Exhibit 10.3
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ASSET PURCHASE AGREEMENT
by and between
MOTOROLA (CHINA) ELECTRONICS LIMITED
and
SEMICONDUCTOR MANUFACTURING
INTERNATIONAL CORPORATION
DATED AS OF SEPTEMBER 23, 2003
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TABLE OF CONTENTS
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ARTICLE 1 DEFINITIONS.........................................................2
ARTICLE 2 THE ASSET PURCHASE AND SALE........................................12
2.1 Purchase and Sale..................................................12
2.2 Purchased Assets...................................................12
2.3 Excluded Assets....................................................13
2.4 Intellectual Property Matters......................................14
2.5 Commercial Matters.................................................14
2.6 Equity Matters.....................................................14
2.7 Non-Assignable Contracts...........................................14
2.8 Assumption of Liabilities..........................................15
2.9 Excluded Liabilities...............................................15
2.10 Consideration......................................................16
2.11 Purchase Price Allocation..........................................16
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLER...........................17
3.1 Organization and Qualification.....................................17
3.2 Due Execution......................................................17
3.3 Non-contravention..................................................17
3.4 Taxes..............................................................18
3.5 Litigation.........................................................18
3.6 Title to Tangible Assets...........................................19
3.7 Compliance with Laws...............................................19
3.8 Contracts and Commitments..........................................19
3.9 Environmental Matters..............................................20
3.10 Real Property Rights...............................................21
3.11 Permits............................................................22
3.12 Brokers' Fees......................................................22
3.13 Sufficiency of the Purchased Assets................................22
3.14 Warranty Disclaimer................................................23
3.15 Insurance..........................................................23
3.16 No Material Changes................................................24
3.17 Employee Matters...................................................24
3.18 No Notices.........................................................24
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BUYER............................25
4.1 Organization and Qualification.....................................25
4.2 Due Execution......................................................25
4.3 Non-contravention..................................................25
4.4 Litigation.........................................................26
4.5 Brokers' Fees......................................................26
4.6 Series C Financing.................................................26
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TABLE OF CONTENTS
(continued)
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ARTICLE 5 CLOSING............................................................27
5.1 Pre-Closing and Closing............................................27
5.2 Deliveries at Closing by Seller....................................27
5.3 Deliveries at Closing by Buyer.....................................28
ARTICLE 6 CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS........................28
6.1 Accuracy of Representations and Fulfillment of Covenants...........28
6.2 Suit or Action.....................................................29
6.3 No Order...........................................................29
6.4 Consents...........................................................29
6.5 Compliance with Laws...............................................29
6.6 Delivery of Documents..............................................29
6.7 Opinion of Counsel.................................................29
6.8 Material Adverse Effect............................................29
6.9 Customs Duty Exemption.............................................29
6.10 Building and Land Certificates.....................................30
6.11 Real Property Transfer Arrangements................................30
6.12 Series D Preference Share Purchase Agreement.......................30
ARTICLE 7 CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER......................30
7.1 Accuracy of Representations and Fulfillment of Covenants...........30
7.2 Suit or Action.....................................................30
7.3 No Order...........................................................31
7.4 Consents...........................................................31
7.5 Compliance with Laws...............................................31
7.6 Delivery of Documents..............................................31
7.7 Bank Loan..........................................................31
7.8 Opinion of Counsel.................................................31
7.9 Material Adverse Effect............................................31
7.10 Establishment of Subsidiary........................................31
7.11 Customs Duty Exemption.............................................32
7.12 Real Property Transfer Arrangements................................32
7.13 Series D Preference Share Purchase Agreement.......................32
ARTICLE 8 CERTAIN PRE-CLOSING OBLIGATIONS....................................32
8.1 Further Assurances and Cooperation.................................32
8.2 Access.............................................................33
8.3 Insurance..........................................................33
8.4 Notification of Certain Matters....................................33
8.5 Formation of SMIC Tianjin..........................................34
8.6 Actions of Seller and Conduct of MOS 17 Operations Prior
to the Closing Date................................................34
8.7 Termination Fees...................................................35
8.8 Customs Duty Exemption.............................................36
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TABLE OF CONTENTS
(continued)
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8.9 Building and Land Certificates.....................................36
ARTICLE 9 EMPLOYEE MATTERS...................................................36
9.1 Transferred Employees..............................................36
9.2 Temporary Assignment of Seller Employees to Buyer-Sub..............39
ARTICLE 10 CERTAIN CLOSING AND POST-CLOSING OBLIGATIONS.......................39
10.1 Contribution of Assets.............................................39
10.2 Records and Documents..............................................40
10.3 Certain Export Matters.............................................41
10.4 Environmental Permits..............................................41
10.5 Further Assurances.................................................41
ARTICLE 11 INDEMNITY AND SURVIVAL OF REPRESENTATIONS..........................41
11.1 Survival...........................................................41
11.2 Indemnification....................................................42
11.3 Limits on Indemnification Obligation...............................42
11.4 Notice and Defense of Third Party Claims...........................43
11.5 Exclusivity of Remedy..............................................44
ARTICLE 12 TERMINATION OF AGREEMENT...........................................44
12.1 Termination or Abandonment.........................................44
12.2 Effect of Termination..............................................45
ARTICLE 13 GENERAL PROVISIONS.................................................45
13.1 Expenses...........................................................45
13.2 Notices............................................................45
13.3 Nondisclosure and Publicity........................................46
13.4 Risk of Loss.......................................................48
ARTICLE 14 DISPUTES...........................................................48
14.1 Amicable Resolution................................................48
14.2 Consultation.......................................................48
14.3 Arbitration........................................................48
14.4 Arbitral Proceedings...............................................49
14.5 Arbitration Expenses...............................................49
14.6 Binding Award......................................................49
14.7 Service of Process.................................................49
14.8 Waiver of Immunity.................................................49
14.9 Equitable Relief...................................................49
ARTICLE 15 MISCELLANEOUS......................................................49
15.1 Limitation on Liability............................................49
15.2 Governing Law......................................................50
15.3 Entire Agreement; Amendment........................................50
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TABLE OF CONTENTS
(continued)
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15.4 Successors and Assigns.............................................50
15.5 Headings...........................................................50
15.6 Schedules; Exhibits................................................50
15.7 Counterparts.......................................................50
15.8 Gender and Number..................................................50
15.9 Severability.......................................................50
15.10 No Third Party Beneficiaries.......................................50
15.11 No Waiver..........................................................51
15.12 Language...........................................................51
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SCHEDULES AND EXHIBITS
Schedules
Schedule 1.1(a) Seller's Knowledge
Schedule 1.1(b) Buyer's Knowledge
Schedule 1.1(c) Construction Materials
Schedule 2.2(a) Tangible Assets
Schedule 2.2(c) Assigned Contracts
Schedule 2.2(e) Transferred Real Property Rights
Schedule 2.2(f) Warranty Rights
Schedule 2.2(g) Transferred Expat Houses
Schedule 2.2(h) Transferred Cars
Schedule 2.2(i) Transferred Computers
Schedule 2.2(j) Transferred Employee Computers
Schedule 2.3(g) Excluded Tangible Assets
Schedule 2.3(n) Excluded Employee Computers
Schedule 2.11 Purchase Price Allocation Schedule
Schedule 5.2(d) Key Assigned Contracts
Schedule 6.4 Consents
Schedule 9.1(a)(1) MOS 17 PRC Employees
Schedule 9.1(a)(2) MOS 17 Expatriate Employees
Schedule 9.1(a)(iv) Compensation Exceptions
Exhibits
Exhibit A-1 Seller's Schedule of Exceptions
Exhibit A-2 Buyer's Schedule of Exceptions
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is entered into as of this 23rd day of
September, 2003, by and between MOTOROLA (CHINA) ELECTRONICS LIMITED ("Seller"),
a wholly foreign-owned enterprise formed in the Tianjin Economic Technological
Development Area in Tianjin, China, in accordance with the laws of the People's
Republic of China and an indirect wholly owned subsidiary of Motorola, Inc., a
Delaware corporation ("Motorola"), and SEMICONDUCTOR MANUFACTURING INTERNATIONAL
CORPORATION ("Buyer"), a company organized under the laws of the Cayman Islands.
RECITALS
WHEREAS, Seller currently owns and operates a wafer fabrication facility
known as "MOS 17" and a semiconductor assembly and test facility known as "BAT
3," both of which are located in the Xiqing Economic Development Zone in
Tianjin, China;
WHEREAS, Seller wishes to sell and transfer to Buyer, and Buyer wishes to
purchase and accept from Seller, the MOS 17 facility and certain of its related
assets that are described in Section 2.2 as the "Purchased Assets," on the terms
and subject to the conditions of this Agreement;
WHEREAS, Seller wishes to sell and transfer to Buyer, and Buyer wishes to
assume from Seller, those certain liabilities relating to the MOS 17 facility
that are described in Section 2.8 as the "Assumed Liabilities," on the terms and
subject to the conditions of this Agreement;
WHEREAS, as consideration for the Purchased Assets and the Assumed
Liabilities, at the Closing, Buyer will issue and sell to Seller 82,857,143
shares of its Series D Preference Shares and Warrants to purchase an additional
8,285,714 Series D Preference Shares, pursuant to the terms and conditions of
the Series D Preference Share Purchase Agreement, which shall be entered into
concurrently with the execution of this Agreement;
WHEREAS, as consideration for the payment of USD$30,000,000 by Motorola to
Buyer pursuant to the terms and conditions of a Funding Letter Agreement between
Motorola and Buyer, Buyer will issue to Motorola 8,571,429 shares of its Series
D Preference Shares and Warrants to purchase an additional 857,143 Series D
Preference Shares, pursuant to the terms and conditions of the Series D
Preference Share Purchase Agreement;
WHEREAS, promptly following the date of this Agreement but in any event
prior to the Closing, Buyer shall form a wholly foreign-owned enterprise in
Tianjin, China in accordance with the laws of the People's Republic of China
("PRC") which shall be a direct wholly owned subsidiary of Buyer ("Buyer-Sub");
WHEREAS, at the Closing, Buyer shall cause the Purchased Assets and Assumed
Liabilities to be contributed to Buyer-Sub;
WHEREAS, Buyer and Motorola intend to enter into a Technology Transfer and
License Agreement, a Patent License Agreement, an IP Assistance Agreement and an
IP Letter Agreement (collectively, the "IP Agreements") concurrently with the
Closing, for purposes of causing the transfer of certain technology, the
exchange of certain licenses and the provision of certain intellectual property
assistance, and as consideration for such technology transfer, license exchange
and intellectual property assistance, at the Closing, Buyer will issue and sell
to Motorola 11,428,571 shares of its Series D Preference Shares and Warrants to
purchase an additional 1,142,857 Series D Preference Shares, pursuant to the
terms and conditions of the Series D Preference Share Purchase Agreement;
WHEREAS, Seller, Buyer and/or Buyer-Sub, as the case may be, intend to
enter into a Consignment Agreement and a Transition Services Agreement
concurrently with the execution of this Agreement, and a Long-Term Services
Agreement concurrently with the Closing, for purposes of addressing certain
short term transitional services and certain long term services between the
parties, which are not otherwise directly addressed herein;
WHEREAS, Seller and Buyer intend to enter into a Real Property Rights
Assignment Agreement for purposes of addressing the division of real property
rights between the parties;
WHEREAS, Buyer and Motorola intend to enter into a Master Foundry Agreement
concurrently with the execution of this Agreement, to be effective upon the
Closing, for purposes of establishing a strategic supplier relationship whereby
Buyer will utilize its capacity to manufacture certain semiconductor products
for Motorola; and
WHEREAS, Motorola intends to execute a Guaranty in favor of Buyer
concurrently with the execution of this Agreement, for purposes of guaranteeing
the obligations of Seller as more fully described therein.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and conditions herein contained and for other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, the
parties hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS
As used in this Agreement, the following capitalized terms shall have the
meanings set forth or referenced below:
"Acquisition Proposal" shall have the meaning set forth in Section
8.6(c).
"Affiliate" shall mean, with respect to any specified Person, any
other Person directly or indirectly controlling, controlled by, or under common
control with, such specified Person.
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"Agreement" shall mean this Asset Purchase Agreement and all
Schedules and Exhibits attached hereto.
"Air Product Contracts" shall have the meaning set forth in Section
8.7.
"Assigned Contracts" shall have the meaning set forth in Section
2.2(c).
"Assignment and Assumption Agreement" shall mean the assignment and
assumption agreement to be entered into between Buyer and Seller, effective as
of the Closing Date.
"Assumed Environmental Liabilities" shall mean liabilities with
respect to: (a) Post-Closing Contamination; (b) the exposure of any Person to
Post-Closing Contamination in the course of or as a consequence of any
activities of the Facility, the Purchased Assets or the MOS 17 Operations on or
after the Closing Date; (c) the violation of Environmental Laws resulting from,
caused by and attributable to the activities of the Facility, the Purchased
Assets or the MOS 17 Operations on or after the Closing Date; (d) any claims,
actions, suits, arbitrations, proceedings or investigations brought or
threatened by any third party, including, without limitation, Governmental
Authorities, with respect to sections (a) through (c) above; and/or (e) any
fees, charges, levies, taxes, compensation or damages with respect to sections
(a) through (c) above, except in each instance where such presence, exposure,
violation, claims, demands and fees in sections (a) to (e) above are relating to
or caused by the activities of the Seller prior to the Closing Date.
"Assumed Liabilities" shall have the meaning set forth in
Section 2.8.
"BAT 3" shall mean Seller's physical semiconductor assembly and test
facility located in the Xiqing Economic Development Zone in Tianjin, China, as
shown in the map on Schedule 2.2(e).
"Xxxx of Sale" shall mean the xxxx of sale to be executed by Seller
and agreed and acknowledged by Buyer, effective as of the Closing Date.
"Building and Land Certificates" shall mean the building ownership
and land use certificates to be issued by the Land Authorities evidencing
Seller's and Buyer's respective building and land use rights reflecting the
division of the site and the transfer of the Transferred Real Property Rights
and the Transferred Expat Houses to Buyer.
"Business Contracts" shall have the meaning set forth in Section 3.8.
"Buyer" shall have the meaning set forth in the preamble.
"Buyer Indemnitees" shall have the meaning set forth in Section
11.2(b).
"Buyer-Sub" shall have the meaning set forth in the recitals.
"Cap Amount" shall have the meaning set forth in Section 11.3(a).
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"Closing" shall have the meaning set forth in Section 5.1(b).
"Closing Date" shall have the meaning set forth in Section 5.1(b).
"Confidential Information" shall mean all information relating to
financial information, trade secrets, processes, patents or trademark
applications, product development, operations, methods and product development
techniques of the other party and any other information of one party provided to
the other party in connection with the transactions contemplated by the
Transaction Agreements that are in such other party's possession on the Closing
Date. With respect to Seller, Confidential Information also includes all
information of Seller or its Affiliates that relates to the Excluded Assets or
the Excluded Liabilities. With respect to Buyer, Confidential Information shall
not include the Transferred Documents and Records. For purposes of
clarification, Confidential Information shall not include information exchanged
between the parties in connection with the Consignment Agreement, the Master
Foundry Agreement or the IP Agreements, which information shall be treated in
accordance with the terms and conditions of the confidentiality provisions in
those respective agreements.
"Consignment Agreement" shall mean the consignment agreement between
Buyer, Seller and Motorola dated as of the date hereof.
"Construction Materials" shall mean the construction materials set
forth on Schedule 1.1(c).
"Contract" shall mean any agreement, lease, sublease, license,
sublicense, indenture, loan document or any other contract giving rise to any
binding commitment, including amendments, supplements or modifications thereto.
"Damages" shall have the meaning set forth in Section 11.2(a).
"Disclosed Breach" shall have the meaning set forth in
Section 8.4(d).
"Dispute" shall have the meaning set forth in Section 14.2.
"Documents and Records" shall mean all files, documents, records,
correspondence, papers and books, including, without limitation, manuals,
operating data, vendor and supplier lists, ledgers, journals, reports, computer
files, employee and personnel records, notebooks and logbooks.
"Easements" shall mean any utility or other necessary service
easement as may be required to now or in the future ensure that BAT 3 and the
Facility each have separate utilities or services, if desired.
"Environmental Laws" as used in this Agreement, and without regard to
any limitation in the implication of such term as it may otherwise be
interpreted in Laws, official constructions, replies or jurisprudence treaties,
shall mean any applicable Law, treaty, or governmental restriction or agreement
with any Governmental Authority which are in effect in the PRC relating to (a)
the environment or to emissions, discharges, generation, releases or threatened
releases of pollutants, contaminants, chemicals or industrial, toxic or
hazardous
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substances or wastes into the environment (including without limitation ambient
air, soil, surface water, ground water, wetlands, land, subsurface strata or
noise), or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of any Hazardous Material or
(b) the protection of human health and safety pertinent to any of the foregoing
in section (a) above.
"Environmental Reports" shall mean reports, studies, analyses or
tests performed on behalf of Seller by third parties and which pertain to
Hazardous Materials in, on or under the Facility or concerning compliance with
Environmental Laws by the Facility.
"Equity Agreements" shall mean the Series D Preference Share Purchase
Agreement, the Fifth Amended and Restated Shareholders Agreement, the Fifth
Amended and Restated Registration Rights Agreement, the Eighth Amended and
Restated Memorandum of Association and the Eighth Amended and Restated Articles
of Association (each as defined in the Series D Preference Share Purchase
Agreement) and the Equity Letter Agreement.
"Equity Letter Agreement" shall mean the letter agreement between
Buyer and Motorola dated as of the date hereof.
