Loan Agreement - Sohu.com Inc. and Jinmei He


                                                                  Execution Copy

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                                 LOAN AGREEMENT


                                    between


                                   JINMEI HE

                                  as Borrower

                                      and

                                 SOHU.COM INC.

                                   as Lender



                           Dated as of June __, 2000


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                                TABLE OF CONTENTS


                              ARTICLE I DEFINITIONS

SECTION 1.01. Definitions ..................................................   1
SECTION 1.02. Interpretation ...............................................   2

                     ARTICLE II AMOUNT AND TERMS OF THE LOAN

SECTION 2.01. The Loan .....................................................   2
SECTION 2.02. Method of Borrowing ..........................................   2
SECTION 2.03. Maturity; Repayment ..........................................   2
SECTION 2.04. Interest .....................................................   3
SECTION 2.05. Waiver .......................................................   3

                   ARTICLE III REPRESENTATIONS AND WARRANTIES

SECTION 3.01. Borrower .....................................................   3

                              ARTICLE IV CONDITIONS

SECTION 4.01. Lender .......................................................   3

                               ARTICLE V COVENANTS

SECTION 5.01. Borrower .....................................................   4

                          ARTICLE VI EVENTS OF DEFAULT

SECTION 6.01. Events of Default ............................................   5

                         ARTICLE VII PLEDGE AND SECURITY

SECTION 7.01. Grant of Security Interest ...................................   5
SECTION 7.02. The Lender's Appointment as Attorney-in-Fact .................   6

                           ARTICLE VIII MISCELLANEOUS

SECTION 8.01. Illegality ...................................................   6
SECTION 8.02. Notices ......................................................   6
SECTION 8.03. Foreign Exchange Restrictions ................................   7
SECTION 8.04. Miscellaneous; Expenses; Indemnification .....................   8

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SECTION 8.05. Successors and Assigns .......................................   8
SECTION 8.06. Governing Law ................................................   8
SECTION 8.07. Headings .....................................................   8
SECTION 8.08. Entire Agreement .............................................   8
SECTION 8.09. Counterparts .................................................   8
SECTION 8.10. Waiver of Sovereign Immunity .................................   9
SECTION 8.11. Use of English Language ......................................   9


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     LOAN AGREEMENT (the "Agreement"), dated June __, 2000, between JINMEI HE, a
citizen of the People's Republic of China (the "Borrower"), and SOHU.COM INC., a
corporation organized under the laws of the state of Delaware (the "Lender").


                                R E C I T A L S
                                ---------------

     WHEREAS, the Borrower and the Lender desire to enter into a loan agreement
for the sole purpose of assisting the Borrower to make additional capital
contributions into Beijing Sohu Online Internet Services, Ltd., a company
organized under the laws of the People's Republic of China ("Beijing Sohu"); and

     WHEREAS, the Borrower has entered into an Option Agreement, dated as of
June __, 2000 (the "Option Agreement"), with Sohu ITC Information Technology
(Beijing) Co., Ltd., a company organized under the laws of the People's Republic
of China ("Beijing ITC").

     NOW, THEREFORE, the Borrower and the Lender agree as follows:


                                    ARTICLE I

                                   DEFINITIONS

      SECTION 1.01. Definitions.  The following terms have the meaning assigned
to them below or in the Sections of this Agreement indicated below:

     "Borrower" has the meaning assigned to it in the Preamble.

     "Business Day" means any day except Saturday, Sunday or other day on which
commercial banks in New York City are authorized or required by law to be
closed.

     "Event of Default" has the meaning set forth in Section 6.01(a).

     "Lender" has the meaning assigned to it in the Preamble.

     "Loan Date" has the meaning assigned to it in Section 2.02.

     "Maturity Date" means the date of the tenth anniversary of the date of this
Agreement, or such other date as may be specified in any notice from the Lender
to the Borrower setting forth the maturity date of the Loan hereunder; provided
that any Maturity Date which would otherwise be a day which is not a Business
Day shall be extended to the next succeeding Business Day.

