Exhibit 10.15
5 March 2004
SEMICONDUCTOR MANUFACTURING INTERNATIONAL CORPORATION
CREDIT SUISSE FIRST BOSTON (HONG KONG) LIMITED
DEUTSCHE BANK AG, HONG KONG BRANCH
THE HONG KONG UNDERWRITERS
named in Schedule 1 hereto
===================================================
UNDERWRITING AGREEMENT
relating to
a Global Offering of 5,151,515,000 Shares of par
value US$0.0004 each
in the capital of
Semiconductor Manufacturing International
Corporation of which not less than 257,576,000
Shares are being offered in Hong Kong at HK$2.69
per Share payable in full on application subject to
refund
===================================================
CONTENTS
CLAUSE PAGE
1. INTERPRETATION ....................................................... 2
2. CONDITIONS ........................................................... 8
3. THE HONG KONG PUBLIC OFFER ........................................... 9
4. THE HONG KONG OFFERING DOCUMENTS ..................................... 12
5. ISSUE OF HONG KONG OFFER SHARES ...................................... 12
6. UNDERWRITING ......................................................... 13
7. PAYMENT UNDER THE PUBLIC OFFER ....................................... 15
8. COMMISSION AND EXPENSES .............................................. 16
9. STABILISATION, UNDERTAKINGS AND AUTHORITY RELATING TO THE HONG KONG
UNDERWRITERS ......................................................... 16
10. REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS ........................ 17
11. FURTHER UNDERTAKINGS ................................................ 18
12. TERMINATION ......................................................... 20
13. INDEMNITY ........................................................... 22
14. REMEDIES, WAIVERS AND RELEASE ....................................... 23
15. ASSIGNMENT .......................................................... 23
16. FURTHER ASSURANCE ................................................... 24
17. ENTIRE AGREEMENT .................................................... 24
18. NOTICES ............................................................. 24
19. ANNOUNCEMENTS ....................................................... 25
20. TIME OF ESSENCE ..................................................... 26
21. INVALIDITY .......................................................... 26
22. GOVERNING LAW ....................................................... 26
23. DISPUTE RESOLUTION .................................................. 26
24. IMMUNITY ............................................................ 27
25. JUDGMENT CURRENCY INDEMNITY ......................................... 27
26. COUNTERPARTS ........................................................ 28
SCHEDULE 1 HONG KONG UNDERWRITERS ....................................... 29
SCHEDULE 2 THE CONDITIONS PRECEDENT DOCUMENTS ........................... 30
Part A ................................................................ 30
1. Legal Documents ................................................... 30
2. Documents relating to the Public Offer ............................ 30
3. Legal Opinions .................................................... 31
4. Other Documents ................................................... 31
Part B ................................................................ 32
SCHEDULE 3 THE WARRANTIES ............................................... 33
SCHEDULE 4 HONG KONG UNDERWRITERS' SET OFF ARRANGEMENTS ................. 43
SCHEDULE 5 ADVERTISING ARRANGEMENTS ..................................... 44
Page II
THIS AGREEMENT is made on 5 March 2004
BETWEEN:
(1) SEMICONDUCTOR MANUFACTURING INTERNATIONAL CORPORATION, a company
incorporated in the Cayman Islands whose registered office is at XX Xxx 000
XX, Xxxxxx House, Xxxxxx Town, Grand Cayman, Cayman Islands (the Company);
(2) CREDIT SUISSE FIRST BOSTON (HONG KONG) LIMITED, a company incorporated in
Hong Kong whose place of business in Hong Kong is at 00/X, Xxx Xxxxxxxx
Xxxxxx, Xxxxxxx, Xxxx Xxxx (CSFB);
(3) DEUTSCHE BANK AG, HONG KONG BRANCH, whose place of business in Hong Kong is
at 00/X Xxxxxx Xxxx Xxxxxx, 0 Xxxxx'x Xxxx Xxxxxxx, Xxxx Xxxx (Deutsche
Bank);
(4) THE HONG KONG UNDERWRITERS whose respective names and addresses are set out
in Schedule 1 (together, the Hong Kong Underwriters and individually, a
Hong Kong Underwriter).
WHEREAS:
(A) The Company was incorporated in the Cayman Islands on 3 April 2000, with
the registration number CR-98964.
(B) The Company submitted a valid application (together with all necessary
supporting documents) to the Registrar of Companies in Hong Kong to be
registered as an oversea company in Hong Kong under Part XI of the
Companies Ordinance and has been registered accordingly on 26 February
2004.
(C) Upon closing of the Global Offering, the Company will have an authorised
share capital of US$22,000,000 divided into 50,000,000,000 Shares of
US$0.0004 each and 5,000,000,000 undesignated preference shares of
US$0.0004 each, and an issued share capital of US$7,290,000 divided into
18,224,352,150 Shares of US$0.0004 each on the basis of the assumptions set
out in the section headed "Share Capital" in the Hong Kong Prospectus.
(D) At a meeting of the board of Directors held on 4 March 2004, resolutions
were passed pursuant to which, inter alia, Directors were authorized to
agree and sign on behalf of the Company this Agreement and all the other
relevant documents in connection with the Global Offering.
(E) Pursuant to the Prospectuses, the Company has agreed to offer for
subscription and the Selling Shareholders have agreed to offer for sale the
Offer Shares pursuant to the Global Offering, with the Hong Kong Offer
Shares being offered pursuant to the Hong Kong Public Offering, the
International Offer Shares being offered pursuant to the International
Offering and the US Offer Shares being offered pursuant to the US Offering.
(F) The Selling Shareholders are expected to grant to the Joint Bookrunners for
and on behalf of the International Underwriters and US Underwriters an
over-allotment option to require the Selling Shareholders to sell up to an
aggregate of 772,727,000 additional Shares to cover over-allocations in
connection with the International Offering and US Offering.
(G) The Company has appointed CSFB and Deutsche Bank to act as joint sponsors
to the Company in relation to the application to the Hong Kong Stock
Exchange for the listing of and granting of permission to deal in the Offer
Shares on the Main Board of the Hong Kong Stock Exchange.
(H) The Company has agreed to give the representations, warranties and
undertakings hereinafter mentioned.
NOW IT IS AGREED as follows:
1. Interpretation
1.1 In this Agreement (including the recitals and the Schedules), the following
expressions shall, unless the context otherwise requires, have the following
meanings:
Acceptance Date means 11 March 2004 being the date on which the application
lists for the Hong Kong Offer Shares will close as stated in the section headed
"How to Apply for Hong Kong Offer Shares" in the Hong Kong Prospectus (or such
other later date as such application lists may close as provided in the
Prospectus and the Application Forms);
Accounts Date means 31 December 2003;
ADRs means American Depositary Receipts to be issued pursuant to the Deposit
Agreement;
ADSs means American Depositary Shares;
affiliate means in relation to a particular company, any company or other entity
which is its holding company or subsidiary, or any subsidiary of its holding
company or which directly, or indirectly through one or more intermediaries,
controls or is controlled by, or is under common control with, the company
specified. For the purposes of this definition the term "control" (including the
terms "controlling," "controlled by" and "under common control with") means the
possession, direct or indirect, of the power to direct or cause the direction of
the management and policies of a person, whether through the ownership of voting
securities, by contract, or otherwise;
Agreement Among Hong Kong Underwriters means the agreement to be entered into
between the Hong Kong Underwriters and the Sponsors at the date hereof;
Application Forms means the white and yellow application forms for the Hong Kong
Offer Shares each in the agreed form to be issued by the Company with the Hong
Kong Prospectus;
Approval means any consent, approval, authorisation, sanction, permission,
order, franchise, registration, filing, clearance, qualification, licence,
permit, certificate or declaration;
Brokerage means brokerage at the rate of 1 per cent. of the Offer Price in
respect of the Hong Kong Offer Shares, payable to members of the Hong Kong Stock
Exchange and the Hong Kong Underwriters (as the case may be) pursuant to the
Hong Kong Public Offering;
Business Day means any day (including a Saturday) on which licensed banks
generally are open for business in Hong Kong;
CCASS means the Central Clearing and Settlement System established and operated
by Hongkong Clearing;
Claw Back Shares means the International Offer Shares or US Offer Shares
withdrawn from the International Offering or the US Offering, as the case may
be, and made available as an
Page 2
additional part of the Hong Kong Offer Shares for subscription pursuant to the
Hong Kong Public Offering pursuant to clause 3.5 or 3.7;
Closing means the time when, or as soon as possible after which, payment is to
be made under clause 7, that is the time when the Conditions have been fulfilled
or waived in accordance with this Agreement, which is 8:00 a.m. on 18 March 2004
or otherwise as agreed between the Company and the Sponsors (on behalf of the
Hong Kong Underwriters);
Companies Ordinance means the Companies Ordinance (Chapter 32 of the Laws of
Hong Kong);
Company Accounts means the audited results of the Group for each of the
financial years ended 31st December 2001, 2002 and 2003;
Conditions means the conditions set out in clause 2.1;
Deposit Agreement means the deposit agreement expected to be entered into
between the Company, the Depositary and all holders from time to time of the
ADRs;
Depositary means JPMorgan Chase Bank;
Director(s) means the director(s) of the Company;
Final Offering Circular means the final offering circular to be issued by the
Company in connection with the International Offering;
Formal Notice means the formal notice substantially in the agreed form required
under Rule 12.02, Chapter 12 of the Hong Kong Listing Rules to be published in
connection with the Hong Kong Public Offering in the newspapers and on the dates
specified in Schedule 5 ;
Global Coordinator means CSFB;
Global Offering means the Hong Kong Public Offering, the International Offering
and the US Offering;
Governmental Authorisation means an Approval from an applicable Governmental
Authority;
Governmental Authority means any public, regulatory or governmental agency or
authority (including, without limitation, the Hong Kong Stock Exchange), other
authority and any court at the national, provincial, municipal or local level;
Group means the Company, the Subsidiaries and any of its subsidiaries from time
to time;
HK dollars and HK$ means Hong Kong dollars, the lawful currency of Hong Kong;
holding company has the meaning ascribed thereto in section 2 of the Companies
Ordinance;
Hongkong Clearing means Hong Kong Securities Clearing Company Limited;
Hong Kong means Hong Kong Special Administrative Region of the PRC;
Hong Kong Listing Rules means The Rules Governing the Listing of Securities on
The Stock Exchange of Hong Kong Limited;
Page 3
Hong Kong Offer Shares means the Initial Public Offer Shares (i) together with,
where applicable, the Claw Back Shares, or (ii) as may be adjusted pursuant to
clause 6.7;
Hong Kong Offering Documents means the Hong Kong Prospectus and the Application
Forms;
Hong Kong Prospectus means the prospectus to be issued by the Company in
connection with the Hong Kong Public Offering substantially in the agreed form;
Hong Kong Public Offering means the offer for subscription of the Hong Kong
Offer Shares in Hong Kong on and subject to the terms and conditions set out in
the Hong Kong Offering Documents;
Hong Kong Stock Exchange means The Stock Exchange of Hong Kong Limited;
Hong Kong Underwriters means the underwriters listed in Schedule 1;
Initial Public Offer Shares means the 257,576,000 Shares initially offered for
subscription by the Company pursuant to the Hong Kong Public Offering and
excluding any Claw Back Shares or any adjustment made pursuant to clause 6.7;
International Offer Shares means the Shares initially offered by the Company and
the Selling Shareholders pursuant to the International Offering subject to the
provisions of clauses 3.5, 3.7 and 6.7 and the Over-Allotment Option;
International Offering means the offering of Shares to professional and
institutional investors (including to professional and institutional investors
within Hong Kong) pursuant to the International Offering Circular;
International Offering Circular means the Preliminary Offering Circular and the
Final Offering Circular;
International Underwriting Agreement means the underwriting agreement relating
to the US Offering and the International Offering expected to be entered into
between the Company, the Selling Shareholders, the International Underwriters
and the US Underwriters on or following the Price Determination Date;
International Underwriters means the group of underwriters of the International
Offering, led by CSFB and Deutsche Bank, who are expected to enter into the
International Underwriting Agreement;
Intersyndicate Agreement means the agreement to be entered into between the Hong
Kong Underwriters, the International Underwriters and the US Underwriters;
Joint Bookrunners means CSFB and Deutsche Bank;
Law means any law, rule, regulation, guideline, opinion, notice, circular,
order, judgment, decree or ruling of any Governmental Authority;
Listing Committee means the Listing Committee of the Hong Kong Stock Exchange;
Multiple Applications Letter means the letter from the Company to the Share
Registrar substantially in the agreed form relating to identification of
multiple applications in relation to the Hong Kong Offer Shares;
Page 4
Nominee means HSBC Nominees (Hong Kong) Limited, in whose name the application
monies are to be held by the Receiving Bankers under the Receiving Bankers'
Agreement;
Non-PRC Subsidiary means a Subsidiary incorporated in any jurisdiction other
than the PRC;
Offer Shares means the 3,030,303,000 Shares and 2,121,212,000 Shares
respectively being initially offered for subscription (by the Company) and sale
(by the Selling Shareholders) pursuant to the Global Offering together with any
further Shares sold pursuant to the exercise of the Over-Allotment Option;
Offer Price means the price per Share for the Hong Kong Offer Shares as fixed in
accordance with the provisions of clause 3.6;
Over-Allotment Option means the option expected to be granted by the Selling
Shareholders to the International Underwriters and the US Underwriters
exercisable by the Joint Bookrunners on behalf of the International Underwriters
and the US Underwriters under the International Underwriting Agreement to
require the Selling Shareholders to sell up to an aggregate of 772,727,000
additional Shares solely to cover over-allocation in connection with the
International Offering and the US Offering;
Over-Allotment Shares means up to 772,727,000 Shares which the Selling
Shareholders may be required to sell at the Offer Price pursuant to the
Over-Allotment Option;
PRC means the People's Republic of China, which, for the purpose of this
Agreement, excludes Hong Kong, the Macau Special Administrative Region of the
PRC and Taiwan;
PRC Subsidiary means a Subsidiary incorporated in the PRC;
Preliminary Offering Circular means the preliminary offering circular issued by
the Company in connection with the International Offering (dated 25 February
2004);
Price Determination Agreement means the letter agreement to be entered into
between the Sponsors (on behalf of the Underwriters), and the Company
immediately following the determination of the Offer Price in accordance with
clause 3.6 to record the price so determined;
Price Determination Date means the date on which the Offer Price is determined
in accordance with the provisions of clause 3.6, which is expected to be on or
about 11 March 2004 and in any event shall not be later than 17 March 2004;
Proceedings means any suit, action or proceeding arising out of or in connection
with this Agreement;
Prospectuses means the Hong Kong Prospectus, the US Prospectus and the
International Offering Circular;
Prospectus Date means 8 March 2004;
Receiving Bankers means The Hongkong and Shanghai Banking Corporation, Standard
Chartered Bank and Bank of China (Hong Kong) Limited, being the banks appointed
to hold the application monies received in connection with the Hong Kong Public
Offering pursuant to the Receiving Bankers' Agreement;
Receiving Bankers' Agreement means the agreement appointing the Receiving
Bankers in the agreed form;
Page 5
Registrar's Agreement means the agreement between the Share Registrar and the
Company in the agreed form;
Reporting Accountants means Deloitte Touche Tohmatsu;
Schedules means schedules to this Agreement;
Securities Act means the US Securities Act of 1933, as amended;
Selling Shareholders means certain shareholders of the Company offering for sale
Offer Shares in the Global Offering, as set out in Schedule B to the
International Underwriting Agreement;
SFO means the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong
Kong);
Share Registrar means Computershare Hong Kong Investor Services Limited;
Shares means ordinary shares of par value US$0.0004 each in the share capital of
the Company for which applications have been made for the grant of the listing,
and permission to deal, on the Hong Kong Stock Exchange;
Sponsors means CSFB and Deutsche Bank;
Subsidiaries means the subsidiaries of the Company as listed in the Accountants'
Report set out in Appendix I to the Prospectus, and Subsidiary means any of
them;
subsidiary has the meaning ascribed to it in the Companies Ordinance;
Taxation means all forms of taxation whether in Hong Kong or elsewhere in the
world wherever imposed and all statutory, governmental, state, provincial, local
governmental or municipal impositions, duties and levies and all penalties,
charges, costs and interest relating thereto;
transaction means any transaction, act, event, omission or circumstance existing
of whatever nature;
Transaction Levy means the transaction levy charged by the Hong Kong Stock
Exchange on the Company and the subscribers for the Hong Kong Offer Shares;
Underwriters means the Hong Kong Underwriters, the International Underwriters
and the US Underwriters;
US and United States means the United States of America, its territories, its
possessions, any State of the United States of America and the District of
Columbia;
US dollar and US$ means United States dollar, the lawful currency of the United
States;
US Offer Shares means the Shares initially offered by the Company and the
Selling Shareholders pursuant to the US Offering, subject to the provisions of
clauses 3.5, 3.7 and 6.7 and the Over-Allotment Option;
US Offering means the offering of Shares in the United States and Canada as
defined and described in the Hong Kong Prospectus;
US Prospectus means the prospectus to be issued by the Company in connection
with the US Offering;
Page 6
US Underwriters means the group of underwriters of the US Offering led by Credit
Suisse First Boston LLC and Deutsche Bank Securities Inc. who are expected to
enter into the International Underwriting Agreement;
Valid Applications means applications under the Hong Kong Public Offering from
persons made before the closing of the application lists by (a) giving
electronic application instructions to Hongkong Clearing (i) which have been
duly submitted and are otherwise in accordance with the terms and conditions of
the Hong Kong Offering Documents and (ii) in respect of which the debit from
such person's Designated Bank Account (as defined in the General Rules of CCASS)
to effect such instructions has been accepted by the relevant bank when first
requested (or, and without prejudice to the provisions of clauses 6.1 and 6.5,
if practicable in the circumstances and requested by the Sponsors (for
themselves and on behalf of the other Hong Kong Underwriters) or the Company, on
further request) or (b) on Application Forms which (i) have been duly completed
and submitted and are otherwise in accordance with the terms and conditions of
the Hong Kong Offering Documents and (ii) are accompanied by cheques or banker's
cashier orders for the full amount payable on application which are honoured on
first presentation (or, and without prejudice to the provisions of clauses 6.1
and 6.5, if practicable in the circumstances and requested by the Sponsors (for
themselves and on behalf of the other Hong Kong Underwriters) or the Company, on
further presentation) and subject to the provisions of clauses 3.4 and 3.5;
Verification Notes means the verification notes in respect of the Hong Kong
Prospectus prepared by Freshfields Bruckhaus Xxxxxxxx dated 5 March 2004 (signed
copies of which have been or will be delivered to the Sponsors); and
Warranties means the representations, warranties and undertakings in Schedule 3
and given or made, or deemed to be given or made, pursuant to clause 10 and
Warranty shall be construed accordingly.