"Estimated Secondment Expense" shall have the meaning set forth in
Section 9.2(b).
"Excluded Assets" shall have the meaning set forth in Section 2.3.
"Excluded Employee Computers" shall have the meaning set forth in
Section 2.3(n).
"Excluded Tangible Assets" shall have the meaning set forth in
Section 2.3(g).
"Excluded Liabilities" shall have the meaning set forth in Section
2.9.
"Export Regulations" shall have the meaning set forth in
Section 10.3.
"Facility" shall mean Seller's physical wafer fabrication facility
known as "MOS 17" located at #00, Xxxx Xxx Xxxx, in the Xiqing Economic
Development Zone in Tianjin, China as shown in the map on Schedule 2.2(e), which
specifically excludes BAT 3.
"FCPA" shall have the meaning set forth in Section 8.1(c).
"Financial Statements Letter Agreement" shall mean the letter
agreement between Buyer and Motorola dated as of the date hereof, regarding
financial statements.
"Funding Letter Agreement" shall mean the letter agreement to be
entered into between Buyer and Motorola, effective as of the Closing Date,
regarding the USD$30,000,000 payment by Motorola to Buyer to be used for
operation of the Facility.
"Governmental Authority" shall mean any legislative, executive or
judicial unit of any governmental entity (foreign, federal, state or local) or
any department, commission, board,
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agency, bureau, official or other regulatory, administrative or judicial
authority thereof, foreign or domestic.
"Guaranty" shall mean the guaranty of Motorola in favor of Buyer
dated as of the date hereof.
"Hazardous Materials" shall mean any solid, liquid or gaseous
material, alone or in combination, mixture or solution, which are now defined,
listed or identified as "hazardous" (including "substances" or "wastes"),
"toxic," a "pollutant," a "contaminant," or words of similar import pursuant to
any PRC Environmental Law which is applicable to the site in question, including
asbestos, chlorinated solvents, polychlorinated biphenyls, fuel oil, petroleum
(including its derivatives, by-products or other hydrocarbons) and any other
dangerous, explosive, corrosive, flammable, infectious, toxic, radioactive,
carcinogenic or mutagenic material which is prohibited, limited, controlled,
restricted or regulated under any applicable PRC Environmental Law.
"ICC" shall have the meaning set forth in Section 14.3.
"Indemnified Party" shall have the meaning set forth in Section
11.3(c).
"Indemnifying Party" shall have the meaning set forth in Section
11.3(c).
"Initial Series C Purchase Agreement" shall have the meaning set
forth in Section 4.6.
"IP Agreements" shall have the meaning set forth in the recitals.
"IP Assistance Agreement" shall mean the intellectual property
assistance agreement to be entered into between Buyer and Motorola, effective as
of the Closing Date.
"IP Letter Agreement" shall mean the letter agreement to be provided
by Motorola to Buyer in conjunction with the Patent License Agreement, dated as
of the Closing Date.
"Key Assigned Contracts" shall have the meaning set forth on Schedule
5.2(d).
"Knowledge" shall mean the following as applied to Seller or Buyer:
(a) as to Seller, Seller's Knowledge shall mean the actual knowledge of those
persons listed on Schedule 1.1(a) after making due and diligent inquiry of those
persons employed by Seller or Motorola who would reasonably be expected to have
actual knowledge of the fact or other matter in question and (b) as to Buyer,
Buyer's Knowledge shall mean the actual knowledge of those persons listed on
Schedule 1.1(b) after making due and diligent inquiry of those persons employed
by Buyer or its Subsidiaries who would reasonably be expected to have actual
knowledge of the fact or other matter in question.
"Land Authorities" shall mean the appropriate Tianjin building and
land bureaus to whom Seller and Buyer shall apply for the Building and Land
Certificates.
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"Laws" shall mean all state, federal, provincial, municipal, local,
domestic, foreign or other statutes, laws, ordinances, rules, regulations,
judgments or Orders.
"Liens" shall mean any lien, charge, security interest, mortgage,
pledge, easement, encumbrance or other similar restriction, whether imposed by
agreement, law, equity or otherwise.
"Long-Term Services Agreement" shall mean the long-term services
agreement to be entered into among Buyer, Buyer-Sub and Seller, effective as of
the Closing Date.
"Master Foundry Agreement" shall mean the semiconductor foundry
agreement between Motorola and Buyer, dated as of the date hereof and effective
as of the Closing Date.
"Material Adverse Effect" shall mean (a) with respect to Seller, any
effect that would reasonably be expected to be materially adverse (i) to the
conduct of the MOS 17 Operations and the Purchased Assets, when taken as a
whole, or (ii) to the ability of Seller to perform its obligations under the
Transaction Agreements, and (b) with respect to Buyer, (i) any effect that would
reasonably be expected to be materially adverse (x) to the business or assets of
Buyer and its Subsidiaries and joint ventures, when taken as a whole, or (y) to
the ability of Buyer to perform its obligations under the Transaction
Agreements, or (ii) any change in the relative ownership or control of Buyer
such that U.S. GAAP would require Seller or its Affiliates, based on the advice
of their auditors, to account for their post-Closing direct and indirect
interest in Buyer under the equity method. Notwithstanding any of the foregoing,
the conditions affecting the semiconductor industry as a whole or the U.S.
economy or the Chinese economy as a whole shall not be deemed, either alone or
in combination, a Material Adverse Effect.
"Maximum Tuition Expense" shall have the meaning set forth in Section
9.1(g).
"MOS 17" shall have the meaning set forth in the recitals.
"MOS 17 Operations" shall mean the operations as currently conducted
by Seller at the Facility pursuant to which Seller is conducting wafer
manufacturing and wafer level testing which produces qualified products for
Motorola under Motorola's qualified full flow process. The "MOS 17 Operations"
specifically do not include the design, final test, assembly, sale or
distribution of semiconductor products.
"MOS 17 Employees" shall mean all employees identified by Seller who
perform services for Seller's MOS 17 Operations and who are listed on Schedules
9.1(a)(1) and 9.1(a)(2) to this Agreement.
"MOS 17 Expatriate Employees" shall have the meaning set forth in
Section 9.1(a).
"MOS 17 PRC Employees" shall have the meaning set forth in Section
9.1(a).
"Motorola" shall have the meaning set forth in the preamble.
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"NAP" shall have the meaning set forth in Section 8.7.
"Nondisclosure Agreement" shall mean that certain Nondisclosure
Agreement, dated March 13, 2003, by and between Motorola and Buyer.
"Order" shall mean any order, writ, judgment, decree, injunction or
directive from any Governmental Authority (in each case whether preliminary or
final).
"Patent License Agreement" shall mean the patent license agreement to
be entered into between Motorola and Buyer, effective as of the Closing Date.
"Permits" shall mean permits, certificates, licenses, clearances,
certificates of authority, authorizations, registrations, consents or approvals
granted or issued by or required by or from any Governmental Authority.
"Permitted Liens" shall mean (a) Liens for Taxes, assessments or
other governmental charges not yet due and payable, (b) easements, rights of
way, restrictions, encumbrances, covenants, conditions or encroachments or any
other restrictions on real property affecting the Facility imposed by a
Governmental Authority, (c) Liens which arise by operation of Law (and not by
Contract), or (d) Easements or Liens created by the Transaction Agreements or
the Long Term Services Agreement.
"Person" shall mean an individual, corporation, partnership, limited
liability company, association, trust or other entity or organization, including
a Governmental Authority.
"Post-Closing Contamination" shall mean the presence of any Hazardous
Material in the soil, groundwater, surface water, air or building materials of
the Facility and the real property corresponding to the Transferred Real
Property Rights, and which is generated, originated and resulting from, caused
by and attributable to the Facility, the operation of the Facility or the
Purchased Assets, on or after the Closing Date.
"PRC" shall have the meaning set forth in the recitals.
"Pre-Closing" shall have the meaning set forth in Section 5.1(a).
"Pre-Existing Contamination" shall mean the presence of any Hazardous
Material in the soil, groundwater, surface water, air or building materials of
the Facility or any Hazardous Materials migrating to any Transferred Real
Property Rights, including the Facility, prior to the Closing Date or otherwise
resulting from the conduct of the MOS 17 Operations or the ownership of the
Purchased Assets or from the operation of any other part of Seller's business,
including, without limitation, BAT 3, prior to the Closing Date.
"Purchase Price" shall have the meaning set forth in Section 2.10.
"Purchase Price Allocation Schedule" shall have the meaning set forth
in Section 2.11.
"Purchased Assets" shall have the meaning set forth in Section 2.2.
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"Real Property Rights Assignment Agreement" shall mean the real
property rights assignment and transfer agreement between Seller and Buyer dated
as of the date hereof.
"Real Property Rights" shall have the meaning set forth in Section
3.10(a).
"Real Property Transfer Arrangements" shall have the meaning set
forth in Section 8.9(b).
"Remedial Activities" shall mean any sampling, testing,
investigation, feasibility study, health assessment, risk assessment,
construction activity relating to contamination, installation, encapsulation,
removal (including any transportation and disposal of removed Hazardous
Materials), excavation, treatment, monitoring and clean-up of contamination
from, in, on or under any real property, or the soil, groundwater, surface
water, indoor air, or building materials thereof.
"Retained Environmental Liabilities" shall mean (a) any and all
liabilities, obligations, judgments, penalties, fines, costs or expenses
(including attorney's fees and environmental consultant costs) of any kind or
nature, or the duty to indemnify, defend or reimburse any Person, other than the
Assumed Environmental Liabilities, incurred by Seller or if unknown would be
incurred by Seller, and (b) any and all liabilities, obligations, judgments,
penalties, fines, costs or expenses (including attorney's fees and environmental
consultant costs) of any kind or nature, or the duty to indemnify, defend or
reimburse any Person, arising from, relating to or in connection with the
representations, warranties made by Seller under Section 3.9 (Environmental
Matters) of this Agreement. Without limiting the generality of the foregoing,
Retained Environmental Liabilities shall include any liabilities, obligation,
judgment, penalty, fine, cost or expense (including reasonable attorneys' fees
and environmental consultant costs) of any kind or nature, or the duty to
indemnify, defend or reimburse any Person with respect to: (i) Pre-Existing
Contamination caused by Seller or Seller's predecessor(s); (ii) Pre-Existing
Contamination not caused by Seller or Seller's predecessor(s) but for which
Seller would be legally liable for under applicable law as of the Closing Date;
(iii) the migration at any time prior to, on or after the Closing Date of
Pre-Existing Contamination to any other real property, or the soil, groundwater,
surface water, air or building materials thereof by Seller but subject to (i)
and (ii) herein; (iv) the exposure of any Person to Pre-Existing Contamination
or to Hazardous Materials in the course of or as a consequence of any activities
of the Facility prior to the Closing Date, without regard to whether any health
effect of the exposure has been manifested as of the Closing Date; (v) the
violation of any PRC Environmental Laws by Seller relating in any manner to the
conduct of the MOS 17 Operations or the ownership of the Purchased Assets prior
to the Closing Date; (vi) any claims, actions, suits, arbitrations, proceedings
or investigations brought or threatened by any third party, including, without
limitation, any Governmental Authority, with respect to any of the foregoing;
and (vii) any of the foregoing to the extent that they continue on or after the
Closing Date and are not otherwise contributed to by Buyer.
"Rules" shall have the meaning set forth in Section 14.3.
"Schedule of Exceptions" shall mean the Schedule of Exceptions
attached to this Agreement as Exhibit A-1 with respect to Seller and Exhibit A-2
with respect to Buyer.
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"Seconded Employee" shall have the meaning set forth in Section
9.2(a).
"Secondment Agreement" shall have the meaning set forth in Section
9.2(d).
"Seller" shall have the meaning set forth in the preamble.
"Seller Indemnitees" shall have the meaning set forth in Section
11.2(a).
"Series C Preference Shares" shall mean the Series C preference
shares of Buyer having the rights and preferences set forth in the Seventh
Amended and Restated Articles of Association of Buyer.
"Series C Warrants" shall have the meaning set forth in Section 4.6.
"Series D Preference Share Purchase Agreement" shall mean the
Series D preference share purchase agreement dated as of the date hereof between
Buyer, Seller and Motorola.
"Series D Preference Shares" shall mean the Series D preference
shares of Buyer having the rights and preferences set forth in the Eighth
Amended and Restated Articles of Association of Buyer.
"Subsidiary" of a Person shall mean any corporation or other entity
of which the securities or other ownership interests having voting power to
elect a majority of that corporation's or entity's board of directors or similar
governing body are held by such Person or one or more of its Subsidiaries.
"Tangible Assets" shall have the meaning set forth in Section 2.2(a).
"Tax" or, collectively, "Taxes", as used in this Agreement, and
without regard to any limitation in the implication of such term as it may
otherwise be interpreted in Laws, official constructions, replies or
jurisprudence treaties, shall mean any and all PRC, United States, foreign,
provincial, state, local and other taxes, assessments and other governmental
charges, fees, reserves, levies, duties, impositions and liabilities, including
without limitation taxes based upon or measured by gross receipts, income,
profits, sales, use, grant, allocation, acquisition and occupation, and value
added, ad valorem, transfer, franchise, transaction, withholding, payroll,
recapture, license, permission, impartation, employment, excise and property
taxes, and customs duty taxes and tariffs, together with all interest, penalties
and additions imposed with respect to such amounts, and any obligations with
respect to such amounts arising as a result of being a member of an affiliated,
consolidated, combined, merged, acquired, taken over or unitary group for any
period or under any agreements or arrangements with any other Person.
"Tax Return" shall mean any return, assessment, estimate,
declaration, statement, report, claim for refund, or information statement
relating to Taxes, regardless of its form, format and formality, including any
schedule attached thereto and any amendment thereto.
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"Technology Transfer and License Agreement" shall mean the technology
transfer and license agreement to be entered into between Motorola and Buyer,
effective as of the Closing Date.
"TEDA" shall mean the Tianjin Economic Technological Development Area
in Tianjin, China.
"Third Party Claim" shall have the meaning set forth in Section 11.4.
"Threshold Amount" shall have the meaning set forth in Section
11.3(a).
"Transaction Agreements" shall mean this Agreement, the Transition
Services Agreement, the Xxxx of Sale, the Assignment and Assumption Agreement
and the Real Property Rights Assignment Agreement.
"Transferred Cars" shall have the meaning set forth in
Section 2.2(h).
"Transferred Computers" shall have the meaning set forth in Section
2.2(i).
"Transferred Documents and Records" shall have the meaning set forth
in Section 2.2(d).
"Transferred Employee Computers" shall have the meaning set forth in
Section 2.2(j).
"Transferred Employees" shall mean all MOS 17 Employees who accept
employment with Buyer or Buyer-Sub.
"Transferred Expat Houses" shall have the meaning set forth in
Section 2.2(g).
"Transferred Real Property Rights" shall have the meaning set forth
in Section 2.2(e).
"Transition Services Agreement" shall mean the transition services
agreement between Seller and Buyer, dated as of the date hereof, and to be
executed by Buyer-Sub following its establishment.
"Tribunal" shall have the meaning set forth in Section 14.3.
"Tuition Assistance Period" shall have the meaning set forth in
Section 9.1(g).
"USD" shall mean United States dollars.
"Warrants" shall mean Series D Preference Share Purchase Warrants
issued by Buyer to Seller or Motorola and dated as of the Closing Date.
"Warranty Rights" shall have the meaning set forth in Section 2.2(f).
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ARTICLE 2
THE ASSET PURCHASE AND SALE
2.1 Purchase and Sale. Upon the terms and subject to the conditions of
this Agreement, Seller agrees to sell, assign, convey, deliver and transfer to
Buyer, and Buyer agrees to purchase and accept from Seller, at the Closing, all
of Seller's rights, title and interest in and to the Purchased Assets, free and
clear of all Liens, except for Permitted Liens and, with respect to the
Transferred Real Property Rights, subject to the issuance of Building and Land
Certificates from the Land Authorities.
2.2 Purchased Assets. The following assets are collectively referred to
as the "Purchased Assets":
(a) the tangible assets listed on Schedule 2.2(a) (the "Tangible
Assets");
(b) subject to Section 8.6(b)(i), raw materials inventory in stock
at the Facility on the Closing Date and the Construction Materials (provided
that the Construction Materials shall not be deemed "Purchased Assets" for
purposes of Article 3 hereof);
(c) subject to Sections 2.7 and 8.7 hereof, rights in, to and under
the Contracts listed on Schedule 2.2(c) (the "Assigned Contracts");
(d) Documents and Records of Seller (i) which are physically located
at the premises of the Facility on the Closing Date, to the extent directly
relating to (A) the Transferred Employees, subject to and as more fully
described in Section 10.2(c), (B) the Purchased Assets or (C) the conduct of the
MOS 17 Operations or (ii) to the extent necessary for the conduct of the MOS 17
Operations or the ownership of the Purchased Assets, which are in the physical
care, custody or control of Seller or its Affiliates on the Closing Date (the
"Transferred Documents and Records");
(e) the Real Property Rights listed on Schedule 2.2(e) (the
"Transferred Real Property Rights");
(f) Seller's pre-Closing rights, claims, credits, causes of action
or rights of set-off or counter-claim against manufacturers or vendors pursuant
to manufacturers' and vendors' warranties, representations and guarantees
covering the Tangible Assets as of the Closing and listed on Schedule 2.2(f)
(the "Warranty Rights");
(g) a minimum of thirteen (13) and a maximum of eighteen (18)
apartments or houses, as the case may be, owned by Seller, as more fully
described on Schedule 2.2(g), which schedule shall be finalized with a list of
specifically identified apartments or houses following the acceptance of offers
of employment from Buyer or Buyer-Sub by MOS 17 Expatriate Employees after the
date of this Agreement and prior to the Closing (the "Transferred Expat Houses")
(provided that the Transferred Expat Houses shall not be deemed "Purchased
Assets" for purposes of Article 3 hereof);
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(h) thirteen (13) cars owned by Seller as listed on Schedule 2.2(h)
(the "Transferred Cars") (provided that the Transferred Cars shall not be deemed
"Purchased Assets" for purposes of Article 3 hereof);
(i) personal computers and laptops owned by Seller and used in MOS
17 as listed on Schedule 2.2(i) (the "Transferred Computers"); and
(j) personal computers or laptops, as the case may be, owned by
Seller that are specifically assigned to a Transferred Employee as set forth on
Schedule 2.2(j) (the "Transferred Employee Computers").