      SECTION 1.02. Interpretation.  For all purposes of this Agreement and the
Appendices

 
hereto, except as otherwise expressly provided or unless the context otherwise
requires:

     (a)  the terms defined in Section 1.01 have the meanings assigned to them
          in Section 1.01 and include the plural as well as the singular and
          vice-versa;

     (b)  words importing gender include all genders;

     (c)  any reference to an "Article" or "Section" refers to an Article or
          Section of, as the case may be, this Agreement; and

     (d)  all references to this Agreement and the words "herein", "hereof",
          "hereto" and "hereunder" and other words of similar import refer to
          this Agreement as a whole, as it may be amended from time to time, and
          not to any particular Article, Section or other subdivision.


                                   ARTICLE II

                          AMOUNT AND TERMS OF THE LOAN

      SECTION 2.01. The Loan.  The Lender agrees, subject to the terms and
conditions of this Agreement, to extend a loan to the Borrower (the "Loan")
which the Borrower reasonably requires for the purposes specified in the
Recitals above upon request by the Borrower to the Lender.  The principal amount
of the Loan shall not exceed U.S.$43,000.  The Loan shall not be revolving in
nature and amounts repaid may not be reborrowed.  The commitment of the Lender
to make the Loan shall terminate at the close of business on the Maturity Date.

      SECTION 2.02. Method of Borrowing.  At least 10 Business Days prior to the
date on which the Loan is required, the Borrower shall deliver to the Lender a
notice setting forth: (a) the amount of such Loan requested and (b) the date the
requested amount is to be made available to the Borrower (the "Loan Date"),
provided, however, if the Loan Date does not fall on a Business Day, such Loan
Date shall be deemed to fall on the Business Day immediately following such Loan
Date.  On the Loan Date, the Lender shall make available to the Borrower by the
close of business (Beijing time) on such Loan Date the full amount of the Loan
requested by wire transfer of immediately available funds in United States
dollars to an account designated by the Borrower.
 
      SECTION 2.03. Maturity; Repayment. Any outstanding amount of the Loan and
any other moneys owing under this Agreement, if any, shall become due and
payable by the Borrower on demand from the Lender.  Any proceeds from the
exercise of the option pursuant to the Option Agreement shall be applied towards
the partial repayment of the Loan. Notwithstanding the foregoing, any
outstanding amount of the Loan and any other moneys owing under this Agreement,
if any, shall become due and payable by the Borrower to the Lender on the
Maturity

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Date.

      SECTION 2.04. Interest. The Loan shall not bear any interest.

      SECTION 2.05. Waiver.  No provision set forth in this Article II shall be
waived without the approval of the board of directors of the Lender.


                                  ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

      SECTION 3.01. Borrower.  The Borrower hereby represents and warrants to
the Lender that:

      (a) The Borrower is duly authorized to enter into and perform this
          Agreement and to borrow hereunder and this Agreement constitutes a 
          valid and enforceable agreement of the Borrower; and

      (b) Except for the security interest granted to the Lender pursuant to
          Section 7.01, the Borrower is the sole owner of each item of the
          Collateral specified in Section 7.01 in which it purports to grant a
          security interest hereunder, having good and marketable title thereto,
          free and clear of any and all liens.


                                   ARTICLE IV

                                   CONDITIONS

      SECTION 4.01. Lender.  The obligation of the Lender to extend the Loan
hereunder is subject to the conditions precedent that (a) immediately after the
extension of any Loan, no Event of Default (as defined in Section 6.01) or any
event or condition which with the giving of notice or lapse of time, or both,
would become an Event of Default shall have occurred and be continuing, (b) the
representations and warranties contained in this Agreement are true on and as of
the Loan Date with the same force and effect as if made on and as of such date
and (c) the Lender shall be satisfied as of each Loan Date that the Borrower
intends to use the proceeds of such Loan for the purposes set forth in the
Recitals above.


