Exhibit 4.11
QUALCOMM/Techfaith CONFIDENTIAL
Series A Preferred Share Purchase and Sale Agreement EXECUTION VERSION
DATED MARCH 22, 2006
SERIES A PREFERRED SHARE PURCHASE AND SALE AGREEMENT
AMONGST
TECHFAITH SOFTWARE (CHINA) HOLDING LIMITED
AND
XXXXXXXX XXXXXXXXXXXX
AND
CHINA TECHFAITH WIRELESS COMMUNICATION TECHNOLOGY LIMITED
TABLE OF CONTENTS
Page
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1. DEFINITIONS........................................................... 1
1.1 Certain Defined Terms............................................ 1
1.2 Exhibits and Schedules........................................... 5
1.3 Interpretation................................................... 6
2. AGREEMENT TO PURCHASE AND SELL SERIES A PREFERRED SHARES.............. 6
2.1 Agreement to Purchase and Sell................................... 6
2.2 Authorization.................................................... 7
2.3 Closings; Delivery............................................... 7
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY......................... 8
3.1 Organization, Good Standing, Corporate Power and Qualification... 9
3.2 Capitalization................................................... 9
3.3 Subsidiaries..................................................... 10
3.4 WFOE Subsidiary.................................................. 10
3.5 Authorization.................................................... 11
3.6 Valid Issuance of Shares......................................... 12
3.7 Governmental Consents and Filings................................ 12
3.8 Litigation....................................................... 12
3.9 Intellectual Property............................................ 13
3.10 Compliance with Other Instruments................................ 13
3.11 Agreements; Actions.............................................. 14
3.12 Conflicts of Interest............................................ 16
3.13 Absence of Liens................................................. 17
3.14 Financial Statements............................................. 17
3.15 Changes.......................................................... 18
3.16 Employee Matters................................................. 19
3.17 Tax Returns and Payments......................................... 21
3.18 Permits.......................................................... 22
3.19 Corporate Documents.............................................. 22
3.20 Disclosure....................................................... 22
3.21 Breach of Warranty............................................... 22
4. CONDITIONS TO THE INVESTORS' OBLIGATIONS AT CLOSING................... 22
4.1 The Initial Closing.............................................. 23
4.2 The Subsequent Closing........................................... 25
4.3 The Final Closing................................................ 25
4.4 No Closing Obligation............................................ 26
5. MISCELLANEOUS......................................................... 26
5.1 Survival of Warranties........................................... 26
5.2 Transfer; Successors and Assigns................................. 26
5.3 Governing Law.................................................... 26
5.4 Counterparts..................................................... 26
5.5 Titles and Subtitles............................................. 27
5.6 Notices.......................................................... 27
5.7 No Finder's Fees................................................. 27
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5.8 Confidentiality Obligations...................................... 27
5.9 Fees and Expenses................................................ 29
5.10 Attorney's Fees.................................................. 29
5.11 Amendments and Waivers........................................... 30
5.12 Severability..................................................... 30
5.13 Delays or Omissions.............................................. 30
5.14 Moratorium....................................................... 30
5.15 Entire Agreement................................................. 31
5.16 Dispute Resolution............................................... 31
SCHEDULE 1 - PARTICULARS OF THE COMPANY.................................. 33
PART A: PARTICULARS OF COMPANY PRE-CLOSING............................... 33
PART B: PARTICULARS OF THE WFOE SUBSIDIARY............................... 34
SCHEDULE 2 - CAPITALIZATION OF THE COMPANY POST-CLOSING.................. 35
EXHIBIT A - FORM OF AMENDED MEMORANDUM AND ARTICLES OF ASSOCIATION....... 36
EXHIBIT B - FORM OF INVESTORS' RIGHTS AGREEMENT.......................... 37
EXHIBIT C - DISCLOSURE SCHEDULE.......................................... 38
EXHIBIT D - FORM OF SOFTWARE LICENSE AGREEMENT BETWEEN QUALCOMM AND WFOE
SUBSIDIARY............................................................... 39
EXHIBIT E - FORM OF SOFTWARE LICENSE AGREEMENT BETWEEN TECHFAITH AND WFOE
SUBSIDIARY............................................................... 40
EXHIBIT F - FORM OF DEVELOPMENT AND LICENSE AGREEMENT AMONG WFOE
SUBSIDIARY, TECHFAITH AND QUALCOMM....................................... 41
SERIES A PREFERRED SHARE
PURCHASE AND SALE AGREEMENT
This SERIES A PREFERRED SHARE PURCHASE AND SALE AGREEMENT (this "AGREEMENT") is
made as of the 22nd day of March 2006 by and among:
(1) TECHFAITH SOFTWARE (CHINA) HOLDING LIMITED, a company incorporated in the
Cayman Islands, whose registered office is located at Century Yard, Cricket
Square, Xxxxxxxx Drive, O.P. Box 2681GT, Xxxxxx Town, Grand Cayman, British
West Indies (the "COMPANY"); and
(2) XXXXXXXX XXXXXXXXXXXX, a Delaware limited partnership, whose main office is
located at 0000 Xxxxxxxxx Xxxxx, Xxx Xxxxx, XX 00000 ("QUALCOMM"); and
(3) CHINA TECHFAITH WIRELESS COMMUNICATION TECHNOLOGY LIMITED, a company
incorporated in the Cayman Islands, whose registered office is located at
Century Yard, Cricket Square, Xxxxxxxx Drive, O.P. Box 2681GT, Xxxxxx Town,
Grand Cayman, British West Indies ("Techfaith"), and principal executive
offices are located at 3/F M8 West, No. 1 Jiu Xian Qiao East Road, Xxxx
Xxxx District, Beijing 100016, PRC ("TECHFAITH").
QUALCOMM and Techfaith are herein referred to as "INVESTORS" collectively and
individually as an "INVESTOR".
WHEREAS:
The Company proposes to allot and issue to the Investors the Series A Preferred
Shares (as defined below) marked against each such Investor's name in Schedule
2, and each of the Investors has agreed to purchase and subscribe for the Series
A Preferred Shares, on the terms and subject to the conditions of this
Agreement.
The parties hereby agree as follows:
1. DEFINITIONS
1.1 Certain Defined Terms
The following terms used in this Agreement shall be construed to have the
meanings set forth or referenced below:
"AFFILIATE" means any Person that directly or indirectly, through one or
more intermediaries, controls such other Person, is controlled by, or is
under common control with such other Person.
"AMENDED ARTICLES" has the meaning given to such term in subsection 2.2(a).
"APPLICABLE LAWS" means in relation to any Person, any relevant laws,
regulations, administrative regulations, rules, notices, and other
legislative, executive or judicial decisions or pronouncements which are
publicly promulgated and in force for the time being.
"APPROVAL" means any consent [CHINESE CHARACTERS], operating license
[CHINESE CHARACTERS]), permit [CHINESE CHARACTERS],
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approval [CHINESE CHARACTERS], ratification [CHINESE CHARACTERS],
registration [CHINESE CHARACTERS] or other form of permission to engage in
a specific activity issued by any PRC regulatory or government body or
agency.
"BOARD" means the Company's Board of Directors, as constituted from time to
time.
"BUSINESS PLAN" has the meaning given to such term in Section 3.20.
"COMPANY INTELLECTUAL PROPERTY" has the meaning given to such term in
Section 3.9.
"COMPANY SECRETARY" means the secretary of the Company for the time being.
"CONFIDENTIAL INFORMATION" means all confidential and/or proprietary
business or technical information, in whatever form recorded, that a Party
does not wish to disclose without restriction.
"CONTROL" or its cognate terms in relation to any Person means either of
the following:
(i) the power or right to set or determine the management of the affairs
of that Person or to select, appoint or determine the composition of a
majority of the directors of the board or members of any management
committee or similar body, or to otherwise direct the management of
that Person; or
(ii) the ownership of not less than fifty percent (50%) of the total issued
equity interests, voting shares or stock in that Person.
"CONVERSION SHARES" has the meaning given to such term in subsection
2.2(b).
"ENCUMBRANCE" means any charge, pledge, claim, mortgage, security, lien,
option, equity, power of sale, hypothecation, retention of title, right of
pre-emption, other third party rights or security interest of any kind.
"ESOP" has the meaning given to such term in the Investors' Rights
Agreement.
"ESOP SHARES" means the Ordinary Shares reserved for issuance under the
ESOP.
"FINAL CLOSING" has the meaning given to such term in subsection 2.3(c).
"FINANCING TERMS" has the meaning given to such term in subsection 5.8(e).
"HONG KONG" means the Hong Kong Special Administrative Region of the
People's Republic of China.
"INITIAL CLOSING" has meaning given to such term in subsection 2.3(a).
"INTELLECTUAL PROPERTY RIGHTS" or "IPR" means any and all rights in any
invention, discovery, improvement, utility, model, copyrightable work,
industrial design or mask work, algorithm, data structure, trade secrets or
know-how, patents, Confidential Information, or any idea having commercial
value, any trademark, trade dress, trade name, domain name, or other marks
that serve to identify and distinguish goods or services as coming from, or
falling under the control of, a single source, all rights of whatsoever
nature in computer software
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and data, all intangible rights or privileges of a nature similar to any of
the foregoing in every case in any part of the world and whether or not
registered, and all rights in any applications and granted registrations
for any of the foregoing rights.
"INVESTORS' RIGHTS AGREEMENT" has the meaning given to such term in Section
4.7.
"IPO" means the Company's first public offering of Ordinary Shares, which
is a firm commitment underwritten public offering of Ordinary Shares on a
recognized stock exchange, registered under the relevant securities laws
and managed and/or underwritten by a lead underwriter of reputable
international standing.