1.2 In this Agreement, unless otherwise specified:
(a) references to recitals, clauses, sub-clauses, paragraphs and Schedules are
to recitals, clauses, sub-clauses, paragraphs of, and schedules to, this
Agreement;
(b) a reference to any statute or statutory provision shall be construed as a
reference to the same as it may have been, or may from time to time be,
amended, modified or re-enacted;
(c) references to a "company" shall be construed so as to include any company,
corporation or other body corporate, whenever and however incorporated or
established;
(d) references to a "person" shall be construed so as to include any
individual, firm, company, government, state or agency of a state or any
joint venture, association or partnership (whether or not having separate
legal personality);
(e) references to writing shall include any mode of reproducing words in a
legible and non-transitory form;
(f) references to times of the day are, unless otherwise specified, to Hong
Kong time;
(g) all headings to clauses, sections and Schedules are for convenience only
and do not affect the interpretation of this Agreement;
Page 7
(h) references to the "closing of the application lists" shall be to 12:00 noon
on the Acceptance Date;
(i) the Schedules form part of this Agreement and shall have the same force and
effect as if expressly set out in the body of this Agreement, and any
reference to this Agreement shall include the Schedules; and
(j) a reference to a document being "in the agreed form" means such document in
a form agreed and initialled for the purposes of identification by
Freshfields Bruckhaus Xxxxxxxx and Xxxxxxxxx and May.
2. Conditions
2.1 Obligations Conditional: The obligations of the Hong Kong Underwriters
under this Agreement are conditional upon:
(a) Documents: the Sponsors, on behalf of the Hong Kong Underwriters, receiving
the documents listed in Schedule 2 , Part A not later than 5:00 p.m. on the
Business Day prior to the Prospectus Date and the documents listed in
Schedule 2 , Part B not later than 5:00 p.m. on the Business Day prior to
the Closing, in each case in form and content satisfactory to the Sponsors;
(b) Prospectus Authorisation: the lodging of the Hong Kong Prospectus (and
other required documents) with the Hong Kong Stock Exchange on the Business
Day prior to the Prospectus Date, and the Hong Kong Stock Exchange issuing
a certificate pursuant to section 342C(5) of the Companies Ordinance
certifying that it authorises registration of the Hong Kong Prospectus
prior to the Prospectus Date;
(c) Prospectus Registration: the registration of one copy of the Hong Kong
Prospectus duly certified by two Directors (or by their agents duly
authorised in writing) as having been approved by the resolutions of the
board of Directors and having all the documents required pursuant to the
provisions of section 342C of the Companies Ordinance to be endorsed
thereon or attached thereto by the Registrar of Companies in Hong Kong
before the Prospectus Date;
(d) Listing: listing of and permission to deal in all the Offer Shares being
granted (subject only to allotment) by the Listing Committee in principle
on or before the Price Determination Date and dealings in the Offer Shares
being allowed by the Hong Kong Stock Exchange to commence on the Hong Kong
Stock Exchange on or before 18 March 2004 (or such later date as the
Company and the Sponsors on behalf of the Hong Kong Underwriters may agree)
(and such listing and permission not subsequently being revoked prior to
the time and date detailed in clause 12.1);
(e) International Underwriting Agreement:
(i) the execution and delivery of the International Underwriting
Agreement and the Price Determination Agreement on or around the
Price Determination Date; and
(ii) the International Underwriting Agreement becoming unconditional
in accordance with its terms (other than any condition for this
Agreement to become unconditional) and not having been terminated
in accordance with its terms or otherwise, prior to 8:00 a.m. on
the morning on which dealing is scheduled to commence in the
Offer Shares on the Hong Kong Stock Exchange; and
Page 8
(f) Offer Price: the Offer Price having been fixed on the Price Determination
Date in accordance with the provisions of clause 3.6.
2.2 Undertakings: The Company undertakes to use its reasonable best endeavours
to procure the fulfilment of the conditions set out in clause 2.1 above and in
particular shall furnish such information, supply such documents, pay such fees,
give such undertakings and do all such acts and things as may be reasonably
required by the Sponsors (on behalf of the Hong Kong Underwriters), the Hong
Kong Stock Exchange and the Registrar of Companies in Hong Kong in connection
with the application for the listing of and permission to deal in the Offer
Shares and the fulfilment of such conditions.
2.3 Waiver: The Sponsors, for themselves and on behalf of the Hong Kong
Underwriters, may, at any time, waive any or all of the Conditions or extend the
deadline for the fulfilment of such Conditions by such number of days or in such
manner as they may in their absolute discretion determine.
2.4 Termination: In the event that any of the Conditions is not fulfilled or
waived, or in the event that the Price Determination Date shall not occur, on or
prior to 7 April 2004, this Agreement shall terminate with immediate effect and
the provisions of clause 12.2 shall apply.
3. The Hong Kong Public Offering
3.1 Hong Kong Public Offering: The Company will, subject to the determination
of the Offer Price in accordance with clause 3.6, offer the Hong Kong Offer
Shares for subscription by the public in Hong Kong at the Offer Price, payable
in full on application in HK dollars together with brokerage of 1 per cent., SFC
transaction levy of 0.005 per cent., investor compensation levy of 0.002 per
cent. and Hong Kong Stock Exchange trading fee of 0.005 per cent. on and subject
to the terms and conditions set out in the Hong Kong Offering Documents and this
Agreement.
3.2 Appointment: The Company hereby appoints, to the exclusion of all others:
(a) CSFB to act as global coordinator of the Global Offering;
(b) CSFB and Deutsche Bank to act as joint sponsors for the Company in relation
to the application to the Hong Kong Stock Exchange for the grant of listing
of the Offer Shares;
(c) CSFB and Deutsche Bank to act as joint bookrunners of the Global Offering;
and
(d) the Hong Kong Underwriters as underwriters for the Hong Kong Public
Offering; and
relying on the representations, warranties and undertakings herein contained and
subject as hereafter mentioned, CSFB, Deutsche Bank and each Hong Kong
Underwriter respectively and severally accept such appointments.
The Company hereby confirms that the foregoing appointments confer on CSFB,
Deutsche Bank and each Hong Kong Underwriter, respectively, all powers,
authorities and discretion on behalf of the Company which are reasonably
necessary for, or reasonably incidental to, the lawful making of the Hong Kong
Public Offering.
Each such appointment is made on the basis, and on terms, that each appointee
may, as far as it relates to the Hong Kong Public Offering, at the option of
such appointee, delegate all or any of its relevant rights, duties, powers and
discretions in such manner and on such terms as
Page 9
it thinks fit (with or without formality and without prior notice of any such
delegation being required to be given to the Company) to any one or more of its
affiliates; provided, however, that no such delegation shall in any way release
any appointee from, or otherwise reduce, the duties and responsibilities of such
appointee hereunder.
3.3 Formal Notice: The Company and the Sponsors will, subject to registration
of the Hong Kong Prospectus in accordance with clause 2.1(c), cause the Formal
Notice to be published in such newspapers and on such date(s) as set out in
Schedule 5, or as the Company and the Sponsors may otherwise agree in writing.
The Company will cause such number of copies of the Hong Kong Prospectus
together with Application Forms as the Sponsors (on behalf of the Hong Kong
Underwriters) may reasonably request to be delivered to the Sponsors or as the
Sponsors (on behalf of the Hong Kong Underwriters) may direct for the purpose of
issuing the same generally.
3.4 Application Lists: The application lists for the Hong Kong Offer Shares
will, subject as mentioned below, open at 11:45 a.m. on the Acceptance Date and
will close at 12:00 noon on the same day. In the event of a tropical cyclone
warning signal No. 8 or above or a "black" rainstorm warning signal (in any such
case, a signal) being in force in Hong Kong at any time between 8:00 a.m. and
12:00 noon on the Acceptance Date then the application lists will open at 11:45
a.m. and close at 12:00 noon on the next Business Day on which no signal remains
in force at any time between 8:00 a.m. and 12:00 noon and all references in this
Agreement to the closing of the application lists shall be construed
accordingly.
3.5 Basis of Allocation: The Company agrees that the Joint Bookrunners shall
have the sole and exclusive right in their absolute discretion, and on behalf of
the Company, on and subject to the terms and conditions set out in the Hong Kong
Offering Documents, this Agreement and the Receiving Bankers' Agreement, to
accept or reject (in whole or in part) any applications for Hong Kong Offer
Shares (including, where the number of Hong Kong Offer Shares being. applied for
exceeds the total number of the Hong Kong Offer Shares, the right to determine
the basis of allocation of the Hong Kong Offer Shares) and the Joint
Bookrunners, without prejudice to clause 3.7 below, may, but shall not be
obliged to, withdraw Offer Shares from the International Offering or US Offering
and, on behalf of the Company, make available such Offer Shares as additional
Hong Kong Offer Shares to satisfy Valid Applications.
3.6 Price Determination: The Offer Price shall be fixed by agreement (if
agreement can be reached) between the Company and the Sponsors (on behalf of the
Hong Kong Underwriters) in HK dollars after the demand for the International
Offering has been determined, which price (not including brokerage, Stock
Exchange trading fee, SFC transaction levy and investor compensation levy) shall
not exceed HK$2.69 per Share and is expected to be not lower than HK$2.39 per
Share. The Offer Price will be determined on the Price Determination Date and
shall upon its determination be recorded in the Price Determination Agreement to
be executed at such time.
3.7 Clawback: The aggregate number of Initial Public Offer Shares shall be
increased in the following manner in the event of a Hong Kong Public Offering
over-subscription:
(a) if the number of Shares which are the subject of Valid Applications
represents 15 times or more but less than 50 times the number of Initial
Public Offer Shares, then Shares will be reallocated to the Hong Kong
Public Offering from the International Offering and US Offering so that the
total number of Shares available under the Hong Kong Public Offering will
be increased to 386,364,000 Shares representing approximately 7.5 per cent.
of the total number of Shares initially available in the Global Offering
(without any exercise of the Over-Allotment Option);
Page 10
(b) if the number of Shares which are the subject of Valid Applications
represents 50 times or more but less than 100 times the number of Initial
Public Offer Shares, then Shares will be reallocated to the Hong Kong
Public Offering from the International Offering and US Offering so that the
total number of Shares available under the Hong Kong Public Offering will
be increased to 643,939,000 Shares representing approximately 12.5 per
cent. of the total number of Shares initially available in the Global
Offering (without any exercise of the Over-Allotment Option); and
(c) if the number of Shares which are the subject of Valid Applications
represents 100 times or more the number of Initial Public Offer Shares,
then Shares will be reallocated to the Hong Kong Public Offering from the
International Offering and US Offering so that the total number of Shares
available under the Hong Kong Public Offering will be increased to
1,030,303,000 Shares representing approximately 20 per cent. of the total
number of Shares initially available in the Global Offering (without any
exercise of the Over-Allotment Option).
The relevant number of International Offer Shares and US Offer Shares shall be
withdrawn from the International Offering and US Offering and made available as
additional Hong Kong Offer Shares offered for subscription pursuant to the Hong
Kong Public Offering. Any such reallocation shall have no effect on the
Company's obligations to pay the commission due to the Hong Kong Underwriters
which shall be determined pursuant to clause 8.
3.8 Pools: The total number of Hong Kong Offer Shares shall be divided equally
into two pools for allocation purposes: pool A and pool B. The Shares in pool A
will be allocated by the Sponsors in their discretion (with prior consultation
with the Company) on an equitable basis to applicants who have applied for
Shares with an aggregate subscription price of HK$5 million (excluding the
brokerage and the Hong Kong Stock Exchange trading fee, SFC transaction levy and
investor compensation levy payable) or less per applicant. The Shares in pool B
will be allocated by the Sponsors in their discretion (with prior consultation
with the Company) on an equitable basis to applicants who have applied for
Shares with an aggregate subscription price of more than HK$5 million (excluding
the brokerage and the Hong Kong Stock Exchange trading fee, SFC transaction levy
and investor compensation levy payable) per applicant. The Sponsors shall
determine, after consultation with the Company, the allocation ratio for the two
pools described above subject to the provisions relevant thereto set out in the
section headed "Structure of the Global Offering" in the Hong Kong Prospectus.