                                   ARTICLE V

                                   COVENANTS

   


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      SECTION 5.01. Borrower.  So long as the commitment to make the Loan
hereunder shall be in effect or any amount of the Loan is outstanding, unless
compliance shall conflict with any provision of the Option Agreement or
compliance shall have been waived in writing by the Lender after approval by the
board of directors of the Lender, the Borrower agrees that:

      (a) The Borrower shall use the proceeds of the Loan exclusively for the
          purchase of shares of Beijing Sohu, and the actual use of the proceeds
          shall be certified to the Lender by the Lender's independent public
          auditors;

      (b) The Borrower shall not seek any additional loans from any person or
          entity other than the Lender for the purchase of shares of Beijing
          Sohu;

      (c) The Borrower shall not offer, sell, contract to sell, pledge, make any
          short sale or otherwise dispose of any shares of Beijing Sohu, or any
          options or warrants to purchase any of the Borrower's right, title or
          interest in shares of Beijing Sohu, whether now owned or hereinafter
          acquired by the Borrower, to any person or entity other than the
          Lender;

      (d) The Borrower shall comply in all material respects with all applicable
          laws, ordinances, rules, regulations and requirements of governmental
          authorities except where the necessity of compliance therewith is
          contested in good faith by appropriate proceedings and with respect to
          which adequate reserves have been established; and

      (e) The Borrower shall promptly give notice in writing to the Lender of
          all litigation, arbitral proceedings and regulatory proceedings
          affecting the Borrower or the property of the Borrower.


                                   ARTICLE VI

                                EVENTS OF DEFAULT

      SECTION 6.01. Events of Default.  If any of the following events (each an
"Event of Default") shall occur and be continuing: (a) the Borrower shall fail
to make payment required by Section 2.03 when due; (b) any representation or
warranty made by the Borrower in this Agreement shall prove to have been
incorrect in any material respect when made; (c) the Borrower shall fail to
observe or perform any covenant contained in Article V; (d) the Borrower shall
cease, for any reason, to be an employee of the Lender or Beijing ITC; (e) the
Borrower shall fail to make any payment in respect of any indebtedness for
borrowed money when due or within any applicable grace period, or any event or
condition shall occur which results in the acceleration of the maturity of any
indebtedness for borrowed money of the Borrower or enables (or, with the giving
of notice or lapse of time, or both, would enable) the holder of such


                                      -4-

 
indebtedness for borrowed money or any person acting on such holder's behalf to
accelerate the maturity thereof; (f) the Borrower shall become insolvent
(however such insolvency may be evidenced) or proceedings are instituted by or
against the Borrower under any bankruptcy, reorganization, suspension of
payments or insolvency law or other law for the relief of debtors; (g) a
judgment, decision or order for the payment of money shall be rendered by a
court of law, arbitral authority or regulatory agency against the Borrower and
such judgment, decision or order shall remain unstayed and unpaid for a period
of 10 days; or (h) the validity of this Agreement or the ability of the Borrower
hereunder to perform in accordance with the terms thereof shall be contested by
the Borrower or the Borrower shall deny liability under this Agreement or any
provision of this Agreement shall for any reason be invalid, ineffective or
unenforceable, then, in the case of occurrence of any of the Events of Default
specified above, the Lender may, by written notice to the Borrower, declare the
Loan outstanding hereunder to be forthwith due and payable, whereupon the same
shall become forthwith due and payable, without demand, protest, presentment,
notice of dishonor or any other notice or demand whatsoever, all of which are
hereby waived by the Borrower; provided, that in the case of the Event of
Default specified in Section 6.01(f) with respect to the Borrower, without any
notice to the Borrower or any other act of the Lender, the Loan outstanding
shall become forthwith due and payable without demand, protest, presentment,
notice of dishonor or any other notice or demand whatsoever, all of which are
hereby waived by the Borrower.


                                   ARTICLE VII

                               PLEDGE AND SECURITY

     SECTION 7.01. Grant of Security Interest. As collateral security (the
"Collateral") for the prompt and complete payment and performance when due
(whether at stated maturity, by acceleration or otherwise) of all of the unpaid
principal amount of the Loan and to induce the Lender to enter into this
Agreement and make the Loan, the Borrower hereby assigns, conveys, mortgages,
pledges, hypothecates, grants, transfers and sets over to the Lender a first
security interest in all of the Borrower's right, title and interest, whether
now owned or hereafter acquired by the Borrower, in the shares of Beijing Sohu.