"KEY EMPLOYEES" means any member of the Company's or the WFOE Subsidiary's
senior management and any employee of the Company or the WFOE Subsidiary
who either alone, or in concert with others, develops, invents, programs or
designs any Company Intellectual Property, and "KEY EMPLOYEE" means any of
them.
"LICENSE AGREEMENTS" means (i) the Software License Agreement between
QUALCOMM and the WFOE Subsidiary, (ii) the Software License Agreement
between Techfaith and the WFOE Subsidiary, (iii) the Development and
License Agreement among the WFOE Subsidiary, Techfaith and QUALCOMM (the
"DEVELOPMENT AND LICENSE AGREEMENT"), in substantially the form set out in
Exhibits D, E and F, respectively.
"LOSSES" means losses, damages, costs, expenses, liabilities or claims,
including reasonable legal costs.
"LOVELLS BEIJING OFFICE" means the offices of Lovells International Law
Firm Office in Beijing, China, located at Xxxxx 0, Xxxxxx Xxxxx X0, Xxx
Xxxxxx, Xxxxxxxx Plaza, Xx.0 Xxxx Xxxxx Xx Xxxxxx, Xxxxxxx 000000, Xxxxx.
"MATERIAL ADVERSE EFFECT" means in respect of any Person, a material
adverse effect on the business, assets (including intangible assets),
liabilities, financial condition, property, prospects or results of
operations of that Person.
"MATERIAL CONTRACT" means a contract with a total value over its lifetime
in excess of US$25,000 or which involves an aggregate liability of over
US$25,000 on the part of the Company.
"MILESTONE #1" means the successful delivery by the WFOE Subsidiary and
acceptance in writing by QUALCOMM of the Feature Complete Versions, as such
term is defined in the Development and License Agreement, of the MSM
Software Applications by August 31, 2006.
"MILESTONE #2" means the successful delivery by the WFOE Subsidiary and
acceptance in writing by QUALCOMM of the Production Ready Versions, as such
term is defined in the Development and License Agreement, of the MSM
Software Applications by the date occurring six months following the date
on which Milestone #1 was achieved.
"MILESTONES" means Milestone #1 and Milestone #2 collectively and
"MILESTONE" means either of them.
"MSM" means mobile station modem.
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"MSM SOFTWARE APPLICATIONS" has the meaning giving to such term in the
Development and License Agreement.
"MOFCOM" means [CHINESE CHARACTERS], the PRC Ministry of Commerce and the
approval authority for most foreign invested enterprises in China.
"ORDINARY SHARES" means ordinary shares in the Company with a par value of
US$0.001 per share.
"PARTY" means any party to this Agreement for the time being, and "PARTIES"
means all the parties to this Agreement for the time being, and shall
include a reference to their successors in title and permitted assigns.
"PERSON" means any natural person, corporation, joint venture, partnership,
association, company, or other legal entity (whether incorporated or
unincorporated and whether or not having separate legal personality).
"PRC" or "CHINA" means the People's Republic of China, which for the
purposes of this Agreement excludes Hong Kong, the Macau Special
Administrative Region of the People's Republic of China and Taiwan.
"PREFERRED SHARES" means shares of any class or series in the Company other
than Ordinary Shares.
"PURCHASE PRICE" has the meaning given to such term in Section 2.1.
"QUALCOMM DIRECTOR" has the meaning given to such term in the Investors'
Rights Agreement
"QUALIFIED IPO" means an IPO reasonably acceptable to holders of at least
fifty percent (50%) of the Series A Preferred Shares, with aggregate
proceeds (net of underwriters discounts and commissions) to the Company in
excess of US$20 million and at a listing price which implies a total market
capitalization in excess of US$50 million.
"RMB" means Renminbi [CHINESE CHARACTERS] or the lawful currency of the PRC
for the time being.
"SAFE" means [CHINESE CHARACTERS], the PRC State Administration of Foreign
Exchange or its local branches as the context may require.
"SAFE CIRCULAR" means [CHINESE CHARACTERS] [[CHINESE CHARACTERS] (2005) 75
[CHINESE CHARACTERS]] the SAFE Circular on Issues relating to the
Administration of Foreign Exchange of Company Financing through Offshore
Special Purpose Vehicles and Round-Tripping Investment by PRC Resident
issued by SAFE with effect from 1 November 2005 and any Applicable Laws of
the PRC in force from time to time which operate to restate, amend or
repeal the aforesaid circular or any part thereof.
"SERIES A PREFERRED SHARES" means the Series A Preference Shares in the
Company with a par value of US$0.001 per share.
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"SHARES" means all shares issued in the capital of the Company, including,
but not limited to Ordinary Shares and Series A Preferred Shares.
"SUBSIDIARY" means a company or corporation in which more than fifty
percent (50%) of the equity interests, shares, voting stock (or equivalent)
(including without limitation, by ownership or control of any exercisable
option to obtain a controlling stake in,) is owned or controlled, directly
or indirectly, by the relevant Person, and the term "SUBSIDIARIES" shall be
construed accordingly.
"SUBSEQUENT CLOSING" has the meaning given to such term in subsection
2.3(b).
"TAXATION" means all forms of taxation whether direct or indirect and
whether levied by reference to income, profits, gains, net wealth, asset
values, turnover, added value or other reference and statutory, state,
provincial, local governmental or municipal impositions, duties,
contributions, rates and levies (including without limitation social
security contributions and any other payroll taxes), whenever imposed
(whether imposed by way of a withholding or deduction for or on account of
tax or otherwise) and in respect of any Person and all penalties, charges,
costs and interest relating thereto, and references to "TAXES" shall be
construed accordingly.
"TECHFAITH DIRECTORS" has the meaning given to such term in the Investors'
Rights Agreement.
"THREE CLOSINGS" means the Initial Closing, the Subsequent Closing and the
Final Closing collectively and "CLOSING" refers to any one of them.
"TRANSACTION DOCUMENTS" means this Agreement, the Investors' Rights
Agreement, the Amended Articles and their respective schedules and
exhibits.
"US$" means the official currency of the United States of America for the
time being.
"WFOE" means a wholly foreign owned enterprise established pursuant to the
PRC Wholly Foreign Owned Enterprise Law [CHINESE CHARACTERS] passed on 12
April, 1986 by the National People's Congress of the PRC and the PRC Wholly
Owned Enterprise Law Implementation Regulations [CHINESE CHARACTERS]
approved by the PRC State Council on 28 October 1990 and other relevant PRC
laws and regulations.
"WFOE SUBSIDIARY" has the meaning given to such term in Section 3.4.
1.2 Exhibits and Schedules
The following schedules and exhibits are a part of this Agreement:
Schedule 1 Particulars of the Company
Part A Particulars of Company Pre-Closing
Part B Particulars of Company's WFOE Subsidiary (to be completed
prior to the Initial Closing)
Schedule 2 Capitalization of the Company Post-Closing
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Exhibit A Form of Amended Memorandum and Articles of Association
Exhibit B Form of Investors' Rights Agreement
Exhibit C Disclosure Schedule
Exhibit D Form of Software License Agreement between QUALCOMM and WFOE
Subsidiary
Exhibit E Form of Software License Agreement between Techfaith and WFOE
Subsidiary
Exhibit F Form of Development and License Agreement among WFOE Subsidiary,
Techfaith and QUALCOMM
1.3 Interpretation
References to Applicable Laws in this Agreement shall include a reference
to such Applicable Laws as amended, reissued or any replacement Applicable
Laws. References to the word "including", "includes" or cognate terms shall
be construed without limitation. References to any PRC Ministry or
governmental regulatory body or government agency shall include a reference
to any local branches or administrative sub-divisions under it, and to any
successor body or bodies assuming responsibility for the administration of
the power or function in question.
2. AGREEMENT TO PURCHASE AND SELL SERIES A PREFERRED SHARES
2.1 Agreement to Purchase and Sell
(a) Subject to the terms and conditions of this Agreement, each of
QUALCOMM and Techfaith agrees to purchase at the Initial Closing (as
defined below), and the Company agrees to sell and issue to each of
them, such number of Series A Preferred Shares as is set out against
its name below, at a purchase price of US$1.00 per share (the
"PURCHASE PRICE"):
Investor No. of Subscription Shares Investment Amount
-------- -------------------------- -----------------
QUALCOMM 3 million US$ 3 million
Techfaith 7 million US$ 7 million
Total 10 million US$10 million
(b) Upon the completion of Milestone #1 and subject to the terms and
conditions of this Agreement, each of QUALCOMM and Techfaith agrees to
purchase at the Subsequent Closing (as defined below), and the Company
agrees to sell and issue to each of them such number of Series A
Preferred Shares as is set out against its name below, at the Purchase
Price:
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Investor No. of Subscription Shares Investment Amount
-------- -------------------------- -----------------
QUALCOMM 3 million US$ 3 million
Techfaith 7 million US$ 7 million
Total 10 million US$10 million
(c) Upon the completion of Milestone #2 and subject to the terms and
conditions of this Agreement, each of QUALCOMM and Techfaith agrees to
purchase at the Final Closing (as defined below), and the Company
agrees to sell and issue to each of them such number of Series A
Preferred Shares as is set out against its name below, at the Purchase
Price:
Investor No. of Subscription Shares Investment Amount
-------- -------------------------- -----------------
QUALCOMM 1.5 million US$1.5 million
Techfaith 3.5 million US$3.5 million
Total 5 million US$ 5 million
2.2 Authorization
(a) The Company shall adopt and file with the Registrar of Companies in
the Cayman Islands on or before the Initial Closing (as defined below)
the Amended Memorandum and Articles of Association of the Company in
or substantially in the form attached as Exhibit A to this Agreement
(the "AMENDED ARTICLES").