2.3 Excluded Assets. Notwithstanding anything in Section 2.2 to the
contrary, Seller will retain and not transfer, and Buyer will not acquire, any
rights, title and interest in or to the assets of Seller, other than the
Purchased Assets, including, without limitation, the following assets which
shall not be sold or transferred to Buyer (collectively, the "Excluded Assets"):
(a) Seller's cash, cash equivalents and marketable securities,
including cash on hand or in bank accounts;
(b) Seller's accounts receivables;
(c) technology or intellectual property rights of Seller and its
Affiliates except for licenses and other limited rights granted pursuant to the
Technology Transfer and License Agreement, the Patent License Agreement, the IP
Assistance Agreement and the Master Foundry Agreement;
(d) corporate accounting journals and corporate books of account
which comprise Seller's or its Affiliates' permanent accounting or tax records;
(e) Seller's corporate charter, qualifications to do business,
arrangements with registered agents, taxpayer and other identification numbers,
seals, minute books, stock records, blank stock certificates and other documents
relating to the organization, maintenance and existence of Seller as a
corporation;
(f) refunds pertaining to any Tax obligations of Seller and its
Affiliates;
(g) tangible assets other than the Tangible Assets, including,
without limitation, those tangible assets listed on Schedule 2.3(g) (the
"Excluded Tangible Assets");
(h) Contracts relating to the conduct of the MOS 17 Operations or
use of the Purchased Assets, other than the Assigned Contracts;
(i) other than the Transferred Real Property Rights, real property
owned by Seller, real property leaseholds and other real property rights of
Seller, including, without limitation, BAT 3;
(j) insurance policies of Seller and its Affiliates;
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(k) other than the Warranty Rights, Seller's pre-Closing rights,
claims, credits, causes of action or rights of set-off or counter-claim relating
to the Excluded Assets or the Excluded Liabilities;
(l) inventory sold, transferred, disposed of or consumed in the
ordinary course prior to Closing and finished goods and works-in-progress
inventory at the Facility on the Closing Date;
(m) Permits of Seller or its Affiliates; and
(n) personal computers or laptops, as the case may be, owned by
Seller that are specifically assigned to a MOS 17 Employee who is not a
Transferred Employee as set forth on Schedule 2.3(n) (the "Excluded Employee
Computers").
2.4 Intellectual Property Matters. In connection with the sale and
purchase of the Purchased Assets, Motorola and Buyer intend to enter into the IP
Agreements. Notwithstanding any provision of this Agreement other than Section
3.18 or Article 11 hereof, the parties acknowledge that the rights and
obligations of Motorola, Seller, Buyer and Buyer-Sub with respect to technology
and intellectual property rights are contained exclusively in the IP Agreements
and the Master Foundry Agreement.
2.5 Commercial Matters. In connection with the sale and purchase of the
Purchased Assets, Motorola and Buyer intend to enter into a Master Foundry
Agreement. Notwithstanding the foregoing or any other provision of this
Agreement, the parties acknowledge that the rights and obligations of Motorola,
Seller, Buyer and Buyer-Sub with respect to any supplier or other commercial
arrangement between the parties are contained exclusively in the Master Foundry
Agreement.
2.6 Equity Matters. In connection with the sale and purchase of the
Purchased Assets and the transfer of certain technology, exchange of certain
licenses and provision of certain intellectual property assistance as provided
in the IP Agreements, Buyer, Seller and Motorola intend to enter into the Series
D Preference Share Purchase Agreement. Notwithstanding the foregoing or any
other provision of this Agreement, the parties acknowledge that the rights and
obligations of Motorola, Seller, Buyer and Buyer-Sub with respect to the Series
D Preference Shares, the Warrants and rights related thereto, are contained
exclusively in the Equity Agreements.
2.7 Non-Assignable Contracts. This Agreement shall not constitute an
agreement to assign any Assigned Contract or any claim or right or any benefit
or obligation thereunder or resulting therefrom if an assignment thereof,
without the consent of a third party thereto, would constitute a breach or
violation thereof or a default thereunder and if such a consent is not obtained
at or prior to the Closing. Subject to Section 8.7 hereof, with respect to any
such Assigned Contract as to which the consent of a third party is necessary,
Seller and Buyer will use reasonable commercial efforts, which shall not require
the payment of any money to any third party by Seller or Buyer, to obtain the
written consent of such third parties to any such assignment. Buyer acknowledges
that all or some of the Assigned Contracts may not be transferable. To the
extent permitted by applicable Law and the terms and conditions of the
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applicable Assigned Contract, in the event that consents to the assignment of
any Assigned Contract are not obtained by Seller at or prior to the Closing,
Seller and Buyer will cooperate to establish an arrangement (including through a
subcontracting, subleasing, sublicensing or similar arrangement) effective as of
the Closing Date and reasonably satisfactory to Buyer and Seller under which,
subject at all times to Buyer's fulfillment of the obligations under such
Assigned Contract, the benefits of such Assigned Contract shall be passed to
Buyer and Seller shall promptly pay over to Buyer all money or other
consideration received by it in respect of all such Assigned Contracts, if any,
less any actual out-of-pocket costs or expenses incurred by Seller.
2.8 Assumption of Liabilities. Upon the terms and subject to the
conditions of this Agreement, on and after the Closing Date, Buyer agrees to
assume only the following (collectively, the "Assumed Liabilities"):
(a) liabilities, obligations or proceedings arising under the
Assigned Contracts, that are incurred or arise on or after the Closing Date;
(b) Assumed Environmental Liabilities; and
(c) claims, causes of action, agreements, responsibilities, debts,
liabilities or obligations of Buyer, arising from or incurred in connection with
the Purchased Assets or the operation of the Facility accruing or arising in all
cases on or after the Closing Date or relating to any period commencing on or
after the Closing Date or payable by any reason of any act, event or omission
occurring on or subsequent to the Closing Date, whether direct or indirect,
accrued or unaccrued, known or unknown, absolute or contingent.
For the avoidance of doubt, nothing in this Section 2.8 is intended to
limit the ability of Buyer or its Affiliates to pursue any legal or equitable
remedy against Seller, its shareholders, representatives or Affiliates under
applicable Law from any Governmental Authority, to the extent such remedy is not
contemplated by Section 11.2(b) and Section 11.5.
2.9 Excluded Liabilities. Notwithstanding anything to the contrary in
this Agreement, Buyer shall not assume or be obligated to pay, perform or
otherwise assume or discharge any liabilities or obligations of Seller or any of
its Affiliates, whether direct or indirect, accrued or unaccrued, known or
unknown, or absolute or contingent relating in all cases to any period prior to
the Closing Date, except for the Assumed Liabilities (all of such liabilities
and obligations not so assumed being referred to herein as the "Excluded
Liabilities"), and, without limiting the generality of the foregoing, the
following obligations and liabilities relating to the conduct of the MOS 17
Operations or the Purchased Assets shall not be assumed by Buyer and shall be
retained by Seller:
(a) Seller's liabilities or obligations for Taxes arising from, in
connection with or relating to the conduct of the MOS 17 Operations or the use
or ownership of the Purchased Assets prior to the Closing Date;
(b) employee benefits or compensation arrangements, or claims,
credits, damages, liabilities or obligations arising from, incurred in
connection with or relating to any individual's employment with Seller for
periods ending prior to the Closing Date and severance and termination payments
resulting from the transactions contemplated by this Agreement that
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become payable to each employee in connection with consummation of the
transactions contemplated by this Agreement;
(c) liabilities or obligations of Seller relating to Excluded
Assets;
(d) liabilities or obligations of Seller with respect to Contracts
that are not Assigned Contracts;
(e) liabilities or obligations of Seller arising under the
Transaction Agreements;
(f) liabilities or obligations of Seller or its Affiliates arising
under the Consignment Agreement, the Master Foundry Agreement, the Long Term
Services Agreement, the Equity Agreements, the IP Agreements, the Guaranty, the
Financial Statements Letter Agreement or the Funding Letter Agreement;
(g) liabilities or obligations arising from, incurred in connection
with or relating to any litigation or arbitration involving the Purchased Assets
or the conduct of the MOS17 Operations by Seller prior to the Closing Date,
including the litigation referenced in Section 3.5 of Seller's Schedule of
Exceptions;
(h) liabilities, obligations or proceedings arising under or
incurred in connection with the Assigned Contracts prior to the Closing Date;
and
(i) Retained Environmental Liabilities.
For the avoidance of doubt, nothing in this Section 2.9 is intended to
limit the ability of Seller or its Affiliates to pursue any legal or equitable
remedy against Buyer, its shareholders, representatives or Affiliates under
applicable Law from any Governmental Authority, to the extent such remedy is not
contemplated by Section 11.2(a) and Section 11.5.
2.10 Consideration. At the Closing, Buyer shall issue and sell to Seller
82,857,143 shares of its Series D Preference Shares and Warrants to purchase an
additional 8,285,714 shares of its Series D Preference Shares, which shares and
Warrants shall have an aggregate value of USD$290,000,000, pursuant to the terms
and conditions of the Series D Preference Share Purchase Agreement (such shares
and Warrants, collectively, the "Purchase Price"), which constitutes good,
valuable and sufficient consideration for the Purchased Assets.
2.11 Purchase Price Allocation. Prior to the Closing Date, the parties
shall attempt to reach a good faith agreement regarding the manner in which the
Purchase Price will be allocated among the Purchased Assets. If the parties
agree on such allocation, such allocation shall be set forth in a schedule
attached hereto as Schedule 2.11 at the Closing (the "Purchase Price Allocation
Schedule"). Seller and Buyer shall, and shall cause each of their respective
Affiliates to, act in accordance with the Purchase Price Allocation Schedule in
the preparation and filing of all PRC Tax Returns and similar PRC filings.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
The following representations and warranties of Seller are hereby amended
and excepted to the extent set forth in writing in Seller's Schedule of
Exceptions attached hereto as Exhibit A-1 with any information disclosed with
reference to one section therein being deemed disclosed with respect to all
other sections where it is reasonably apparent from the face of such disclosure
that such information applies to such other sections. Seller hereby represents
and warrants to Buyer as of the date hereof, and will represent and warrant to
Buyer as of the Closing, except as otherwise set forth in Seller's Schedule of
Exceptions, the following:
3.1 Organization and Qualification. Seller is a limited liability company
duly established, validly existing and in good standing under the Laws of the
PRC. Seller has all requisite power and authority to own, operate or lease its
properties and to carry on its business as now conducted by Seller, including
the conduct of the MOS 17 Operations. Seller is duly licensed or qualified to do
business in each jurisdiction in which it is required to be licensed or
qualified and in which the failure to be so licensed or qualified would have a
Material Adverse Effect. The business license of Seller is in full force and
effect. The Articles of Association of Seller, as amended to date, comply with
the applicable requirements of PRC Law and are in full force and effect.
Motorola owns, through its wholly owned Subsidiaries, one hundred percent (100%)
of the ownership interests of Seller.
3.2 Due Execution. Seller has all requisite power and authority to
enter into, execute and deliver this Agreement, the Consignment Agreement, the
Long-Term Services Agreement and each of the other Transaction Agreements to
which it is a party, to perform its respective obligations hereunder and
thereunder, and to consummate the transactions contemplated hereby and thereby.
The Transaction Agreements, the Consignment Agreement and the Long-Term Services
Agreement and the consummation of the transactions contemplated thereby have
been duly and validly approved by the Board of Directors of Seller, to the
extent Seller is a party to such agreement, and each of the Transaction
Agreements, the Consignment Agreement and the Long-Term Services Agreement has
been or will be as of the Closing Date duly and validly executed and delivered
by Seller, to the extent Seller is a party to such agreement, and is or will be
as of the Closing a valid and binding obligation of Seller, to the extent Seller
is a party to such agreement, enforceable against it in accordance with its
respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar Laws or by equitable principles relating
to or limiting creditor's rights generally. Except as set forth in Section 3.2
of Seller's Schedule of Exceptions, no approval, except as has already been
obtained by Seller or its Affiliates as of the date hereof, by the shareholders
or any creditors of Seller or its Affiliates is required with respect to the
execution and delivery by Seller of this Agreement, the Consignment Agreement,
the Long-Term Services Agreement or the other Transaction Agreements or with
respect to the performance by Seller of its obligations hereunder or thereunder.
3.3 Non-contravention. Except as set forth in Section 3.3 of Seller's
Schedule of Exceptions, the execution, delivery and performance of the
Transaction Agreements, the Consignment Agreement and the Long-Term Services
Agreement by Seller and the consummation of the transactions contemplated
thereby will not (a) require the consent, approval
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or authorization of (i) any Person (other than any Governmental Authority), the
failure of which to obtain could give rise to any criminal liability or,
individually or in the aggregate, any liability or obligation in excess of
USD$100,000, or (ii) to Seller's Knowledge, any Governmental Authority, (b)
violate any provision of Law applicable to Seller, which could give rise to any
criminal liability or, individually or in the aggregate, any liability or
obligation in excess of USD$100,000, or (c) conflict with, violate or constitute
a breach of or default under Seller's Articles of Association, as amended to
date, any indenture, mortgage, deed of trust or other Contract, to which Seller
is a party, or by which Seller or any of the Purchased Assets is bound, the
violation or breach of which could give rise to any criminal liability, or
individually or in the aggregate, any liability or obligation in excess of
USD$100,000. To Seller's Knowledge, there are no circumstances that will result
in the transactions contemplated by the Transaction Agreements, the Consignment
Agreement and the Long-Term Services Agreement to be invalidated under the
relevant provisions of the bankruptcy, liquidation or insolvency Laws of the
PRC.
3.4 Taxes.
(a) Seller has prepared and timely filed all required Tax Returns
relating to any and all Taxes concerning or attributable to the MOS 17
Operations, the Purchased Assets or the Assumed Liabilities and such Tax Returns
are true and correct in all material respects and have been completed in
accordance with applicable Laws.
(b) Seller (i) has paid, or caused to be paid, all Taxes that Seller
is required to pay as of the Closing concerning or attributable to the MOS 17
Operations, the Purchased Assets or the Assumed Liabilities, including those
required by PRC Law, except such as are being contested and (ii) will have
withheld or caused to be withheld with respect to MOS 17 Employees all income
taxes, social security and national insurance contributions and other Taxes
required to be withheld as of the Closing, including those required by PRC Law.
(c) Except as set forth in Section 3.4(c) of Seller's Schedule of
Exceptions, no audit or other examination, inspection or assessment of any Tax
Return of Seller relating to the MOS 17 Operations or the Purchased Assets is
presently in progress, nor has Seller or any of its Affiliates been notified of
any request for such an audit or other examination, inspection or assessment.
(d) There are (and immediately following the Closing there will be)
no Liens on the Purchased Assets or the Facility relating to or attributable to
Taxes, except with respect to Taxes not yet due and payable.
3.5 Litigation. Except as set forth in Section 3.5 of Seller's Schedule
of Exceptions, Seller is not involved in any suit, action, claim, arbitration or
other proceeding (administrative or otherwise) with respect to any matter
involving the conduct of the MOS 17 Operations, the Purchased Assets or the
transactions contemplated by the Transaction Agreements, the Consignment
Agreement or the Long-Term Services Agreement, and no such suit, action, claim,
arbitration or other proceeding or investigation is currently pending. To
Seller's Knowledge, there is no suit or action (equitable, legal or
administrative), arbitration or other proceeding threatened against Seller with
respect to the conduct of the MOS 17 Operations, the Purchased
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Assets or the transactions contemplated by the Transaction Agreements, the
Consignment Agreement or the Long-Term Services Agreement. To Seller's
Knowledge, Seller is not in default under, or in violation of, any Order,
relating to the conduct of the MOS 17 Operations.
3.6 Title to Tangible Assets. Seller has good title, free and clear of
Liens, other than Permitted Liens, to the Tangible Assets (except such inventory
or Construction Materials as has been disposed of in the ordinary course); and
except as set forth in Section 3.6 of Seller's Schedule of Exceptions, at the
Closing, Buyer will receive the Purchased Assets free and clear of any Liens, in
each case, except for Permitted Liens.
3.7 Compliance with Laws. Except with respect to Taxes which are
addressed exclusively in Section 3.4 hereof, environmental matters which are
addressed exclusively in Section 3.9 hereof, and real property rights which are
addressed exclusively in Section 3.10 hereof, and except as set forth on Section
3.7 of Seller's Schedule of Exceptions, to Seller's Knowledge, Seller has
complied in all material respects with all Laws applicable to the conduct of the
MOS 17 Operations or the ownership of the Purchased Assets by Seller. To
Seller's Knowledge, Seller has not received any written notification from any
Governmental Authority that the conduct of the MOS 17 Operations or the
ownership of the Purchased Assets by Seller is in violation of any Laws that are
material to the MOS 17 Operations.