Any Shares which are reallocated from the International Offering or US Offering
to the Hong Kong Public Offering pursuant to clause 3.7 shall, subject to the
provisions of this clause and the Hong Kong Offering Documents, be allocated in
such manner as the Sponsors may in their absolute discretion determine, after
consultation with the Company.
3.9 Changes to Price Range and Initial Public Offer Shares: The Sponsors on
behalf of the Hong Kong Underwriters may, where considered appropriate, based on
the level of interest expressed by prospective investors during the
book-building process, with the prior written consent of the Company, change the
indicative Offer Price range or the number of Initial Public Offer Shares as
stated in the Hong Kong Prospectus. In any such case, the Company shall, as soon
as practicable following the decision to make such change and in any event not
later than the morning of the Acceptance Date, cause to be published in the
South China Morning Post and the Hong Kong Economic Times notices of the change
in the indicative Offer Price range or the number of the Initial Public Offer
Shares.
3.10 Receiving Bankers: The Company will prior to the Prospectus Date appoint
the Receiving Bankers to act as receiving bankers in connection with the
receiving of completed applications for Hong Kong Public Offer Shares and the
Nominee in connection with the receiving and holding of application moneys and
any interest accruing thereon, in both cases, on and subject to the terms and
conditions of the Receiving Bankers' Agreement.
Page 11
3.11 Share Registrar: The Company will prior to the Prospectus Date appoint the
Share Registrar to provide services in connection with the processing of
applications under the Hong Kong Public Offering on and subject to the terms and
conditions of the Registrar's Agreement and the Multiple Applications Letter.
3.12 Undertakings to Hong Kong Underwriters: Without prejudice to the foregoing
obligations, the Company undertakes with the Hong Kong Underwriters that it will
use all reasonable best endeavours to do all such other acts and things, pay all
fees and execute all documents as may be reasonably required by the Sponsors for
the purpose of the Global Offering and obtaining listing of and permission to
deal in the Offer Shares on the Hong Kong Stock Exchange (including in
particular effecting all necessary registrations and filings with the Hong Kong
Stock Exchange and the Registrar of Companies in Hong Kong and taking all
reasonable steps to ensure that each of the Directors will sign or cause to be
duly signed on their behalf all documents (including the Verification Notes)
required to be signed by them as directors of the Company for the purposes of or
in connection with any such registrations and filings and the obtaining of
listing of and permission to deal in the Offer Shares on the Hong Kong Stock
Exchange) so as to enable the listing of and permission to deal in the Offer
Shares to commence on 18 March 2004 to be granted by the Listing Committee and
become effective.
3.13 Underwriting Waiver: No Hong Kong Underwriter shall be responsible for any
loss or damage (except for any loss or damage arising primarily out of any gross
negligence, wilful default or fraud on the part of that Hong Kong Underwriter)
to any persons arising from any transaction lawfully and properly carried out by
it pursuant to this Agreement or to the Company for any alleged insufficiency of
the Offer Price.
4. The Hong Kong Offering Documents
4.1 Issue: Subject to the Hong Kong Prospectus having been registered by the
Registrar of Companies in Hong Kong, the Company will, on the Prospectus Date,
issue the Hong Kong Offering Documents and will cause such number of Hong Kong
Offering Documents as the Sponsors may specify to be delivered to the Sponsors
or as the Sponsors direct for the purpose of issuing the same generally.
4.2 Other Documents: Except for the Hong Kong Offering Documents or except as
otherwise provided pursuant to the provisions of this Agreement or as required
by the Hong Kong Stock Exchange, the Company undertakes not to, before Closing,
without the prior written approval of the Sponsors, issue, publish, distribute
or otherwise make publicly available any document (including any prospectus),
material or information in connection with the Hong Kong Public Offering.
5. Issue of Hong Kong Offer Shares
5.1 Allocations: Upon receipt by the Share Registrar of the Application Forms
for the Valid Applications, the Company shall, subject to the terms and
conditions of this Agreement:
(a) at Closing, allot and issue the Initial Public Offer Shares in accordance
with the relevant sections of the Hong Kong Offering Documents and this
Agreement to the applicants and in the numbers specified by the Sponsors
on terms that they rank pari passu in all respects with the existing
issued Shares, including the right to rank in full for all distributions
thereafter declared, paid or made by the Company, and that they will rank
pari passu in all respects with the International Offer Shares;
Page 12
(b) at Closing, procure that the names of the successful applicants (or, where
appropriate, HKSCC Nominees Limited) shall be entered in the register of
members of the Company accordingly (without payment of any registration
fee); and
(c) as soon as practicable, and in any event by no later than the fourth
Business Day after the Acceptance Date, procure that share certificates in
respect thereof (each in a form complying with the Hong Kong Listing Rules)
shall be issued and dispatched, or delivered to Hong Kong Clearing for
immediate credit to such CCASS stock accounts as shall be notified by the
Sponsors to the Company for such purpose, or made available for collection
(as applicable) as provided for in the Hong Kong Offering Documents and
this Agreement.
6. Underwriting
6.1 Several Underwriting Commitments: On and subject to the terms and
conditions of this Agreement and in reliance upon the Warranties, if and to the
extent that, by 12:00 noon on the Acceptance Date, there shall remain any
Initial Public Offer Shares for which Valid Applications, as subsequently
calculated, have not been received (an Under-Subscription), the Hong Kong
Underwriters shall, subject to clause 6.7, apply or procure applications for the
Hong Kong Offer Shares representing the shortfall at the Offer Price in
accordance with the terms and conditions set out in the Hong Kong Offering
Documents (other than as to the deadline for making the application and save as
provided in this clause) and shall pay or procure to be paid, in accordance with
clause 6.6(b) the full amount payable on application PROVIDED THAT the
obligations of the Hong Kong Underwriters in respect of Hong Kong Offer Shares
under this sub-clause shall be several (and not joint and several) on the basis
that each Hong Kong Underwriter shall apply or procure applications for the
number of Hong Kong Offer Shares to which this sub-clause applies in the
proportions set out against its name in the column headed "Percentage of Hong
Kong Public Offering Underwritten" in Schedule 1.
6.2 Rights and Liabilities: None of the Hong Kong Underwriters will be liable
for any failure on the part of any of the other Hong Kong Underwriters to
perform its obligations under this clause. Notwithstanding the foregoing, each
of the Hong Kong Underwriters shall be entitled to enforce any or all of its
rights under this Agreement either alone or jointly with the other Hong Kong
Underwriters.
6.3 Acceptance of Applications: The Company agrees with the Hong Kong
Underwriters that all Valid Applications received prior to the closing of the
application lists and accepted by the Sponsors, either in whole or in part, will
be accepted by the Company before calling upon the Hong Kong Underwriters or any
of them to perform the obligations imposed on them by this clause.
6.4 Calculation of Hong Kong Offer Shares Applied For: Following the closing of
the application lists, the Company will, in conjunction with the Receiving
Bankers and the Share Registrar, calculate and notify the Sponsors of the number
of Hong Kong Offer Shares for which Valid Applications have been received and
not rejected and will use its reasonable endeavours to procure that the
applications will be processed, and such calculation and notification made, as
soon as practicable and in any event not later than 32 hours following the
closing of the application lists.
6.5 Notification to Sponsors: In the event of an Under-Subscription such that
the Hong Kong Underwriters are obliged, subject to clause 6.7, to apply for or
procure applicants pursuant to clause 6.1 for the Hong Kong Offer Shares
representing the shortfall, the Company will use its reasonable endeavours to
procure that the Share Registrar and/or the Receiving Bankers will as soon as
possible and in any event not later than 5:00 p.m. on the
Page 13
Acceptance Date notify the Sponsors on behalf of the Hong Kong Underwriters of
the number of Hong Kong Offer Shares falling to be taken up pursuant to clause
6.1.
6.6 Hong Kong Underwriters' Subscription Obligations: Subject to clause 6.7,
each of the Hong Kong Underwriters will:
(a) as soon as practicable, and in any event not later than 2:00 p.m. or (on a
Saturday) 12 noon on the third Business Day immediately after the date on
which any notification is made under clause 6.5 and subject to the
Conditions having been fulfilled or waived by the Sponsors (on behalf of
the Hong Kong Underwriters), severally, in the proportions set out in
Schedule 1, deliver to the Company duly completed Application Form(s) for
such number of Hong Kong Offer Shares as fall to be taken up by them
pursuant to clause 6.1, and subject to the proviso in clause 6.1,
specifying the name(s) and address(es) of the applicant(s) and the number
of Hong Kong Offer Shares to be allocated to each such applicant; and
(b) at Closing, upon the Company duly allotting, issuing and delivering such
Hong Kong Offer Shares to the Sponsors through the facilities of Hongkong
Clearing for credit to the CCASS participants' accounts of the said
applicants, severally pay, or procure to be paid, to the Company the
aggregate amount of the Offer Price for the Hong Kong Offer Shares as fall
to be taken up by such Hong Kong Underwriters pursuant to clause 6.1 and in
the proportions set out in Schedule 1 (subject to the sub-paragraphs below)
provided that while such payments may be made through the Sponsors on
behalf of the Hong Kong Underwriters at their discretion and without
obligation, the Sponsors shall not be responsible for the failure by any
Hong Kong Underwriter (apart from itself in its capacity as a Hong Kong
Underwriter) to make such payment. The net purchase price payable by the
Hong Kong Underwriters for the Hong Kong Offer Shares as fall to be taken
up by them above shall be paid to the Company after deducting:
(i) the underwriting commission of 2.75 per cent. payable pursuant
to clause 8.1;
(ii) the aggregate SFC transaction levy and investor compensation
levy (at the rate of 0.014 per cent. of the Offer Price) and the
aggregate Hong Kong Stock Exchange trading fee (at the rate of
0.01 per cent. of the Offer Price) payable by the Company and
the applicants to the Hong Kong Stock Exchange in respect of
such Hong Kong Offer Shares, which will be arranged to be paid
to the Hong Kong Stock Exchange by the Sponsors on behalf of the
Company and the applicants; and
(iii) brokerage at the rate of 1 per cent. of the Offer Price which
may be retained by the Hong Kong Underwriters.
6.7 Reallocation to International Offering or US Offering: If an
Under-Subscription shall occur, the Sponsors shall have the right (but are not
obliged) to apply for (subject to and in accordance with this Agreement) or to
reallocate to the International Offering or US Offering (in such proportion as
the Sponsors consider appropriate) all or any of the Hong Kong Offer Shares
which any Hong Kong Underwriter is required to apply for pursuant to clause 6.1.
Any application submitted or procured to be submitted by the Sponsors or any
allocation to the International Offering pursuant to this sub-clause and duly
subscribed for or purchased by the International Underwriters and/or US
Underwriters and/or subscribers or purchasers procured by any one or more of
them shall satisfy pro tanto the obligation of the Hong Kong Underwriters under
this clause and, as between the Hong Kong Underwriters, on a pro-rata basis and
no underwriting commission will be payable to the Hong Kong Underwriters
regarding such reallocated Shares.
Page 14
6.8 Cessation of Hong Kong Underwriters' Obligations: All obligations and
liabilities of the Hong Kong Underwriters under this Agreement to subscribe or
procure subscribers for Hong Kong Offer Shares will cease following due payment
in full by or on behalf of the respective Hong Kong Underwriters in accordance
with clause 6.6(b) or on the Sponsors being notified pursuant to clause 6.4 that
the Hong Kong Public Offering is fully subscribed or over subscribed by Valid
Applications.
6.9 Reduction of Hong Kong Underwriters' Obligation: The obligation of each
Hong Kong Underwriter pursuant to this clause shall be reduced to the extent
that valid Underwriters' Applications (as defined in Schedule 4 ) are made or
procured by such Hong Kong Underwriter to be made in accordance with the
arrangements set out in Schedule 4 .
6.10 Acknowledgement: Nothing in this Agreement shall be deemed to give the
Global Coordinator, Joint Sponsors or any Hong Kong Underwriter any authority to
make any written disclosure, representation or warranty or supply any written
information stating that such disclosure, representation or information is made
on behalf of the Company in connection with the Hong Kong Public Offering unless
the same is contained in the Hong Kong Offering Documents, this Agreement or
otherwise authorised or approved by or on behalf of the Company.
7. Payment Under the Hong Kong Public Offering
7.1 Payment to the Company: At Closing or as soon as possible thereafter, the
application moneys with interest thereon held by the Nominee will, in accordance
with the provisions of the Receiving Bankers' Agreement and subject to clause
7.2 below, be paid over to the Company after the share certificates for the Hong
Kong Offer Shares have been despatched or delivered by or on behalf of the
Company to the successful applicants under the Hong Kong Public Offering through
the facilities of Hongkong Clearing for credit to CCASS participants accounts or
made available to such applicants, as the case may be. The Company covenants and
agrees that it will in accordance with the provisions of the Receiving Bankers'
Agreement, pay or cause to be paid:
(a) the underwriting commission (such payment to be made by way of deduction
from the above application moneys held by the Receiving Bankers in
accordance with the terms of the Receiving Bankers' Agreement) and the
expenses payable pursuant to clause 8; and
(b) such sums as are required to satisfy the payments referred to in clause
7.2.
7.2 Brokerage and Levy: The Sponsors on behalf of the Hong Kong Underwriters
will arrange for the payment by the Nominee on behalf of the Company and
successful applicants under the Hong Kong Public Offering:
(a) to members of the Hong Kong Stock Exchange and the Hong Kong Underwriters
(as the case may be) of brokerage at the rate of 1 per cent. of the Offer
Price;
(b) to the Hong Kong Stock Exchange of the SFC transaction levy and investor
compensation levy at the aggregate rate of 0.014 per cent. of the Offer
Price; and
(c) to the Hong Kong Stock Exchange of the trading fee at the rate of 0.01 per
cent. of the Offer Price,
in respect of Valid Applications for the Hong Kong Offer Shares, such amounts to
be paid out of the application moneys.
Page 15
7.3 Global Coordinator's and Sponsors' responsibilities: Subject to any other
provision of this Agreement (including but not limited to clause 8.3), the
Global Coordinator and Sponsors shall not be responsible for the payment (by
deduction from the gross proceeds or otherwise) of any fees, costs, charges and
expenses of or incurred by the Company which are agreed to be paid by the
Company pursuant to the provisions of this Agreement (including but not limited
to clause 8.3).
8. Commission and Expenses
8.1 Underwriting commissions: In consideration of the services of the Hong Kong
Underwriters under this Agreement, the Company will pay to the Sponsors, for
themselves and on behalf of the other Hong Kong Underwriters, an underwriting
commission calculated at the rate of 2.75 per cent. of the Offer Price
multiplied by the number of Initial Public Offer Shares, ignoring for this
purpose any Claw Back Shares and any Shares reallocated under clause 6.7. For
the avoidance of doubt, the Hong Kong Underwriters shall not be entitled to any
underwriting commissions in respect of the Claw Back Shares or the Shares
reallocated under clause 6.7 as the relevant underwriting discounts and
commissions relating to such Shares will be payable to the relevant
International Underwriters and/or US Underwriters in accordance with the
International Underwriting Agreement and deducted from the subscription moneys
payable under the International Underwriting Agreement.