(b) On or prior to the Initial Closing, the Company shall have authorized
(i) the sale and issuance to the Investors of the relevant number of
Series A Preferred Shares required by the proposed Three Closings, and
(ii) the issuance of the Ordinary Shares to be issued upon conversion
of such Series A Preferred Shares (the "CONVERSION SHARES"). The
Series A Preferred Shares and the Conversion Shares shall have the
rights, preferences, privileges and restrictions set forth in the
Investors' Rights Agreement and the Amended Articles.
2.3 Closings; Delivery
(a) Subject to the satisfaction of the conditions set out in Section 2.1
and Section 4.1 respectively, the initial sale and purchase of the
Series A Preferred Shares shall take place via the exchange of
documents and signatures at Lovells Beijing Office, or at such other
time and place and in such manner as the Company and the Investors
mutually agree upon, orally or in writing (which time and place are
designated as the "INITIAL CLOSING").
(b) Subject to the satisfaction of the conditions set out in Section 2.1
and Section 4.2 respectively, the subsequent sale and purchase of the
Series A Preferred Shares shall
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take place subject to:
(i) the exchange of a bring-down compliance certificate dated as of
the Subsequent Closing (as defined below), provided that such
date shall be on or before August 31, 2006;
(ii) the issue of written certification by a director of each of the
Investors that Milestone # 1 has been satisfied;
(iii) the issue of written certification by a director of each of the
Investors that the there has been no material breach to the
Investment Documents, the WFOE Articles of Association or the
License Agreements;
at the law offices of Lovells Beijing Office, or at such other time
and place and in such manner as the Company and the Investors mutually
agree upon, orally or in writing (which time and place are designated
as the "SUBSEQUENT CLOSING").
(c) Subject to the satisfaction of the conditions set out in Section 2.1
and Section 4.3 respectively, the final sale and purchase of the
Series A Preferred Shares shall take place subject to:
(i) the exchange of a bring-down compliance certificate dated as of
the Final Closing (as defined below), provided that such date
shall be within six months of the Subsequent Closing;
(ii) the issue of written certification by a director of each of the
Investors that Milestone # 2 has been satisfied;
(iii) the issue of written certification by a director of each of the
Investors that the there has been no material breach to the
Investment Documents, the WFOE Articles of Association or the
License Agreements;
at the law offices of Lovells Beijing Office, or at such other time
and place and in such manner as the Company and the Investors mutually
agree upon, orally or in writing (which time and place are designated
as the "FINAL CLOSING")
(d) At each Closing, the Company shall deliver to each of the Investors a
share certificate representing the Series A Preferred Shares being
purchased by such Investors at such Closing duly executed by the
Company in accordance with the provisions of the Amended Articles
against payment of the purchase price therefore by check payable to
the Company, by wire transfer to a bank account designated by the
Company, by cancellation or conversion of indebtedness of the Company
to such Investor, or by any combination of such methods.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to each Investor that the
representations and warranties contained in this Section 3 are true,
accurate and complete as of the date of each Closing (as the case may be),
subject to the disclosures (if any) set out in the Disclosure
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Schedule in the form attached as Exhibit C to this Agreement (the
"DISCLOSURE SCHEDULE").
For the purposes of those representations and warranties, the phrase "TO
THE COMPANY'S KNOWLEDGE" shall mean the actual knowledge, after making due
inquiry, of its then duly appointed and elected officers. In addition, for
the purposes of those representations and warranties contained in Section 3
(other than those in Sections 3.1, 3.2, 3.4, 3.5 and 3.6), the term "the
COMPANY" shall include a reference to any Subsidiaries, branches or other
entities formed by the Company (whether or not having separate legal
personality) and include a reference to the WFOE Subsidiary, unless the
context otherwise requires, or otherwise noted herein.
3.1 Organization, Good Standing, Corporate Power and Qualification
The Company is a corporation duly organized, validly existing and in good
standing under the Applicable Laws of the Cayman Islands and has all
requisite corporate power and authority to carry on its business as
presently conducted and as proposed to be conducted. The Company is duly
qualified to transact business and is in good standing in each jurisdiction
in which the failure to so qualify would have a Material Adverse Effect.
3.2 Capitalization
(a) Immediately prior to the Initial Closing, the authorized capital of
the Company, consists of:
(i) 50,000,000 Ordinary Shares, 10 shares of which are issued and
outstanding;
(ii) 25,000,000 Preferred Shares, all of which have been designated as
Series A Preferred Shares, and up to all of which will be sold
pursuant to this Agreement. The rights, privileges and
preferences of the Series A Preferred Shares are as stated in the
Investors' Rights Agreement, the Amended Articles and as provided
by the general corporation law of the Cayman Islands; and
(iii) Options to acquire 2,777,778 Ordinary Shares, all of which are
reserved for issuance under the ESOP.
(b) Except for:
(i) the conversion privileges of the Series A Preferred Shares to be
issued under this Agreement; and
(ii) the 2,777,778 Ordinary Shares reserved for issuance upon exercise
of options issued pursuant to the ESOP,
there are no outstanding options, pledges, guarantees, warrants,
rights (including conversion or preemptive rights and rights of first
refusal or similar rights) or agreements, orally or in writing, to
purchase or acquire from the Company any shares of Ordinary Shares or
Preferred Shares, or any securities convertible into or exchangeable
for shares of Ordinary Shares or Preferred Shares.
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3.3 Subsidiaries
Except for the WFOE Subsidiary (as defined below), the Company does not
presently own or control, directly or indirectly, any interest in any other
Person.
3.4 WFOE Subsidiary
(a) The Company holds 100% of the registered capital of Techfaith Software
(China) Limited [CHINESE CHARACTERS] (the "WFOE SUBSIDIARY"). The
Company's interest in the WFOE Subsidiary is directly owned by it,
free and clear of all Encumbrances, and no Person has any right to
participate in, or receive any payment based on any amount relating
to, the revenue, income, value or net worth of the WFOE Subsidiary or
any component or portion thereof, or any increase or decrease in any
of the foregoing.
(b) The amount of registered capital of the WFOE Subsidiary is 100% duly
vested in the Company. There are no outstanding options, warrants,
rights (including conversion or preemptive rights), agreements,
commitments whatsoever for the purchase or acquisition from the WFOE
Subsidiary of any registered capital or any securities convertible
into or ultimately exchangeable or exercisable for any such registered
capital.
(c) The WFOE Subsidiary has been duly established and validly exists under
Applicable Laws of the PRC. The establishment documents relating to
the WFOE Subsidiary are lawful and valid and have been duly approved
or issued (as applicable) by the competent PRC authorities in
accordance with Applicable Laws of the PRC.
(d) The WFOE Subsidiary does not have any Affiliates (other than the
Company) subsidiaries or investee entities, and neither owns or
controls, directly or indirectly, any interest in any other Person,
nor does it have in place any joint venture, joint operation [CHINESE
CHARACTERS] or similar arrangements with any other Person, nor does it
maintain or operate any offices or branches or Subsidiaries, except
for its office premises as set out in its PRC business license.
(e) The WFOE Subsidiary has full corporate power and authority to operate
its properties and assets and to carry on its business as currently
conducted and as presently proposed to be conducted, and all Approvals
needed for the operations of its business as presently operated or
contemplated to be operated have been duly obtained in accordance with
Applicable Laws of the PRC from the relevant competent PRC authorities
and are in full force and effect. No examination and approval
authority in the PRC exceeded its power or otherwise acted unlawfully
in approving the establishment or operations of the WFOE Subsidiary.
(f) All post-establishment filings and registrations with the PRC
authorities required in respect of the WFOE Subsidiary and its
operations, including the registration with the State Administration
of Industry and Commerce, the SAFE, the State Administration of
Taxation and local tax bureau, customs authorities, and social
security and insurance authorities, have been duly completed in
accordance with, and within the time limits stipulated under,
Applicable Laws of the PRC.
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(g) The WFOE Subsidiary has not received any letter or notice from any
relevant PRC governmental or regulatory authority notifying it of the
suspension, revocation, or threatened revocation, of any Approvals
issued to it for non-compliance, or of the need for compliance or
remedial actions to be taken in respect of the activities carried out
directly or indirectly by the WFOE Subsidiary.
(h) With respect to the land use rights, building ownership rights or
rights to use any of the foregoing (if any) held by the WFOE
Subsidiary, the WFOE Subsidiary has exclusive, full and unimpaired
legal ownership of such rights, building ownership rights or rights to
use free from any Encumbrances, conditions, orders or other
restrictions, and has obtained all necessary Approvals with government
authorities with respect thereto, including effecting registration of
its office lease with the relevant land resources administration
authorities in accordance with Applicable Laws of the PRC.
(i) All requisite formalities and legal requirements in respect of the
implementation of the machinery, equipment, parts, tools and materials
by the WFOE Subsidiary have been and will be complied with in
accordance with Applicable Laws of the PRC.
(j) The WFOE Subsidiary has been conducting and will conduct its business
activities within the permitted scope of business and is otherwise
operating its business in full compliance with all Applicable Laws of
the PRC, including producing, processing and/or distributing products
with all requisite Approvals granted by the relevant competent PRC
governmental or regulatory authorities.
(k) All Applicable Laws of the PRC with respect to the opening and
operation of foreign exchange accounts and foreign exchange activities
of the WFOE Subsidiary, where applicable have been and will continue
to be fully complied with, and all requisite Approvals including any
from SAFE required under the SAFE Circular in relation thereto have
been duly and lawfully obtained and are in full force and effect and
there exist no grounds on which any such Approval may be cancelled or
revoked or the WFOE Subsidiary or its legal representative may be
subject to liability or penalties for material misrepresentation or
failure to disclose material information to the issuing SAFE
authority.