3.8 Contracts and Commitments. Section 3.8 of Seller's Schedule of
Exceptions sets forth a list of all Contracts outstanding as of the date hereof,
directly relating to the MOS 17 Operations or the Purchased Assets, to which
Seller is a party and which meet any of the descriptions set forth below
(collectively, the "Business Contracts"):
(a) imposes a security interest in any Purchased Asset having a
value in excess of USD$50,000;
(b) involves the receipt of funds in excess of USD$50,000 per year;
(c) involves expenditures in excess of USD$50,000 in connection with
an Assigned Contract and which is not terminable upon less than ninety (90) days
notice by Seller;
(d) is a license under which Seller has licensed any software or
other technology of a third party necessary for the conduct of the MOS 17
Operations;
(e) is a lease, contract or other arrangement having a value in
excess of USD$50,000 and which is not terminable upon less than ninety (90) days
notice by Seller, under which Seller has acquired any property or assets of a
third party for use in the conduct of the MOS 17 Operations or under which
Seller otherwise utilizes in the conduct of the MOS 17 Operations any properties
or assets of another party or which are jointly owned by Seller with any other
party or parties which has not otherwise been described pursuant to any other
paragraph of this Section 3.8 (with any such relationship identified in such
description);
(f) is a Permit or Order that is material to the ownership of the
Purchased Assets or to conduct the MOS 17 Operations which has not otherwise
been described pursuant to any other paragraph of this Section 3.8; or
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(g) contains any covenant limiting the freedom of Seller to engage
in any line of business or to compete with any person or entity which would so
limit the freedom of Buyer after the Closing Date.
Except for those Business Contracts set forth in Section 3.8 of
Seller's Schedule of Exceptions which are identified as Business Contracts that
may be terminated prior to the Closing, each Business Contract is valid and
binding and is in full force and effect as to Seller, assuming the other party
thereto is bound which, to Seller's Knowledge, is the case for each Business
Contract. To Seller's Knowledge, no event has occurred which is or, after the
giving of notice or passage of time or both, would constitute a default under,
or a breach of, any material provision of any Business Contract by Seller or, to
Seller's Knowledge, by any other party thereto.
3.9 Environmental Matters.
With respect to the conduct of the MOS 17 Operations or the use or
operation of the Purchased Assets:
(a) To Seller's Knowledge, Section 3.9 of Seller's Schedule of
Exceptions contains an accurate and complete list of all the Environmental
Reports. The Seller has delivered or will make available true and complete
copies of all the Environmental Reports to Buyer.
(b) Except as disclosed in the Environmental Reports, the design,
construction, delivery, operation and use of the Facility are each in material
compliance with all applicable Environmental Laws.
(c) Except as disclosed in the Environmental Reports, there are no
Hazardous Materials present in the surface water, groundwater or soil (either
surface or subsurface), or in such instances as could not reasonably be expected
to result in a Material Adverse Effect with respect to Seller.
(d) Except as set forth in Section 3.9 of Seller's Schedule of
Exceptions, Seller has all Permits, licenses, authorizations and approvals which
are required under applicable Environmental Laws and is in material compliance
with such Permits licenses, authorizations and approvals.
(e) There are no pending or, to Seller's Knowledge, threatened
administrative, regulatory or judicial actions (whether civil or criminal),
suits, arbitration allegations, demands, demand letters, fines, charges,
penalties, claims, Liens, notices of noncompliance or violation, investigations
or proceedings relating to compliance with applicable Environmental Law against
Seller.
(f) To Seller's Knowledge, Seller is not aware of any events or
circumstances that might reasonably be expected to form the basis of an order
for clean-up or remediation, demand for fines, charges or penalties or an
action, suit or proceeding by any private party or Governmental Authority,
against Seller relating to Hazardous Materials or compliance with applicable
Environmental Laws.
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(g) Seller has complied in all material respects and is in material
compliance with applicable Environmental Laws pertaining to the MOS 17
Operations and has not incurred any liability as a result of any breach of any
such requirements which is attributable to the conduct of the MOS 17 Operations
or Seller's ownership or use of the Purchased Assets. To Seller's Knowledge,
there are no circumstances likely to give rise to any such liability. To
Seller's Knowledge, Seller has taken reasonable steps to prevent damage to the
environment which could give rise to a third party claim in relation to the MOS
17 Operations or the Facility or the ownership, occupancy, use or
transferability of the Purchased Assets or render any premises owned, used or
occupied by MOS 17 Operation (including the Facility) unusable or subject to an
order for decontamination or similar procedure.
(h) To Seller's Knowledge, Seller has been cooperative with the
competent Government Authorities in the latter's investigation relating to
Environmental Laws, and there have not been incidents or practices on the part
of Seller, either convicted or claimed, of refusal, resistance, fraud, cheating
or misleading in connection therewith.
(i) To Seller's Knowledge, Seller has no reason to believe that
Buyer would be required to incur significant capital expenditures related to
pollution control abatement or other compliance with Environmental Laws as such
laws regulate the equipments, facilities, machineries, or technology being
purchased or transferred.
(j) To Seller's Knowledge, Seller has never produced, stored,
transported, sold or used toxic chemicals or materials containing radioactive
substances other than in material compliance with the relevant provisions under
the Environmental Laws.
(k) For any projects that may cause pollution to its environment and
before such projects are initiated, Seller or its Affiliates, as required by
Environmental Laws, have duly prepared and filed environmental quality impact
assessment report, have included environment protection facilities into the
entire project, which facilities have been engineered, constructed and put into
operation simultaneously with the project itself, have obtained or completed all
approvals, license, consents, permits, registrations and other procedures for
the project pertaining to environment protection and pollution control, and have
not dismantled or left idle the environment protection facilities without the
approval by competent environmental authorities during the course of the
operation of the projects.
(l) To Seller's Knowledge, Seller has satisfied all requirements for
corrective or remedial actions for violation of or non-compliance with
Environmental Laws, if any.
(m) To Seller's Knowledge, Seller has provided all or made access
available to Buyer of materials and information available and relating to the
representations and warranties in this Section 3.9.
3.10 Real Property Rights.
(a) Section 3.10(a) of Seller's Schedule of Exceptions sets forth a
list of all real property leased, subleased, licensed and/or occupied by Seller,
used directly and primarily in connection with the Purchased Assets or the
conduct of the MOS17 Operations ("Real Property Rights").
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(b) The plants, buildings and structures included in the Purchased
Assets have no material defects, are in good operating condition and repair and
have been reasonably maintained consistent with standards generally followed in
the industry (giving due account to the age and length of use of same, ordinary
wear and tear excepted), are adequate and suitable for their present uses and,
in the case of plants, buildings and other structures, to Seller's Knowledge,
are structurally sound.
(c) The Purchased Assets listed on Section 3.10(a) of Seller's
Schedule of Exceptions, as currently used, occupied and operated, does not
constitute a nonconforming use under all applicable building, zoning,
subdivision and other land use and similar Laws except for violations that have
not had and could not give rise to any criminal liability or, individually or in
the aggregate, any liability or obligation in excess of USD$100,000.
(d) Except as set forth in Section 3.10(d) of Seller's Schedule of
Exceptions, the Transferred Real Property Rights are not subject to any rights
of reversion or conditions precedent that have not been satisfied and no Person
has any right of first refusal or first offer with respect to any such
Transferred Real Property Rights. Except as set forth in Section 3.10(d) of
Seller's Schedule of Exceptions, to Seller's Knowledge, Seller's ownership of
its interest in the Transferred Real Property Rights has not been legally
challenged by any Person, including by any Governmental Authority, and there are
no tenants (other than Seller or its Affiliates) occupying the property on which
the MOS17 Operations are located.
(e) Except as otherwise disclosed in the Seller's Schedule of
Exceptions, to Seller's Knowledge, (x) Seller has paid all outstanding fees,
charges, and payments required under any Permits that are related to the
Transferred Real Property Rights, compensation, lease, levies and impositions
that are properly due and payable to the applicable Governmental Authority and
other parties to which the Seller has entered into contractual relationship in
connection with its ownership, use, occupation, construction, operation or
maintenance of the real property set forth in Section 3.10(a) of the Schedule of
Exceptions, and (y) there are no present or, to Seller's Knowledge, threatened
claims, allegations, challenges, warning, orders or proceedings against Seller
for its delay or default in making such payment in whole or in part.
3.11 Permits. Except as set forth in Section 3.11 of Seller's Schedule of
Exceptions, to Seller's Knowledge, Seller currently has all the Permits from all
PRC Governmental Authorities as are required for the conduct of the MOS 17
Operations and the use, occupation and operation, as applicable, of the
Purchased Assets by Seller as of the date hereof or possession of the Purchased
Assets by Seller as of the date hereof. To Seller's Knowledge, neither Seller
nor its Affiliates has received notice of proceedings relating to the
revocation, suspension or modification of any Permit necessary for the conduct
of the MOS 17 Operations.
3.12 Brokers' Fees. Seller has no liability or obligation to pay any fees
or commissions to any broker, finder or agent with respect to the transactions
contemplated by this Agreement, the Consignment Agreement, the Long-Term
Services Agreement or the other Transaction Agreements for which Buyer or any of
its Affiliates could become liable or obligated.
3.13 Sufficiency of the Purchased Assets.
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(a) The Purchased Assets, together with the services, assets,
properties or rights to be provided to or made available to Buyer or Buyer-Sub
under the Transition Services Agreement, the Real Property Rights Assignment
Agreement, the Consignment Agreement and the Long-Term Services Agreement
constitute all of the assets necessary for the conduct of the MOS 17 Operations
as of the Closing Date, except for (i) the Excluded Tangible Assets set forth on
Schedule 2.3(g), (ii) the services of the MOS 17 Employees who do not agree to
accept offers of employment from Buyer or Buyer-Sub, (iii) those assets,
services, properties and rights set forth in Section 3.13(a)(iii) of Seller's
Schedule of Exceptions, (iv) Permits set forth in Sections 3.8(f) and 3.11 of
Seller's Schedule of Exceptions, (v) Contracts relating to the conduct of the
MOS 17 Operations that are not Assigned Contracts and are set forth in Section
3.13(a)(v) of Seller's Schedule of Exceptions, (vi) Real Property Rights that
are not Transferred Real Property Rights as set forth in Section 3.13(a)(vi) of
Seller's Schedule of Exceptions; and (vii) third party technology or
intellectual property rights.
(b) The Tangible Assets, the Transferred Cars, the Transferred
Computers, the Transferred Employee Computers, the Excluded Tangible Assets set
forth on Schedule 2.3(g) and the Excluded Employee Computers constitute all of
the tangible personal assets owned by Seller that are used or held for use by
Seller primarily in the MOS 17 Operations.
(c) Except as set forth in Section 3.13(c) of Seller's Schedule of
Exceptions, the Tangible Assets are, in all material respects, in good working
condition, ordinary wear and tear excepted. Section 3.13(c) of Seller's Schedule
of Exceptions lists each Tangible Asset that is not physically located on the
premises of the Facility and, except as set forth thereon, all of the Tangible
Assets are physically located on the premises of the Facility.
The parties hereby acknowledge that the foregoing representations in this
Section 3.13 are intended to apply only to Seller's conduct of the MOS 17
Operations and is not intended to apply to the assets, properties or rights of
Motorola (together, with its Affiliates), in its capacity as a customer of the
MOS 17 Operations.
3.14 Warranty Disclaimer.
EXCEPT AS SPECIFICALLY SET FORTH IN THIS AGREEMENT OR AS REQUIRED BY
APPLICABLE LAW, SELLER MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO ANY MATTER
WHATSOEVER RELATING TO THE PURCHASED ASSETS, INCLUDING THE CONDITION OF THE
PURCHASED ASSETS, THEIR MERCHANTABILITY OR THEIR FITNESS FOR ANY PARTICULAR
PURPOSE. WITHOUT LIMITING THE FOREGOING, THE PARTIES ACKNOWLEDGE AND AGREE THAT
THE CONSTRUCTION MATERIALS, THE TRANSFERRED EX XXX HOUSES AND THE TRANSFERRED
EMPLOYEE CARS ARE TRANSFERRED AND SOLD TO BUYER "AS IS" AND "WHERE IS" AND WITH
ALL FAULTS.
3.15 Insurance. Seller maintains for the benefit of the MOS 17
Operations insurance with insurance companies or associations, in such amounts
and covering such risks as are usually carried by companies engaged in similar
operations. As of the date hereof until the Closing Date, all such insurance is
and will be in full force and effect and all premiums due with respect
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thereto are and will be currently paid and provide adequate insurance coverage
for the MOS 17 Operations.
3.16 No Material Changes. Since July 6, 2003 (PRC time), there has not
been any Material Adverse Effect with respect to Seller.
3.17 Employee Matters.
(a) Schedules 9.1(a)(1) and 9.1(a)(2) contain (i) a complete and
accurate list of all MOS 17 Employees, as of the date of this Agreement, showing
for each such employee: (i) the current annual salary paid to such employee from
the Seller or its Affiliates, (ii) the number of stock options or other units of
equity compensation granted to such employee in 2002 and 2003, (iii) the date of
hire, (iv) leave status (including type of leave) and expected date of return
for non-disability related leaves and expiration dates for disability-related
leaves, and (v) visa status.
(b) Solely with respect to the MOS 17 Employees (i) there is no
strike, labor dispute, work slowdown or work stoppage actually pending or, to
Seller's Knowledge, threatened, against Seller with respect to the Facility or
the conduct of the MOS 17 Operations, and (ii) no collective bargaining
agreement grievance is pending or, to Seller's Knowledge, threatened against
Seller or any other entity with respect to the Facility or conduct of the MOS 17
Operations, that would materially impair the ability of Buyer or Buyer-Sub to
conduct the MOS 17 Operations.
(c) There (i) is no outstanding, pending or, to Seller's Knowledge,
threatened claim against Seller by any MOS 17 Employee that would reasonably be
expected to materially impair the ability of the Buyer or Buyer-Sub to conduct
the MOS 17 Operations, (ii) is no dispute between Seller and a number or class
of any of the MOS 17 Employees which has had or would reasonably be expected to
materially impair the ability of the Buyer to conduct the MOS 17 Operations, and
(iii) are no payments of compensation or funding of social security, welfare or
compulsory insurance if applicable and required by Law currently due but unpaid
to any MOS 17 Employee by Seller or its Affiliates for which Buyer would be
liable.
(d) All salaries and other amounts due to the MOS 17 Employees and
to the social security, welfare, compulsory insurance and tax authorities, if
applicable, for the benefit of the MOS 17 Employees have been paid by Seller and
will be paid up to the Closing. Seller is not in default on any social security,
welfare, compulsory insurance or tax payments required by Law for the MOS 17
Employees.
(e) Neither the consent nor any form of approval from any MOS 17
Employee, including any employee who is a member of a collective bargaining
unit, will be required to be obtained in order to execute or consummate the
transactions contemplated by the Transaction Agreements; provided that, Seller
cannot require any MOS 17 Employee to accept employment with Buyer or Buyer-Sub.
Each employee must consent individually to enter into an employment relationship
with Buyer or Buyer-Sub.
3.18 No Notices. As of the date of execution of the Technology Transfer
and License Agreement, Motorola has not received any written notice alleging
that the HIP7 Yield
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Information (as defined in the Technology Transfer and License Agreement)
misappropriates any trade secret of any third party or infringes any copyright
rights of any third party.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER.
The following representations and warranties of Buyer are hereby amended
and excepted to the extent set forth in Buyer's Schedule of Exceptions attached
hereto as Exhibit A-2 with any information disclosed with reference to one
section therein being deemed disclosed with respect to all other sections where
it is reasonably apparent from the face of such disclosure that such information
applies to such other sections. Buyer hereby represents and warrants to Seller
as of the date hereof, and will represent and warrant to Seller as of the
Closing, except as otherwise set forth in Buyer's Schedule of Exceptions, the
following:
4.1 Organization and Qualification.
(a) Buyer is a corporation duly established, validly existing and in
good standing under the Laws of the Cayman Islands. Buyer has all requisite
power and authority to own, operate or lease its properties and to carry on its
business as now conducted. Buyer is duly licensed or qualified to do business in
each jurisdiction in which it is required to be licensed or qualified to do
business and in which the failure to be so licensed or qualified would have a
Material Adverse Effect.
(b) The Articles of Association of Buyer, as amended to date, comply
with the applicable requirements of Cayman Islands Law and are in full force and
effect.
4.2 Due Execution. Buyer has all requisite power and authority to enter
into, execute and deliver this Agreement, the Consignment Agreement, the
Long-Term Services Agreement and each of the other Transaction Agreements to
which it is a party, to perform its respective obligations hereunder and
thereunder, and to consummate the transactions contemplated hereby and thereby.
The Transaction Agreements, the Consignment Agreement and the Long-Term Services
Agreement and the consummation of the transactions contemplated thereby have
been duly and validly approved by the Board of Directors of Buyer and each of
the Transaction Agreements, the Consignment Agreement and the Long-Term Services
Agreement has been or will be as of the Closing Date duly and validly executed
and delivered by Buyer and is or will be as of the Closing a valid and binding
obligation of Buyer enforceable against it in accordance with its respective
terms, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar Laws or by equitable principles relating to or limiting
creditor's rights generally. Except as set forth in Section 4.2 of Buyer's
Schedule of Exceptions, no approval by the shareholders or any creditors of
Buyer or its Affiliates is required with respect to the execution and delivery
by Buyer of this Agreement, the Consignment Agreement, the Long-Term Services
Agreement or the other Transaction Agreements or with respect to the performance
by Buyer of its obligations hereunder or thereunder.