8.2 Allocation of underwriting commissions: The allocation and distribution of
the underwriting commissions referred to in clause 8.1 above among the Hong Kong
Underwriters shall be separately dealt with in the Agreement Among Hong Kong
Underwriters. Payment of the underwriting commissions by the Company to the
Sponsors in accordance with this Agreement shall constitute good, full and final
discharge of the Company's obligations under this Agreement to the Hong Kong
Underwriters to make payment of such underwriting commissions. The Company shall
not be concerned as to or bear any liability in respect of the allocation or
distribution of such underwriting commissions by the Sponsors to any one or more
of the Hong Kong Underwriters.
8.3 Expenses: The Company shall pay to the Joint Bookrunners all such fees and
expenses incurred in connection with or incidental to this Agreement or the
Global Offering as set out in the International Underwriting Agreement.
8.4 Saving: In the event that this Agreement is terminated after the
International Underwriting Agreement has been entered into, clause 12.2(c) shall
apply with regards to the payment of the aforementioned costs, fees and
expenses.
9. Stabilisation and Liability
9.1 Stabilisation: The Sponsors and their affiliates may, in connection with
the Global Offering, for their own account as principal or on behalf of any Hong
Kong Underwriter, but not as agent for the Company, to the extent permitted by
and in compliance with applicable laws and regulatory requirements of Hong Kong
or elsewhere, over-allocate or effect transactions in the market or otherwise,
only with a view to stabilising or maintaining the market price of the Offer
Shares, at such prices, in such amounts and in such manner as the Sponsors
and/or their relevant affiliates may determine and at levels other than those
which might otherwise prevail in the open market. Such stabilising, if
commenced, may be discontinued at any time. Any expenses and losses resulting
from such over-allocation and stabilisation or other transactions effected
pursuant to this clause shall be debited, and any profit arising from them shall
be beneficially credited to a stabilisation account the arrangements regarding
which shall be a matter exclusively for the Sponsors and their affiliates, the
Hong Kong Underwriters, the International Underwriters and the US
Page 16
Underwriters governed by the Intersyndicate Agreement, or otherwise as agreed
between them.
9.2 Liability: For the avoidance of doubt, neither of the Sponsors shall be
responsible or liable to the Company for any breach of the provisions in this
Agreement by any Hong Kong Underwriter (other than itself in its capacity as a
Hong Kong Underwriter or as a sponsor).
10. Representations, Warranties and Undertakings
10.1 The Company: The Company represents, warrants and undertakes to the
Sponsors and the Hong Kong Underwriters and each of them in the terms set out in
Schedule 3 . The Company accepts that each of the Sponsors and the Hong Kong
Underwriters is entering into this Agreement in reliance upon each such
representation, warranty and undertaking.
10.2 Separate Warranties: Each Warranty shall be construed separately and shall
not be limited or restricted by reference to or inference from the terms of any
other of the Warranties or any other term of this Agreement.
10.3 Duration: The Warranties shall remain in full force and effect
notwithstanding completion of the Hong Kong Public Offering.
10.4 Repetition: The Warranties are given on and as at the date of this
Agreement with respect to the facts and circumstances subsisting at the date of
this Agreement. In addition, the Warranties shall be deemed to be repeated on
and as at:
(a) the date on which the Hong Kong Prospectus is registered by the Registrar
of Companies in Hong Kong as required by section 342C of the Companies
Ordinance;
(b) the Acceptance Date; and
(c) the Closing,
in each case, by reference to the facts and circumstances then existing.
10.5 Notice: The Company undertakes to give notice to the Sponsors and each of
the Hong Kong Underwriters forthwith of any matter or event coming to its
attention prior to the dates on which the Warranties are deemed to be given
pursuant to the provisions of clause 10.4 which shows any of the Warranties to
be or to have been untrue, inaccurate or misleading or breached.
10.6 Action to be Taken: If at any time during the period of three months after
the date hereof, by reference to the facts and circumstances then existing,
prior to the last of the dates on which the Warranties are deemed to be repeated
pursuant to the provisions of clause 10.4, any matter or event comes to the
attention of the Company or any of the Hong Kong Underwriters as a result of
which any of the Warranties, if repeated immediately after the occurrence of
such matter or event, would be untrue, inaccurate or misleading or which would
or might render untrue, inaccurate or misleading any statement, whether of fact
or opinion, contained in any of the Hong Kong Offering Documents or the Formal
Notice if the same were issued immediately after the occurrence of such matter
or event, the Company or such Hong Kong Underwriter (as the case may be) shall
forthwith notify each of the other parties hereto and, without prejudice to any
other rights of any party, the Company and the Sponsors on behalf of the Hong
Kong Underwriters shall forthwith consult with a view to agreeing, if the Hong
Kong Prospectus has already been registered with the Registrar of Companies in
Hong Kong or distributed (as the case may be), what announcement or circular or
document, if any, should be issued, published, distributed or made available or
what other
Page 17
act or thing should be done. The Company agrees not to issue, publish,
distribute or make publicly available any such announcement, circular or
document without the prior written consent of the Sponsors (for themselves and
on behalf of the Hong Kong Underwriters).
10.7 Further Obligations: The Company will not, and will procure that none of
its affiliates will:
(a) do or omit to do anything which may cause any of the representations or
warranties given pursuant to clause 10 to be untrue in any material respect
at any time immediately prior to the commencement of dealings in the Offer
Shares on the Hong Kong Stock Exchange (assuming such representations or
warranties to be repeated at the relevant time by reference to the facts
and circumstances then subsisting); or
(b) at any time immediately prior to the commencement of dealings in the Offer
Shares on the Hong Kong Stock Exchange enter into any contract or
commitment of an unusual or onerous nature, whether or not that contract,
if entered into prior to the date hereof, would constitute a material
contract for the purpose of the Hong Kong Prospectus.
10.8 Waiver: No claim shall be made against the Global Coordinator, Sponsors or
the Hong Kong Underwriters or any of them or against any other Indemnified
Person as defined in clause 13 by the Company or any of its affiliates to
recover any damage, cost, charge or expense which the Company, the Directors or
any of the affiliates of the Company may suffer or incur by reason of or arising
out of the carrying out by the Global Coordinator or Sponsors or Hong Kong
Underwriters or any of them of the work to be done by the Global Coordinator or
Sponsors or Hong Kong Underwriters or any of them pursuant hereto or the
performance of their respective obligations hereunder or otherwise in connection
with the Hong Kong Offering Documents, the Global Offering and any associated
transactions (whether in performance of its duties as underwriter or financial
adviser or otherwise) PROVIDED THAT the aforesaid shall not apply to any damage,
cost, charge or expense by reason of or to the extent arising out of any gross
negligence, wilful default, or wilful and material breach of any of the
obligations hereunder, or fraud, on the part of such Global Coordinator, Sponsor
or Hong Kong Underwriter.
11. Further Undertakings
11.1 The Company: The Company undertakes to each of the Global Coordinator,
Sponsors and Hong Kong Underwriters that:
(a) the Company will comply in all respects with the terms and conditions of
the Hong Kong Public Offering and, in particular, without limitation to
comply with applicable obligations imposed upon it by the Companies
Ordinance and the Hong Kong Listing Rules in respect of or by reason of the
matters contemplated by this Agreement including, but without limitation,
the making of all necessary filings with the Registrar of Companies in Hong
Kong and the Hong Kong Stock Exchange and the making available for
inspection in Hong Kong of the documents and in the manner referred to in
Appendix VI to the Hong Kong Prospectus during the period specified in that
section;
(b) the Company will require that the Share Registrar and the Receiving Bankers
comply with the terms of their respective appointments set out in the
Registrar's Agreement, the Multiple Applications Letter and the Receiving
Bankers' Agreement. None of the terms of the appointments of the Share
Registrar and the Receiving Bankers shall be amended without the prior
written consent of the Sponsors (on behalf of the Hong Kong Underwriters);
Page 18
(c) the Company will procure that there shall be delivered to the Hong Kong
Stock Exchange the declaration in the form set out in Xxxxxxxx 0, Xxxx X xx
xxx Xxxx Xxxx Listing Rules;
(d) the Company will use the net proceeds received by it pursuant to the Global
Offering in the manner specified in the Prospectus under the heading "Use
of proceeds". In the event and to the extent that any such net proceeds is
placed on deposits with banks due to their not immediately being used for
the specific purposes as described in the Prospectus, it shall place such
proceeds on short-term bank deposits;
(e) the Company will pay any tax, duty, levy, fee or other charge or expense
(if any) which may be payable in the Cayman Islands, the PRC and Hong Kong,
whether pursuant to the requirement of any law, rule or regulation or
otherwise, in connection with the creation, allotment and issue of the
Offer Shares, the Global Offering, the execution and delivery of, and the
performance of any of the provisions under, this Agreement;
(f) the Company will maintain a listing for the Shares on the Hong Kong Stock
Exchange for at least one year after the Conditions have been fulfilled
except following a withdrawal of such listing which has been approved by
the relevant shareholders of the Company in accordance with the Hong Kong
Listing Rules or following an offer (within the meaning of the Hong Kong
Code on Takeovers and Mergers) for the Company becoming unconditional;
(g) the Company will procure that the audited accounts of the Company for the
financial years ending 31 December 2004 and 31 December 2005 will be
prepared on a basis consistent in all material respects with the accounting
policies adopted for the purposes of the financial statements contained in
the report of the Reporting Accountants set out in Appendix I to the Hong
Kong Prospectus;
(h) the Company will not without the prior written approval of the Sponsors,
which shall not be unreasonably withheld, within the first year from the
Acceptance Date issue, publish, distribute or otherwise make available to
the public any document, material or information in connection with the
Global Offering (except for the Hong Kong Offering Documents, the Final
Offering Circular, the US Prospectus and except as otherwise provided under
this Agreement); and
(i) the Company will not, at any time after the date of this Agreement up to
and including the date on which all of the Conditions are fulfilled (or
waived) in accordance with this Agreement, amend or agree to amend its
Memorandum and Articles of Association save as requested by the Hong Kong
Stock Exchange.
11.2 Restrictions on Allotment etc.: The Company undertakes to each of the
Global Coordinator, Sponsors and Hong Kong Underwriters that except for
issuances pursuant to (i) the Global Offering, (ii) the exercise of employee
stock options outstanding on the date of the Hong Kong Prospectus, (iii) the
conversion of the outstanding convertible preference shares referred to in the
section headed "Share Capital - Preference Shares" in the Hong Kong Prospectus,
(iv) the exercise of outstanding warrants to purchase Series B convertible
preference shares, (v) the closing of our pending technology transaction with
one of our technology partners, (vi) the subscription of shares by Beida
Microelectronics Investment Ltd. upon its receipt of requisite government
approval to remit the U.S. dollar subscription price and (vii) the 2004 Stock
Option Plan, the 2004 Equity Incentive Plan and the 2004 Employee Stock Purchase
Plan, for a period of 180 days after the date of the US Prospectus, the Company
will not without the Sponsors' prior written consent and unless in compliance
with the requirements of the Hong Kong Listing Rules:
Page 19
(a) offer, sell, contract to sell, pledge, sell any option or contract to
purchase, purchase any option or contract to sell, grant or agree to grant
any option, right or warrant to purchase, lend or otherwise transfer or
dispose of, either directly or indirectly, or repurchase, any of its ADSs
or Shares or securities convertible into or exchangeable or exercisable
for, or that represent the right to receive, ADSs or Shares; or
(b) enter into any swap, hedge or other arrangement that transfers to another,
in whole or in part, any of the economic consequences of ownership of ADSs
or Shares,
whether any of the transactions described in (a) or (b) above is to be settled
by delivery of ADSs, Shares such other securities, in cash or otherwise.
11.3 Effect of Undertakings: The undertakings in this clause 11 shall remain in
full force and effect notwithstanding the completion of the Global Offering and
all matters contemplated in this Agreement.
12. Termination
12.1 Termination by Sponsors: If, at any time prior to 8:00 a.m. on the day that
trading in the Offer Shares commences on the Hong Kong Stock Exchange:
(a) there shall develop, occur, exist or come into effect:
(i) any new law or regulation or any change in existing laws or
regulations or any change in the interpretation or application
thereof by any court or other competent authority of the
Cayman Islands, Hong Kong, the PRC, Japan or the US; or
(ii) any change or development involving a prospective change in,
or any event or series of events involving any change in,
local, national or international financial, political,
military, industrial, economic or market conditions (including
but not limited to a change in the system under which the
value of the Hong Kong currency is linked to that of the
currency of the US or a devaluation of the Renminbi against
any foreign currencies) in the Cayman Islands, Hong Kong, the
PRC, the US or Japan;
(iii) any suspension or material limitation in trading in shares or
securities generally on the New York Stock Exchange or the
Hong Kong Stock Exchange, or minimum or maximum prices for
trading having been fixed, or maximum ranges for prices having
been required, by any of the said exchanges or by such system
or by order of any regulatory or governmental authority, or a
disruption has occurred in securities settlement or clearance
services or procedures in the US, Hong Kong, the PRC, Japan or
the Cayman Islands; or
(iv) a change or development occurs involving a prospective change
in taxation or exchange control (or the implementation of any
exchange control) or currency exchange rates in Hong Kong, the
PRC, the US, Japan or elsewhere; or
(v) any change or prospective change in the condition, financial
or otherwise, or in the earnings, business affairs, business
prospects or trading position of the Company or any member of
the Group; or
Page 20
(vi) any general moratorium on commercial banking activities in
Hong Kong (imposed by the Financial Secretary and/or the Hong
Kong Monetary Authority or other competent authority), New
York (imposed at Federal or New York State level or other
competent authority), the PRC, the Cayman Islands or Japan; or
(vii) any outbreak or escalation of hostilities (whether or not war
is or has been declared) involving the US, the PRC, Hong Kong,
the Cayman Islands or Japan or any escalation thereof, or the
declaration by the US, the PRC, Hong Kong, the Cayman Islands
or Japan of a national emergency or war,
which, in the sole judgment of the Sponsors (for themselves and on
behalf of the Hong Kong Underwriters):
(A) has or is likely to have a material adverse effect on
the business, financial or other condition or prospects
of the Group or, in the case of sub-clause (iv) above, to
any present or prospective shareholder of the Company in
his/its capacity as such; or
(B) has or is likely to have a material adverse effect on the
successful completion of the Global Offering; or
(C) makes it inadvisable or impracticable to proceed with the
Global Offering or the delivery of the Offer Shares on
the terms and in the manner contemplated by the
Prospectuses; or
(b) there comes to the notice of the Sponsors any matter or event showing any
of the Warranties given by the Company in this Agreement to be untrue or
misleading; or
(c) there comes to the notice of the Sponsors any breach on the part of the
Company of any of the provisions of this Agreement or the International
Underwriting Agreement,
then the Sponsors may in their absolute discretion, upon giving notice in
writing to the Company and to the Hong Kong Underwriters, terminate this
Agreement with immediate effect.