(l) With regard to employment and staff or labour management, the WFOE
Subsidiary has complied with all Applicable Laws of the PRC, including
Applicable Laws pertaining to contributions to local welfare funds,
social benefits, medical benefits, insurance, retirement benefits,
pension or the like.
3.5 Authorization
All corporate action required to be taken by the Board and allot and in
order to authorize the Company:
(i) to enter into the Transaction Documents;
(ii) to allot and issue Preferred Shares and to designate any such
Preferred Shares as Series A Preferred Shares at the Closing; and
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(iii) to allot and issue any Ordinary Shares including but not limited
to any ESOP Shares or any Conversion Shares, has been taken or
shall be taken prior to the Closing. All action on the part of
the officers of the Company necessary for the execution and
delivery of the Transaction Documents, the performance of all
obligations of the Company under the Transaction Documents to be
performed as of the Closing, and the issuance and delivery of the
Series A Preferred Shares has been taken or shall be taken prior
to the Closing. The Transaction Documents, when executed and
delivered by the Company, shall constitute lawful, valid and
legally binding obligations of the Company, enforceable against
the Company in accordance with their respective terms except:
(1) as limited by Applicable Laws relating to bankruptcy,
insolvency, reorganization, moratorium, fraudulent
conveyance, or other laws of general application relating to
or affecting the enforcement of creditors' rights generally;
or
(2) as limited by Applicable Laws relating to the availability
of specific performance, injunctive relief, or other
equitable remedies.
3.6 Valid Issuance of Shares
The Series A Preferred Shares, when issued, sold and delivered in
accordance with the terms and for the consideration set forth in this
Agreement, shall be validly issued, fully paid and non-assessable and free
of restrictions on transfer other than restrictions on transfer under this
Agreement, the Investors' Rights Agreement, Applicable Laws and
Encumbrances created by or imposed by the Investors. Subject to the filings
described in Section 3.7 below, the Series A Preferred Shares shall be
issued in compliance with all Applicable Laws. The ESOP Shares and the
Conversion Shares have been duly reserved for issuance, and upon issuance
in accordance with the terms of the Amended Articles and the Investors'
Rights Agreement, shall be validly issued, fully paid and non-assessable
and free of restrictions on transfer other than restrictions on transfer
under the Transaction Documents, Applicable Laws and Encumbrances created
by or imposed by the Investors. Subject to Section 3.7 below, the ESOP
Shares and the Conversion Shares shall be issued in compliance with all
Applicable Laws.
3.7 Governmental Consents and Filings
No consent, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, any governmental
authority in any jurisdiction is required on the part of the Company in
connection with the consummation of the transactions contemplated by this
Agreement, except for the filing of the Amended Articles, which shall have
been filed in accordance with Applicable Laws at the time of or after
Closing.
3.8 Litigation
There is no claim, action, suit, proceeding, arbitration, complaint, charge
or investigation pending or, to the Company's knowledge, currently
threatened:
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(i) against the Company or any of its officers or directors;
(ii) questions the validity of any of the Transaction Documents or the
right of the Company to enter into them, or to consummate the
transactions contemplated by the Transaction Documents; or
(iii) would reasonably be expected to have, either individually or in
the aggregate, a Material Adverse Effect on the Company.
Neither the Company nor, to the Company's knowledge, any of its officers or
directors, is a party or is named as subject to the provisions of any
order, writ, injunction, judgment or decree of any court or government
agency or instrumentality. There is no action, suit, proceeding or
investigation by the Company pending or which the Company intends to
initiate.
3.9 Intellectual Property
The Company owns or possesses sufficient legal rights to:
(i) all trademarks, service marks, trade names, copyrights, trade
secrets, licenses, information and proprietary rights and
processes; and
(ii) to the Company's knowledge, all patents and patent rights (such
rights are collectively referred to herein as the "COMPANY
INTELLECTUAL PROPERTY") as are necessary to the conduct of the
Company's business as now conducted and as presently proposed to
be conducted, without any known conflict with, or infringement
of, the rights of others.
To the Company's knowledge, no product or service marketed or sold (or
proposed to be marketed or sold) by the Company violates or shall violate
any license or infringe any Intellectual Property Rights of any other
Person. Save as expressly contemplated by any Transaction Document and
other than with respect to commercially available software products under
standard end-user object code license agreements, there are no outstanding
options, licenses, agreements, claims, Encumbrances or shared ownership
interests of any kind relating to the foregoing, nor is the Company bound
by or a party to any options, licenses or agreements of any kind with
respect to the Intellectual Property Rights of any other Person. The
Company has not received any communications alleging that the Company has
violated or, by conducting its business, would violate any of the
Intellectual Property Rights of any other Person. Section 3.9 of the
Disclosure Schedule lists all Intellectual Property Rights of the Company.
The Company has not embedded any open source or community source code in
any of its products generally available or in development, including but
not limited to any libraries or codes licensed under any general public
license or similar license arrangement. For the purposes of this Section
3.9, the Company shall be deemed to have knowledge of a patent right if the
Company has actual knowledge of the patent right or would be found to be on
notice of such patent right as determined by reference to applicable patent
laws.
3.10 Compliance with Other Instruments
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The Company is not in violation or default under:
(i) any provisions of the Amended Articles, the WFOE Subsidiary
Articles of Association or the Investors' Rights Agreement;
(ii) any applicable instrument, judgment, order, writ or decree;
(iii) any note, indenture or mortgage; or
(iv) any lease, agreement, contract or purchase order to which it is a
party, or by which it is bound, or that is required to be listed
on the Disclosure Schedule, or of any provision of any Applicable
Law applicable to the Company, the violation of which would have
a Material Adverse Effect on the Company.
Neither the execution, delivery and performance of any of the Transaction
Documents and the consummation of the transactions contemplated by the
Transaction Documents, nor the conduct or carrying on of the Company's
business as presently conducted or proposed to be conducted shall result in
any such violation or be in conflict with or constitute, with or without
the passage of time and giving of notice, either:
(i) a default under any such provision, instrument, judgment, order,
writ, decree, contract or agreement or any Applicable Law in
relation to the Company; or
(ii) an event which results in the creation of any Encumbrance upon
any assets of the Company, or the suspension, revocation,
forfeiture, or non-renewal of any material Approval held by the
Company.
3.11 Agreements; Actions
(a) Except for the Transaction Documents and matters arising in connection
with this financing, there are no agreements, understandings,
instruments, contracts or proposed transactions to which the Company
is a party or by which it is bound that involve:
(i) obligations (contingent or otherwise) of, or payments to, the
Company;
(ii) the license of any Intellectual Property Rights to or from the
Company;
(iii) the grant of rights to manufacture, produce, assemble, license,
market, or sell its products to any other Person, or which affect
the Company's exclusive right to develop, manufacture, assemble,
distribute, market or sell its products anywhere in the world; or
(iv) indemnification by the Company with respect to infringements of
proprietary rights.
(b) The Company has not:
(i) declared or paid any dividends, or authorized or made any
distribution upon or with respect to any class or series of its
share capital or capital stock;
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(ii) incurred any indebtedness for money borrowed or incurred any
other liabilities;
(iii) made any loans or advances to any Person, other than ordinary
advances for travel expenses; or
(iv) sold, exchanged or otherwise disposed of any of its assets or
rights, other than the sale of its inventory in the ordinary
course of business. For the purposes of subsections (b) and (c)
of this Section 3.11, all indebtedness, liabilities, agreements,
understandings, instruments, contracts and proposed transactions
involving the same Person (including any Persons the Company has
reason to believe are affiliated with each other) shall be
aggregated for the purpose of meeting the individual minimum
dollar amounts of such subsection.
(c) The Company is not a guarantor of or indemnitor of, the indebtedness
of any other Person.
(d) The Company is not in breach of any contracts, agreements or
arrangements to which it is a party, and has no knowledge of the
invalidity of, or grounds for rescission, avoidance or repudiation of
any such contract, agreement, arrangement or transaction to which the
Company is a party, nor has it received notice of any intention to
terminate any such contract, agreement or arrangements, or to
repudiate or disclaim any such transaction.
(e) No party with whom the Company has entered into any contract,
agreement or arrangement is in default thereunder, being a default
which would have a Material Adverse Effect on the Company, and there
are no circumstances likely to give rise to any such default.
(f) The Company is not a party to any agreement, contract or arrangement
which, by reason of the sale of the Series A Preferred Shares, or by
reason of any Party or any of its Affiliates entering into or
performing any provision of this Agreement and/or of the Transaction
Documents, gives any other contracting party the right to terminate
such contract, agreement or arrangement, or to create or increase any
obligation on the Company (whether to make payment or otherwise) to
any Person.
(g) Save as expressly provided in or contemplated by the Transaction
Documents, the Company has no material or long term agreements,
contracts, arrangements or commitments binding upon it including but
not limited to:
(i) any contract, agreement or arrangement entered into otherwise
than in the ordinary course of business;
(ii) any contract, agreement or arrangement otherwise than by way of
bargain at arm's length;
(iii) involving licensing or transfer of technology or IPR to or by
the Company;
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(iv) any sale or purchase option or similar contract or arrangement
affecting any assets owned or used by the Company or by which the
Company is bound;
(v) any agreement, contract or arrangement which cannot readily be
fulfilled or performed by the Company on time or without undue or
unusual expenditure of money or effort;
(vi) any agreement, contract or arrangement whereby the Company is, or
has agreed to become, a member of any joint venture, consortium
or partnership or other unincorporated association; and
(vii) any agreement, contract or arrangement whereby the Company is,
or has agreed to become, a party to any distributorship or agency
agreement.