4.3 Non-contravention. Except as set forth in Section 4.3 of Buyer's
Schedule of Exceptions, the execution, delivery and performance of the
Transaction Agreements, the
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Consignment Agreement and the Long-Term Services Agreement by Buyer and the
consummation of the transactions contemplated thereby will not (a) require the
consent, approval or authorization of (i) any Person (other than any
Governmental Authority), the failure of which to obtain could give rise to any
criminal liability or, individually or in the aggregate, any liability or
obligation in excess of USD$100,000, or (ii) to Buyer's Knowledge, any
Governmental Authority, (b) violate any provision of Law applicable to Buyer,
which could give rise to any criminal liability or, individually or in the
aggregate, any liability or obligation in excess of USD$100,000, or (c) conflict
with, violate or constitute a breach of or default under Buyer's Articles of
Association, as amended to date, any indenture, mortgage, deed of trust or other
Contract, to which Buyer is a party, or by which Buyer or any of its assets or
properties is bound, the violation or breach of which could give rise to any
criminal liability, or individually or in the aggregate, any liability or
obligation in excess of USD$100,000.
4.4 Litigation. Except as set forth in Section 4.4 of Buyer's Schedule of
Exceptions, Buyer is not involved in any suit, action, claim, arbitration or
other proceeding (administrative or otherwise) with respect to any matter
involving any of its assets, business or properties, or the transactions
contemplated by the Transaction Agreements, the Consignment Agreement or the
Long-Term Services Agreement, and no such suit, action, claim, arbitration or
other proceeding or investigation (administrative or otherwise) is currently
pending. To Buyer's Knowledge, there is no suit or action (equitable, legal or
administrative), arbitration or other proceeding threatened against Buyer with
respect to any of its assets, business of properties, or the transactions
contemplated by the Transactions Agreements, the Consignment Agreement or the
Long-Term Services Agreement. To Buyer's Knowledge, Buyer is not in default
under, or in violation of any Order relating to its assets, business or
properties.
4.5 Brokers' Fees. Buyer has no liability or obligation to pay any fees
or commissions to any broker, finder or agent with respect to the transactions
contemplated by this Agreement, the Consignment Agreement, Long-Term Services
Agreement or the other Transaction Agreements for which Seller or any of its
Affiliates could become liable or obligated.
4.6 Series C Financing. Pursuant to that certain Series C Preference
Share Purchase Agreement, dated as of September 8, 2003, by and between Buyer
and the investors listed therein (the "Initial Series C Purchase Agreement"),
Buyer consummated the initial sale of Series C Preference Shares and raised
USD$409,640,493.50 through the issuance of an aggregate of 117,040,141 Series C
Preference Shares at a price per share of $3.50 and warrants to purchase
11,704,014 Series C Preference Shares with an exercise price of $0.01 (the
"Series C Warrants") to certain investors. In addition, Buyer may issue an
additional 15,999,714 Series C Preference Shares and Series C Warrants to
purchase 1,599,971 Series C Preference Shares in the aggregate to Asia Pacific
Investors and another investor pursuant to written agreements in effect on the
date hereof in accordance with their respective terms and as described in
Section 3.16 of Buyer's Schedule of Exceptions to the Series D Preference Share
Purchase Agreement. On the date hereof, Buyer raised USD$49,120,000.00 through
the issuance of an additional 14,034,286 Series C Preference Shares, with Series
C Warrants to purchase 1,403,429 Series C Preference Shares, pursuant to an
amended and restated Initial Series C Purchase Agreement dated as of the date
hereof. None of the proceeds received by Buyer from such investors for such
sales resulted from the cancellation of existing indebtedness of Buyer. Of the
total subscription amount
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received by Buyer pursuant to the Initial Series C Purchase Agreement, at least
USD$150,000,000 of the amount was received from investors who were
then-unaffiliated with any of Buyer's then-existing investors and one of the
lead investors was a financial investor.
ARTICLE 5
CLOSING
5.1 Pre-Closing and Closing. Upon the terms and subject to the conditions
set forth in this Agreement:
(a) The parties shall prepare for the consummation of the
transactions contemplated herein in both the United States and the PRC (each, a
"Pre-Closing"). The parties shall conduct a United States Pre-Closing in the
offices of Xxxxx & XxXxxxxx, Two Embarcadero Center, 24th Floor, San Francisco,
California, and a PRC Pre-Closing in the offices of the Xxx Xx Law Offices,
China Resources Xxxxxxxx, 00xx Xxxxx, 0 Xxxxxxxxxxxxx Xxx., Beijing. At each
Pre-Closing, the parties shall deliver or cause to be delivered all of the
instruments as more fully described in Section 5.2 and Section 5.3, to be held
in escrow pending the Closing.
(b) The consummation of the transactions contemplated herein (the
"Closing"), shall be deemed to have taken place and shall be deemed to be
effective at 12:01 a.m., Tianjin (PRC) time, on the first business day after
which all of the conditions precedent to Closing as set forth in Article 6 and
Article 7 hereof have been fulfilled or waived and both of the Pre-Closings
described in subsection (a) above have been completed (the "Closing Date").
5.2 Deliveries at Closing by Seller. At the Closing, Seller shall deliver
or cause to be delivered to Buyer all instruments, duly executed, which are
required by the terms hereof or by applicable Law to be delivered at the
Closing, including:
(a) each of the Transaction Agreements not previously executed;
(b) the Long-Term Services Agreement;
(c) each of the Equity Agreements not previously executed, to which
Seller is a party;
(d) copies of consents or approvals (or waivers in lieu thereof)
required under any Assigned Contract set forth on Schedule 5.2(d) (the "Key
Assigned Contracts") or required by any Governmental Authority as set forth on
Schedule 6.4;
(e) (i) a copy of the resolutions of the board of directors of
Seller authorizing the execution, delivery and performance of this Agreement,
the other Transaction Agreements and each other agreement, document or
certificate to which Seller is a party and is required to be delivered pursuant
hereto or in connection herewith, and authorizing the consummation of the
transactions contemplated hereby and thereby and (ii) a certificate of the
secretary or officer of Seller, dated as of the Closing Date, to the effect that
such resolutions were duly adopted and are in full force and effect on the
Closing Date; and
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(f) a certificate of Seller dated the Closing Date, certifying to
the fulfillment of the conditions specified in Section 6.1.
5.3 Deliveries at Closing by Buyer. At the Closing, Buyer shall deliver
or cause to be delivered to Seller all instruments, duly executed, which are
required by the terms hereof or by applicable Law to be delivered at the
Closing, including:
(a) share certificates and Warrants evidencing the Purchase Price;
(b) each of the Transaction Agreements not previously executed;
(c) the Long-Term Services Agreement;
(d) each of the Equity Agreements not previously executed;
(e) (i) a copy of the resolutions of the board of directors of Buyer
authorizing the execution, delivery and performance of this Agreement, the other
Transaction Agreements and each other agreement, document or certificate to
which Buyer is a party and is required to be delivered pursuant hereto or in
connection herewith, and authorizing the consummation of the transactions
contemplated hereby and thereby and (ii) a certificate of the secretary or
officer of Buyer, dated as of the Closing Date, to the effect that such
resolutions were duly adopted and are in full force and effect on the Closing
Date;
(f) copies of (i) the Articles of Association of Buyer-Sub, (ii) the
letter of approval or certifications from applicable Governmental Authority
relating to (x) the establishment of Buyer-Sub, (y) executed and approved
Articles of Association of Buyer-Sub in the form as provided in (i) above, and
(z) to the extent applicable, the contribution of the Purchased Assets and
transfer of the Assumed Liabilities to Buyer-Sub, (iii) the business license of
Buyer-Sub, and (iv) if applicable, the assumption agreement pursuant to which
Buyer-Sub assumes the Assumed Liabilities from either the Buyer or the Seller
(or similar documents to the same effect); and
(g) a certificate of Buyer dated the Closing Date for such Closing,
certifying to the fulfillment of the conditions specified in Section 7.1.
ARTICLE 6
CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS
All obligations of Buyer hereunder to complete and effect the transactions
contemplated by the Transaction Agreements are subject to the fulfillment on or
before the Closing Date of each of the following conditions, any of which may be
waived, in writing, by Buyer:
6.1 Accuracy of Representations and Fulfillment of Covenants. The
representations and warranties of Seller contained in Article 3 of this
Agreement that are qualified as to materiality or Material Adverse Effect shall
be accurate in all respects and all other representations and warranties of
Seller contained in Article 3 of this Agreement shall be accurate in all
material respects, in each case, when made and as of the Closing with the same
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force and effect as if made as of the Closing (except for those representations
and warranties that address matters only as of a particular date, which shall
have been accurate as of such particular date), except as to matters arising
from the date of this Agreement to the Closing Date as a result of Buyer's early
access to the Facility pursuant to the Consignment Agreement or the Transition
Services Agreement. Seller shall have performed, in all material respects, all
obligations and complied, in all material respects, with each and all of the
covenants, agreements and conditions required to be performed or complied with
on or prior to the Closing. Seller shall have delivered to Buyer an officer's
certificate pursuant to Section 5.2(f) hereof confirming the matters in each of
the foregoing sentences.
6.2 Suit or Action. On the Closing Date, there shall be no suit, action
or injunction pending or, to Seller's Knowledge, threatened, challenging or
seeking to restrain, enjoin or prohibit the transactions contemplated by the
Transaction Agreements or the Long-Term Services Agreement.
6.3 No Order. There shall be no applicable Law or Order enacted,
promulgated or issued which is in effect or which has the effect of making the
transactions contemplated by the Transaction Agreements or the Long-Term
Services Agreement illegal or which otherwise prohibits consummation of the
transactions contemplated by the Transaction Agreements or the Long-Term
Services Agreement.
6.4 Consents. Buyer and Seller shall have obtained (a) all consents (or
waivers in lieu thereof) required under the Key Assigned Contracts and (b) all
necessary approvals from any Governmental Authority including, without
limitation, the approvals of Governmental Authorities set forth on Schedule 6.4.
6.5 Compliance with Laws. Seller shall have complied with all applicable
Laws as are necessary to consummate the transactions contemplated by the
Transaction Agreements and the Long-Term Services Agreement, including, without
limitation, the Export Regulations.
6.6 Delivery of Documents. Seller shall have executed and delivered to
Buyer the documents, instruments and certificates identified in Section 5.2. In
addition, Motorola shall have executed and delivered to Buyer the Guaranty, the
Funding Letter Agreement, the Master Foundry Agreement, each of the IP
Agreements, the Financial Statements Letter Agreement, and each of the Equity
Agreements to which Motorola is a party.
6.7 Opinion of Counsel. At the Closing, Buyer shall have received the
opinion, dated as of the Closing Date, of the Xxx Xx Law Offices.
6.8 Material Adverse Effect. Since the date hereof, there shall not have
been any Material Adverse Effect with respect to Seller.
6.9 Customs Duty Exemption. Seller shall have obtained from applicable
Governmental Authorities the Certificate in Evidence of Release of Supervision
over Duty-Free Imported Goods by Foreign-Invested Enterprises or any other
documents or approvals necessary to evidence that Seller has been granted an
exemption from supervision of any duty-free imported machinery, equipment, raw
materials or other tangible assets that are Purchased Assets, and that Seller is
legally permitted to transfer the Purchased Assets to Buyer or Buyer-Sub
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without incurring any taxes, duties, imposts, tariffs or levies payable to any
PRC customs authorities.
6.10 Building and Land Certificates. Seller shall have obtained building
ownership certificates from the appropriate Tianjin building bureau for all
Transferred Real Property Rights listed on Schedule 2.2(e) that are buildings,
reflecting Seller's existing ownership of such buildings. In addition, Seller
and Buyer shall, respectively, have obtained newly issued Building and Land
Certificates from the Land Authorities; provided however, that if such Building
and Land Certificates are not issued to and received by Seller or Buyer from the
Land Authorities within fifteen (15) days following receipt by Seller and Buyer
of all approvals set forth on Schedule 6.4, then the condition set forth in this
Section 6.10 shall be automatically waived by Buyer and shall no longer
constitute a condition precedent to Buyer's obligation to complete and effect
the transactions contemplated by the Transaction Agreements.
6.11 Real Property Transfer Arrangements. Seller and Buyer shall have
entered into the Real Property Transfer Arrangements in accordance with Section
8.9 hereof.
6.12 Series D Preference Share Purchase Agreement. Each of the conditions
to Buyer's obligation to issue and sell the Series D Preference Shares and
Warrants set forth in Section 6 of the Series D Preference Share Purchase
Agreement, other than Section 6.5 thereof, shall have been satisfied or waived
in accordance with such agreement.
ARTICLE 7
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
All obligations of Seller hereunder to complete and effect the transactions
contemplated by the Transaction Agreements are subject to the fulfillment on or
before the Closing Date of each of the following conditions, any of which may be
waived, in writing, by Seller:
7.1 Accuracy of Representations and Fulfillment of Covenants. The
representations and warranties of Buyer contained in Article 4 of this Agreement
that are qualified as to materiality or Material Adverse Effect shall be
accurate in all respects and all other representations and warranties of Buyer
contained in Article 4 of this Agreement shall be accurate in all material
respects, in each case, when made and as of the Closing with the same force and
effect as if made as of the Closing (except for those representations and
warranties that address matters only as of a particular date, which shall have
been accurate as of such particular date), except as to matters arising from the
date of this Agreement to the Closing Date in the ordinary course of business.
Buyer shall have performed, in all material respects, all obligations and
complied, in all material respects, with each and all of the covenants,
agreements and conditions required to be performed or complied with on or prior
to the Closing. Buyer shall have delivered to Seller an officer's certificate
pursuant to Section 5.3(g) hereof confirming the matters in each of the
foregoing sentences.
7.2 Suit or Action. On the Closing Date, there shall be no suit, action
or injunction pending or, to Buyer's Knowledge, threatened, challenging or
seeking to restrain, enjoin or
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prohibit the transactions contemplated by the Transaction Agreements or the
Long-Term Services Agreement.
7.3 No Order. There shall be no applicable Law or Order enacted,
promulgated or issued which is in effect or which has the effect of making the
transactions contemplated by the Transaction Agreements or the Long-Term
Services Agreement illegal or which otherwise prohibits consummation of the
transactions contemplated by the Transaction Agreements or the Long-Term
Services Agreement.
7.4 Consents. Buyer and Seller shall have obtained all necessary
approvals from any Governmental Authority including, without limitation, the
approvals of Governmental Authorities set forth on Schedule 6.4.
7.5 Compliance with Laws. Buyer shall have complied with all applicable
Laws as are necessary to consummate the transactions contemplated by the
Transaction Agreements and the Long-Term Services Agreement, including, without
limitation, the Export Regulations.
7.6 Delivery of Documents. Buyer shall have executed and delivered to
Seller the documents, instruments and certificates identified in Section 5.3. In
addition, Buyer shall have executed and delivered to Motorola the Funding Letter
Agreement, the Master Foundry Agreement, the Financial Statements Letter
Agreement, and each of the IP Agreements.
7.7 Bank Loan. Buyer and/or Buyer's wholly-owned Subsidiaries shall have
entered into a binding written agreement with a bank or banks for a line of
credit in the amount of at least USD$350,000,000 on customary terms and
conditions (a) pursuant to which Buyer or its Subsidiaries, as the case may be,
may draw upon the full amount of such line of credit, in their sole discretion
(subject to the applicable notification requirements and procedures set forth
therein), immediately following the execution of such bank agreement and, to
Buyer's Knowledge, in the reasonably foreseeable future, and (b) that are not,
in the aggregate, materially less favorable to Buyer or its Subsidiaries than
the current terms and conditions of Buyer's Subsidiary's long term bank loan in
the amount of USD$480,000,000 that was entered into in December 2001 and
provided that the repayment terms shall not be substantially less favorable to
Buyer or its Subsidiaries, as the case may be, than the repayment terms of such
December 2001 bank loan, which repayment terms include, for the avoidance of
doubt, repayment beginning after two and one-half years in five installments
every six months and repayment in full after five years.
7.8 Opinion of Counsel. At the Closing, Seller shall have received
(i) the opinion, dated as of the Closing Date, of Fangda Partners, and (ii) the
opinion, dated as of the Closing Date, of Xxxxxx & Calder.
7.9 Material Adverse Effect. Since the date hereof, there shall not have
been any Material Adverse Effect with respect to Buyer.
7.10 Establishment of Subsidiary. Buyer-Sub shall have been established
and organized in accordance with applicable Law.
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7.11 Customs Duty Exemption. Seller shall have obtained from applicable
Governmental Authorities the Certificate in Evidence of Release of Supervision
over Duty-Free Imported Goods by Foreign-Invested Enterprises or any other
documents or approvals necessary to evidence that Seller has been granted an
exemption from supervision of any duty-free imported machinery, equipment, raw
materials or other tangible assets that are Purchased Assets, and that Seller is
legally permitted to transfer the Purchased Assets to Buyer or Buyer-Sub without
incurring any taxes, duties, imposts, tariffs or levies payable to any PRC
customs authorities.
7.12 Real Property Transfer Arrangements. Seller and Buyer shall have
entered into the Real Property Transfer Arrangements in accordance with Section
8.9 hereof.
7.13 Series D Preference Share Purchase Agreement. Each of the conditions
to Seller's obligation to purchase or acquire the Series D Preference Shares and
Warrants set forth in Section 5 of the Series D Preference Share Purchase
Agreement, other than Section 5.6 thereof, shall have been satisfied or waived
in accordance with such agreement.