12.2 Consequences of Termination: Upon the termination of this Agreement
pursuant to the provisions of clause 2.4 or clause 12.1:
(a) each of the parties hereto shall cease to have any rights or obligations
under this Agreement, save in respect of the provisions of this clause 12.2
and clauses 13, 19, 22 to 25 (inclusive) and any rights or obligations
which may have accrued under this Agreement prior to such termination;
(b) with respect to the Hong Kong Public Offering, all payments made by the
Hong Kong Underwriters or any of them pursuant to clause 6.6 and/or by
successful applicants under Valid Applications shall be refunded forthwith
(in the latter case the Company shall procure that the Share Registrar and
the Nominee despatch refund cheques to all applicants under the Hong Kong
Public Offering in accordance with the Registrar's Agreement and the
Receiving Bankers' Agreement); and
(c) the Hong Kong Underwriters shall not be entitled to the underwriting
commissions referred to in clause 8.1, but the provisions of clause 8.3
relating to expenses shall apply.
Page 21
13. Indemnity
13.1 The Company: The Company undertakes to indemnify and keep indemnified (on
an after-tax basis) and hold harmless each of the Global Coordinator, the
Sponsors and the Hong Kong Underwriters (for itself and on trust for its
directors, officers, employees, agents, assignees and affiliates (the Related
Parties)) (each an Indemnified Person) from and against (i) all and any actions,
claims (whether or not any such claim involves or results in any actions or
proceedings), demands, investigations and proceedings from time to time made or
brought or threatened to be made or brought against such Indemnified Person
(together the Actions), and (ii) all losses, damages, liabilities, payments,
costs or expenses including legal fees and taxes (including stamp duty and any
penalties and/or interest arising in respect of any taxes) (including, without
limitation, all payments, costs or expenses made or incurred arising out of or
in connection with the settlement of any Actions or in investigating, disputing
or defending the same or the enforcement of any such settlement or any judgment
obtained in respect of any Actions) (together the Losses) which may be suffered,
made or incurred by an Indemnified Person (with such amount of indemnity to be
paid to each of the Global Coordinator, the Sponsors and the Hong Kong
Underwriters to cover all the Actions against and Losses incurred by such party
and its Related Parties) arising out of or in connection with:
(a) the proper performance by any of the Global Coordinator, the Sponsors, the
Hong Kong Underwriters or any of them of its or their obligations under
this Agreement; or
(b) the issue, publication, distribution or making available of any of the Hong
Kong Offering Documents or the International Offering Circular or the US
Prospectus (including any amendment thereof or supplement thereto) and/or
any announcement whatsoever in connection with the Global Offering (whether
or not approved by the Sponsors pursuant to clause 19); or
(c) the allotment and issue of the Offer Shares; or
(d) any act or omission resulting in a breach or alleged breach on the part of
the Company of any of the provisions of this Agreement; or
(e) any of the Warranties being untrue, inaccurate or misleading or otherwise
breached or being alleged by any third party to be untrue, inaccurate or
misleading or otherwise breached; or
(f) any breach or alleged breach by the Company of the laws, rules or
regulations of any country or territory resulting from the distribution of
the Hong Kong Offering Documents or the International Offering Circular, or
the US Prospectus and/or any offer, sale or distribution of the Shares
otherwise than in accordance with and on the terms of those documents and
this Agreement; or
(g) the settlement of any investigation or proceeding by any governmental
agency or body, commenced or threatened,
PROVIDED THAT (i) the indemnity in respect of any Action or Loss shall not be
available to any Indemnified Person to the extent that such Action or Loss is
finally judicially determined to have been caused primarily by the gross
negligence, wilful default or misconduct, fraud or material breach of this
Agreement on the part of such Indemnified Person; and (ii) any settlement or
compromise of any Action or Loss by any of the Global Coordinator, Sponsors and
Hong Kong Underwriters or any other Indemnified Person shall be made without
prejudice to any claim, action or demand which any of the other Global
Page 22
Coordinator, Sponsors and Hong Kong Underwriters or any other Indemnified Person
may have or make against the Company under this clause or otherwise under this
Agreement.
13.2 Proceedings: In case any proceeding (including any governmental
investigation) shall be instituted involving any Indemnified Person, such
Indemnified Person shall promptly notify the Company in writing and the Company
shall pay the fees and disbursements of counsel related to such proceeding. Such
Indemnified Person shall, subject to any requirement imposed by any insurer of
the Indemnified Person, consult with the Company and the Sponsors and keep them
informed in relation to such proceeding. Any failure by an Indemnified Person to
notify or consult the Company shall not in any way relieve or reduce the
obligations of the Company to indemnify each and every Indemnified Person under
this clause 13.
13.3 Legal Counsel: Legal counsel to the Indemnified Persons shall be selected
by the Sponsors. The Company may participate at its own expense in the defence
of any such action; provided, however, that counsel to the Company shall not
(except with the consent of the Indemnified Person) also be counsel to the
Indemnified Person. The Company shall not, without the prior written consent of
the Indemnified Person, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this clause (whether or not the Indemnified Persons are actual or
potential parties thereto), unless such settlement, compromise or judgment: (i)
includes an unconditional release of each Indemnified Person from all
liabilities arising out of such litigation, investigation, proceeding or claim;
and (ii) does not include a statement as to the admission of fault by or on
behalf of any Indemnified Person.
14. Remedies, Waivers and Release
14.1 Delay or Omission: No delay or omission on the part of any party hereto in
exercising any right, power or remedy under this Agreement shall:
(a) impair such right, power or remedy; or
(b) operate as a waiver thereof.
14.2 Single or Partial Exercise: The single or partial exercise of any right,
power or remedy under this Agreement shall not preclude any other or further
exercise thereof or the exercise of any other right, power or remedy.
14.3 Cumulative and Not Exclusive: The rights, powers and remedies provided in
this Agreement are cumulative and not exclusive of any rights, powers and
remedies provided by law.
14.4 Release or Compromise: Each party hereto may expressly release or
compromise the liability of any other party hereto or grant time or other
indulgence to any party hereto in any way without releasing or reducing or
compromising the liability of such party or any other party hereto in any other
way.
15. Assignment
15.1 This Agreement shall be binding on, and enure for the benefit of, the
parties hereto and their respective successors, personal representatives and
permitted assigns.
Page 23
15.2 The Global Coordinator, Sponsors and Hong Kong Underwriters or any of them
may assign to any affiliate the benefits of and interests and rights in or
arising under this Agreement. Save as aforesaid, no other party hereto shall
assign or transfer all or any part of any benefit of, or interest or right in,
this Agreement, or any benefit, interest, right or obligation arising under this
Agreement.
16. Further Assurance
The Company shall from time to time, on being required to do so by the Sponsors
now or at any time in the future do or procure the doing of such acts and/or
execute or procure the execution of such documents as the Sponsors may consider
necessary to give full effect to this Agreement and securing to the Global
Coordinator, the Sponsors and the Hong Kong Underwriters or any of them the full
benefit of the rights, powers and remedies conferred upon them or any of them in
this Agreement.
17. Entire Agreement
17.1 This Agreement and any other documents referred to in this Agreement
constitute the whole and only agreement between the Company, the Global
Coordinator, the Sponsors and the Hong Kong Underwriters relating to the
underwriting of the Hong Kong Public Offering and supersedes and extinguishes
any other prior drafts, agreements, undertakings, representations, warranties
and arrangements of any nature whatsoever, whether or not in writing, relating
thereto made or given by any other party or any other person, whether or not in
writing, at any time prior to the execution of this Agreement (Pre-contractual
Statements).
17.2 Each party hereto acknowledges that in entering into this Agreement on the
terms set out in this Agreement it is not relying upon any Pre-contractual
Statement which is not expressly set out herein or the documents referred to
herein.
17.3 No party shall have any right of action (except in the case of fraud)
against any other party to this Agreement arising out of or in connection with
any Pre-contractual Statement except to the extent that such Pre-contractual
Statement is repeated in this Agreement or the documents referred to herein.
17.4 This Agreement may only be varied in writing signed by each of the parties
hereto.
18. Notices
18.1 Form: Any notice or other communication given or made under this Agreement
shall be in writing (other than writing on the screen of a visual display unit
or other similar device which shall not be treated as writing for the purpose of
this clause) and shall, unless otherwise specified, be in English.
18.2 Delivery: Any such notice or other communication shall be addressed as
provided in clause 18.3 and, if so addressed, shall be deemed to have been duly
given or made as follows:
(a) if sent by personal delivery, upon delivery at the address of the relevant
party;
(b) if sent by post, five Business Days after the date of posting; and
(c) if sent by facsimile, upon despatch to the facsimile number of the
recipient, with the production of a transmission report by the machine from
which the facsimile was sent which indicates that the facsimile was sent in
its entirety to the facsimile number of the recipient and provided that a
confirmation copy of such notice or communication
Page 24
shall be sent by post to the addressee concerned not later than the
Business Day immediately following the date of despatch of the facsimile.
18.3 Addresses: The relevant addressee, address and facsimile number of the
Company for the purposes of this Agreement, subject to clause 18.4, is set out
below. The relevant addressee, address and facsimile number of CSFB, Deutsche
Bank and the other Hong Kong Underwriters are set out in Schedule 1.
Name of Party Address Facsimile No.
------------- ------- -------------
The Company 00 Xxxxxxxxxx Xxxx x00 00 0000 0000
Xxxxxx Xxx Xxxx
Xxxxxxxx 000000
PRC
Attention: Xxxxxx Xxx
Copy to: Company Secretary
18.4 Change of Details: A party may notify the other parties to this Agreement
of a change to its relevant addressee, address or facsimile number for the
purposes of clause 18.3 provided that such notification shall only be effective
on:
(a) the date specified in the notification as the date on which the change is
to take place; or
(b) if no date is specified or the date specified is earlier than the date on
which a notice is deemed under clause 18.2 above to have been duly given,
the date on which such notice is so deemed to have been duly given.
19. Announcements
19.1 No Announcement: Subject to clause 19.2, no announcement concerning the
Hong Kong Public Offering or any ancillary matter shall be made by any of the
parties hereto without the prior written approval of the Sponsors, such approval
not to be unreasonably withheld or delayed.
19.2 Permitted Announcement: Any party hereto may make an announcement
concerning the Hong Kong Public Offering or any ancillary matter if and to the
extent:
(a) required by law or by an order of a court of competent jurisdiction;
(b) required by any securities exchange or regulatory or governmental body to
which such party is subject or submits, wherever situated, including,
without limitation, the Hong Kong Stock Exchange, whether or not the
requirement has the force of law; or
(c) the Sponsors have given prior written approval to the making of the
announcement,
PROVIDED THAT in relation to paragraphs (a) and (b) above any such announcement
shall be made only after consultation (where reasonably practicable) with the
Sponsors.
19.3 Period: The restrictions contained in this clause shall continue to apply
for a period of one year after the execution of this Agreement. The Company
shall procure compliance by its subsidiaries with the provisions of this clause.
Page 25
20. Time of Essence
Any time, date or period referred to in this Agreement may be extended by mutual
agreement between the Company and the Sponsors (for themselves and for and on
behalf of the other Hong Kong Underwriters). Save as otherwise expressly
provided, as regards any date or period originally fixed or any date or period
so extended as aforesaid, time is of the essence of this Agreement.
21. Invalidity
If at any time any provision of this Agreement is or becomes illegal, invalid or
unenforceable in any respect under the law of any jurisdiction, that shall not
affect or impair:
(a) the legality, validity or enforceability in that jurisdiction of any other
provision of this Agreement; or
(b) the legality, validity or enforceability under the law of any other
jurisdiction of that or any other provision of this Agreement.
22. Governing Law
This Agreement shall be governed by and construed in accordance with Hong Kong
law.
23. Dispute Resolution
23.1 Arbitration: Subject to the option in favour of each of the Global
Coordinator, Sponsors and Hong Kong Underwriters (as set out in clause 23.2
below), any dispute, controversy or claim arising out of or relating to this
Agreement, or the breach, termination or invalidity thereof, shall be referred
to and finally resolved by arbitration in accordance with the UNCITRAL
Arbitration Rules (the Rules) as in force from time to time and as may be
amended by the rest of this clause.
There shall be three arbitrators. The appointing authority shall be the Hong
Kong International Arbitration Centre (HKIAC).
Where there are multiple parties, whether as Claimant or as Respondent, the
multiple Claimants, jointly, shall appoint a Claimants-appointed arbitrator, and
the multiple Respondents, jointly, shall appoint a Respondents-appointed
arbitrator for the purpose of Article 7(1) of the Rules. The Claimants-appointed
arbitrator and the Respondents-appointed arbitrator shall then choose the third
arbitrator who will act as presiding arbitrator of the tribunal.
The place of arbitration shall be Hong Kong, and the arbitration shall be
administered by HKIAC.
The governing law of the arbitration proceedings shall be the laws of Hong Kong.
The language to be used in the arbitral proceedings shall be English.
By agreeing to arbitration pursuant to this clause, the parties waive
irrevocably their right to any form of appeal, review or recourse to any state
court or other judicial authority, insofar as such waiver may be validly made.
The award is given by a majority decision. If there be no majority, the award
shall be made by the Chairman of the arbitral tribunal alone.
Page 26
23.2 Option: Notwithstanding clause 23.1 above, the Company agrees for the
benefit of each of the Global Coordinator, the Sponsors and the Hong Kong
Underwriters that each of the Global Coordinator, the Sponsors and the Hong Kong
Underwriters shall have the sole right to commence proceedings in the courts of
Hong Kong (and any other court having jurisdiction) to settle any disputes
(including claims for set-off and counterclaims) and enforce any rights which
may arise in connection with the validity, effect, interpretation or performance
of, or the legal relationships established by, this Agreement or otherwise
arising in connection with this Agreement.
23.3 Waiver: The Company irrevocably waives (and irrevocably agrees not to
raise) any objection which it may now or hereafter have to the laying of the
venue of any proceedings in any court of competent jurisdiction and any claim of
forum non conveniens and further irrevocably agrees that a judgment in any
proceedings brought in any court referred to in this clause shall be conclusive
and binding upon it and may be enforced in the courts of any other jurisdiction.
23.4 Agents for Service: The Company hereby irrevocably authorises and appoints
Xx Xxxx Xxx Yui Chen of 000, Xxxxx X, Xxxxx'x Xxxxxx, 0 Xxx Xxxx Xxxx, Xxxx Xxxx
(or such persons, being resident in Hong Kong, as the Company may from time to
time appoint as the Company's agents for service pursuant to the requirements of
Part XI of the Companies Ordinance) to accept service of all legal process,
including service of a notice of arbitration under the Rules, arising out of or
connected with this Agreement and service on such persons shall be deemed to be
service on the Company.
23.5 Commencement in Other Jurisdiction: Should court proceedings be commenced
by the Global Coordinator, either of the Sponsors or a Hong Kong Underwriter in
any jurisdiction other than Hong Kong pursuant to clause 23.2, upon being given
notice of such proceedings in writing, the party against whom such proceedings
have been brought shall immediately appoint an agent to accept service of
process in that jurisdiction and shall give notice to the relevant Global
Coordinator, Sponsor or Hong Kong Underwriter of the details and address for
service of such agent.
24. Immunity
To the extent that any party hereto may in any court proceedings arising out of
or in connection with this Agreement or in any proceedings taken for the
enforcement of any determination, decision, order or award made in such court
proceedings claim for itself or its assets immunity from suit or other legal
process or to the extent that in any such court or enforcement proceedings there
may be attributed to itself or its assets such immunity (whether or not
claimed), such party hereby irrevocably waives such immunity and consents, in
respect of any such court or enforcement proceedings, to the giving of any
relief or the issue of any process including, without limitation, the making,
enforcement or execution against property whatsoever (irrespective of its use or
intended use) to the full extent permitted by applicable laws.