(h) There are no agreements in force restricting the freedom of the
Company to provide and take goods and services or to manage its own
business affairs by such means and from and to such Persons as it may
from time to time think fit.
(i) Save for any condition or warranty implied by law or contained in its
standard terms of business or otherwise given in the ordinary course
of business, the Company has not given any guarantee condition or
warranty or made any representation in respect of goods (including
trading stock) or services supplied or contracted to be supplied by
it, nor has it accepted any obligation that could give rise to any
liability after any such goods or services has been supplied by it.
(j) Other than pursuant to or as expressly contemplated by any Transaction
Document, the Company has not entered into any agreement, contract or
arrangement with, or given any undertaking or assurance to, any of the
existing shareholders of the Company or their Affiliates.
(k) Other than as required by or as expressly contemplated by any
Transaction Document, there are no agreements, contracts or
arrangements binding on the Company which prohibit or restrict the
sale, disposal or transfer of any equity or debt securities (or any
interests therein) owned by the Company.
3.12 Conflicts of Interest
(a) Other than:
(i) standard employee benefits generally made available to all
employees;
(ii) standard director and officer indemnification agreements approved
by the Board; and
(iii) the purchase of the Company's Ordinary Shares and the issuance
of options to purchase the Company's Ordinary Shares pursuant to
the ESOP, in each instance, approved by the Board,
there are no agreements, understandings or proposed transactions
between the
-17-
Company and any of its officers, directors, employees or Key
Employees, or any Affiliate thereof.
(b) The Company is not indebted, directly or indirectly, to any of its
directors, officers or employees, or to their respective spouses or
children, or to any Affiliate of any of the foregoing, other than in
connection with expenses or advances of expenses incurred in the
ordinary course of business. None of the Company's directors, officers
or employees, or any members of their immediate families, or any
Affiliate of the foregoing:
(i) are, directly or indirectly, indebted to the Company; or
(ii) to the Company's knowledge, have any direct or indirect ownership
interest in any Person which is an Affiliate of the Company, or
with which the Company has a business relationship, or any Person
which competes with the Company. To the Company's knowledge, none
of the Company's directors, officers or employees or any members
of their immediate families or any Affiliate of any of the
foregoing are, directly or indirectly, interested in any contract
with the Company. None of the directors or officers, or any
members of their immediate families, has any material commercial,
industrial, banking, consulting, legal, accounting, charitable or
familial relationship with any of the Company's major business
relationship partners, service providers, joint venture partners,
licensees and competitors.
3.13 Absence of Liens
The property and assets that the Company owns are free and clear of all
loans and Encumbrances, except for statutory liens for the payment of
current Taxation obligations that are not yet delinquent and Encumbrances
that arise in the ordinary course of business and do not materially impair
the Company's ownership or use of such property or assets. With respect to
the property and assets it leases, the Company is in compliance with the
terms of such leases and, to its knowledge, holds a valid leasehold
interest free of any Encumbrances other than those of the lessors of such
property or assets.
3.14 Financial Statements
(a) Financial Statements
The Company has been incorporated for less than a full fiscal year and
has not prepared any financial statements. The Company maintains and
will continue to maintain a standard system of accounting established
and administered in accordance with generally accepted accounting
principles. The Company shall prepare and deliver to each Investor a
copy of its audited and unaudited financial statements as they become
available in accordance with Section 5.3 of the Investors' Rights
Agreement.
(b) Management Accounts
The management accounts of the Company have been prepared in
accordance with
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International Accounting Standards, and on a consistent basis as those
used in the audited accounts of the Company and show a true and fair
view of the assets and liabilities, profits and losses of the Company
and its subsidiaries as a group as of the management accounts date.
(c) Books and Financial Records
All the accounts, books, registers, ledgers and financial and other
material records of whatsoever kind of the Company have been fully
properly and accurately kept and completed; there are no inaccuracies
or discrepancies of any kind contained or reflected therein; and they
give and reflect a true and fair view of the financial, contractual
and trading position of the Company and of its plant and machinery,
fixed and current assets and liabilities (actual and contingent),
debtors, creditors and works-in-progress.
3.15 Changes
Since the Company's establishment, there has not been:
(a) any change in the business assets, liabilities, financial condition,
trading prospects or operating results of the Company, except changes
in the ordinary course of business that have not caused singly, or in
the aggregate, a Material Adverse Effect on the Company, and the
business of the Company has been carried on so as to maintain the same
as a going concern;
(b) any damage, destruction or loss, whether or not covered by insurance,
that would have a Material Adverse Effect on the Company;
(c) any waiver or compromise by the Company of a valuable right or of a
material debt owed to it;
(d) any satisfaction or discharge of any claim, or Encumbrance or payment
of any obligation by the Company, except in the ordinary course of
business and the satisfaction or discharge of which would not have a
Material Adverse Effect on the Company;
(e) any material change to a Material Contract or agreement or arrangement
by which the Company or any of its assets is bound or subject;
(f) any material change in any compensation agreement or arrangement with
any employee, officer, director or shareholder;
(g) any resignation or termination of employment of any officer or Key
Employee of the Company;
(h) any Encumbrance created by the Company, with respect to any of its
material properties or assets, except liens for taxes not yet due or
payable and liens that arise in the ordinary course of business and do
not materially impair the Company's ownership or use of such property
or assets;
-19-
(i) any loans or guarantees made by the Company to, or for the benefit of,
its employees, officers or directors, or any members of their
immediate families, other than travel advances and other advances made
in the ordinary course of its business;
(j) any declaration, setting aside or payment or other distribution in
respect of any of the Company's share capital, or any direct or
indirect redemption, purchase, or other acquisition of any of such
shares by the Company;
(k) any sale, assignment or transfer of any Company Intellectual Property
Rights;
(l) receipt of notice that there has been a loss of, or material order
cancellation by, any major customer of the Company, or loss of source
of supply to or by any abnormal factor, not affecting similar
businesses to a like extent;
(m) to the Company's knowledge, any other event or condition of any
character, other than events affecting the economy or the Company's
industry sector generally, that could reasonably be expected to result
in a Material Adverse Effect on the Company;
(n) the Company has not disposed of any asset (including trading stock) or
supply of any service or business facility of any kind (including a
loan of money or the letting, hiring or licensing of any property
whether tangible or intangible) in circumstances where the
consideration actually received, or receivable for such disposal or
supply was less than the consideration which would be deemed to have
been received for tax purposes;
(o) save as otherwise expressly provided for in the Transaction Documents,
the Company has not assumed or incurred any liabilities (actual or
contingent) or expenditure otherwise than in the ordinary course of
carrying on its business, or entered into any transaction which is not
in its ordinary course of business;
(p) any payment made by the Company which shall not be deductible for tax
purposes either in computing the profits of the Company or in
computing the tax chargeable on the Company and its subsidiaries as a
group;
(q) any change to the Company's financial year end;
(r) save for resolutions, copies of which have been delivered to each
Investor prior to the date hereof, or which are required to be passed
by the Company prior to any Closing in order to satisfy the conditions
set out in previous or following sections, any board or shareholders'
resolutions passed by the Company; or
(s) any arrangement or commitment by the Company to do any of the things
described in this Section 3.15, and the Company is not aware of any
facts which shall likely give rise to the occurrence of any of the
foregoing.
3.16 Employee Matters
(a) To the Company's knowledge, none of its employees is obligated under
any contract (including licenses, covenants or commitments of any
nature) or other agreement, or
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subject to any judgment, decree or order of any court or
administrative agency, that would materially interfere with such
employee's ability to perform its obligations under its contract of
employment with the Company, to promote the interest of the Company,
or that would conflict with the Company's business. Neither the
execution or delivery of the Transaction Documents, nor the carrying
on of the Company's business by the employees of the Company, nor the
conduct of the Company's business as now conducted and as presently
proposed to be conducted, shall, to the Company's knowledge, conflict
with or result in a breach of the terms, conditions, or provisions of,
or constitute a default under, any contract, covenant or instrument
under which any such employee is now obligated.
(b) Without prejudice to the generality of subsection (a) above, to the
Company's knowledge, none of the current or former officers, employees
or consultants of the Company (including the Key Employees) are in
violation of any term of any written employment contract, patent
disclosure agreement, proprietary information agreement,
non-competition agreement, non-solicitation agreement, confidentiality
agreement, or any other similar contract or agreement or any
restrictive covenants relating to the right of that officer, employee
or consultant to be employed or engaged by the Company, or relating to
the use of trade secrets or proprietary information of others, and no
former employer of any such Person has any rights in respect of the
Company Intellectual Property.
(c) The Company is not delinquent in payments to any of its employees,
consultants, or independent contractors for any wages, salaries,
commissions, bonuses, or other direct compensation for any service
performed for it to the date hereof or amounts required to be
reimbursed to such employees, consultants, or independent contractors.
The Company has complied with all applicable equal employment
opportunity laws and with other laws related to employment, including
those related to wages, hours, worker classification, collective
bargaining, and the payment and withholding of Taxes and other sums as
required by law except where non-compliance with any Applicable Laws
would not result in a Material Adverse Effect on the Company. The
Company has withheld and paid to the appropriate governmental entity
or is holding for payment not yet due to such governmental entity all
amounts required to be withheld from employees of the Company by way
of Taxation and is not liable for any arrears of Taxation or other
sums for failure to comply with any of the foregoing. The WFOE
Subsidiary has withheld all amounts required to be withheld by it, as
a withholding agent, by way of Taxation, and has contributed to all
stationary welfare and social security funds as required under
Applicable Laws of the PRC in respect of all employees of the WFOE
Subsidiary.
