxxx.
49. An undertaking agreement dated November 19, 2003 entered
into between Puccini and Mr. Xxxx Xxx Lei.
Termination and Novation Agreements
50. A novation agreement dated November 25, 2002 entered into
between Mr. Xxxx Xxx Lei, Advanced Internet Services and
Shenzhen Freenet relating to the novation of all rights,
obligation and liabilities from Mr. Xxxx Xxx Lei to
Shenzhen Freenet pursuant to the loan agreement dated
January 17, 2001 entered into between Mr. Xxxx Xxx Lei and
Advanced Internet Services.
51. A novation agreement dated November 25, 2002 entered into
between Mr. Xxxx Xxx Lei, Advanced Internet Services and
Shenzhen Freenet relating to the novation of all rights,
obligations and liabilities from Mr. Xxxx Xxx Lei to
Advanced Internet Services pursuant to the loan agreement
dated January 17, 2001 entered into between Mr. Xxxx Xxx
Lei and Shenzhen Freenet.
52. A termination & novation agreement dated November 25, 2002
entered into between Mr. Xxxx Xxx Lei, Advanced Internet
Services and Shenzhen Freenet with respect to (1)
termination of the loan agreement dated August 21, 2002
entered into between Mr. Xxxx Xxx Lei and Shenzhen Freenet
whereby Mr. Xxxx Xxx Lei advanced a certain sum to Shenzhen
Freenet exclusively for contributing to the registered
capital of Shenzhen Freenet; and (2) novation of all
rights, obligations and liabilities from Mr. Xxxx Xxx Lei
to Advanced Internet Services with respect to a certain sum
of the shareholders' loan under the same loan agreement.
53. A novation agreement dated November 25, 2002 entered into
between Advanced Internet Services, Mr. Xxxx Xxx Lei and
Shenzhen Freenet relating to the novation of all rights,
obligations and liabilities from Mr. Xxxx Xxx Lei to
Shenzhen Freenet pursuant to the novation agreement dated
March 2, 2001 entered into between Mr. Sing Wang, Mr. Xxxx
Xxx Lei and Advanced Internet Services whereby Mr. Sing
Wang has assigned
51
all his rights, title, interest and benefits of and novated
all his obligations and liabilities under the loan
agreement dated December 10, 1999 to Mr. Xxxx Xxx Lei.
54. A novation agreement dated November 25, 2002 entered into
between Advanced Internet Services, Mr. Xxxx Xxx Lei and
Shenzhen Freenet relating to the novation of all rights,
obligations and liabilities from Mr. Xxxx Xxx Lei to
Advanced Internet Services pursuant to the novation
agreement dated March 2, 2001 entered into between Mr. Sing
Wang, Mr. Xxxx Xxx Lei and Shenzhen Freenet whereby Mr.
Sing Wang has assigned all his rights, title, interest and
benefits of and novated all his obligations and liabilities
under the loan agreement dated December 10, 1999 to Mr.
Xxxx Xxx Lei.
55. A novation agreement dated November 25, 2002 entered into
between Advanced Internet Services, Mr. Xxxx Xxx Lei and
Shenzhen Freenet relating to the novation of all rights,
obligations and liabilities from Mr. Xxxx Xxx Lei to
Shenzhen Freenet pursuant to the first loan agreement dated
December 29, 2000 and the second loan agreement dated June
5, 2001, both entered into between Mr. Xxxx Xxx Lei and
Advanced Internet Services.
56. A novation agreement dated November 25, 2002 entered into
between Advanced Internet Services, Mr. Xxxx Xxx Lei and
Shenzhen Freenet relating to the novation of all rights,
obligations and liabilities from Mr. Xxxx Xxx Lei to
Advanced Internet Services pursuant to the first loan
agreement dated December 29, 2000 and the second loan
agreement dated June 5, 2001, both entered into between Mr.
Xxxx Xxx Lei and Shenzhen Freenet.
57. A termination agreement dated December 1, 2002 entered into
between Mr. Xxxx Xxx Lei and Lahiji with respect to the
termination of a loan agreement dated August 8, 2002
entered into the same parties whereby Lahiji advanced a
certain sum to Mr. Xxxx Xxx Lei to invest in Beijing Lei
Ting.
58. A novation agreement dated September 25, 2003 entered into
among Xx. Xxxx Xxx Xxxx, Mr. Xxxx Xxx Lei, Xxxxxx Gem and
Puccini, regarding the share option agreement and share
pledge agreement dated July 25, 2002.
