SHARE PURCHASE AGREEMENT
FOIA confidential treatment requested: [***] indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to such omitted portions.
SHARE PURCHASE AGREEMENT (the “Agreement”), dated as of November 6, 2008, by and among
Semiconductor Manufacturing International Corporation (the “Company”), and Datang Telecom
Technology & Industry Holdings Limited (the “Buyer”).
WHEREAS
A. The Buyer wishes to purchase through its wholly-owned subsidiary to be incorporated in the
Hong Kong Special Administrative Region of the People’s Republic of China (the “PRC”) (the “HKCo”),
and the Company wishes to sell, upon the terms and conditions stated in this Agreement an aggregate
of 3,699,094,300 common shares, par value US$0.0004 per share, of the Company (the “New Common
Shares”) for a purchase price of HK$0.36 per share. The aggregate purchase price of the New Common
Shares shall be US$171.8 million based on an exchange rate of US$1=HK$7.752 (the “Aggregate
Purchase Price”). Unless the context otherwise requires, the New Common Shares subscribed for
shall be referred to herein as the “Securities”.
B. The Company and the Buyer are executing and delivering this Agreement in reliance upon the
exemption from securities registration under the U.S. Securities Act of 1933, as amended (the “1933
Act”) afforded by Regulation S (“Regulation S”) as promulgated by the United States Securities and
Exchange Commission (the “SEC”) under the 1933 Act.
NOW, THEREFORE, the Company and the Buyer hereby agree as follows:
1. | PURCHASE AND SALE OF NEW COMMON SHARES |
(a) Purchase of New Common Shares. Subject to the satisfaction or waiver of the
conditions set forth in Sections 5, 6 and 7 below, the Company shall issue and sell to HKCo, and
the Buyer through HKCo shall purchase from the Company on the Closing Date (as defined in Section
1(c)(i) below), the New Common Shares (the “Closing”).
(b) Purchase Price. The Aggregate Purchase Price shall be US$171.8 million.
(c) Closing.
(i) Date and Time. The date and time of the Closing (the “Closing Date”) shall be
10:00 a.m., Hong Kong time, on such date as is specified by the Company and the Buyer, which date
shall be no later than the first Business Day after the satisfaction or waiver of the conditions to
the Closing
set forth in Sections 5, 6 and 7 below, at the offices of Xxxxxxxxx and May, 47th Floor,
Xxxxxxx Xxxxx, Xxx Xxxxxxxxx Xxxxx, Xxxxxxx, Xxxx Xxxx or at such other time, date and location as
is mutually agreed in writing by the Company and the Buyer.
FOIA confidential treatment requested: [***] indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to such omitted portions.
(ii) Payment and Delivery. On or before the Closing Date:
(A) the Buyer shall pay the Aggregate Purchase Price to the Company for the New Common Shares
to be issued and sold to the Buyer at the Closing, by electronic bank transfer, in immediately
available funds [***]. The payment shall be
made to the bank account, bank and bank address as specified by the Company in writing prior to the
Closing Date;
(B) the Buyer shall deliver to the Company an executed written agreement in a form
satisfactory to the Company between the HKCo and the parties hereto to the effect that the HKCo
will:
(1) | be bound by and comply with all
the obligations under this Agreement applicable to the
Securities, including without limitation, the standstill
provisions set forth in Section 4(e), the lockup provisions set
forth in Section 4(i) and the public disclosure provisions set
forth in Section 4(j); |
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(2) | give representations and
warranties to the Company in the form set forth in Section 2(a),
2(b), 2(c), 2(d), 2(e), 2(f), 2(g), 2(h), 2(i), 2(j), 2(k) and
2(m), and agree to the provisions set forth in Section 9 (except
that references to the “Buyer” shall be replaced with references
to the “HKCo”), and provided that the terms of the
Confidentiality Agreement (as defined in Section 9) shall be
incorporated fully into such agreement); and |
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(3) | without prejudice to the rights
of the Buyer under this Agreement, acknowledge that the HKCo
shall not have any right or understanding or arrangement
(whether formal or informal) to nominate any person as a
director of the Company, appoint any other personnel at the
Company or exercise any other rights relating to the Securities
that are not contained in the Memorandum of Association and
Articles of Association of the Company as in effect as of the
Closing Date (the “Articles”) or under any applicable laws. |
(C) the Company shall deliver to the Buyer:
(1) | certificates in respect of the
New Common Shares, respectively, duly executed on behalf of the
Company and registered in the name of the HKCo; |
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FOIA confidential treatment requested: [***] indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to such omitted portions.
