Sohu.com (SOHU)

Initial Public Offering of Changyou

On April 7, 2009, Changyou completed its initial public offering on the NASDAQ Global Select Market, trading under the symbol “CYOU.”

The initial public offering consisted of American depositary shares (“ADSs”), with each ADS representing two Class A ordinary shares. Changyou’s ordinary shares are divided into Class A ordinary shares and Class B ordinary shares. Each Class A ordinary share is entitled to one vote on all matters subject to a shareholder vote, and each Class B ordinary share is entitled to ten votes on all matters subject to a shareholder vote.

At the closing of the initial public offering, Changyou issued and sold 7,500,000 Class A ordinary shares represented by 3,750,000 ADSs, and Sohu, through its indirectly wholly-owned subsidiary Sohu.com (Game) Limited (“Sohu Game”), sold 9,750,000 Class A ordinary shares represented by 4,875,000 ADS, including 2,250,000 Class A ordinary shares represented by 1,125,000 ADSs sold pursuant to the exercise of the underwriters’ over-allotment option.

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Net proceeds to Changyou and Sohu from this initial public offering were approximately $55.8 million and $72.5 million, respectively, for total proceeds of approximately $128.3 million, after deducting underwriting discounts and commissions but before deducting offering expenses.

Following the completion of the offering, there were issued and outstanding a combined total of 102,500,000 Class A and Class B ordinary shares of Changyou, which consisted of (1) 70,250,000 Class B ordinary shares held by Sohu through Sohu Game, (2) 15,000,000 Class B ordinary shares, of which 6,000,000 were restricted and were not vested as of the completion of the offering, held by Tao Wang through Prominence, and (3) 17,250,000 Class A ordinary shares held by public shareholders.

Thus, immediately following the completion of the offering, and treating all Tao Wang’s 15,000,000 Class B ordinary shares (including the 6,000,000 Class B restricted ordinary shares subject to forfeiture to Sohu Game under vesting terms) as owned by Tao Wang, Sohu held approximately 68.5% of the combined total Changyou’s outstanding Class A and Class B ordinary shares and controlled 80.8% of the total voting power in Changyou. As a result, Sohu has the power to elect the entire board of directors of Changyou and determine the outcome of all matters submitted to a shareholder vote.