59. A novation agreement dated September 25, 2003 entered into
among Xx. Xxxx Xxx Xxxx, Mr. Xxxx Xxx Lei, Xxxxxx Gem and
Puccini, regarding the loan agreement dated July 25, 2002.
60. A novation agreement dated September 26, 2003 entered into
among Shenzhen Freenet, Xx. Xxxx Xxx Xxxx and Xx. Xxxxx
Xxxx. Pursuant to this agreement, Xx. Xxxxx Xxxx assumes
all of the rights and obligations of Xx. Xxxx Xxx Xxxx with
respect to RMB30.3 million (US$3.7 million) of the RMB136.0
million (US$16.4 million) lent by Xx. Xxxx Xxx Xxxx.
Power of Attorney and Investment Attorney Agreements
52
61. An investment attorney agreement dated September 25, 2003
entered into among Puccini, Mr. Xxxx Xxx Lei and Xx. Xxxx
Xxx Xxxx.
62. An irrevocable power of attorney dated September 26, 2003
executed by Xx. Xxxx Xxx Xxxx granting Mr. Xxxx Xxx Lei,
or, if Mr. Xxxx Xxx Lei is no longer an employee of Beijing
Super Channel or if Beijing Super Channel gives written
notice to replace Mr. Xxxx Xxx Lei, any other nominated
employee of Beijing Super Channel, full power and authority
to exercise all of her shareholder's rights with respect to
her interest in Beijing Lei Ting.
63. An irrevocable power of attorney dated September 26, 2003
executed by Xx. Xxxxx Xxxx granting Mr. Xxxx Xxx Lei, or,
if Mr. Xxxx Xxx Lei is no longer an employee of Beijing
Super Channel or if Beijing Super Channel gives written
notice to replace Mr. Xxxx Xxx Lei, any other nominated
employee of Beijing Super Channel, full power and authority
to exercise all of his shareholder's rights with respect to
his interest in Shenzhen Freenet.
64. An irrevocable power of attorney dated September 26, 2003
executed by Xx. Xxxx Xxx Xxxx granting Mr. Xxxx Xxx Lei,
or, if Mr. Xxxx Xxx Lei is no longer an employee of Beijing
Super Channel or if Beijing Super Channel gives written
notice to replace Mr. Xxxx Xxx Lei, any other nominated
employee of Beijing Super Channel, full power and authority
to exercise all of her shareholder's rights with respect to
her interest in Shenzhen Freenet.
65. An irrevocable power of attorney dated September 26, 2003
executed by Xx. Xxxx Xxx Xxxx granting Mr. Xxxx Xxx Lei,
or, if Mr. Xxxx Xxx Lei is no longer an employee of Puccini
Network or if Puccini Network gives written notice to
replace Mr. Xxxx Xxx Lei, any other nominated employee of
Puccini Network, full power and authority to exercise all
of her shareholder's rights with respect to her interest in
Xx Xx Network.
66. An irrevocable power of attorney dated September 26, 2003
executed by Mr. Xxxx Xxx Lei granting Mr. Hong Liang or, if
Mr. Hong Liang ceases to be an employee of Beijing Super
Channel or upon notice by Beijing Super Channel to replace
him, any other nominated employee of Beijing Super Channel,
full power and authority to exercise all of his
shareholder's rights with respect to his interest in
Beijing Lei Ting.
67. An irrevocable power of attorney dated September 26, 2003
executed by Mr. Xxxx Xxx Lei granting Mr. Hong Liang or, if
Mr. Hong Liang ceases to be an employee of Xx Xx Network or
upon notice by Xx Xx Network to replace him, any other
nominated employee of Puccini Network, full power and
authority to exercise all of his shareholder's rights with
respect to his interest in Xx Xx Network.
Trademark and License Agreements
53
68. A trademark license agreement dated September 26, 2003
entered into between xxx.xxx enterprises limited ("xxx.xxx
enterprises") and Beijing Super Channel, pursuant to which
xxx.xxx enterprises granted Beijing Super Channel a
non-exclusive license to use certain trademarks solely in
respect of Internet and Internet-related businesses in the
PRC.
69. A domain name license agreement dated September 26, 2003
entered into between xxx.xxx enterprises and Beijing Super
Channel, pursuant to which xxx.xxx enterprises granted
Beijing Super Channel a non-exclusive license to use the
xxx.xxx, xx.xxx.xxx and xx.xxx.xxx domain names.
70. A trademark license agreement dated September 26, 2003
entered into between Beijing Super Channel and Beijing Lei
Ting, granting a non-exclusive right to Beijing Lei Ting to
use certain trademarks for a license fee.