ARTICLE 8
CERTAIN PRE-CLOSING OBLIGATIONS
8.1 Further Assurances and Cooperation.
(a) Seller and Buyer each hereby agree to use all reasonable
commercial efforts to cooperate with the other and to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary or
desirable under applicable Laws to consummate all of the transactions
contemplated herein and to be performed hereunder, including, without
limitation, successfully and timely obtaining (i) all regulatory consents,
approvals or authorizations set forth in Section 3.3(a)(ii) of Seller's Schedule
of Exceptions and Section 4.3(a)(ii) of Buyer's Schedule of Exceptions, (ii)
from applicable Governmental Authorities exemptions from payment by Seller
and/or Buyer-Sub of any and all customs duties and VAT relating to Seller's
transfer to Buyer or Buyer's transfer to Buyer-Sub or Buyer-Sub's import, as the
case may be, and Buyer-Sub's use, of the Tangible Assets, and (iii) the Building
and Land Certificates as described in Section 8.9. Each of Seller and Buyer
shall promptly inform the other party of any communication from any Governmental
Authority in connection with the filings made by the parties and any review of
such filings and the transactions contemplated by this Agreement conducted by
such authority.
(b) Seller and Buyer each hereby agree to use all reasonable
commercial efforts to cooperate with the other to obtain (i) all necessary
consents or other approvals of third parties necessary to transfer the Purchased
Assets and Assumed Liabilities and to assign the Assigned Contracts to Buyer,
subject to Section 2.7, and (ii) such Permits as may be required under
applicable Laws.
(c) Seller and Buyer each hereby agree to comply with all applicable
Laws, including requirements applicable to the conduct of the MOS 17 Operations
or the use of the Purchased Assets or as may be required for each party to
comply with the Transaction
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Agreements and the Consignment Agreement. Further, Seller and Buyer each hereby
agree that it shall not engage in unethical conduct or any activity that might
result in a violation of the U.S. Foreign Corrupt Practices Act of 1977, as
amended (the "FCPA"), or act in any fashion or take any action or permit or
authorize any action which could render the other party liable for a violation
of the FCPA.
(d) Seller agrees to provide reasonable advice and assistance to
Buyer, as may be reasonably requested by Buyer, to assist Buyer in its
discussion with Governmental Authorities in the PRC with respect to Buyer
obtaining favorable tax incentive treatment from Governmental Authorities.
8.2 Access. From the date hereof until the Closing Date, Seller shall
give Buyer and its representatives access during normal business hours and under
reasonable circumstances to all properties and Documents and Records relating to
the MOS 17 Operations or the Purchased Assets and furnish Buyer with all
financial and other information in its possession directly relating to the MOS
17 Operations or the Purchased Assets as Buyer may from time to time reasonably
request for the purposes of facilitating Buyer's conduct of the Facility after
the Closing; provided, however, that the disclosure of such Documents and
Records does not, or would not (i) result in the loss by Seller or its
Affiliates of the attorney-client privilege, the work product doctrine or any
other judicially-recognized privilege, protection or immunity from disclosure,
(ii) require disclosure of any Tax Return of Seller or its Affiliates, or (iii)
result in the breach of any confidentiality obligation to which Seller or any of
its Affiliates is subject; provided, further, that (x) in no event shall the
foregoing rights apply in connection with any claims, litigation or other legal
proceedings of Buyer (or its Affiliates) against Seller or its Affiliates. In
the event that Buyer or its authorized representatives are granted access to the
Facility by Seller pursuant to this Section 8.2, Buyer and its authorized
representatives shall be given access to the Facility as a visitor or visitors
only and must be accompanied or supervised by an authorized employee of Seller
at all times. Notwithstanding anything to the contrary in this Section 8.2,
Seller shall not be obligated to provide access to Documents and Records to
Buyer or its advisors or representatives in connection with Buyer's preparation
for an initial public offering pursuant to this Section 8.2, and each of Seller
and Buyer hereby acknowledge and agree that any access to Documents and Records
in connection with Buyer's preparation for an initial public offering, if any,
shall be governed by the Financial Statements Letter Agreement. Buyer shall not
contact any employee, customer, supplier, landlord or tenant of Seller without
the prior written consent (including, without limitation, written consent by
e-mail) of Xxx Xxxxxxxxx, Xxxx Xxxxxxx or Xxxx Xxxxxxx, which consent shall not
be unreasonably withheld.
8.3 Insurance. Buyer shall obtain and maintain reasonable and customary
liability insurance with carriers to cover the Purchased Assets and the
activities of the Facility following the Closing. Buyer shall provide Seller
with a certificate of insurance evidencing the foregoing. All premiums,
assessments and other charges incurred in maintaining such insurance in full
force and effect, as well as the payment of any deductibles or self-insured
retentions, shall be the sole responsibility of Buyer.
8.4 Notification of Certain Matters.
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(a) Buyer shall promptly notify Seller of any representation or
warranty made by Buyer in this Agreement that becomes untrue or inaccurate in
any material respect, or any failure of Buyer to comply with or satisfy in any
material respect any covenant, condition or agreement to be complied with by
Buyer under this Agreement.
(b) Seller shall promptly notify Buyer of any representation made by
Seller in this Agreement that becomes untrue or inaccurate in any material
respect, or any failure of Seller to comply with or satisfy in any material
respect any covenant, condition or agreement to be complied with by Seller under
this Agreement.
(c) No information or knowledge obtained as a result of any notice
provided pursuant to this Section 8.4 or otherwise under this Agreement shall
(i) affect or be deemed to supplement, amend or otherwise modify any
representations and warranties of the other party hereto contained in this
Agreement, any other Transaction Agreement or in any certificate, instrument or
other document delivered in connection with the transactions contemplated
hereby, or (ii) affect the conditions to the obligations of such party to
consummate the transactions contemplated hereby.
(d) In the event that either party hereto discloses to the other
party hereto that a representation or warranty has become untrue or inaccurate
in any material respect, or that such party has failed to comply with or satisfy
in any material respect any covenant, condition or agreement under this
Agreement (a "Disclosed Breach"), pursuant to this Section 8.4 or otherwise, the
parties hereby agree to use reasonable commercial efforts to negotiate in good
faith to resolve any claims prior to the Closing which one party may otherwise
be entitled to make against the other party after the Closing pursuant to
Article 11 in respect of such Disclosed Breach.
8.5 Formation of SMIC Tianjin. Prior to the Closing, Buyer shall
establish Buyer-Sub in accordance with the Laws of the PRC.
8.6 Actions of Seller and Conduct of MOS 17 Operations Prior to the
Closing Date. Except to the extent contemplated in the Consignment Agreement or
the Transition Services Agreement:
(a) From the date hereof and continuing until the Closing Date,
Seller shall (i) conduct the MOS 17 Operations in the ordinary course consistent
with past practice, and (ii) use reasonable commercial efforts to (x) preserve
intact its relationships with third parties with respect to the conduct of the
MOS 17 Operations, (y) preserve and maintain the Purchased Assets in the
ordinary course consistent with past practice, and (iii) comply with all
material governmental and regulatory requirements applicable to the conduct of
the MOS 17 Operations; provided, however, that Seller shall have no obligation
to maintain inventory levels consistent with past practice.
(b) In furtherance of, and not in limitation of, the foregoing,
Seller shall not, with respect to the conduct of the MOS 17 Operations prior to
Closing:
(i) sell, lease, encumber, pledge, modify, transfer, convey,
assign, distribute, license or otherwise dispose of any Purchased Assets or
right to the use of any
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Purchased Assets, except for the disposition or use of inventory and
Construction Materials in the ordinary course;
(ii) fail to maintain in full force and effect, or fail to
renew, material Permits necessary or required to conduct the MOS 17 Operations;
(iii) fail to maintain the Purchased Assets in customary repair,
order and condition, or, in the event of a casualty or Damage to any of the
Purchased Assets prior to the Closing, either repair or replace such damaged
assets or, at the option of Seller, transfer the proceeds of insurance covering
such damaged assets to Buyer at the Closing or upon receipt, whichever occurs
later;
(iv) alter, terminate or amend any Assigned Contract or waive
any material rights thereunder;
(v) take or omit to take any action with the intention to
cause Seller's representations and warranties hereunder to be inaccurate in any
material respect at, or as of any time prior to, the Closing;
(vi) without the express prior written consent of Buyer or
Buyer-Sub, terminate any MOS 17 Employee (which shall not include an employee's
voluntary separation or resignation), or increase the salary of any Transferred
Employees (except for any increases already planned and communicated to Buyer or
Buyer-Sub prior to the date hereof) prior to the Closing; and
(vii) agree to commit to do any of the foregoing.
(c) Seller will not, nor will it authorize or permit any of its
officers, directors, Affiliates, agents or representatives to, directly or
indirectly, solicit, negotiate, offer or accept offers or proposals from any
third party relating to the acquisition of all or substantially all of the MOS
17 Operations or the Purchased Assets (an "Acquisition Proposal"). Seller will,
and will cause its officers, directors, Affiliates, agents and representatives
to, immediately cease any and all existing discussions, communications and
negotiations with all third parties relating to any Acquisition Proposal.
8.7 Termination Fees. Buyer has agreed to assume Seller's rights and
obligations in, to and under (a) the MOS 17 On Site Services Contract, dated as
of October 1, 2000, by and between Seller and Northern Air Products (Tianjin)
Ltd. ("NAP") and (b) the Product Supply Agreement, dated as of January 1, 2001,
by and between Seller and NAP (collectively, the "Air Products Contracts"), in
each case, subject to obtaining all necessary third party consents and subject
to Buyer obtaining from NAP satisfactory terms and conditions under the Air
Products Contracts. Buyer shall use reasonable commercial efforts to, and shall
negotiate in good faith to, obtain satisfactory amendments to the terms and
conditions of the Air Products Contracts from NAP and to assume the Air Products
Contracts from Seller in order to avoid payment of any termination fees by Buyer
or Seller. However, in the event that Buyer is unable to obtain satisfactory
amendments to the terms and conditions for the Air Products Contracts or does
not assume the Air Products Contracts from Seller, Seller and Buyer shall each
pay one half of the termination fees, if any, associated with the termination of
such contracts.
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8.8 Customs Duty Exemption. With Buyer's cooperation as set forth in
Section 8.1(a)(iii) above, the Seller shall apply to the applicable customs
authority for a Certificate in Evidence of Release of Supervision over Duty-Free
Imported Goods by Foreign-Invested Enterprises or any other documents or
approvals necessary to evidence that Seller has been granted an exemption from
supervision of any duty-free imported machinery, equipment, raw materials or
other tangible assets that are Purchased Assets, and that Seller is legally
permitted to transfer the Purchased Assets to Buyer or Buyer-Sub without
incurring any taxes, duties, imposts, tariffs or levies payable to any PRC
customs authorities.
8.9 Building and Land Certificates.
(a) Seller and Buyer each hereby agree to: (i) cooperate in good
faith with the other to seek guidance and additional information from the
appropriate Land Authorities on the procedures and timing necessary for
obtaining the Building and Land Certificates on the Closing Date and (ii)
cooperate in good faith with the other to agree upon the timing of the
application for the Building and Land Certificates, which application, subject
to guidance and additional information received from the Land Authorities, the
parties currently anticipate making thirty (30) days prior to the anticipated
Closing Date (which anticipated Closing Date shall be discussed and mutually
agreed upon between Seller and Buyer).
(b) As soon as practicable after obtaining the guidance and
additional information from the appropriate Land Authorities as described in
Section 8.9(a) above and prior to applying for the Building and Land
Certificates with the appropriate Land Authorities, Seller and Buyer shall enter
into such agreements or arrangements, including, if deemed necessary by both
parties, an amendment to this Agreement and/or the Real Property Rights
Assignment Agreement, on terms that (i) Buyer reasonably believes in good faith
are necessary to limit Buyer's risks and concerns in the event that the Transfer
Closing Items (as defined in the Real Property Rights Assignment Agreement) are
obtained after the Closing and (ii) Seller reasonably believes in good faith are
necessary to limit Seller's risks and concerns in the event that the Transfer
Closing Items are obtained prior to the Closing (the "Real Property Transfer
Arrangements"). Both parties agree to use all reasonable commercial efforts to
obtain the Building and Land Certificates and other Transfer Closing Items at
the Closing.
ARTICLE 9
EMPLOYEE MATTERS
9.1 Transferred Employees.
(a) Buyer shall, or shall cause Buyer-Sub to, offer employment to
all of the employees of Seller who work at the Facility prior to the Closing
Date and who are listed on Schedule 9.1(a)(1) ("MOS 17 PRC Employees") and
Schedule 9.1(a)(2) ("MOS 17 Expatriate Employees"). An offer of employment
extended by Buyer or Buyer-Sub to an employee in accordance with the preceding
sentence shall be (unless otherwise indicated, the following provisions are
applicable to MOS 17 PRC Employees and MOS 17 Expatriate Employees):
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(i) for a position with job duties substantially similar to
the job duties of the position held by such employee with Motorola or Seller
immediately prior to the hire date;
(ii) For each MOS 17 PRC Employee, at the same or at a greater
annualized salary rate, including any applicable variable pay rate (e.g., shift
differential pay), as the employee is currently receiving from Seller, and this
annualized salary rate shall not be decreased for a period of at least one year
from the date the employee accepts employment with Buyer or Buyer-Sub; and
(iii) For each MOS 17 Expatriate Employee, at an annualized
salary rate, including any applicable variable pay rate (e.g., shift
differential pay), substantially comparable to the salary of similarly situated
employees of Buyer or Buyer-Sub in positions with similar responsibilities, and
this annualized salary rate shall not be decreased for a period of at least one
year from the date the employee accepts employment with Buyer or Buyer-Sub;
(iv) with an incentive program or other additional compensation
which shall be substantially comparable or greater than such incentive program
or other additional compensation provided to similarly situated employees of
Buyer or Buyer-Sub in positions with similar responsibilities, provided that,
this clause (iv) does not apply to the employees listed on Schedule 9.1(a)(iv);
and
(v) with employee benefit plans and similar programs
(including for this purpose a holiday schedule) available to similarly situated
employees of Buyer or Buyer-Sub in positions with similar responsibilities.
(b) For any employee on Schedule 9.1(a)(1) or Schedule 9.1(a)(2) on
a leave of absence prior to the Closing Date, Buyer shall, or shall cause
Buyer-Sub to, extend a conditional offer of employment as described in Section
9.1(a) above to each such person. The offer will be conditioned upon the
employee qualifying for a leave of absence with Buyer or Buyer-Sub. Any employee
on a leave of absence receiving an offer of employment with Buyer or Buyer-Sub
under this Section 9.1(b) and who cannot return to work on the Closing Date must
apply for a leave of absence under Buyer or Buyer-Sub's policies prior to the
Closing Date. Buyer or Buyer-Sub will determine whether to grant the request for
a leave of absence in accordance with its policies and applicable Law
(c) Other than as expressly provided in Section 2.9(b), Buyer shall
be or shall cause Buyer-Sub to be responsible for and shall be obligated to pay,
perform or otherwise assume or discharge any employment related liabilities,
including, without limitation, any employee benefits or compensation
arrangements or claims, credits, damages, liabilities or obligations arising
from, in connection with or relating to any individual's employment by Buyer or
Buyer-Sub, for periods beginning on or after the Closing Date. Without limiting
the foregoing sentence, Buyer and Buyer-Sub agree that they are responsible for
any liabilities arising from, in connection with, or relating to any
individual's employment by Buyer or Buyer-Sub.
(d) Seller shall be responsible for and shall be obligated to pay,
perform or otherwise assume or discharge any employment related liabilities,
including, without limitation, any employee benefits or compensation
arrangements or claims, credits, damages, liabilities or
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obligations arising from, in connection with or relating to any Transferred
Employee's employment by Seller, for periods ending on the date immediately
prior to the Closing Date, including the liabilities set forth in Section
2.9(b). In addition to the foregoing, Seller shall pay all vacation days and
sick days of Transferred Employees accrued through the date immediately prior to
the Closing Date.
(e) Work Authorizations. Buyer shall, or shall cause Buyer-Sub to,
provide necessary assistance to the Transferred Employees to obtain for the
benefit of the Transferred Employees all required government approvals,
including but not limited to a valid Visa and any other required permit or
authorization, that will be required for the Transferred Employees to commence
work for Buyer or Buyer-Sub at the Facility.
(f) Continued Employment. Buyer shall ensure or shall cause
Buyer-Sub to ensure that Buyer or Buyer-Sub, as the case may be, does not
terminate any Transferred Employee (other than for (i) willful misconduct or
gross negligence which constitutes a serious violation of labor discipline or
the rules or regulations of Buyer or Buyer-Sub, (ii) commitment of a criminal
offense, or (iii) material performance deficiencies which remain uncorrected
after reasonable warning, training and post change/adjustment) or otherwise
alter their terms of employment (as described in Section 9.1(a) above) during
the first year after the Closing; provided, however, that if Buyer or Buyer-Sub
does terminate any Transferred Employee (other than for (1) willful misconduct
or gross negligence which constitutes a serious violation of labor discipline or
the rules or regulations of Buyer or Buyer-Sub, (2) commitment of a criminal
offense, or (3) material performance deficiencies which remain uncorrected after
reasonable warning, training and post change/adjustment) or requires the
Transferred Employee to relocate and the Transferred Employee refuses, in each
case, during the first year after the Closing, Buyer shall, or shall cause
Buyer-Sub to, pay the Transferred Employee severance equal to the amount
required by Law, plus the amount of salary the Transferred Employee would have
otherwise received from the date of termination through the first anniversary of
his or her hire date.