(d) To the Company's knowledge, no Key Employee has terminated or intends
to terminate employment with the Company or is otherwise likely to
become unavailable to continue as a Key Employee, nor does the Company
have a present intention to terminate the employment of any of the
foregoing. Except for statutory compensation as required under
Applicable Laws, upon termination of the employment of any such
employees, no severance or other payments shall become due. Except as
disclosed in the Disclosure Schedule, the Company has no policy,
practice, plan, or program of
-21-
paying severance pay or any form of severance compensation to any of
its employees in connection with the termination of their employment
services.
(e) The Company has not made any representations regarding equity
incentives to any officer, employees, director or consultant that are
inconsistent with the share amounts and terms set forth in the Board
minutes or which are inconsistent with provisions of any Transaction
Document.
(f) There are no claims against the Company arising out of the termination
of employment of any former Key Employee.
(g) The Company does not maintain, and has not established, sponsored, or
participated in or contributed to, any employee benefit plan other
than the ESOP.
(h) To the Company's knowledge, none of the officers or directors of the
Company is disqualified from holding office under any Applicable Laws,
nor has any such Person, during the previous five (5) years, been:
(i) subject to voluntary or involuntary petition under applicable
bankruptcy or insolvency laws or the appointment of a receiver,
fiscal agent or similar officer by a court for his business or
property;
(ii) convicted in a criminal proceeding or named as a subject of a
pending criminal proceeding (excluding traffic violations and
other minor offences);
(iii) subject to any order, judgment, or decree (not subsequently
reversed, suspended, or vacated) of any court of competent
jurisdiction permanently or temporarily enjoining him from
engaging, or otherwise imposing limits or conditions on his
engagement in any securities, investment advisory, banking,
insurance, or other type of business or acting as an officer or
director of a company;
(iv) found by a court of competent jurisdiction in a civil action or
by the Securities and Exchange Commission or the Commodity
Futures Trading Commission to have violated any United States
federal or state securities, commodities, or unfair trade
practices law, which such judgment or finding has not
subsequently been reversed, suspended, or vacated, or
(v) found by a court of competent jurisdiction to have violated any
other Applicable Laws which such judgment or finding has not
subsequently been reversed, suspended or vacated.
3.17 Tax Returns and Payments
There are no Taxes due and payable by the Company which have not been paid
in a timely fashion. There are no accrued and unpaid Taxes of the Company
which are due, whether or not assessed or disputed. There have been no
examinations or audits of any tax returns or reports by any applicable
governmental agency. The Company has duly and in a timely fashion filed all
federal, state, county, local and foreign tax returns required to have been
filed
-22-
by it and there are in effect no waivers of applicable statutes of
limitations with respect to Taxes for any year.
3.18 Permits
The Company has all Approvals necessary for the conduct of its business,
the lack of which could reasonably be expected to have a Material Adverse
Effect. The Company is not in default in any material respect under any of
such Approvals and has not received notice of default in respect of any of
the foregoing from any Person.
3.19 Corporate Documents
The copy of the minute books of the Company provided to the Investors
contains minutes of all meetings of directors and stockholders and all
actions by written consent without a meeting by the directors and
stockholders since the date of incorporation and accurately reflects in all
material respects all actions by the directors (and any committee of
directors) and shareholders with respect to all transactions referred to in
such minutes.
The Amended Articles are in the form provided to the Investors.
3.20 Disclosure
The Company has made available to the Investors all the material
information reasonably available to the Company that the Investors have
requested or which would reasonably be required by the Investors for
deciding whether to acquire the Series A Preferred Shares and any Ordinary
Shares, including certain of the Company's projections describing the
proposed business plan for the WFOE Subsidiary (the "BUSINESS PLAN"). The
Company has not withheld, deleted, modified or otherwise altered any
material information relating to the Company, and none of the information
provided to the Investors is false, untrue or misleading. To the Company's
knowledge, no representation or warranty of the Company contained in this
Agreement, as qualified by the Disclosure Schedule, and no certificate
furnished or to be furnished to the Investors at any Closing contains any
untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements contained herein or therein not
misleading in light of the circumstances under which they were made. The
Business Plan was prepared in good faith; however, the Company does not
warrant that it shall achieve any results projected in the Business Plan.
It is understood that this representation is qualified by the fact that the
Company has not delivered to the Investor, and has not been requested to
deliver, a private placement or similar memorandum or any written
disclosure of the types of information customarily furnished to purchasers
of securities.
3.21 Breach of Warranty
The Company agrees that in the event that any of the warranties or
representations set out in this Agreement proves to be misleading or untrue
as at Closing, then it shall indemnify and hold harmless the Investors
against any Losses that each such Investor may suffer as a result of the
breach of such warranties or representations.
4. CONDITIONS TO THE INVESTORS' OBLIGATIONS AT CLOSING
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4.1 The Initial Closing
The rights and obligations of each of the Investors to purchase any shares
of the Series A Preferred Shares at the Initial Closing are subject to the
fulfilment, on or before such Closing, of each of the following conditions
precedent, unless otherwise waived by each of the Investors:
(a) Representations and Warranties
Save as disclosed in the Disclosure Schedule, the representations and
warranties of the Company contained in Section 3 shall be true and
correct in all material respects as of the Closing, except that any
such representations and warranties shall be true and correct in all
respects where such representation and warranty is qualified with
respect to materiality in Section 3, as the case may be in writing.
(b) Performance
The Company shall have performed and complied with all covenants,
agreements, obligations and conditions contained in this Agreement
that are required to be performed or complied with by it on or before
the Closing.
(c) Compliance Certificate
Each of the President or Chief Executive of the Company and the Legal
Representative of the WFOE Subsidiary shall have delivered to each of
the Investors at the Closing a certificate signed by themselves on
behalf of their respective entities in a form satisfactory to the
Investors certifying that the conditions specified in Sections 4.1(a)
and (b) have been fulfilled.
(d) Opinion of Cayman Islands Counsel
Each of the Investors shall have received from Xxxxxxx Xxxx & Xxxxxxx,
Cayman Islands counsel for the Company, an opinion, dated as of the
Closing, in a form satisfactory to the Investors in their sole
discretion.
(e) Opinion of PRC Counsel
Each of the Investors shall have received from PRC counsel for the
Company, an opinion, dated as of the Closing, in a form satisfactory
to the Investors in their sole discretion.
(f) Board of Directors of the Company and the WFOE Subsidiary
As of the Closing, the authorized size of the Board shall be three (3)
members, consisting of one (1) representative from QUALCOMM and two
(2) representatives from Techfaith.
The authorized size of the board of directors of the WFOE Subsidiary
shall also be three (3) members, consisting of one (1) representative
from QUALCOMM and two
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(2) representatives from Techfaith.
(g) Investors' Rights Agreement
At the Initial Closing, the Investors' Rights Agreement (and/or any
relevant document documenting and confirming the relevant party's
accession to the Investors' Rights Agreement) shall have been executed
and delivered by QUALCOMM and Techfaith and the Company.
(h) Amended Articles
At the Initial Closing, the Company shall have filed the Amended
Articles with the relevant government body in compliance with
Applicable Laws of the Cayman Islands on or prior to the Closing, and
the Amended Articles shall continue to be in full force and effect as
of the Closing.
(i) License Agreements
At the Initial Closing, each of the License Agreements shall have been
executed and delivered by QUALCOMM, Techfaith, and/or the WFOE
Subsidiary, as required by such agreements.
(j) Establishment of WFOE Subsidiary
At or prior to the Initial Closing, the WFOE Subsidiary shall have
been duly established and all post-establishment filings and
registrations with the PRC authorities required with respect to the
WFOE Subsidiary and its operation as contemplated by the Business Plan
have been duly completed in accordance with, and within the time
limits stipulated under, Applicable Laws of the PRC.
(k) Secretary's Certificate
The Company Secretary shall have delivered to each Investor at the
Closing a certificate certifying as true copies of originals:
(i) the Amended Articles;
(ii) resolutions of the Board approving the Transaction Documents and
the transactions contemplated under the Transaction Documents;
and
(iii) resolutions of the shareholders in the Company approving the
Amended Articles and, where so required, pursuant to the Amended
Articles, the Transaction Documents and the transactions
contemplated by the Transaction Documents.
(l) Proceedings and Documents
All corporate and other proceedings and approvals in connection with
the transactions contemplated hereby at the Closing and all documents
incident thereto, including but not limited to board and shareholder
approvals and registration
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approvals, shall have been obtained in form and substance reasonably
satisfactory to the Investors, and each of such Investors (or its
counsel) shall have received all such counterpart original and
certified or other copies of such documents as it may reasonably have
requested. Such documents may include good standing certificates.
(m) Compliance with Laws
Each Investor warrants and represents to the other Investors that as
of the date of Closing, it has fully and duly complied with, and is
not, and neither it, nor any Affiliates of such Investor, the Company,
and/or the Subsidiary shall become, in connection with, or as a result
of its execution or performance of this Agreement and/or its entering
into or performing any of its obligations under the Transaction
Documents or the transactions contemplated thereby, in contravention
of any Applicable Laws. In this Section 4.1(m), Applicable Laws
includes, without limitation, a reference to the SAFE Circular as well
as a reference all other Applicable Laws of the PRC as may be issued
or promulgated by from time to time.