71. A trademark license agreement dated September 26, 2003
entered into between Beijing Super Channel and Shenzhen
Freenet, granting a non-exclusive right to Shenzhen Freenet
to use certain trademarks for a license fee.
72. A domain name license agreement dated September 26, 2003
entered into between Beijing Super Channel and Beijing Lei
Ting, granting a non-exclusive right to Bejing Lei Ting to
use the xxx.xxx, xx.xxx.xxx, xx.xxx.xxx, music 000.xxx.xx,
000.xxx.xx and xxx.xxx.xx domain names for a license fee.
The term of this agreement is 10 years.
73. A domain name license agreement dated September 26, 2003
entered into between Beijing Super Channel and Shenzhen
Freenet, granting a non-exclusive right to Shenzhen Freenet
to use the xxx.xxx, xx.xxx.xxx, xx.xxx.xxx and 000.xxx
domain names for a license fee. The term of this agreement
is 10 years.
74. A domain name transfer agreement dated September 26, 2003
entered into between Beijing Super Channel and Beijing Lei
Ting, pursuant to which Beijing Lei Ting agreed to transfer
to Beijing Super Channel certain domain names for a lump
sum.
75. A domain name transfer agreement dated September 26, 2003
entered into between Beijing Super Channel and Shenzhen
Freenet, pursuant to which Shenzhen Freenet agreed to
transfer to Beijing Super Channel certain domain names for
a lump sum.
76. A trademark license agreement dated November 19, 2003
entered into between Beijing Super Channel and Xx Xx
Network granting a non-exclusive right to Xx Xx Network to
use certain trademarks for a license fee.
77. A domain name license agreement dated November 19, 2003
entered into between Beijing Super Channel and Xx Xx
Network granting a non-exclusive right to Xx Xx Network to
use the xxx.xxx, xx.xxx.xxx and xx.xxx.xxx names for a
license fee. The term of this agreement is 10 years.
54
78. A domain name transfer agreement dated November 19, 2003
entered into between Puccini Network and Xx Xx Network
pursuant to which Xx Xx Network agreed to transfer the
XXXX.xxx and xxxxxx.xxx.xx domain names to Puccini Network
for a lump sum.
79. A domain name license agreement dated November 19, 2003
entered into between Puccini Network and Xx Xx Network
granting a non-exclusive right to Xx Xx Network to use the
XXXX.xxx and xxxxxx.xxx.xx domain names for a license fee.
The term of this agreement is 10 years.
80. A trademark and domain name license agreement dated [.],
2004 entered into between xxx.xxx enterprises limited
("xxx.xxx enterprises") and Beijing Super Channel pursuant
to which xxx.xxx enterprises granted a non-exclusive
license to use certain trademarks solely in respect of
Internet and Internet-related businesses in the PRC and to
use the xxx.xxx, xx.xxx.xxx and xx.xxx.xxx domain.
Technical and Consultancy Services Agreements
81. An exclusive technical and consulting services agreement
dated September 26, 2003 entered into between Beijing Super
Channel and Shenzhen Freenet, pursuant to which Shenzhen
Freenet agreed to engage Beijing Super Channel exclusively
for certain technical and consulting services. The term of
this agreement is 10 years from the date of execution.
82. An exclusive technical and consulting services agreement
dated September 26, 2003 entered into between Beijing Super
Channel and Beijing Lei Ting, pursuant to which Beijing Lei
Ting agreed to engage Beijing Super Channel exclusively for
certain technical and consulting services. The term of this
agreement is 10 years from the date of execution.
83. An exclusive technical and consulting services agreement
dated September 26, 2003 entered into between GreaTom and
Shenzhen Freenet, pursuant to which Shenzhen Freenet agreed
to engage GreaTom exclusively (other than Beijing Super
Channel) for certain technical and consulting services. The
term of this agreement is 10 years from the date of
execution.
84. An exclusive technical and consulting services agreement
dated November 19, 2003 entered into between Puccini
Network and Xx Xx Network pursuant to which Xx Xx Network
agreed to engage Puccini Network exclusively for certain
technical and consulting services. The term of this
agreement is 10 years from the date by execution.
Business Operation Agreements
85. A business operation agreement dated September 26, 2003
entered into between Beijing Super Channel, Beijing Lei
Ting, Xx. Xxxx Xxx Xxxx and Mr. Xxxx Xxx Lei, pursuant to
which Beijing Super Channel agreed to act as a performance
guarantor for Beijing Lei Ting in respect of its
55
transactions with third parties. In return, Beijing Lei
Ting granted Beijing Super Channel a security interest over
all of its assets. In addition, Beijing Lei Ting and its
shareholders, Xx. Xxxx Xxx Xxxx and Mr. Xxxx Xxx Lei,
agreed that Beijing Lei Ting will not carry on any
transactions that may materially adversely affect its
operations and will appoint Beijing Super Channel's
nominees as its directors, chief executive officer and
other senior officers. The term of this agreement is 10
years from the date of execution.