     SECTION 7.02.  The Lender's Appointment as Attorney-in-Fact.  Upon the
occurrence of and during the continuation of an Event of Default, the Lender or
its nominee, on the Lender's behalf, may thereafter exercise (A) all voting and
other rights pertaining to the Collateral and (B) any and all rights and
privileges pertaining to the Collateral as if it were the absolute owner
thereof, all without liability except to account for property actually received
by it, but the Lender shall have no duty to exercise any such right, privilege
or option and shall not be responsible for any failure to do so or delay in so
doing.  The Borrower hereby irrevocably constitutes and appoints the Lender and
each officer of the Lender and each agent designated by any such officer, with
full power of substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of the Borrower and in
the name of the Borrower or in its


                                      -5-

 
own name, from time to time in the Lender's discretion, for the purpose of
exercising such rights. The Borrower hereby ratifies, to the extent permitted by
law, all that said attorneys shall lawfully do or cause to be done by virtue
hereof. The power of attorney granted pursuant to this Section 7.02 is a power
coupled with an interest and shall be irrevocable until all of the unpaid
principal amount of the Loan and all fees and other amounts owed by the Borrower
under this Agreement are indefeasibly paid in full.


                                  ARTICLE VIII

                                  MISCELLANEOUS

     SECTION 8.01. Illegality. If it shall become unlawful for the Lender to
continue to maintain any Loan or to make any Loan hereunder, then upon receipt
of notice to such effect by the Borrower from the Lender, the Lender's
obligation to make the Loan hereunder shall be suspended and the Borrower shall
repay the Loan in full.

     SECTION 8.02. Notices. All notices, requests and other communications to
the Lender or to the Borrower hereunder shall be in writing (including facsimile
or similar writing and overnight express mail or courier delivery, but excluding
ordinary mail delivery) and shall be given to the addresses stated below.

     If to the Borrower:    Jinmei He
                            (PRC Identification number: 510103700307736)
                            Room 2-301, Gan Xiu Building
                            Zhuangjiabing Technology Institute
                            Fengtai District
                            Beijing 100072
                            People's Republic of China
                            Telephone:  (86-10) 6510-2162 ext. 236
                            Facsimile:  (86-10) 6510-2159
                        
     If to the Lender:      Sohu.com Inc.
                            7 Jianguomen Nei Avenue
                            Suite 1519, Tower 2
                            Bright China Chang An Building
                            Beijing 100005
                            People's Republic of China
                            Attention:  Thomas Gurnee
                            Telephone:  (86-10) 6510-2571
                            Facsimile:  (86-10) 6510-2572

                            
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                             With a copy to:
                           
                             Sullivan & Cromwell
                             28th Floor
                             9 Queen's Road Central
                             Hong Kong
                             Attention: Chun Wei
                             Telephone:  (852) 2826-8688
                             Facsimile:  (852) 2522-2280
                       
or to such other address or facsimile number as either party may hereafter
specify for the purpose by notice to the other party in the manner provided in
this Section 8.02. All such notices, requests and other communications shall be
deemed received (a) if given by facsimile transmission, when transmitted to the
facsimile number specified in this Section 8.02 and confirmation of receipt is
received and (b) if given by overnight express mail or courier delivery or any
other means permitted by this Section 8.02, when received; provided, that if the
date of receipt hereunder is not a business day in the place of receipt, the
notice, request or communication shall be deemed not to have been received until
the next succeeding business day in the place of receipt.

     SECTION 8.03. Foreign Exchange Restrictions. All amounts payable by the
Borrower hereunder shall be paid in United States dollars. If, as a result of
foreign exchange restrictions in the People's Republic of China, it becomes
illegal for the Borrower to make any payment referred to in this Agreement to
the Lender in United States dollars, then the Borrower shall make such payment
in any other currency which is still permitted for such purposes. The Lender, in
its absolute discretion, may stipulate payment in any of these permitted
currencies. The amount of the payment in such circumstances shall be the amount
which is sufficient when fully converted in any foreign currency market in New
York or any other place in the world chosen by the Lender in its absolute
discretion to purchase the required amount in United States dollars, free and
clear of all costs, expenses and commissions.