4.2 The Subsequent Closing
The rights and obligations of each of the Investors to purchase any shares
of the Series A Preferred Shares at the Subsequent Closing are subject to
the fulfilment, on or before such Closing, of each of the following
conditions precedent, in addition to the conditions precedent set forth in
Section 4.1 (except for Sections 4.1(g), (h), (i) and (j)), unless
otherwise waived by each of the Investors:
(a) a written certification by a director of each of the Investors that
Milestone #1 has been satisfied;
(b) a written certification by a director of each of the Investors that
there has not been any material breach by the Company, the WFOE
Subsidiary, QUALCOMM or Techfaith, as the case may be, to any of the
Transaction Documents and/or the WFOE Articles of Association; and
(c) a written certification by a director of each of the Investors that
there has not been any material breach by the Company, the WFOE
Subsidiary, QUALCOMM or Techfaith, as the case may be, to any of the
License Agreements.
4.3 The Final Closing
The rights and obligations of each of the Investors to purchase any shares
of the Series A Preferred Shares at the Final Closing are subject to the
fulfilment, on or before such Closing, of each of the following conditions
precedent, in addition to the conditions precedent set forth in Section 4.1
(except for Sections 4.1(g), (h), (i) and (j)), unless otherwise waived by
each of the Investors:
(a) a written certification by a director of each of the Investors that
Milestone #2 has been satisfied;
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(b) a written certification by a director of each of the Investors that
there has not been any material breach by the Company, the WFOE
Subsidiary, QUALCOMM or Techfaith, as the case may be, to any of the
Transaction Documents and/or the WFOE Articles of Association; and
(c) a written certification by a director of each of the Investors that
there has not been any material breach by the Company, the WFOE
Subsidiary, QUALCOMM or Techfaith, as the case may be, to any of the
License Agreements.
4.4 No Closing Obligation
In the event that there has been material breach by the Company, the WFOE
Subsidiary, QUALCOMM or Techfaith, as the case may be, to any of the
Transaction Documents or License Agreements, and such breach has not been
remedied during the applicable cure period, then any non-breaching party
may immediately terminate this Agreement. Any termination of this Agreement
shall not prejudice any cause of action or claim of a Party on account of
any breach or default by another Party.
5. MISCELLANEOUS
5.1 Survival of Warranties
Unless otherwise set forth in this Agreement, the representations and
warranties of the Company contained in or made pursuant to this Agreement
shall survive the execution and delivery of this Agreement and the Closing
and shall in no way be affected by any investigation of the subject matter
thereof made by or on behalf of any of the Investors.
5.2 Transfer; Successors and Assigns
The terms and conditions of this Agreement shall inure to the benefit of
and be binding upon the respective successors and assigns of the Parties.
Nothing in this Agreement, express or implied, is intended to confer upon
any party other than the Parties or their respective successors and assigns
any rights, remedies, obligations, or liabilities under or by reason of
this Agreement, except as expressly provided in this Agreement.
5.3 Governing Law
This Agreement shall be governed by, and construed in accordance with, the
laws of the Hong Kong as to matters within the scope thereof, without
regard to its principles of conflicts of laws.
5.4 Counterparts
This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original, but all of which together shall constitute one
and the same instrument. This Agreement may also be executed and delivered
by facsimile signature and any number of counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and
the same instrument.
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5.5 Titles and Subtitles
The titles and subtitles used in this Agreement are used for convenience
only and are not to be considered in construing or interpreting this
Agreement.
5.6 Notices
All notices and other communications given or made pursuant to this
Agreement shall be in writing and shall be deemed effectively given:
(i) upon personal delivery to the Party to be notified;
(ii) when sent by "read" receipt confirmed electronic mail or
facsimile (subject to confirmation of completed uninterrupted
transmission) if sent during normal business hours of the
recipient, and if not so confirmed, then on the next business
day;
(iii) five (5) days after having been sent by registered or certified
mail, return receipt requested, postage prepaid; or
(iv) one (1) day after deposit with a nationally recognized overnight
courier, specifying next day delivery, with written verification
of receipt.
All communications shall be sent to the respective Parties at their address
as set forth above or on the signature page, or to such e-mail address,
facsimile number or address as subsequently modified by written notice
given in accordance with this Section 5.6. If notice is given to the
Company, a copy shall also be sent to the registered address of the Company
and if notice is given to any Investors, a copy shall also be given to
Lovells Beijing Office.
5.7 No Finder's Fees
Each Party represents that it neither is, nor shall it be obligated for any
finder's fee or commission in connection with this transaction nor has it
procured that the Company shall be liable for any such finder's fee. The
Company agrees to indemnify and hold harmless each Investor from any
liability for any commission or compensation in the nature of a finder's or
broker's fee arising out of this transaction (and the costs and expenses of
defending against such liability or asserted liability) for which the
Company or any of its officers, directors or representatives is
responsible.
5.8 Confidentiality Obligations
(a) All Confidential Information shall remain the property of the
furnishing Party. The furnishing Party grants the receiving Party or
Parties the right to use such Confidential Information only as
follows. Such Confidential Information (i) shall not be reproduced or
copied, in whole or part, except for use as expressly authorized in
this Agreement; (ii) shall, together with any full or partial copies
thereof, be returned or destroyed when no longer needed or upon any
termination of this Agreement; and (iii) shall only be disclosed to
employees of the receiving Party or Parties who have a need to know
(and such Party or Parties shall advise such employees of the
obligations assumed
-28-
herein and shall ensure their compliance herewith). Moreover, such
Confidential Information shall be used by the receiving Party or
Parties only for the purpose of performing under this Agreement.
Unless the furnishing Party consents in writing, such Confidential
Information shall be held in confidence by the receiving Party or
Parties. These restrictions shall not apply to any Confidential
Information (i) which can be proven to be or have been independently
developed by the receiving Party or Parties or lawfully received free
of restriction from another source having the right to so furnish such
Confidential Information; (ii) after it has become generally available
to the public without breach of this Agreement by the receiving Party
or Parties or its/their Affiliates; (iii) which at the time of
disclosure to the receiving Party or Parties was known to such Party
or Parties free of restriction and evidenced by documentation in such
Party's or Parties' possession; or (iv) which the disclosing Party
agrees in writing is free of such restrictions.
(b) Confidential Information is subject to this Section 5.8 whether
delivered orally or in tangible form and without regard to whether it
has been identified or marked as confidential or proprietary. Each
Party agrees to use its best efforts to xxxx or otherwise identify as
confidential or proprietary all Confidential Information that it
desires to be subject to the terms of this clause before furnishing it
to the other Party or Parties. Upon request, a Party shall promptly
identify whether specified information must be held by the receiving
Party or Parties subject to this Section 5.8.
(c) Each Party agrees that the QUALCOMM Director and Techfaith Directors
shall be entitled to report all matters concerning the Company or the
WFOE Subsidiary, including but not limited to matters discussed at any
meeting of the Board and of any committee of the Board, to his/her
appointer, and that such QUALCOMM Director or any Techfaith Directors
may take advice and obtain instructions from his/her appointer,
without prejudice to the QUALCOMM Director's or Techfaith Directors'
obligation (as the case may be) to act at all times in the best
interests of the Company or the WFOE Subsidiary.
(d) Each Party acknowledges that the terms and conditions of this
Agreement, other Transaction Documents, and all exhibits, restatements
and amendments hereto and thereto (collectively, the "Financing
Terms"), including their existence, shall be considered Confidential
Information and shall not be disclosed by it to any third party except
in accordance with the provisions set forth in this Section 5.8.
(e) Notwithstanding anything in the foregoing to the contrary, the Company
may disclose any of the Financing Terms to its current or bona fide
directors, officers, employees, investment bankers, lenders,
accountants, auditors, insurers and attorneys, in each case only where
such Persons have a need to know and are under non-disclosure
obligations imposed by contract, professional ethics, law or otherwise
that are at least as restrictive as this Section 5.8.
(f) The obligations contained in this Section 5.8 shall endure, even after
the termination of this Agreement, without limit in point of time
except to the extent that and until any Confidential Information
enters the public domain as set out above.
-29-
5.9 Fees and Expenses
(a) Subject to the provisions of subsection (b) below:
(i) the Company shall bear, and shall reimburse and pay each of the
Investors all costs and expenses (including all legal, accounting
and out of pocket costs and expenses) incurred in relation to the
proposed investment by the Investors, including for the
restructuring of the Company and preparation of the Company for
offshore investors, and the negotiation, preparation and
execution of the definitive documentation relating thereto, up to
the maximum amount of US$200,000. In the event that such
aggregate costs and expenses of the Investors exceed US$200,000,
each Investor shall be reimbursed such amount as shall be
determined as follows:
R = US$200,000 x I/T
Where
R is the amount in US$ that such Investor shall receive as
reimbursement for its costs and expenses hereunder,
I is the total amount of costs and expenses incurred by such
Investor, and
T is the total amount of costs and expenses incurred by all the
Investors; and
(ii) such amount referred to in subsection (a)(i) above shall be
deducted from and set-off against the total investment amount
payable by each of the Investors for the Series A Preferred
Shares under this Agreement.
(b) In the event that the sale and purchase of shares under this Agreement
is not completed, and the Parties agree in writing to terminate this
Agreement for reasons attributable to:
(i) the Company, the provisions of subsection (a) above shall
continue to apply, and the Company shall continue to be bound by
its obligations therein, save that the amount to be reimbursed
and paid to the Investors under subsection (a) above shall be
paid to each of the Investors, in such form as may be acceptable
to such Investor within thirty (30) days of the termination of
this Agreement.
(ii) the Investors, the provisions of subsection (a) above shall not
apply, and each Party shall bear its own professional and other
costs and expenses incurred by it in relation to the investment
contemplated hereunder.