86. A business operation agreement dated September 26, 2003
entered into between Beijing Super Channel, Shenzhen
Freenet, Xx. Xxxx Xxx Xxxx and Xx. Xxxxx Xxxx, pursuant to
which Beijing Super Channel agreed to act as a performance
guarantor for Shenzhen Freenet in respect of its
transactions with third parties. In return, Shenzhen
Freenet granted Beijing Super Channel a security interest
over all of its assets. In addition, Shenzhen Freenet and
its shareholders, Xx. Xxxx Xxx Xxxx and Xx. Xxxxx Xxxx,
agreed that Shenzhen Freenet will not carry on any
transactions that may materially adversely affect its
operations and will appoint Beijing Super Channel's
nominees as its directors, chief executive officer and
other senior officers. The term of this agreement is 10
years from the date of execution.
87. A business operation agreement dated November 19, 2003
entered into among Puccini Network Xx Xx Network and Mr.
Xxxx Xxx Lei and Xx. Xxxx Xxx Xxxx, pursuant to which
Puccini Network agreed to act as performance guarantor for
Xx Xx Network in respect of its transactions with third
parties. In return, Xx Xx Network granted Puccini Network a
security interest over all of its assets. In addition, Xx
Xx Network and its shareholders, Xx. Xxxx Xxx Xxxx and Mr.
Xxxx Xxx Lei agreed that Xx Xx Network will not carry on
any transactions that may materially adversely affect its
operations and will appoint Puccini Network's nominees as
its directors, chief executive officer and other senior
officers. The term of this agreement is 10 years from the
date of execution.
56
SCHEDULE V
SUBSIDIARIES OF THE COMPANY INCORPORATED IN THE PRC
XXX.XXX (China) Investment Limited
Beijing Super Channel Network Limited
Shanghai Super Channel Network Limited
Beijing GreaTom United Technology Company Limited
Puccini Network Technology (Beijing) Limited
57
SCHEDULE VI
SUBSIDIARIES OF THE COMPANY
INCORPORATED OUTSIDE OF THE PRC
Lahiji Vale Limited
Laurstinus Limited
Advanced Internet Services Limited
Bright Horizon Enterprises Limited
Puccini International Limited
58
SCHEDULE VII
SUBSIDIARIES OF THE COMPANY
INCORPORATED IN HONG KONG
Advanced Internet Services Limited
59
Exhibit A
FORM OF OPINION TO BE DELIVERED BY ISSUER'S UNITED STATES COUNSEL
1
Exhibit B
FORM OF OPINION TO BE DELIVERED BY HONG KONG COUNSEL
2
Exhibit C
FORM OF OPINION TO BE DELIVERED BY PRC COUNSEL
3
Exhibit D
FORM OF OPINION TO BE DELIVERED BY CAYMANS COUNSEL
4
Exhibit E
FORM OF OPINION TO BE DELIVERED BY DEPOSITARY'S COUNSEL
5
Exhibit F
FORM OF LOCK-UP LETTER
[.], 2004
Citigroup Global Markets Asia Limited
c/o Citigroup Global Markets Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Xxxxxx Xxxxxxx Xxxx Xxxxxx Asia Limited
00xx Xxxxx, Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxx Xxxx.
Dear Sirs and Mesdames:
The undersigned understands that Citigroup Global Markets Asia Limited
("Citigroup") and Xxxxxx Xxxxxxx Xxxx Xxxxxx Asia Limited ("Xxxxxx Xxxxxxx")
propose to enter into an Underwriting Agreement (the "Underwriting Agreement")
with XXX Online Inc., a Cayman Islands Company (the "Company"), providing for
the public offering (the "Public Offering") by the several Underwriters named
therein (the "Underwriters"), of 11,250,000 American Depositary Shares ("ADSs")
representing 900,000,000 ordinary shares, par value HK$[.] per share (each, an
"Ordinary Share"), each ADS representing 80 Ordinary Shares.
Concurrent with the Public Offering, the Company is entering into an
agreement (the "Hong Kong Underwriting Agreement") providing for the public
offering by the Company for subscription in Hong Kong (the "Hong Kong Public
Offering") of up to an aggregate of 100,000,000 Ordinary Shares (the "Hong Kong
Shares") through arrangements with certain underwriters in Hong Kong (the "Hong
Kong Underwriters"). The undersigned understands that Citigroup and Xxxxxx
Xxxxxxx shall act as the joint global coordinators (the "Joint Global
Coordinators") for the Public Offering and the Hong Kong Public Offering.