     SECTION 8.04. Miscellaneous; Expenses; Indemnification. The provisions of
this Agreement may not be waived, modified or amended except by an instrument in
writing signed by the party to be charged with such waiver, modification or
amendment and, if such party to be charged is the Lender, with the approval of
the board of directors of the Lender. No failure or delay on the part of the
Lender in exercising any of its powers or rights hereunder, nor partial or
single exercise thereof, shall constitute a waiver thereof or shall preclude any
other future exercise of any other power or right. The Borrower shall pay all
stamp, documentary or other taxes and out-of-pocket expenses and internal
charges of the Lender (including fees and disbursements of counsel and time
charges of attorneys who may be employees of the Lender) in connection with any
payment made hereunder and in connection with the preparation of this Agreement
and in connection with any Event of Default and collection or other enforcement
proceedings resulting therefrom. The Borrower agrees to indemnify the Lender and
hold the 


                                      -7-

 
Lender harmless from and against any and all liabilities, losses, damages, costs
and expenses of any kind (including, without limitation, the actual fees and
disbursements of counsel for the Lender in connection with any investigative,
administrative or judicial proceeding, whether or not the Lender shall be
designated as a party thereto) which may be incurred by the Lender relating to
or arising out of this Agreement or the use of the proceeds of the Loan.

     SECTION 8.05. Successors and Assigns. This Agreement shall be binding upon
the parties hereto and their respective successors and assigns. Neither party
may assign or otherwise transfer its or her rights or obligations under this
Agreement without the prior written consent of the other party.

     SECTION 8.06. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS
OF THE STATE OF DELAWARE, WITHOUT REGARD TO THE CONFLICT OF LAWS RULES THEREOF.
THE PARTIES HEREBY CONSENT TO EXCLUSIVE JURISDICTION AND VENUE FOR ANY ACTION
ARISING OUT OF THIS AGREEMENT IN THE CHANCERY COURT OF THE STATE OF DELAWARE FOR
NEW CASTLE COUNTY OR THE FEDERAL DISTRICT COURT FOR THE DISTRICT OF DELAWARE.

     SECTION 8.07. Headings. Headings are for ease of reference only and shall
not form a part of this Agreement.

     SECTION 8.08. Entire Agreement. This Agreement, including any appendices
hereto, constitutes the entire agreement between the parties hereto with respect
to the subject matter hereof, and supersedes all other prior agreements or
undertakings with respect to the subject matter hereof, both written and oral.

     SECTION 8.09. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be deemed an original, with the same effect as
if the signatures thereto and hereto were upon the same instrument.

     SECTION 8.10. Waiver of Sovereign Immunity. To the extent that the Borrower
has or hereafter may acquire any immunity from jurisdiction of any court or from
any legal process (whether through service or notice, attachment prior to
judgment, attachment in aid or execution or otherwise) with respect to herself
or her property, the Borrower hereby irrevocably waives such immunity in respect
of her obligations under this Agreement to the extent permitted by applicable
law and, without limiting the generality of the foregoing, agrees that the
waivers set forth in this Section 8.10 shall have the effect to the fullest
extent permitted under the Foreign Sovereign Immunities Act of 1976 of the
United States of America and are intended to be irrevocable for the purposes of
such Act.

     SECTION 8.11. Use of English Language. This Agreement has been executed and
delivered in the English language. Any translation of this Agreement into
another language shall have no interpretive effect. All documents or notices to
be delivered pursuant to or in connection with this Agreement shall be in the
English language or, if any such document or notice is not in

                                      -8-

 
the English language, accompanied by an English translation thereof, and the
English language version of any such document or notice shall control for
purposes hereof.


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     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first written above.


                                           JINMEI HE



                                           By
                                             ------------------------------
 

                                           SOHU.COM INC.



                                           By
                                             ------------------------------
                                             Name:
                                             Title:


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