25. Judgment Currency Indemnity
25.1 Conversion into Another Currency: If for the purposes of obtaining judgment
in any court by the Company or the Global Coordinator or either of the Sponsors
or a Hong Kong Underwriter as the case may be (for the purposes of this clause,
the Claiming Party) it is necessary to convert a sum due hereunder into any
currency other than HK dollars, the parties hereto agree, to the fullest extent
that they may effectively do so, that the rate of exchange used shall be the
rate at which in accordance with normal banking procedures such Claiming Party
could purchase HK dollars with such other currency in Hong Kong on the Business
Day preceding that on which final judgment is given.
Page 27
25.2 Discharge of Obligation: The obligation of any party hereto in respect of
any sum due from such party (for the purposes of this clause, the Obligor) to
any Claiming Party shall, notwithstanding any judgment in a currency other than
HK dollars, not be discharged until the first Business Day following receipt by
such Claiming Party of any sum adjudged to be so due in such other currency, on
which (and only to the extent that) such Claiming Party may in accordance with
normal banking procedures purchase HK dollars with such other currency.
25.3 Obligor's Indemnity: If the HK dollars purchased pursuant to this clause
are less than the sum originally due to the Claiming Party, such Obligor agrees,
as a separate obligation and notwithstanding any such judgment, to indemnify the
Claiming Party against such loss.
25.4 Claiming Party's Obligation: If the HK dollars purchased pursuant to this
clause are greater than the sum originally due to the Claiming Party, the
Claiming Party agrees, as a separate obligation and notwithstanding any such
judgment, to repay to the Obligor an amount equal to the excess of the HK
dollars so purchased over the sum originally due hereunder to the Claiming
Party.
26. Counterparts
26.1 This Agreement may be executed in any number of counterparts, and by the
parties on separate counterparts, but shall not be effective until each party
has executed at least one counterpart.
26.2 Each counterpart shall constitute an original of this Agreement, but all
the counterparts shall together constitute but one and the same instrument.
IN WITNESS whereof this Agreement has been executed under hand by or on behalf
of the parties hereto the day and year first above written.
Page 28
SCHEDULE 1
HONG KONG UNDERWRITERS
Name Address Percentage of Hong Number of Hong
---- ------- ------------------- --------------
Kong Public Kong Offer Shares
------------ -----------------
Offering Underwritten
--------- ------------
Underwritten
------------
Credit Suisse First Boston 45/th/ Floor 38.5% 99,168,000
Two Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxx Xxxx
Deutsche Bank AG, Hong Kong Branch 55/th/ Floor 31.5% 81,136,000
Xxxxxx Kong Center
0 Xxxxx'x Xxxx Xxxxxxx
Xxxx Xxxx
BOCI Asia Limited 00/xx/ Xxxxx, Xxxx xx Xxxxx 5% 12,879,000
Tower
0 Xxxxxx Xxxx
Xxxxxxx, Xxxx Xxxx
The Hongkong and Shanghai Banking Xxxxx 00 5% 12,879,000
Corporation Limited 0 Xxxxx'x Xxxx Xxxxxxx
Xxxx Xxxx
SinoPac Securities (Asia) Limited 23/F Two International 5% 12,879,000
Finance Centre
0 Xxxxxxx Xxxxxx
Xxxxxxx, Xxxx Xxxx
CSC Securities (HK) Limited Unit 3204-09, Cosco Tower 3% 7,727,000
000 Xxxxx'x Xxxx Xxxxxxx
Xxxx Xxxx
DBS Asia Capital Limited 16/th/ Floor 3% 7,727,000
Man Xxx Xxxxxxxx
00 Xxx Xxxxx Xxxx
Xxxxxxx, Xxxx Xxxx
First Shanghai Securities Ltd 19/th/ Floor 3% 7,727,000
Wing Xx Xxxxx
00 Xxx Xxxxx Xxxx
Xxxxxxx, Xxxx Xxxx
Kingston Securities Ltd. 2801 One International 3% 7,727,000
Finance Centre
0 Xxxxxxx Xxxx Xxxxxx
Xxxxxxx, Xxxx Xxxx
Xxxxx Xxxxx Securities Ltd. 28/F Bank of China Tower 3% 7,727,000
0 Xxxxxx Xxxx
Xxxxxxx, Xxxx Xxxx
Page 29
SCHEDULE 2
THE CONDITIONS PRECEDENT DOCUMENTS
Part A
1. Legal Documents
1.1 A certified copy of the resolutions of the shareholders of the Company
referred to in the sections headed "1. Further Information About the Company -
c. Resolutions of the Shareholders of the Company", "2. Repurchase of Our Shares
- a. Relevant Legal and Regulatory Requirements - (i) Shareholders Approval" "7.
Share Option Schemes - Stock Option Plan" and "7. Share Option Schemes -
Employee Stock Purchase Plan", in Appendix V to the Prospectus.
1.2 A certified copy of the resolutions of the Directors:
(a) considering the Prospectus and the Verification Notes in detail;
(b) approving and authorizing the execution on behalf of the Company of this
Agreement together with all other agreements and documents necessary for or
to give effect to the Global Offering and implementing the listing of the
Shares;
(c) approving the Global Offering;
(d) approving and authorising the issue and the registration with the Registrar
of Companies in Hong Kong of the Hong Kong Offering Documents.
1.3 Two signed originals of the Receiving Bankers' Agreement.
1.4 Two certified copies of the Registrar's Agreement.
1.5 Two certified copies of the Multiple Applications Letter duly signed by the
parties thereto.
2. Documents Relating to the Hong Kong Public Offering
2.1 Seven printed copies of each of the Hong Kong Prospectus and the
Application Forms, each duly signed by the Directors or their respective duly
authorised attorneys and, if signed by their respective duly authorised
attorneys, certified copies of the relevant power of attorney or authorisation
document.
2.2 An original copy or copies of the Verification Notes signed by or on behalf
of each person to whom responsibility is therein assigned.
2.3 Two signed original copies of the accountants' report dated the Prospectus
Date issued by the Reporting Accountants, the text of which is contained in
Appendix I to the Hong Kong Prospectus.
2.4 Two original letters dated the Prospectus Date from the Reporting
Accountants addressed to the Hong Kong Underwriters confirming, inter alia, the
indebtedness statement
Page 30
contained in the Hong Kong Prospectus and commenting on the statement contained
in the Hong Kong Prospectus as to the sufficiency of working capital and on the
other financial information set out in the Hong Kong Prospectus, such letter to
be in the form previously approved by the Sponsors on behalf of the Hong Kong
Underwriters.
2.5 An original comfort letter dated the date of this Agreement from the
Reporting Accountants addressed to the Hong Kong Underwriters.
2.6 Two signed original copies of the letter, summary of values and valuation
certificate dated the Prospectus Date issued by Chesterton Xxxxx Ltd., the text
of which is contained in Appendix III to the Hong Kong Prospectus.
2.7 Two signed originals of the letter from Xxxxxx and Xxxxxx Asia referred to
in Appendix IV to the Hong Kong Prospectus.
2.8 A certified copy of each of the letters referred to in the section headed
"8. Other Information - i. Consents" in Appendix V to the Hong Kong Prospectus
containing consents to the issue of the Prospectus with the inclusion of
references to the respective parties' names, and where relevant their reports,
letters and valuation certificates in the form and context in which they are
included.
2.9 One certified copy of a letter from the Registrar of Companies Hong Kong
confirming that the Hong Kong Prospectus has been registered pursuant to section
342C of the Companies Ordinance.
2.10 A letter or facsimile to the Sponsors (for themselves and on behalf of the
Hong Kong Underwriters) from Xxxxxxxxx and May confirming that the documents
referred to in the paragraph headed "Documents delivered to the Registrar of
Companies" in Appendix VI to the Hong Kong Prospectus have been delivered to the
Registrar of Companies in Hong Kong as required by section 342C of the Companies
Ordinance.
2.11 A certified copy of each of the material contracts referred to in the
section headed "3. Further Information About Our Business - a. Summary of
material contracts" in Appendix V to the Hong Kong Prospectus (other than this
Agreement).
2.12 Certificates as to the accuracy of the Chinese translation of the Hong Kong
Offering Documents given by the relevant translator thereof together with a
certificate issued by the Sponsors as to the competency of such translator in
respect of the Hong Kong Offering Documents.
2.13 A certified copy of the listing agreement executed by the Company and
delivered to the Hong Kong Stock Exchange.
3. Legal Opinions
A facsimile copy (with two original signed copies to follow as soon as possible)
of each of: (i) the legal opinion from Jingtian & Gongcheng in respect of
properties owned and leased by the Group; and (ii) the legal opinions from
Jingtian & Gongcheng in respect of the PRC Subsidiaries and various contracts
and operation arrangements of the Group governed under PRC laws, each in forms
satisfactory to the Sponsors.
4. Other Documents
4.1 A certified copy of an original confirmation letter from each Director of
the Company to the Sponsors confirming that he has, and an original confirmation
letter from the Company
Page 31
to the Sponsors confirming that the Directors have, read and understood the
memorandum entitled "Memorandum for the Directors Summarising their Duties in
respect of the Proposed Offering of Ordinary Shares and Listing on the Stock
Exchange of Hong Kong Limited" prepared by Xxxxxxxxx and May and that Xxxxxxxxx
and May has explained the contents of the relevant memorandum to him.
4.2 Two certified copies of each of the following:
(a) the responsibility letters, powers of attorney and statements of interests
signed by each Director;
(b) the Form B signed by each Director.
4.3 One certified copy of each of the following:
(a) the certificate of incorporation of the Company;
(b) the business licence of each of the PRC Subsidiaries;
(c) the certificate of registration of the Company under Part XI of the
Companies Ordinance.
Part B
1. Two original bringdown comfort letters addressed to the Hong Kong
Underwriters from the Reporting Accountants dated as of the date of the Closing
in form and substance satisfactory to the Sponsors.
2. Two signed originals of the legal opinion from each of Jingtian & Gongcheng
and Haiwen & Partners concerning such matters as the Sponsors may reasonably
require.
3. Two signed originals of the legal opinion from Xxxxxx and Xxxxxx concerning
such matters as the Sponsors may reasonably require.
4. Two signed originals of the Hong Kong legal opinions from each of Xxxxxxxxx
and May and Freshfields Bruckhaus Xxxxxxxx concerning such matters as the
Sponsors may reasonably require.
5. Two signed originals of the legal opinion from each of Shearman & Sterling
LLP and Skadden, Arps, Slate, Xxxxxxx and Xxxx LLP concerning such matters as
the Sponsors may reasonably require.
6. A certified copy/copies of the resolutions of the board committee of the
Company relating to the Global Offering approving, among other things, the basis
of allotment and allotment of Shares to allottees.
Page 32
SCHEDULE 3
THE WARRANTIES
1. The Hong Kong Prospectus, the Formal Notice, the Application Forms and the
documents required to be filed with the Hong Kong Stock Exchange pursuant to
rule 9.11 and 9.12 of the Hong Kong Listing Rules contain all information
required by the applicable requirements of the Companies Ordinance, the SFO, any
other applicable Hong Kong government regulations or legislation, the Companies
Law (2003 Revision) of the Cayman Islands, the Hong Kong Listing Rules, and all
other rules and regulations of the Hong Kong Stock Exchange. The Hong Kong
Prospectus contains all such information which are necessary to enable investors
to make an informed assessment of the assets and liabilities, financial
position, profits and losses, and prospects of the Company and its subsidiaries
and the rights attaching to the Offer Shares. In addition, the Hong Kong
Prospectus, as of the date thereof and as of the date hereof did not and does
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in the circumstances under which they were made, not
misleading in any material respect, except that this representation and warranty
shall not apply to any statements or omission made in reliance upon and in
conformity with information furnished to the Company by the Global Coordinator,
the Joint Sponsors or the Hong Kong Underwriters.
2. The Company has been duly incorporated and is a validly existing company
limited by shares in good standing under the laws of the Cayman Islands, with
power and authority (corporate and other) to own its properties and conduct its
business in a manner presently conducted and as described in the Prospectuses;
and the Company is duly qualified to do business as a foreign corporation in
good standing in all other jurisdictions in which its ownership or lease of
property or the conduct of its business requires such qualification, except
where the failure to be so qualified or be in good standing would not
individually or in the aggregate have a material adverse effect on the condition
(financial or other), business, properties, business prospects or results of
operations of the Company and its subsidiaries taken as a whole (Material
Adverse Effect).
3. The Company's Articles of Association comply with the requirements of the
Hong Kong Listing Rules and applicable laws of the Cayman Islands, including the
Companies Law (2003 Revision), and are in full force and effect. Neither the
Company nor any of its Subsidiaries is (A) in violation of its Memorandum of
Association or Articles of Association (or other constitutive documents) or (B)
in default of the performance or observance of any material obligation,
agreement, covenant or condition contained in any contract, indenture, mortgage,
deed or trust, loan or credit agreement, note, license, lease or other agreement
or instrument to which it is a party or by which it may be bound, or to which
any of its properties or assets may be subject (and no event has occurred which,
with the giving of notices or lapse of time or both, would constitute such
default). Neither the Company nor any of its subsidiaries has taken any action
nor have any steps been taken or legal, legislative, or administrative
proceedings been started or threatened (x) to wind up, dissolve, or eliminate
the Company or any of its subsidiaries or (y) to withdraw, revoke or cancel the
Company's or any of its subsidiaries' licenses, other than the withdrawal of the
Company's license to do business in the State of California, US.