(g) Tuition Assistance to MOS 17 Expatriate Employees. Seller
currently provides assistance to MOS 17 Expatriate Employees for tuition
expenses for the children of these employees to attend private elementary and
secondary school. Buyer currently does not provide this benefit to its
employees. Seller agrees to continue this tuition assistance on a limited basis
for MOS 17 Expatriate Employees who become Transferred Employees. Seller will
pay the tuition for children of MOS 17 Expatriate Employees who become
Transferred Employees for a period of time (the "Tuition Assistance Period")
beginning on the Closing Date and ending on the earlier of (i) one year
following the Closing Date or (ii) the date on which Buyer or Buyer-Sub
completes its initial public offering or (iii) with respect to any Transferred
Employee, the date of the employee's separation from employment with Buyer or
Buyer-Sub. In addition, Seller shall, at the request of Buyer prior to the
Closing, provide a payment to such Transferred Employees for the tax liability
incurred by such employees as a result of payments made pursuant to this Section
9.1(g). In no circumstance will the amount paid for tuition assistance and
payment for tax liability for the children of all employees pursuant to this
Section 9.1(g) exceed the aggregate amount of USD$500,000 (the "Maximum Tuition
Expense"). Buyer agrees that the amount Motorola will transfer to Buyer pursuant
to the Funding Letter Agreement will be reduced by the Maximum Tuition Expense.
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9.2 Temporary Assignment of Seller Employees to Buyer-Sub. Pursuant to
Section 9.1 above, Buyer or Buyer-Sub will make offers of employment to all MOS
17 Expatriate Employees. Buyer and Buyer-Sub recognize that not all of these
employees will accept its offers of employment. Buyer or Buyer-Sub may wish to
retain on a temporary basis the services of some of the MOS 17 Expatriate
Employees who do not accept Buyer or Buyer-Sub's offer of employment. To
facilitate this temporary assignment, Seller and Buyer agree to the following:
(a) As soon as practicable after the execution of this Agreement,
Buyer or Buyer-Sub will provide to Seller a proposed list of all MOS 17
Expatriate Employees it wishes to engage on a temporary basis if the employees
do not accept Buyer or Buyer-Sub's offers of employment. The list shall contain
the names of the employees, and the length of assignment requested by Buyer or
Buyer-Sub. In no event will the length of assignment exceed six months from the
Closing Date. With respect to those employees on this list who have not accepted
employment with Buyer-Sub as of the Closing Date, Buyer or Buyer-Sub shall
identify those employees it would like to be seconded. Seller agrees to assign
such employees (the "Seconded Employee(s)") to Buyer or Buyer-Sub for a period
not to exceed the period indicated on the list.
(b) Buyer shall be, or shall cause Buyer-Sub to be, responsible for
all salary and benefit costs associated with the Seconded Employees during the
assignment. Buyer or Buyer-Sub will pay for these costs as follows: Seller will
continue to pay the salary and benefits of the Seconded Employees during the
period of the assignment. On or before the Closing Date, Seller will provide the
estimated costs of salary and benefits during the proposed assignment for each
Seconded Employee to Buyer and Buyer-Sub (the "Estimated Secondment Expense").
Buyer agrees that the amount Motorola will transfer to Buyer pursuant to the
Funding Letter Agreement will be reduced by the aggregate Estimated Secondment
Expense.
(c) Seller agrees not to terminate (which shall not include an
employee's voluntary separation or resignation) any Seconded Employee prior to
the end of the assignment agreed to by Seller without the advance written
consent of Buyer or Buyer-Sub. Buyer and Buyer-Sub acknowledge that any of the
Seconded Employees may choose to separate from employment with Seller
voluntarily prior to the end of the assignment period, and that Seller has no
control over that decision. The assignment of any Seconded Employee who
voluntarily separates from employment with Seller will end immediately. In this
circumstance, Seller will have no liability to Buyer or Buyer-Sub other than to
return the portion of any salary and benefit cost for that Seconded Employee for
the period from the date of separation through the end of the agreed to
assignment.
(d) On or before the Closing Date, Seller and Buyer or Buyer-Sub
will enter into a Secondment Agreement detailing and controlling the terms of
the assignment of the Seconded Employees (the "Secondment Agreement").
ARTICLE 10
CERTAIN CLOSING AND POST-CLOSING OBLIGATIONS
10.1 Contribution of Assets. At the Closing, Buyer shall contribute the
Purchased Assets and the Assumed Liabilities to Buyer-Sub, and Buyer-Sub shall
accept and assume the
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Purchased Assets and the Assumed Liabilities; provided, however, that in the
event the Building and Land Certificates are issued by the Land Authorities
after the Closing, Buyer shall contribute the Transferred Real Property Rights
and the Transferred Expat Houses to Buyer-Sub and Buyer-Sub shall accept such
contribution promptly following receipt by Buyer of such Building and Land
Certificates.
10.2 Records and Documents.
(a) On or after the Closing Date, Seller shall grant to Buyer and
its representatives, at Buyer's reasonable request, reasonable access to and the
right to make copies at Buyer's sole expense of those Documents and Records in
Seller's possession related to the Purchased Assets or the MOS 17 Operations and
covering any period prior to the Closing as may be reasonably necessary for the
purposes of facilitating Buyer's conduct of the MOS 17 Operations after the
Closing, litigation (other than litigation involving Seller (or its
Affiliates)), preparation of financial statements, Tax Returns and/or audits or
other valid business purposes; provided, however, that the disclosure of such
Documents and Records does not, or would not (i) result in the loss by Seller or
its Affiliates of the attorney-client privilege, the work product doctrine or
any other judicially-recognized privilege, protection or immunity from
disclosure, (ii) require disclosure of any Tax Return of Seller or its
Affiliates, or (iii) result in the breach of any confidentiality obligation to
which Seller or any of its Affiliates is subject; provided, further, that in no
event shall the foregoing rights apply in connection with any claims, litigation
or other legal proceedings of Buyer (or its Affiliates) against Seller or its
Affiliates. Notwithstanding anything to the contrary in this Section 10.2,
Seller shall not be obligated to provide access to Documents and Records to
Buyer or its advisors or representatives in connection with Buyer's preparation
for an initial public offering pursuant to this Section 10.2, and Seller and
Buyer hereby acknowledge and agree that any access to Documents and Records in
connection with Buyer's preparation for an initial public offering, if any,
shall be governed by the Financial Statements Letter Agreement. If Seller elects
to dispose of any such Documents and Records within six (6) years following the
Closing Date, Seller shall first give Buyer sixty (60) days written notice,
during which period Buyer shall have the right to take such Documents and
Records without further consideration. The parties hereby acknowledge that this
Section 10.2(a) shall not apply to any Documents and Records held by Motorola
(together with its Affiliates), in its capacity as a customer of the MOS 17
Operations.
(b) On or after the Closing Date, Buyer shall grant to Seller and
its representatives, at Seller's reasonable request, reasonable access to and
the right to make copies at Seller's sole expense of those Documents and Records
in Buyer's possession related to the Purchased Assets or the MOS 17 Operations
and covering any period prior to the Closing as may be reasonably necessary for
litigation (other than litigation involving Buyer (or its Affiliates)),
preparation of financial statements, Tax Returns and/or audits or other valid
business purposes; provided, however, that (i) the disclosure of such Documents
and Records does not, or would not (x) require disclosure of any Tax Return of
Buyer or its Affiliates, or (y) result in the breach of any confidentiality
obligation to which Buyer or any of its Affiliates is subject and (ii) with
respect to Documents and Records that are not Transferred Documents and Records,
the disclosure of such non-Transferred Documents and Records does not, or would
not result in the loss by Buyer or its Affiliates of the attorney-client
privilege, the work product doctrine or any other judicially-recognized
privilege, protection or immunity from disclosure; provided, further,
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that in no event shall the foregoing rights apply in connection with any claims,
litigation or other legal proceedings of Seller (or its Affiliates) against
Buyer or its Affiliates. If Buyer elects to dispose of any such Documents and
Records within six (6) years following the Closing Date, Buyer shall first give
Seller sixty (60) days written notice, during which period Seller shall have the
right to take such Documents and Records without further consideration.
(c) The personnel files of all MOS 17 PRC Employees are maintained
at the TEDA Labor and Social Security Bureau. Seller will use reasonable
commercial efforts to work with Buyer or Buyer-Sub to attempt to transfer to
Buyer or Buyer-Sub on the Closing Date or as soon as reasonably possible
thereafter the files of all MOS 17 PRC Employees who become Transferred
Employees. For each MOS 17 Expatriate Employee who becomes a Transferred
Employee, Seller will provide Buyer or Buyer-Sub a copy of the employee's Human
Resources file maintained in the Motorola Solutions Center. Buyer or Buyer Sub
shall reimburse Seller for any costs associated with transferring the files
referenced above.
10.3 Certain Export Matters. Buyer hereby acknowledges that the Purchased
Assets include commodities, software and technology exported from the United
States, which are subject to the United States export control Laws, including,
without limitation, the Export Administration Regulations, 15 C.F.R. Parts
730-774 (collectively, the "Export Regulations"). Buyer shall comply strictly
with all Export Regulations that are applicable to the Purchased Assets and
hereby specifically covenants and agrees that neither it nor Buyer-Sub shall
export, reexport, transfer, or disclose any of the Purchased Assets to any other
person, firm, corporation or other entity, or to any other country, except in
accordance with the Export Regulations and the terms and conditions of any
applicable license exception or export license issued thereunder.
10.4 Environmental Permits. Buyer shall obtain any applicable Permits,
including environmental Permits, needed to transport, install or operate the
Tangible Assets or the Facility. Buyer shall, or Buyer shall cause Buyer-Sub to,
be responsible for compliance with all applicable Environmental Laws after Buyer
or Buyer-Sub, as the case may be, takes title to the Purchased Assets.
10.5 Further Assurances. At any time from time to time after the Closing,
each of the parties hereto shall execute and deliver such other documents and
instruments, provide such materials and information, and take such other actions
as reasonably requested by the other party hereto as are necessary and
appropriate to carry out the purposes of this Agreement, to vest title of the
Purchased Assets in Buyer, and to fulfill its obligations under this Agreement.
ARTICLE 11
INDEMNITY AND SURVIVAL OF REPRESENTATIONS
11.1 Survival. All representations and warranties contained in the
Transaction Agreements shall survive the Closing for a period of one (1) year
from the Closing Date, and thereafter shall expire and be of no force or effect,
except for: (a) the representations and warranties contained in Sections 3.1
(Organization and Qualification), 3.2 (Due Execution), 3.3 (Non-contravention),
3.6 (Title to Tangible Assets), 4.1 (Organization and Qualification), 4.2 (Due
Execution) and 4.3 (Non-contravention), which shall survive for three (3) years
from the
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Closing Date, (b) the representations and warranties contained in Section 3.4
(Taxes), which shall survive for a period of four (4) years from the Closing
Date, and (c) the representations and warranties contained in Section 3.9
(Environmental Matters) which shall survive for a period of four (4) years from
the Closing Date. All covenants contained in the Transaction Agreements shall
survive the Closing and will continue indefinitely in full force and effect
until the expiration of the applicable statute of limitations for claims arising
under a breach of such covenants. Any claim for indemnification under Section
11.2(a)(i) or Section 11.2(b)(i) that is asserted by written notice as provided
in Section 11.3 within the survival period shall survive until resolved pursuant
to Article 14.
11.2 Indemnification.
(a) Buyer shall indemnify and hold harmless Seller and its
representatives, shareholders and Affiliates (collectively, "Seller
Indemnitees") from, and will reimburse Seller Indemnitees for and against, any
and all loss, liability, claim, damage, cost or expense (including reasonable
attorneys' fees and expenses), judgments and fines (collectively, "Damages") (i)
caused by any breach of any representation or warranty of Buyer or Buyer-Sub in
the Transaction Agreements, (ii) caused by failure to fulfill any covenant or
agreement of Buyer or Buyer-Sub contained in the Transaction Agreements, or
(iii) arising from the Assumed Liabilities. For the avoidance of doubt, Seller
may not seek indemnification under clause (iii) hereof to the extent that such
Damages are a result of Seller's negligence, grossly negligent or bad faith
actions or inactions or willful misconduct.
(b) Seller shall indemnify and hold harmless Buyer and its
representatives, shareholders and Affiliates (collectively, "Buyer Indemnitees")
from, and will reimburse Buyer Indemnitees for and against, any Damages, (i)
caused by any breach of any representation or warranty of Seller in the
Transaction Agreements, (ii) caused by failure to fulfill any covenant or
agreement of Seller contained in the Transaction Agreements or (iii) arising
from the Excluded Liabilities (other than Excluded Liabilities described in
Section 2.9(f)). For the avoidance of doubt, Buyer may not seek indemnification
under clause (iii) hereof to the extent that such Damages are a result of
Buyer's or Buyer-Sub's negligence, grossly negligent or bad faith actions or
inactions or willful misconduct. Damages shall be paid by Seller (A) at any time
prior to the IPO (as such term is defined in the Eighth Amended and Restated
Articles of Association), in shares of Series D Preference Shares (based on a
per share value equal to the per share Purchase Price set forth in the Series D
Preference Share Agreement) of Buyer held by Seller equal to the amount of the
Damages, or (B) at any time following the IPO, in cash.
11.3 Limits on Indemnification Obligation.
(a) Seller shall not be required to make any payments pursuant to
this Article 11, unless and until the aggregate amount of all Damages pursuant
to this Article 11 shall exceed USD$7,200,000 (the "Threshold Amount"), in which
event Buyer shall be entitled to recover all Damages including the Threshold
Amount. The maximum aggregate amount recoverable by Buyer from Seller with
respect to any claims relating to the Transaction Agreements or the transactions
contemplated thereby shall not exceed USD$100,800,000 (the "Cap Amount");
provided, however, that notwithstanding the foregoing, neither the Threshold
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Amount nor the Cap Amount shall apply to any amount recoverable by Buyer
pursuant to the indemnity set forth in Sections 11.2(b)(ii) or 11.2(b)(iii).
(b) Buyer shall not be required to make any payments pursuant to
this Article 11, unless and until the aggregate amount of all Damages pursuant
to this Article 11 shall exceed the Threshold Amount, in which event Seller
shall be entitled to recover all Damages including the Threshold Amount. The
maximum aggregate amount recoverable by Seller from Buyer with respect to any
claims relating to the Transaction Agreements or the transactions contemplated
thereby shall not exceed the Cap Amount; provided, however, that notwithstanding
the foregoing, neither the Threshold Amount nor the Cap Amount shall apply to
any amount recoverable by Seller pursuant to the indemnity set forth in Sections
11.2(a)(ii) or 11.2(a)(iii).
(c) The party seeking indemnification (the "Indemnified Party")
shall give written notice to the indemnifying party (the "Indemnifying Party")
of the facts and circumstances giving rise to any claim for indemnification as
soon as reasonably possible but in any event within thirty (30) days after it
obtains knowledge of the basis for a claim for indemnification hereunder;
provided, however, that failure to give such notice within thirty (30) days
shall not relieve the Indemnifying Party of any liability or obligation
hereunder except to the extent of any Damages or liabilities caused by or
arising out of such failure. The Indemnified Party shall take all reasonable
steps to mitigate all indemnifiable liabilities and damages upon and after
becoming aware of any event which could reasonably be expected to give rise to
any liabilities and damages that are indemnifiable hereunder. No party shall be
entitled to indemnification to the extent of any warranty or insurance coverage
or any tax benefit actually received as a result of the facts and circumstances
relating to any indemnifiable claim; provided, however, that any increase in
insurance premium or cost of collecting from an insurance company shall be
deemed an indemnifiable claim hereunder. If any Damages are covered by
insurance, the Indemnified Party shall use all reasonable commercial efforts to
recover the amount of such Damages from the insurer of the Indemnifying Party
which recovery shall reduce the amount of Damages hereunder.
(d) To the extent that either party discharges any claim for
indemnification hereunder, such party shall be subrogated to all rights of the
other party against third parties directly relating to such claim.
11.4 Notice and Defense of Third Party Claims. With respect to each claim
by a third party which could give rise to an indemnification obligation under
this Article 11 (a "Third Party Claim"), the Indemnified Party shall give prompt
notice to the Indemnifying Party of the Third Party Claim; provided, however,
that failure to give such notice shall not relieve the Indemnifying Party of any
liability or obligation hereunder except to the extent of any Damages or
liabilities caused by or arising out of such failure. The Indemnifying Party
may, at its sole cost and expense, upon notice to the Indemnified Party within
thirty (30) days after the Indemnifying Party receives notice of the Third Party
Claim, assume the defense of the Third Party Claim, with counsel of its choice.
The Indemnifying Party shall not consent to a settlement of, or the entry of any
judgment arising from, any Third Party Claim, unless (a) (i) the settlement or
judgment is solely for money damages, (ii) the settlement or judgment does not
seek an injunction or other equitable relief and (iii) there is no finding or
admission of any violation of Law or any violation of the rights of any Person,
or (b) the Indemnified Party consents in writing
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thereto, which consent shall not be unreasonably withheld. The Indemnifying
Party shall provide the Indemnified Party with fifteen (15) days prior notice
before it consents to a settlement of, or the entry of a judgment arising from,
any Third Party Claim. The Indemnified Party shall be entitled to participate in
the defense of (but not control) any Third Party Claim, the defense of which is
assumed by the Indemnifying Party, with its own counsel and at its own expense.