5.10 Attorney's Fees
Without prejudice to the provisions of Section 5.9, if any action at law or
in equity (including arbitration) is necessary to enforce or interpret the
terms of any of the Transaction
-30-
Documents, the prevailing Party shall be entitled to reasonable attorney's
fees, costs and necessary disbursements in addition to any other relief to
which such Party may be entitled.
5.11 Amendments and Waivers
Any term of this Agreement may be amended, terminated or waived with the
written consent of each Party. Any amendment or waiver effected in
accordance with this Section 5.11 shall be binding upon each Investor and
each transferee of the Series A Preferred Shares (or of the Ordinary Shares
issuable upon conversion thereof), each future holder of all such
securities, and the Company.
5.12 Severability
The invalidity of unenforceability of any provision hereof shall in no way
affect the validity or enforceability of any other provision.
5.13 Delays or Omissions
No delay or omission to exercise any right, power or remedy accruing to any
Party under this Agreement, upon any breach or default of any other Party
under this Agreement, shall impair any such right, power or remedy of such
non-breaching or non-defaulting Party nor shall it be construed to be a
waiver of any such breach or default, or an acquiescence therein, or of or
in any similar breach or default thereafter occurring; nor shall any waiver
of any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring. Any waiver, permit, consent or
approval of any kind or character on the part of any Party of any breach or
default under this Agreement, or any waiver on the part of any Party of any
provisions or conditions of this Agreement, must be in writing and shall be
effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or under Applicable Law or otherwise
afforded to any Party, shall be cumulative and not alternative.
5.14 Moratorium
(a) In the event that the Initial Closing does not take place on the date
of this Agreement:
(i) each of the Parties shall use its best efforts to complete the
due diligence, restructuring and all other work contemplated
under and in connection with this Agreement, including the
fulfilment of the conditions precedent, so as to facilitate
effecting Closing as soon as possible; and
(ii) the Company shall not, unless otherwise agreed to in writing by
each Investor, solicit for or engage with other outside parties
on any fund raising efforts until the date of the Closing.
(b) For the avoidance of doubt, each Investor reserves the right, and the
Company acknowledges that such Investor being in the business of
making venture investments have the right to receive information of,
meet with employees of, and discuss or invest in any company whether
or not such company has products or services which compete with those
of the Company, and without informing the
-31-
Company.
5.15 Entire Agreement
This Agreement (including the Schedules and Exhibits hereto, if any),
together with the other Transaction Documents constitute the full and
entire understanding and agreement between the Parties with respect to the
subject matter hereof, and any other written or oral agreement relating to
the subject matter hereof existing between the Parties are expressly
cancelled.
5.16 Dispute Resolution
(a) Any dispute arising out of or in connection with this Agreement,
including any question regarding its existence, validity or
termination, shall be referred to representatives of the Parties for
settlement through friendly consultations between the Parties hereto.
In case no agreement can be reached through consultation within thirty
(30) days from either Party's written notice to the other for
commencement of such consultations, the dispute may be submitted to
arbitration for settlement by either Party. Any and all such disputes
shall be finally resolved by arbitration in accordance with the
Arbitration Rules of the United Nations Commission on International
Trade Law (UNCITRAL) in force at the relevant time and as may be
amended by the rest of this section. The place of arbitration shall be
the Hong Kong International Arbitration Centre ("HKIAC"). The official
language of the arbitration shall be English and the tribunal shall
consist of one arbitrator to be appointed by HKIAC. The sole
arbitrator appointed by HKIAC shall have experience in handling China
cross-border financing disputes.
(b) In the course of arbitration, all the Parties shall continue to
implement the terms of this Agreement except for those matters subject
to arbitration.
(c) Notwithstanding the above, the Parties hereby consent to and agree
that, in addition to any recourse to arbitration as set out above, any
Party may seek a temporary or permanent injunction from a court or
other authority with competent jurisdiction and, notwithstanding that
this Agreement is governed by the laws of the Hong Kong, a court or
authority hearing an application for injunctive relief may apply the
law of the jurisdiction where the court or other authority is located
in determining whether to grant the injunction.
[Remainder of Page Left Blank Intentionally]
-32-
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first above written.
TECHFAITH SOFTWARE (CHINA) HOLDING LIMITED
By: /s/ Xxxxx Xxxx
---------------------------------
Name: Xxxxx Xxxx
Title: Director
Address: Century Yard, Cricket Square, Xxxxxxxx Drive,
O.P. Box 2681GT, Xxxxxx Town, Grand Cayman,
British Indies West
XXXXXXXX XXXXXXXXXXXX
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: EVP and CFO
Address: 0000 Xxxxxxxxx Xxxxx, Xxx Xxxxx, XX 00000 XXX
CHINA TECHFAITH WIRELESS COMMUNICATION TECHNOLOGY LIMITED
By: /s/ Junhon Xxxxx
---------------------------------
Name: Junhon Xxxxx
Title: Vice President
Address: 3/F M8 West, No. 1 Jiu Xian Qiao East Road,
Xxxx Xxxx District, Beijing 100016, PRC
SIGNATURE PAGE TO SERIES A SHARE PURCHASE AND SALE AGREEMENT
-33-
SCHEDULE 1 - PARTICULARS OF THE COMPANY
PART A: PARTICULARS OF COMPANY PRE-CLOSING
AUTHORISED SHARE CAPITAL: 75,000,000
ORDINARY SHARES: 50,000,000
SERIES A PREFERRED SHARES: 25,000,000
NUMBER OF ORDINARY SHARES IN ISSUE: 10
PAR VALUE OF ORDINARY SHARES IN
ISSUE: US$0.001 PER ORDINARY SHARE
NUMBER OF SERIES A PREFERRED SHARES
IN ISSUE: 0
PAR VALUE OF SERIES A PREFERRED
SHARES IN ISSUE: US$0.001 PER SERIES A PREFERRED SHARE
DIRECTORS: JUNHOU XXXXX AND XXXXX XXXX
REGISTERED OFFICE OF COMPANY: CENTURY YARD, CRICKET SQUARE,
XXXXXXXX DRIVE, O.P. BOX 2681GT,
XXXXXX TOWN, GRAND CAYMAN,
BRITISH WEST INDIES
-34-
PART B: PARTICULARS OF THE WFOE SUBSIDIARY
[to be completed prior to the Initial Closing]
NAME: English and Chinese
REGISTERED CAPITAL: US$10,000,000
TOTAL INVESTMENT AMOUNT: US$25,000,000
PAID-UP REGISTERED CAPITAL:
BUSINESS LICENCE NO. AND DATE:
MOFCOM APPROVAL NO:
DATE OF APPROVAL CERTIFICATE:
SHAREHOLDERS:
DIRECTORS: [__________]
LEGAL ADDRESS: [____________]
-35-
SCHEDULE 2 - CAPITALIZATION OF THE COMPANY POST-CLOSING
PART A: AT INITIAL CLOSING
AUTHORISED CAPITAL: 50,000,000 ORDINARY SHARES AND 25,000,000 SERIES A PREFERRED
SHARES
PAR VALUE OF
SERIES A SHARES IN ISSUE PERCENTAGE
SHAREHOLDER ORDINARY SHARES PREFERRED SHARES (IN US$) SHAREHOLDING*
----------- --------------- ---------------- --------------- -------------
QUALCOMM 3 3 million 0.001 30%
Techfaith 7 7 million 0.001 70%
--- ---------- ---
Total 10 10 million 100%
=== ========== ===
* OF TOTAL NUMBER OF SHARES ISSUED IN THE CAPITAL OF THE COMPANY (ON A
FULLY-CONVERTED BASIS)
PART B: AT SUBSEQUENT CLOSING
PAR VALUE OF
SERIES A SHARES IN ISSUE PERCENTAGE
SHAREHOLDER ORDINARY SHARES PREFERRED SHARES (IN US$) SHAREHOLDING*
----------- --------------- ---------------- --------------- -------------
QUALCOMM 3 6 million 0.001 30%
Techfaith 7 14 million 0.001 70%
--- ---------- ---
Total 10 20 million 100%
=== ========== ===
PART C: AT FINAL CLOSING
PAR VALUE OF
SERIES A SHARES IN ISSUE PERCENTAGE
SHAREHOLDER ORDINARY SHARES PREFERRED SHARES (IN US$) SHAREHOLDING*
----------- --------------- ---------------- --------------- -------------
QUALCOMM 3 7.5 million 0.001 30%
Techfaith 7 17.5 million 0.001 70%
--- ------------ ---
Total 10 25 million 100%
=== ============ ===
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EXHIBIT A - FORM OF AMENDED MEMORANDUM AND ARTICLES OF ASSOCIATION
[INTENTIONALLY OMITTED.]
-37-
EXHIBIT B - FORM OF INVESTORS' RIGHTS AGREEMENT
[INTENTIONALLY OMITTED.]
-38-
EXHIBIT C - DISCLOSURE SCHEDULE
[TO BE UPDATED AT EACH OF THE INITIAL CLOSING,
SUBSEQUENT CLOSING AND FINAL CLOSING.]
-39-
EXHIBIT D - FORM OF SOFTWARE LICENSE AGREEMENT BETWEEN
QUALCOMM AND WFOE SUBSIDIARY
[INTENTIONALLY OMITTED.]
-40-
EXHIBIT E - FORM OF SOFTWARE LICENSE AGREEMENT BETWEEN
TECHFAITH AND WFOE SUBSIDIARY
[INTENTIONALLY OMITTED.]
-41-
EXHIBIT F - FORM OF DEVELOPMENT AND LICENSE AGREEMENT
AMONG WFOE SUBSIDIARY, TECHFAITH AND QUALCOMM
[INTENTIONALLY OMITTED.]