4. The section headed "1. Further Information About Our Company - e. Our
subsidiaries" in Appendix V to the Hong Kong Prospectus correctly identifies
each of the
Page 33
PRC Subsidiaries. Each PRC Subsidiary is a wholly owned subsidiary of the
Company, duly incorporated and is validly existing under the laws of the PRC
with full legal right, power and authority (corporate or other) to own, use,
lease and operate its properties, conduct its business in the manner presently
conducted and, if such manner is described in the Prospectuses, as described in
the Prospectuses, and is duly qualified to conduct business in each jurisdiction
in which it conducts business and, except as disclosed in the Prospectuses, is
duly qualified to own, use, lease and operate its properties in each
jurisdiction in which it owns or leases properties and such qualification is
required, or is and will be subject to no material liability or disability by
reason of the failure to be so qualified in any such jurisdiction. Each PRC
Subsidiary has been duly established as a wholly foreign-owned enterprise with
limited liability legal person status under the laws and regulations of the PRC
and: (i) all approvals, permits, licenses, registrations and qualifications
required by the laws and regulations of the PRC for establishing a wholly
foreign-owned enterprise have been duly obtained from appropriate government
authorities of the PRC in connection with the establishment of each PRC
subsidiary and all such approvals, permits, licenses, registrations and
qualifications are subsisting with no charge, amendment or limitation which is
reasonably likely to have a Material Adverse Effect; (ii) with respect to
Semiconductor Manufacturing International (Shanghai) Corporation (SMIC
Shanghai), the entire amount of registered capital as stated in its articles of
association and business license as amended from time to time has been fully and
timely contributed by the Company, verified by qualified independent accounting
firms confirming the Company's contribution of the entire amount of registered
capital of SMIC Shanghai, and filed and registered with relevant PRC
registration authorities. The Company's equity interest in SMIC Shanghai is free
and clear of any security interest, mortgage, pledge, lien, encumbrance, claim
or equity in favor of any third party. With respect to Semiconductor
Manufacturing International (Beijing) Corporation (SMIC Beijing), the Company
has contributed the first instalment payment to the registered capital of SMIC
Beijing, which instalment has been verified by a qualified independent
accounting firm, and filed and registered with relevant PRC registration
authorities. The Company's equity interest in SMIC Beijing is free and clear of
any security interest, mortgage, pledge, lien, encumbrance, claim or equity in
favor of any third party. The balance is required to be paid up prior to July
24, 2004. In connection with Semiconductor Manufacturing International (Tianjin)
Corporation (SMIC Tianjin), a monetary portion of the first instalment of its
registered capital has been fully paid up and verified by a qualified
independent accounting firms confirming the Company's contribution of same, and
the second instalments are required to be contributed by the Company prior to
December 31, 2005. Except as disclosed in the Prospectuses, the Company's
interest in SMIC Tianjin is free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity in favor of any third party; (iii)
the articles of association of each PRC Subsidiary comply with all applicable
laws and regulations of the PRC and have been approved by relevant PRC
governmental authorities and are in full force and effect; (iv) SMIC Tianjin is
under no regulatory requirement for an annual review due to its recent
establishment. SMIC Shanghai has passed its 2001 annual examination 2002 annual
examination due to the registration authorities' issuance of a new business
license reflecting its increase in registered capital. SMIC Beijing has passed
2002 annual examination by governmental authorities. Neither SMIC Shanghai nor
SMIC Beijing has been found to have any deficiency or default under PRC laws and
regulations, and both SMIC Shanghai and SMIC Beijing have timely received all
requisite certifications from each applicable governmental authority in respect
of such annual examinations; (v) SMIC Shanghai is duly accredited as an
integrated circuit production enterprise under the laws and regulations of the
PRC, and is entitled to preferential industrial and taxation policies
promulgated by the State Council of the PRC as described in the Prospectuses.
SMIC Beijing and SMIC Tianjin have not yet received accreditation as integrated
circuit production enterprises, and the Company expects SMIC Beijing and SMIC
Tianjin to timely receive, their respective accreditation as integrated circuit
production enterprise.
Page 34
5. The section headed "1. Further Information About Our Company - e. Our
subsidiaries" in Appendix V to the Hong Kong Prospectus correctly identifies
each Non-PRC Subsidiary. Each Non-PRC Subsidiary of the Company has been duly
incorporated or established and is an existing corporation in good standing
under the laws of the jurisdiction of its incorporation or establishment, with
power and authority (corporate and other) to own its properties and conduct its
business as described in the Prospectuses; and each Non-PRC Subsidiary of the
Company is duly qualified to do business as a foreign corporation or entity in
good standing in all other jurisdictions in which its ownership or lease of
property or the conduct of its business requires such qualification, except
where the failure to be so qualified or be in good standing would not have a
Material Adverse Effect; all of the issued and outstanding capital stock of each
Non-PRC Subsidiary of the Company has been duly authorized and validly issued
and is fully paid and nonassessable; and the capital stock of each Non-PRC
Subsidiary owned by the Company, directly or through subsidiaries, is owned free
from and clear of all liens, charges, encumbrances and defects.
6. The authorized and issued share capital of the Company as of the dates
indicated is correctly set forth in the sections headed "Share capital" and
"Financial Information - Capitalization" in the Hong Kong Prospectus. The shares
of outstanding capital stock of the Company have been issued in compliance with
all applicable securities laws. Except as disclosed in the Prospectuses, there
are no outstanding options to purchase, or any preemptive rights or other rights
to subscribe for or to purchase, any securities or obligations convertible into,
or any contracts or commitments to issue or sell, shares of the Company's
capital stock or any such options, rights, convertible securities or
obligations. The Offer Shares, and all other outstanding shares of capital stock
of the Company have been duly authorized; all outstanding shares of capital
stock of the Company are, and, when the International Offer Shares and US Offer
Shares have been delivered and paid for in accordance with the International
Underwriting Agreement on each Closing Date (as defined therein) and when the
Hong Kong Offer Shares have been delivered and paid in accordance with this
Agreement and on the terms of the Hong Kong Prospectus, the Offer Shares will
have been validly issued, fully paid and nonassessable and will conform to the
description thereof contained in the Prospectuses; the holders of the Offer
Shares, (including the Depositary, which will hold Shares on behalf of holders
from time to time of American depositary receipts which evidence ADSs), against
payment of the purchase price in accordance with the International Underwriting
Agreement on each Closing Date (as defined therein) and this Agreement, will be,
except subject to the terms and provisions of the Deposit Agreement, entitled to
all the rights of a shareholder conferred by the Memorandum of Association and
Articles of Association of the Company and the Companies Ordinance and Cayman
Islands law; there are no restrictions on transfers of the Offer Shares, except
as disclosed in the Prospectuses; the Shares may be freely deposited by the
Company with the Depositary against issuance of ADRs as contemplated in the
Deposit Agreement; and the Offer Shares are freely issuable and transferable by
or on behalf of the Company to or for the account of the several Underwriters.
7. The statements contained in the Prospectus:
(a) under the heading "Working Capital" in the section headed "Financial
Information"; and
(b) under the heading "Use of Proceeds and Future Plans and Prospects",
represent the true and honest belief of the Directors arrived at after due,
proper and careful consideration and enquiry.
Page 35
8. In respect of the connected transactions (as defined under the Hong Kong
Listing Rules) between the Company and any connected person (as defined under
the Hong Kong Listing Rules) (the Connected Transactions):
(a) the statements contained in the Prospectus relating to the Connected
Transactions are true and accurate in all material respects and there are
no other facts known to the Directors the omission of which would make any
such statements misleading in all material respects, and there are no other
Connected Transactions which have not been disclosed or reflected in the
Prospectus;
(b) all information (including but not limited to historical figures) and
documentation provided by the Company to the Sponsors and the Hong Kong
Underwriters and their professional advisers are true and accurate and
there is no other information or document which have not been provided the
result of which would make the information and documents so received
misleading in any material respect;
(c) the Company (insofar as it is a party to any Connected Transactions) has
complied with and will continue to comply with the Hong Kong Listing Rules
in relation to Connected Transactions including ensuring that the terms of
such Connected Transactions are fair and reasonable so far as the
shareholders of the Company are concerned;
(d) the Company has complied with and undertakes to continue to comply with the
terms of the Connected Transactions disclosed in the Prospectus so long as
the agreement relating thereto is in effect and shall inform the Joint
Sponsors should there by any breach of any such terms either before or
after the listing of Shares on the Hong Kong Stock Exchange; and
(e) each of the Connected Transactions and the Connected Transaction agreements
as disclosed in the Prospectus constitutes a legal, valid and binding
agreement, enforceable in accordance with its terms by the relevant member
of the Group against the other party.
9. Save as described in the section headed "Connected Transactions and other
Related Party Transactions" in the Prospectus, there are no other connected
transactions (as defined in the Hong Kong Listing Rules) which the Company
and/or any of the Subsidiaries has entered into.
10. All material contracts to which any member of the Group is a party which are
required to be filed with the Hong Kong Registrar of Companies will be filed.
11. There are no contracts, agreements or understandings between the Company and
any person that would give rise to a valid claim against the Company or any
Underwriter for a brokerage commission, finder's fee or other like payment in
connection with the Global Offering.
12. The Hong Kong Offer Shares have (as at the date of this Agreement) been
approved in principle for listing, will (as at the Closing) be approved for
listing subject to allotment and issue of Shares, and will (immediately prior to
commencement of dealings in the Offer Shares on the Hong Kong Stock Exchange)
have been formally approved for listing.
13. No consent, approval, authorization, or order of, clearance by, or
registration or filing with, any governmental agency or body or any court or any
stock exchange is required to be obtained or made by the Company for the
consummation of the transactions contemplated by
Page 36
this Agreement, the Receiving Bankers Agreement or the Registrars Agreement in
connection with the issuance of the Offer Shares by the Company, including the
deposit of any Securities represented by the ADSs with the Depositary and the
issuance of the ADRs evidencing the ADSs, the listing of all of the Company's
Shares (including the Offer Shares) in ordinary form on the Hong Kong Stock
Exchange and the listing of the ADSs on the New York Stock Exchange, the offer
of the Hong Kong Offer Shares, except such consents, approvals, authorizations,
orders, clearances, registrations or filings as have been obtained or made and
are in full force and effect under the Securities Act, the Japanese Rules and
Regulations (as defined herein) and such as may be required under applicable
state securities laws, blue sky laws in the United States, Hong Kong, the Cayman
Islands and the Foreign Exchange and Foreign Trade Law of Japan and the rules of
the National Association of Securities Dealers, Inc. (NASD).
14. Except as disclosed in the Prospectuses, under current laws and regulations
of the Cayman Islands and any political subdivision thereof, all dividends and
other distributions declared and payable on the Offer Shares, including those
represented by the ADSs, may be paid by the Company to the holder thereof in
United States dollars or Hong Kong dollars and all such payments made to holders
thereof who are non-residents of the Cayman Islands will not be subject to
income, withholding or other taxes under laws and regulations of the Cayman
Islands or any political subdivision or taxing authority thereof or therein and
will otherwise be free and clear of any other tax, duty, withholding or
deduction in the Cayman Islands or any political subdivision or taxing authority
thereof or therein and without the necessity of obtaining any governmental
authorization in the Cayman Islands or any political subdivision or taxing
authority thereof or therein.
15. The execution, delivery and performance of this Agreement, the Receiving
Bankers' Agreement, the Registrar's Agreement and the International Underwriting
Agreement, and the consummation of the transactions contemplated in each of
them, and the issuance and sale of the Offer Shares, including the deposit of
any Securities represented by the ADSs with the Depositary and the issuance of
the ADRs evidencing the ADSs, the offering of the Hong Kong Offer Shares and the
listing of all of the Company's Shares (including the Offer Shares) in ordinary
form on the Hong Kong Stock Exchange and the listing of the ADSs on the New York
Stock Exchange, do not and will not result in a breach or violation of any of
the terms and provisions of, or constitute a default or require any consent
under, (i) any statute, rule, regulation or order of any governmental agency or
body or any court, domestic or foreign, having jurisdiction over the Company or
any subsidiary of the Company or any of their properties, (ii) any agreement or
instrument to which the Company or any such subsidiary is a party or by which
the Company or any such subsidiary is bound or to which any of the properties of
the Company or any such subsidiary is subject except for any breach, violation
or default which would not have a Material Adverse Effect, or (iii) the
Memorandum of Association or Articles of Association or any other constituent
document of the Company or any such subsidiary.
16. Each of this Agreement, the Receiving Bankers' Agreement, the Registrar's
Agreement and the International Underwriting Agreement (and the other agreements
contemplated herein and therein) has been or will be duly authorized, executed
and delivered by the Company and constitutes a legal, valid and binding
agreement of the Company.
17. The sixth amended and restated registration rights agreement, dated February
23, 2004 by and among the Shareholders of the Company listed in Annex A through
D thereof and the Company (the Registration Rights Agreement) has been duly
authorized, executed and delivered by or on behalf of the Company and
constitutes a legal, valid and binding agreement of the Company, enforceable in
accordance with its terms against the Company except as enforcement thereof may
be limited by bankruptcy, insolvency, fraudulent transfer,
Page 37
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general principles of equity.
18. Except as disclosed in the Prospectuses, each of the Company and its
Subsidiaries has good and marketable title to all real properties and all other
properties and assets owned by them which is, in each case, material to their
business or operations, in each case free from and clear of all liens,
encumbrances, charges, defects, claims, options or restrictions that would
materially affect the value thereof or materially interfere with the use made or
to be made thereof by them; and except as disclosed in the Prospectuses, the
Company and its Subsidiaries hold all material leased real or personal property
under valid and enforceable leases with no exceptions that would materially
interfere with the use made or to be made thereof by them, except that pursuant
to the Land Use Right Transfer Contract (the Beijing Land Contract) entered into
between SMIC Beijing and the Building & Land Administration Department of
Beijing Economy and Technology Development Area on December 31, 2002, use of the
land stipulated in the Beijing Land Contract is confined to construction of
micro-electronic factories; if products manufactured by SMIC Beijing are not
micro-electronics, SMIC Beijing is required to pay additional land premium based
on the then standard land price announced by Beijing Economic and Technological
Development Area; if SMIC Beijing transfers or leases the land use right to a
third party or SMIC Beijing carries out other business activities, SMIC Beijing
is required to pay additional land premium based on the then standard land price
announced by Beijing Economic and Technological Development Area; if SMIC
Beijing mortgages the land use right and a mortgagee forecloses the mortgaged
property, the mortgagee has to deduct the land premium which will be the then
standard land use price announced by Beijing Economic and Technological Area,
from the sale proceeds and then pay the land premium to the Building and Land
Administration Bureau of Beijing Economic and Technological Development Area;
and except as disclosed in the Prospectuses, the Company and its subsidiaries
hold all leased real or personal property under valid and enforceable leases
with no exceptions that would materially interfere with the use made or to be
made thereof by them. SMIC Shanghai and SMIC Beijing have obtained their
respective land-use rights required to conduct its business, including land-use
rights validly granted and/or transferred to them and held in their respective
names relating to land on which their facilities are located respectively in
Shanghai and Beijing. SMIC Beijing has fully paid the land-use right transfer
fee, free and clear of all encumbrances and defects, except that it has not paid
relevant stamp tax in connection therewith. However, the above failure to pay
such stamp tax does not affect the validity of SMIC Beijing's title to the land
use rights. SMIC Tianjin is in the process of amending the land use right
certificate currently held in the name of Motorola (China) Electronics Limited,
relating to land on which its facilities are located, whereas its investor, the
Company, has already issued to Motorola (China) Electronics Limited certain
shares and warrants to purchase additional shares, as consideration for assets
including the above land use right it purchased from the latter.
19. Except as disclosed in the Prospectuses, the Company and its Subsidiaries
possess adequate certificates, authorities or permits issued by appropriate
governmental agencies or bodies necessary to conduct the business now operated
by them and have not received any notice of proceedings relating to the
revocation or modification of any such certificate, authority or permit that, if
determined adversely to the Company or any of its Subsidiaries, would
individually or in the aggregate have a Material Adverse Effect.
20. No labor dispute between the Company or any Subsidiary and their respective
employees exists or, to the knowledge of the Company, is imminent that would
reasonably be expected to have a Material Adverse Effect.
21. Each of the Company and its Subsidiaries owns or possesses the right to use
all patents and other rights to inventions, trademarks, trademark registrations,
service marks, service xxxx registrations, trade names, copyrights, trades
secrets, know-how, licenses, and
Page 38
other intellectual property (collectively, intellectual property rights)
necessary to conduct the business now operated by it or presently employed by
them, and if such business is described in the Prospectuses, as described in the
Prospectuses, except where such failure to own or possess rights to use which
would not have a Material Adverse Effect. To the knowledge of the Company (after
due and careful enquiry) and except as described in the Prospectuses, there is
no reasonable basis to allege that the Company or any of its subsidiaries has
infringed or violated, is infringing or violating, or will infringe or violate
any intellectual property rights of others. Except as described in the
Prospectuses, the Company has not received any notice or communication alleging
that the Company or any of its subsidiaries infringes any intellectual property
rights of others that, if determined adversely to the Company or any of its
subsidiaries would, individually or in the aggregate have a Material Adverse
Effect.