The parties shall cooperate in the defense of any Third Party Claim. If the
Indemnifying Party does not assume the defense of any such claim or proceeding
resulting therefrom in accordance with the terms hereof, the Indemnified Party
may defend such claim or proceeding in a reasonable manner, including settling
such claim or proceeding on such terms as the Indemnified Party may deem
appropriate after giving fifteen (15) days' notice of the same to the
Indemnifying Party and obtaining the written consent of the Indemnifying Party,
which consent shall not be unreasonably withheld. The party who has assumed the
defense of any such claim or proceeding shall keep the other party reasonably
informed, in writing, as to the defense of any such matter hereunder. All
parties hereto will cooperate in the defense or prosecution of claims involving
a third party and will furnish such records, information and testimony, and
attend such conferences, discovery proceedings, hearings, trials and appeals, as
may be reasonably requested in connection therewith.
11.5 Exclusivity of Remedy. After the Closing, the indemnification rights
provided hereunder shall be the exclusive remedy of Seller and Buyer and each of
their respective Affiliates and their officers, directors, employees,
stockholders, Affiliates, agents or representatives with respect to any dispute
arising out of or related to the Transaction Agreements.
ARTICLE 12
TERMINATION OF AGREEMENT
12.1 Termination or Abandonment. Notwithstanding anything contained in
this Agreement to the contrary, this Agreement may be terminated and abandoned
at any time prior to the Closing:
(a) by the mutual written consent of Seller and Buyer; or
(b) by Seller or by Buyer if any court of competent jurisdiction or
Governmental Authority having jurisdiction shall have issued an Order or taken
any other action restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement and such Order or other action shall
have become final and non-appealable; or
(c) by Seller or by Buyer for any reason if the Closing has not
occurred by January 31, 2004, unless otherwise mutually agreed in writing by
Seller and Buyer, provided, that a party cannot terminate this Agreement under
this Section 12.1(c) if the failure of the Closing to occur is the result of the
action or inaction of such party to perform any of its obligations hereunder,
which principally causes the failure of the Closing to occur (except the failure
on the part of such party to satisfy a closing condition over which such party
has no control).
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12.2 Effect of Termination. If any party terminates this Agreement
pursuant to Section 12.1 above, all obligations of the parties hereunder shall
terminate without any liability of any party to any other party; provided,
however, that the provisions of Section 13.1 (Expenses), Section 13.3
(Nondisclosure and Publicity), Article 14 (Disputes), Section 15.1 (Limitation
on Liability), Section 15.2 (Governing Law) and Section 15.12 (Language) shall
survive termination of this Agreement.
ARTICLE 13
GENERAL PROVISIONS
13.1 Expenses.
(a) Except as expressly provided herein, all of the expenses
incurred by Seller (including, without limitation, fees and expenses of legal
counsel, investment bankers or other representatives or consultants) in
connection with the preparation, execution and consummation of this Agreement
and with the transactions contemplated herein shall be paid by Seller; and all
of Buyer's such expenses in such connection shall be paid by Buyer. Seller
hereby agrees to pay costs and fees incurred in connection with the translation
of documents and Buyer hereby agrees to pay its own costs and fees incurred in
connection with the review of such translated documents.
(b) Each party shall be responsible for and shall pay when due such
Taxes resulting from or payable in connection with the transactions contemplated
by the Transaction Agreements as are imposed upon such party by PRC Law.
(c) Seller and Buyer shall each pay one half of the costs associated
with (i) the preparation and filing of Buyer's feasibility study, (ii) land
surveys to be performed prior to the Closing by the parties in order to
effectuate the division of the real property rights between Seller and Buyer and
(iii) the establishment of Buyer-Sub; provided, however, that Seller shall not
in any case be obligated to pay any costs or fees of Buyer's legal counsel or
any other costs or fees described in this Section 13.1(c) in an amount, in the
aggregate, in excess of USD$30,000.
13.2 Notices. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing, and shall be deemed to have
been duly given to a party (a) when delivered, if delivered by hand or by
nationally recognized overnight courier service (costs prepaid), or (b) when
received, if sent by facsimile with confirmation of transmission by the
transmitting equipment, in each case to the following addresses or facsimile
numbers and marked to the attention of the person (by name or title) designated
below (or to such other address or facsimile number as a party may designate by
written notice to the other parties):
If to Seller: Motorola (China) Electronics Limited
#108 Xxxx Xxx Lu
Xxxxxxxx Xxxxxxxx
Xxxxxxx 000000
People's Republic of China
Facsimile No: x00 (00) 0000-0000
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Attention: Xxxxxx Xxx
With a copy to: Motorola, Inc.
0000 Xxxxxxx Xxxxxx Xx.
XX00/XX000
Facsimile No.: (000) 000-0000
Attention: Xxxx Xxxxxxx
And to: Motorola, Inc.
Law Department
0000 X. Xxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: General Counsel
If to Buyer: Semiconductor Manufacturing International
Corporation
Xx 00 Xxxxxxxxxx Xxxx
Xxxxxx Xxx Xxxx, Xxxxxxxx 000000
The People's Republic of China
Facsimile No.: x00 (00) 0000-0000
Attention: Chief Executive Officer
With copy to: Semiconductor Manufacturing International
Corporation
Xx 00 Xxxxxxxxxx Xxxx
Xxxxxx Xxx Xxxx, Xxxxxxxx 000000
The People's Republic of China
Facsimile No.: x00 (00) 0000-0000
Attention: General Counsel
And to: Shearman & Sterling LLP
0000 Xxxxx Xxxx
Xxxxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxx Xxxxx, Esq.
13.3 Nondisclosure and Publicity.
(a) Without the prior written consent of the other party or except
as otherwise provided herein, neither Seller nor Buyer shall, and each of Seller
and Buyer shall cause its respective Affiliates, representatives, agents,
officers, directors and employees not to, distribute, disclose or provide access
to any of the other party's Confidential Information to any third party;
provided, however, that Confidential Information shall not include information
that (i) is or becomes known to the public without any violation of any written
agreement between the parties, (ii) becomes legally available on a
non-confidential basis from any third party, the disclosure of which does not
violate any contractual or legal obligation of such third party with respect to
such information, or (iii) can be shown to have been independently developed by
any person and which development does not violate any contractual or legal
obligation of such
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person with respect to such information. In the event that (x) any party or any
such Affiliate, representative, agent, officer, director or employee becomes
legally compelled to disclose any Confidential Information, such party shall
provide the other party with prompt written notice of such requirement so that
the other party may seek a protective order or other remedy or waive compliance
with this section, or (y) such protective order or other remedy is not obtained,
or such waiver is given, if such party determines, upon the advice of counsel,
that it is required to disclose such Confidential Information, such party may
furnish only that portion of such Confidential Information which is legally
required to be provided and exercise its reasonable commercial efforts to obtain
assurances that confidential treatment will be accorded such Confidential
Information.
(b) Except as required by Law, the parties agree to, and will cause
their respective Affiliates, representatives, agents, officers, directors and
employees to, not disclose the terms and provisions of the Transaction
Agreements, the Long-Term Services Agreement, the Guaranty, the Funding Letter
Agreement and the Equity Agreements, including the exhibits and schedules
thereto, to any other person, except (i) for disclosures to their respective
advisors and representatives who need to be aware of the foregoing in order to
effectuate the consummation of the transactions contemplated hereby or the
initial public offering of Buyer or (ii) upon the prior written consent of the
other party.
(c) Except as required by Law, neither party shall issue any press
release or make any other public disclosure (including disclosure to public
officials) with respect to the Transaction Agreements, the Long-Term Services
Agreement, the Guaranty, the Funding Letter Agreement and the Equity Agreements,
including the exhibits and schedules thereto, or the transactions contemplated
thereby, without the prior consent of the other party; provided, however, that
either party may, if considered necessary by its counsel to fulfill its
obligations as a publicly traded corporation, respond to inquiries and issue
such releases as it considers necessary and appropriate, if it (i) notifies the
other party in advance of the substance of such proposed response or proposed
release, (ii) gives such party reasonable opportunity for comment prior to such
response or release and (iii) if so requested by such party in connection with
any disclosure to any Governmental Authority, uses reasonable commercial efforts
to obtain confidential treatment (or any comparable standard of foreign
regulators, to the extent applicable) of the information to be disclosed.
(d) Upon the request of the other party, each party hereby agrees to
return or destroy, or cause to be returned or destroyed, all documents, records,
notes, correspondence or analyses (including all copies thereof) containing any
Confidential Information in its possession or in the possession of its
Affiliates, representatives, agents, officers, directors and employees, provided
to it in the course of evaluating the transactions contemplated by this
Agreement or otherwise. Such return or destruction shall be certified in writing
to each party by an authorized officer of the other party. Such return or
destruction, however, does not abrogate the continuing obligations of the
parties under this Agreement.
(e) The Nondisclosure Agreement shall terminate as of the Closing.
(f) The obligations of each of the parties hereto to comply with the
provisions contained herein shall continue for a period of three years
commencing on the Closing Date.
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13.4 Risk of Loss. Any risk of loss or damage to the Purchased Assets will
be borne by Seller until the Closing at which time all risk of loss and title
thereto will pass to Buyer, subject to the terms and conditions of this
Agreement.
ARTICLE 14
DISPUTES
14.1 Amicable Resolution. Seller, Buyer, Motorola and Buyer-Sub mutually
desire that friendly collaboration will develop between themselves. Accordingly,
they shall try to resolve in a friendly manner all disagreements and
misunderstandings connected with their respective rights and obligations under
the Transaction Agreements, including any amendments thereto.
14.2 Consultation. Any dispute, controversy or claim arising out of or
relating to any Transaction Agreement, or the performance, interpretation,
breach, termination or validity thereof (including the validity, scope and
enforceability of this arbitration provision) (a "Dispute"), shall be resolved
through friendly consultation. Such consultation shall begin immediately after
one party hereto has delivered to the other party hereto a written request for
such consultation stating specifically the nature of the Dispute. All
communications made pursuant to this Section 14.2 shall be treated as
communications for the purpose of settlement and as such shall be deemed to be
confidential and inadmissible in any subsequent arbitration or litigation.
14.3 Arbitration. If the Dispute cannot be resolved within thirty (30)
days following the date on which such written request is given under Section
14.2, the Dispute may be submitted to arbitration upon the request of either
party hereto and shall be finally resolved by an arbitral tribunal (the
"Tribunal") under the Rules of Arbitration of the International Chamber of
Commerce (the "ICC") as are in force at the time of any such arbitration (the
"Rules") and as may be amended by the rest of this Section 14.3. The Tribunal
shall consist of three arbitrators appointed in accordance with the Rules,
except as otherwise provided below. Seller and Buyer shall each nominate one
arbitrator, obtain its nominee's acceptance of such nomination and deliver
written notification of such nomination to the other party hereto within thirty
(30) days after the date of delivery of the request to initiate arbitration. In
the event that a party hereto fails to nominate an arbitrator or deliver
notification of such nomination to the other party hereto within such time
period, upon the request of the other party hereto, such arbitrator shall
instead be appointed by the International Court of Arbitration of the ICC within
thirty (30) days after receiving such request. The two arbitrators nominated in
accordance with the above provisions shall appoint the third arbitrator, obtain
the appointee's acceptance of such appointment and notify the parties in writing
of such appointment and acceptance within thirty (30) days after the date of
nomination of the second arbitrator to be appointed. If the first two
arbitrators fail to appoint a third arbitrator or notify the parties of that
appointment within this time period, then upon the request of either party, the
third arbitrator shall be appointed by the International Court of Arbitration of
the ICC within thirty (30) days after receiving such request. The third
arbitrator shall serve as chairman of the Tribunal.
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14.4 Arbitral Proceedings. The place of arbitration shall be Singapore.
All arbitration proceedings shall be conducted in the English language. The
arbitrators shall decide any Dispute strictly in accordance with the governing
law specified in Section 15.2. Judgment upon any arbitral award rendered
hereunder may be entered in any court having jurisdiction, or application may be
made to such court for a judicial acceptance of the award and an order of
enforcement, as the case may be.
14.5 Arbitration Expenses. The costs and expenses of the arbitration,
including, without limitation, the fees of the Tribunal, shall be borne equally
by the parties, and each party shall pay its own fees, disbursements and other
charges of its counsel.
14.6 Binding Award. Any award made by the Tribunal shall be final and
binding on each of the parties. The parties expressly agree to waive the
applicability of any Laws and regulations that would otherwise give the right to
appeal the decisions of the Tribunal so that there shall be no appeal to any
court of law for the award of the Tribunal, and a party shall not challenge or
resist the enforcement action taken by the other party in whose favor an award
of the Tribunal was given.
14.7 Service of Process. Each party irrevocably consents to the service of
process, notices or other paper in connection with or in any way arising from
the arbitration or the enforcement of any arbitral award, by use of any of the
methods and to the addresses for the giving of notices set forth in Section
13.2. Nothing contained herein shall affect the right of any party to serve such
processes, notices or other papers in any other manner permitted by applicable
Laws.
14.8 Waiver of Immunity. To the extent that any party has or may hereafter
acquire immunity from jurisdiction of any court or from legal process with
respect to itself or its property, on the grounds of sovereign immunity or
otherwise, such party hereby irrevocably waives such immunity, to the fullest
extent permitted by Law, in respect of its obligations under the Transaction
Agreements.
14.9 Equitable Relief. The parties hereto agree that certain of the
services provided under the Transaction Agreements are unique and that
irreparable damage may occur in the event that the transactions contemplated by
the Transaction Agreements shall not be consummated or in the event that any
provisions of the Transaction Agreements shall not be performed in accordance
with their specific terms or were otherwise breached. Accordingly, it is agreed
that each party hereto may be entitled to seek an injunction to enforce
specifically the terms and provisions of the Transaction Agreements, this being
in addition to any other remedy to which such party is entitled at Law or
equity.
ARTICLE 15
MISCELLANEOUS
15.1 Limitation on Liability. NOTWITHSTANDING ANY OTHER PROVISION OF THIS
AGREEMENT, IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR SPECIAL, INCIDENTAL,
INDIRECT, COLLATERAL, CONSEQUENTIAL OR PUNITIVE DAMAGES
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IN CONNECTION WITH ANY CLAIMS, LOSSES, DAMAGES, OR INJURIES ARISING OUT OF THE
CONDUCT OF THE PARTIES PURSUANT TO THIS AGREEMENT.
15.2 Governing Law. The execution, validity and performance of and
resolution of disputes under this Agreement are governed by the officially
published and publicly available Laws of the PRC. When the officially published
and publicly available Laws of the PRC do not cover a certain matter,
international legal principles and practices shall apply. The parties
specifically disclaim the United Nations Convention on Contracts for the
International Sale of Goods.
15.3 Entire Agreement; Amendment. The Transaction Agreements, and all
agreements executed on the date hereof or concurrently with the Closing between
Seller, Buyer and their respective Affiliates, if applicable, together with all
exhibits and schedules thereto, constitute the entire understanding of the
parties hereto, superseding all prior agreements or understandings relating to
any of the subject matters hereof (including, without limitation, the Term Sheet
between Motorola and Buyer). No modification or amendment of the terms and
conditions of the Transaction Agreements shall be effective unless in writing
and signed by the parties or their respective duly authorized agents.
15.4 Successors and Assigns. This Agreement inures to the benefit of, and
is binding upon, the successors, permitted assigns, distributees and personal
representatives of the parties hereto. Neither party may assign its rights or
obligations under the Transaction Agreements without the express written consent
of the other party.
15.5 Headings. This Agreement shall not be interpreted by reference to any
of the titles or headings to the sections or paragraphs of this Agreement, which
have been inserted for convenience purposes only and are not deemed a part
hereof.
15.6 Schedules; Exhibits. This Agreement is deemed to include all of the
schedules and exhibits hereto, which are made a part hereof by this reference
thereto.
15.7 Counterparts. This Agreement may be executed in one or more
counterparts, including counterparts transmitted by facsimile or electronic
transmission, all of which together shall be deemed to constitute one and the
same instrument.
15.8 Gender and Number. This Agreement shall be construed by the actual
gender and/or number of the person, persons, entity and/or entities referenced
herein, regardless of the gender and/or number used in such reference.
15.9 Severability. This Agreement shall be fully enforceable and effective
as to the parties hereto as to its remaining provisions in the event any
provision is held to be invalid, illegal or unenforceable.
15.10 No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies on any person other than the parties hereto and their
respective successors and permitted assigns.
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15.11 No Waiver. Any failure or delay on the part of either party in the
exercise of any right or privilege hereunder shall not operate as a waiver
thereof, nor shall any single or partial exercise of any such right or privilege
preclude other or further exercise thereof or any other right or privilege.
15.12 Language. This Agreement is composed in English and Chinese. The
English version of this Agreement shall be the valid, binding, superceding and
governing version in the event that there is a dispute with respect to the
meaning of the text between the English version and the Chinese version of this
Agreement.
[Signature pages follow]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
SELLER:
MOTOROLA (CHINA) ELECTRONICS LIMITED,
a company organized under the laws of
the People's Republic of China
By: /s/ Xxxxx Xxxx
__________________________________
Name: Xxxxx Xxxx
________________________________
Title: Director
_______________________________
BUYER:
SEMICONDUCTOR MANUFACTURING
INTERNATIONAL CORPORATION,
a company organized under the laws of
the Cayman Islands
By: /s/ Xxxxxxx X. Xxxxx
__________________________________
Name: Xxxxxxx X. Xxxxx
________________________________
Title: President and CEO
_______________________________
Signature Page to Asset Purchase Agreement