To induce the Underwriters that may participate in the Public Offering to
continue their efforts in connection with the Public Offering, the undersigned
agrees that, without the prior written consent of the Joint Global Coordinators
on behalf of the Underwriters, it will not (and will not publicly announce any
intention to), during the period beginning on the date hereof and ending 6
months after the date of the listing of the Hong Kong Shares, (i) offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase,
lend, or otherwise transfer or dispose of, directly or indirectly, any ADSs or
Ordinary Shares of the Company or any securities convertible into, or
exercisable or exchangeable for ADSs or Ordinary Shares of the Company, (ii)
file any registration statement with the Securities and Exchange Commission
relating to the offering of
6
any ADSs or Ordinary Shares or any securities convertible into or exercisable or
exchangeable for ADSs or Ordinary Shares or (iii) enter into any swap or other
arrangement that transfers to another, in whole or in part, any of the economic
consequences of ownership of ADSs or Ordinary Shares of the Company, whether any
such transaction described in clause (i), (ii) or (iii) above is to be settled
by delivery of ADSs or Ordinary Shares of the Company or such other securities,
in cash or otherwise. The foregoing sentence shall not apply to (i) the sale of
ADSs or Ordinary Shares of the Company to the Underwriters pursuant to the
over-allotment option, (ii) the loan of Ordinary Shares of the Company to the
Underwriters pursuant to stock borrowing arrangements, and (iii) transactions
relating to the Ordinary Shares or other securities of the Company acquired in
open market transactions after the completion of the Public Offering. In
addition, the undersigned agrees that, without the prior written consent of the
Joint Global Coordinators on behalf of the Underwriters, it will not, during the
period commencing on the date hereof and ending 6 months after the date of the
listing of the Hong Kong Shares, make any demand for or exercise any right with
respect to, the registration of any Ordinary Shares of the Company or any
security convertible into or exercisable or exchangeable for Ordinary Shares of
the Company. The undersigned also agrees and consents to the entry of stop
transfer instructions with the Company's transfer agent and registrar against
the transfer of the undersigned's Ordinary Shares of the Company except in
compliance with the foregoing restrictions.
Notwithstanding the foregoing, if (i) during the last 17 days of the 12
months restricted period the Company issues a earnings release or material news
or a material event relating to the Company occurs; or (ii) prior to the
expiration of the 12 months restricted period, the Company announces that it
will release earnings results during the 16-day period beginning on the last day
of the 12 months period, the restrictions imposed by this letter shall continue
to apply until the expiration of the 18-day period beginning on the issuance of
the earnings release or the occurrence of the material news or material event.
The undersigned understands that the Company and the Underwriters are
relying upon this Lock-Up Agreement in proceeding toward consummation of the
Public Offering. The undersigned understands that monetary damages may not be an
adequate remedy for breach of this Lock-Up Agreement and that the Company and
the Underwriters shall be entitled to equitable relief, including injunctive
relief and specific performance, in the event of any breach of the provisions of
this Lock-Up Agreement. Such remedies shall not be deemed to be the exclusive
remedies for a breach of this Lock-Up Agreement but shall be in addition to all
other remedies available at law or equity. Neither the Company nor the
Underwriters shall be liable for any punitive, special, consequential or
indirect damages arising under this Lock-Up Agreement. The undersigned further
understands that this Lock-Up Agreement is irrevocable and shall be binding upon
the undersigned's heirs, legal representatives, successors and assigns.
Whether or not the Public Offering actually occurs depends on a number of
factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Company and the Underwriters.
7
We hereby acknowledge, accept and agree to the provisions set forth in
Section 10(a) of the Underwriting Agreement, which Section 10(a) is incorporated
herein by reference as if set forth in full herein; provided that, for purposes
of such incorporation, references therein to the "Company" shall be deemed to
refer to "XXX Group Limited".
This letter agreement shall be governed by and construed in accordance
with the internal laws of the State of New York.
Very truly yours,
_________________________
XXX Group Limited
_________________________
(Address)
Accepted as of the date hereof
CITIGROUP GLOBAL MARKETS ASIA LIMITED,
as Global Coordinator
By:__________________________
Name:
Title:
XXXXXX XXXXXXX XXXX XXXXXX ASIA LIMITED,
as Global Coordinator
By:__________________________
Name:
Title:
8