22. Except as disclosed in the Prospectus, no stamp or other issuance or
transfer taxes or duties and no capital gains, income, withholding or other
taxes are payable by or on behalf of the International Underwriters, the US
Underwriters or the Hong Kong Underwriters to Hong Kong, the United States, the
PRC or the Cayman Islands or any political subdivision or taxing authority
thereof or therein in connection with (A) the issuance, offer, sale and delivery
by the Company of the Offer Shares, (B) the deposit by the Company of any
Securities represented by the ADSs with the Depositary and the issuance of the
ADRs evidencing the ADSs, (C) the sale and delivery of the Offer Shares by the
Underwriters as part of the Underwriters' distribution of the Offer Shares as
contemplated hereunder; and (D) the delivery of the Securities to be sold by the
Selling Shareholders in the manner contemplated by the International
Underwriting Agreement.
23. No holder of any of the Offer Shares after completion of the Global Offering
is or will be subject to any liability of the Company by virtue only of his
holding of any such Offer Shares. Except as disclosed in the Prospectuses, there
are no limitations on the rights of holders of the Offer Shares to hold, vote or
transfer their Offer Shares.
24. Each of the Company and its Subsidiaries has filed on a timely basis all
necessary tax returns, reports and filings, and all such returns, reports or
filings are true, correct and complete in all material respects, and are not the
subject of any disputes with revenue or other authorities other than these
disputes which if determined adversely to the Company, would not have a Material
Adverse Effect; and, to the knowledge of the Company after due investigation,
there are no circumstances giving rise to such disputes. The Company and each of
its subsidiaries, has paid all material taxes required to be paid by them and
has no knowledge of any tax deficiency which might be assessed, except as would
not have a Material Adverse Effect.
25. Except as disclosed in the Prospectuses, neither the Company nor any of its
subsidiaries is in violation of any statute, any rule, regulation, decision or
order of any governmental agency or body or any court, domestic or foreign,
relating to the use, disposal or release of hazardous or toxic substances or
relating to the protection or restoration of the environment or human exposure
to hazardous or toxic substances (collectively, environmental laws), owns or
operates any real property contaminated with any substance that is subject to
any environmental laws, is liable for any off-site disposal or contamination
pursuant to any environmental laws, or is subject to any claim relating to any
environmental laws, which violation, contamination, liability or claim would
individually or in the aggregate have a Material Adverse Effect; and the Company
is not aware of any pending investigation which might lead to such a claim.
26. The Company and its subsidiaries maintain insurance in such amounts and
covering such risks as the Company reasonably considers adequate for the conduct
of its business and as is customary for similarly-sized companies engaged in
similar businesses in similar industries and in similar locations, all of which
insurance is in full force and effect, except
Page 39
where the failure to maintain such insurance could not reasonably be expected to
have a Material Adverse Effect. There are no material claims by the Company or
any of its subsidiaries under any such policy or instrument as to which any
insurance company is denying liability or defending under a reservation of
rights clause. The Company has no reason to believe that it will not be able to
renew its existing insurance as and when such coverage expires or will be able
to obtain replacement insurance adequate for the conduct of the business and the
value of its properties at a cost that could not reasonably be expected to have
a Material Adverse Effect.
27. None of the Company, its Subsidiaries or any of their officers or directors
(whether or not pursuant to the Directed Share Program) has paid, promised or
authorized the payment, directly or indirectly, of any monies or any thing of
value, in each case to the extent that such payment, promise or authorization
constitutes bribery in breach of applicable laws of the Cayman Islands, Hong
Kong or the PRC, to any government official or employee of any political party
for the purpose of influencing any act or decision of such official or of the
government to obtain or retain business, or direct business to the Company or
any of its subsidiaries, made any unlawful contribution or gift to any political
or governmental organization, party or individual to any candidate for
government office, or failed to disclose fully any contribution in violation of
law or made any payment to any federal or state governmental officer or
official, or other person charged with similar public or quasi-public duties,
other than payments required by the laws of the United States or any
jurisdiction thereof or permitted by all such applicable laws (any such act, a
Prohibited Payment). A Prohibited Payment does not include the payment of
reasonable and bona fide expenditures, such as travel and lodging expenses,
which are directly related to the promotion, demonstration or explanation of
products or services, or the execution or performance of a contract with a
government authority or agency thereof; provided that such payments are
permissible under applicable laws.
28. Except as disclosed in the Prospectuses, there are no pending actions, suits
or proceedings against or affecting the Company, any of its subsidiaries or any
of their respective properties (including, to the knowledge of the Company, any
actions, suits or proceedings alleging that the Company or any of its
subsidiaries has infringed or violated, is infringing or violating or will
infringe or violate any intellectual property rights of others, any actions,
suits or proceedings against current or former employees of the Company or any
of its subsidiaries) that, if determined adversely to the Company or any of its
subsidiaries, would individually or in the aggregate have a Material Adverse
Effect, or would materially and adversely affect the ability of the Company to
perform its obligations under this Agreement; and, to the knowledge of the
Company, no such actions, suits or proceedings are threatened or contemplated.
29. The Reporting Accountants who prepared the accountants' report contained in
the Hong Kong Prospectus are independent auditors complying with the guidelines
on independence issued by the Hong Kong Society of Accountants.
30. The financial statements and data included in the Prospectuses present
fairly the financial position of the Company and its consolidated subsidiaries
as of the dates shown and their results of operations and cash flows for the
periods shown, and such financial data have been prepared in conformity with the
generally accepted accounting principles in the United States applied on a
consistent basis; and the notes included in each Prospectus present fairly the
information required to be stated therein; and the assumptions used in preparing
the pro forma financial statements included in the Prospectuses provide a
reasonable basis for presenting the significant effects directly attributable to
the transactions or events described therein, the related pro forma adjustments
give appropriate effect to those assumptions, and the pro forma columns therein
reflect the proper application of those adjustments to the corresponding
historical financial statement amounts.
Page 40
31. Except as disclosed in the Prospectuses, since the date of the latest
audited financial statements included in the Prospectuses, neither the Company
nor its subsidiaries has (i) entered into or assumed any material contract, (ii)
incurred, assumed or acquired any material liability (including contingent
liability) or other obligation, (iii) acquired or disposed of or agreed to
acquire or dispose of any business or any other asset material to the Company
and its subsidiaries taken as a whole or (iv) entered into a letter of intent or
memorandum of understanding (or announced an intention to do so) relating to any
matter identified in clauses (i) through (iii) above, nor has the Company or its
subsidiaries sustained any material loss or interference with its business from
fire, explosion or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree, and since
the respective dates as of which information is given in the Prospectus, nor has
there been any change in the capital stock (including registered capital) or
long-term debt of the Company or its subsidiaries or any material adverse change
in or affecting the financial position, business prospects, shareholders' equity
or results of operations of the Company or its subsidiaries.
32. No material information was withheld from the Reporting Accountants for the
purpose of their preparation of their report in the Prospectus including for the
purpose of the Reporting Accountants' review of the Company's financial
reporting procedures and all information given to the Reporting Accountants for
such purposes was given in good faith, the factual contents of such report are
true, accurate and complete in all material respects and no material fact or
matter has been omitted.
33. The Company and each of its subsidiaries have devised and maintain a system
of internal accounting and other controls sufficient to provide reasonable
assurance that (A) transactions are executed in accordance with the management's
general or specific authorizations; (B) transactions are recorded as necessary
to permit preparation of financial statements in conformity with United States
generally accepted accounting principles and to maintain accountability for
assets; (C) access to assets is permitted only in accordance with management's
general or specific authorization; and (D) the recorded accountability for
assets is compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences. The Company and its
subsidiaries maintain and keep books, records and accounts which, in reasonable
detail, accurately and fairly reflect their transactions and dispositions of
assets.
34. The Company is not and, after giving effect to the offering and sale of the
Offer Shares and the application of the proceeds thereof as described in the
Prospectuses, will not be an "investment company" as defined in the US
Investment Company Act of 1940, as amended.
35. The Company does not expect to be a passive foreign investment company
(PFIC) within the meaning of Section 1297 of the United States Internal Revenue
Code of 1986, as amended, for the tax year ending December 31, 2004, and does
not expect to become a PFIC in the future. The Company has no plan or intention
to take any action that would result in the Company becoming a PFIC in the
future.
36. Neither the Company nor any of its Subsidiaries nor any of their respective
officers, directors or affiliates (within the meaning of the Securities Act and
the regulations thereunder) has taken, nor will any of them take, directly or
indirectly, any action which constitutes or is designed to cause or result in,
or which could reasonably be expected to constitute, cause or result, under the
Exchange Act, the SFO and rules and regulations thereunder, the rules and
regulations of the Hong Kong Stock Exchange or the Hong Kong Listing Rules, in
the stabilization or manipulation of the price of any security of the Company or
its Subsidiaries to facilitate the sale or resale of the Offer Shares.
Page 41
37. Except as disclosed in the Prospectuses, (A) no indebtedness (actual or
contingent) and no contract or arrangement is outstanding between the Company or
any of its subsidiaries and (B) no indebtedness (actual or contingent) and no
material contract or arrangement is outstanding between the Company, or any of
its subsidiaries and any director of the Company or any connected person of the
Company or any of their associates (each within the meaning of the Hong Kong
Listing Rules). To the knowledge of the Company (after making all reasonable
inquiries), except as disclosed in the Prospectuses, none of the directors or
substantial shareholders of the Company or any of their respective associates
(as defined in the Hong Kong Listing Rules) is engaged in any business similar
to or in competition with the business of the Company or any of its subsidiaries
nor are any of the directors of the Company interested, directly or indirectly,
in any assets which have since the date two years immediately proceeding the
date of the Hong Kong Prospectus been acquired or disposed of by or leased to or
by the Company or any of its subsidiaries.
38. The Company is in compliance with all applicable provisions of the
Xxxxxxxx-Xxxxx Act and will ensure that it is in compliance with all of the
other applicable provisions of the Xxxxxxxx-Xxxxx Act upon the subsequent
release by the US SEC of rules and regulations promulgated under the
Xxxxxxxx-Xxxxx Act.
39. The section entitled "Financial Information - Management's Discussion and
Analysis of Financial Condition and Results of Operation - Critical Accounting
Policies" in the Hong Kong Prospectus accurately and fully describes (A)
accounting policies which the Company believes are the most important in the
portrayal of the financial condition and results of operations of the Company
and its consolidated subsidiaries and which require management's most difficult,
subjective or complex judgments ("critical accounting policies"); (B) judgments
and uncertainties affecting the application of critical accounting policies; and
(C) explanation of the likelihood that materially different amounts would be
reported under different conditions or using different assumptions. The
Company's board of directors, senior management and audit committee have
reviewed and agreed with the selection, application and disclosure of critical
accounting policies. The section entitled "Financial Information - Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Liquidity and Capital Resources" in the Hong Kong Prospectus accurately and
fully describes (x) all material trends, demands, commitments, events,
uncertainties and risks, and the potential effects thereof, that the Company
believes would materially affect liquidity and are reasonably likely to occur;
and (y) all off-balance sheet arrangements that have or are reasonably likely to
have a current or future effect on the financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources of the Company and its subsidiaries taken as a
whole. Except as disclosed in the Prospectuses, there are no outstanding
guarantees or other contingent obligations of the Company or any subsidiary that
could reasonably be expected to have a Material Adverse Effect.
Page 42
SCHEDULE 4
HONG KONG UNDERWRITERS' SET OFF ARRANGEMENTS
1. This Schedule sets out the arrangements and terms pursuant to which the
obligations of each Hong Kong Underwriter under clause 6 of this Agreement will
be reduced to the extent that it makes (or procures to be made) one or more
Valid Applications which is or are accepted (hereafter referred to as
Underwriters' Applications). These arrangements mean that in no circumstances
will any Hong Kong Underwriter have any further liability as a Hong Kong
Underwriter if one or more Underwriters' Applications, duly made by it or
procured by it to be made, are validly made and accepted for not less than the
number of the Hong Kong Offer Shares noted against its name in Schedule 1.
2. In order to qualify as Underwriters' Applications, such applications must be
made on one or more Application Forms and delivered, together with a cheque or
cheques or banker's cashier order or orders for the amounts payable on
application (including brokerage and transaction levy and Hong Kong Stock
Exchange trading fee), to the Sponsors by not later than 10:00 a.m. on the
Acceptance Date. Each such application must bear the stamp of the Hong Kong
Underwriter or the Hong Kong Underwriter's broker or nominee by whom or on whose
behalf the application is made or, if made by the Hong Kong Underwriter's
sub-underwriter, marked to identify the relevant Hong Kong Underwriter and there
must be clearly marked on the Application Form(s) "SMIC - Underwriter's
Application". These applications will subsequently be notified and delivered by
the Sponsors to the Receiving Bankers by 12:00 noon on the Acceptance Date.
3. If all of the Hong Kong Offer Shares shall not have been validly both applied
and paid for in the manner referred to in this Agreement, each Hong Kong
Underwriter will, subject to the provisions of this Agreement, be obliged to
take up the proportion of the shortfall that (a) its net underwriting
participation (that is its underwriting participation pursuant to clause 6 less
the aggregate number of Hong Kong Offer Shares for which Underwriters'
Applications have been made by it or procured to be made by into the extent that
they have been accepted and up to the limit of its underwriting participation),
bears to (b) the aggregate of the underwriting participation of all the Hong
Kong Underwriters including itself less the aggregate number of Hong Kong Offer
Shares for which Underwriters' Applications have been made (including by
itself).
4. The obligations of Hong Kong Underwriters determined pursuant to paragraph 3
above may be rounded, as determined by the Sponsors in their sole discretion, to
avoid fractions. The determination of the Sponsors shall be final and
conclusive.
5. No preferential consideration will be given in respect of Underwriters'
Applications.
Page 43
SCHEDULE 5
ADVERTISING ARRANGEMENTS
Newspapers Dates
South China Morning Post 8 March 2004
9 March 2004
10 March 2004
11 March 2004
Hong Kong Economic Times 8 March 2004
9 March 2004
10 March 2004
11 March 2004
Page 44
SIGNED by )
for and on behalf of )
SEMICONDUCTOR MANUFACTURING )
INTERNATIONAL CORPORATION )
in the presence of: )
SIGNED by )
for and on behalf of )
CREDIT SUISSE FIRST )
BOSTON (HONG KONG) LIMITED )
in the presence of: )
SIGNED by )
and )
for and on behalf of )
DEUTSCHE BANK AG, )
HONG KONG BRANCH )
in the presence of: )
Page 45
SIGNED by )
for and on behalf of )
)
as duly authorized attorney for )
BOCI ASIA LIMITED, )
CSC SECURITIES (HK) LIMITED, )
DBS ASIA CAPITAL LIMITED, )
FIRST SHANGHAI SECURITIES LTD., )
THE HONGKONG AND SHANGHAI )
BANKING CORPORATION LIMITED, )
KINGSTON SECURITIES LTD., )
SINOPAC SECURITIES (ASIA) LIMITED, )
SOUTH CHINA SECURITIES LTD. )
in the presence of: )
Page 46