(2) | a certified register of members
of the Common Shares of the Company, reflecting HKCo’s ownership
of the New Common Shares, respectively; |
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(3) | a certified register of directors
of the Company reflecting the two Buyer Nominees’ (as defined
below) membership on the Board of Directors of the Company (the
“Board”) as appointed pursuant to Section 4(f) below; |
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(4) | copies of the board resolutions
of the Company approving the entering into and execution of this
Agreement and the commercial agreement pursuant to Section 4(h)
and all transactions contemplated herein and the appointment of
the directors pursuant to Section 4(f); |
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(5) | a certificate, executed on behalf
of the Company by the Secretary of the Company and dated as of
the Closing Date, as to (i) the resolutions consistent with
Section 3A(b) as adopted by the Board, and (ii) the Articles, in
the form attached hereto as Schedule A; |
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(6) | a certificate, executed on behalf
of the Company by an authorized officer of the Company and dated
as of the Closing Date, as to the conditions precedent set forth
in Section 7(b) hereof; |
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(7) | an opinion of Xxxxxx & Xxxxxx,
Cayman Islands counsel to the Company, in a form to be agreed
between the parties, covering due authorization, valid issuance
of shares, capitalization opinion, no governmental restrictions
and no conflicts with law or charter documents; |
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(8) | an opinion of Xxxxxxxxx and May,
Hong Kong counsel to the Company, in a form to be agreed between
the parties, covering the enforceability of this Agreement and
the SEHK ’s approval of listing of the New Common Shares; and |
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(9) | an opinion of M & A Law Firm, PRC
counsel to the Company, in a form to be agreed between the
parties, covering compliance with PRC laws. |
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FOIA confidential treatment requested: [***] indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to such omitted portions.
2. | BUYER’S REPRESENTATIONS AND WARRANTIES. |
The Buyer hereby represents and warrants to the Company that:
(a) Regulation S.
(i) The Buyer (A) is domiciled and has its principal place of business outside the United
States, (B) certifies that it is not a U.S. Person as defined under Rule 902 of Regulation S and is
not acquiring the Securities for the account or benefit of any U.S. Person, (C) at the time of
offering to the Buyer and communication of the Buyer’s order to purchase the Securities and at the
time of the Buyer’s execution of this Agreement, the Buyer was located outside the United States,
and (D) at the time of the Closing the Buyer, or persons acting on the Buyer’s behalf in connection
therewith, will be located outside the United States.
(ii) The Buyer has been advised and acknowledges that: (A) the Securities issued pursuant to
this Agreement have not been, and when issued, will not be registered under the 1933 Act or the
securities laws of any state of the United States, (B) in issuing and selling the Securities to the
Buyer pursuant hereto, the Company is relying upon the exemption from registration provided by
Regulation S of the 1933 Act, and (C) it is a condition to the availability of the Regulation S
safe harbor that the Securities not be offered or sold in the United States or to a U.S. Person
until the expiration of a period of 40 days after the Closing Date (the “Distribution Compliance
Period”).
(iii) The Buyer acknowledges and covenants that until the expiration of the Distribution
Compliance Period: (A) it and its agents or representatives have not and will not solicit offers to
buy, offer for sale or sell any of the Securities or any beneficial interest therein in the United
States or to or for the account of a U.S. Person, and (B) notwithstanding the foregoing, prior to
the expiration of the Distribution Compliance Period, the Securities may be offered and sold by the
holder thereof only if such offer and sale is made in compliance with the terms of this Agreement
and either, (X) the offer or sale is within the United States or to or for the account of a U.S.
Person and pursuant to an effective registration statement, Rule 144 promulgated under the 1933 Act
or an exemption from the registration requirements of the 1933 Act, or (Y) the offer and sale is
outside the United States and to other than a U.S. Person. The foregoing restrictions are binding
upon subsequent transferees of the Securities, except for transferees pursuant to an effective
registration statement. The Buyer agrees that after the Distribution Compliance Period, the
Securities may be offered or sold within the United States or to or for the account of a U.S.
Person only in accordance with this Agreement and pursuant to applicable securities laws.
(iv) The Buyer is not a “distributor” (as defined in Regulation S) or a “dealer” (as defined
in the Act).
(v) The Buyer hereby acknowledges that during the Distribution Compliance Period, no deposit
of the Securities issued hereunder will be accepted into its American Depositary Shares (“ADS”)
program, and the Securities may not be offered or sold in the United States or to U.S. Persons
unless the Securities are registered under the 1933 Act, or an exemption from the registration
requirements of the 1933 Act is available. The Buyer further acknowledges that, for so long as the
Securities are held by “affiliates” within the meaning of Rule 144(a)(1) under the 1933 Act or are
“restricted securities” within the meaning of Rule 144(a)(3) under the 1933 Act, the Securities
will not be eligible for deposit under any unrestricted depositary receipt facility.
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FOIA confidential treatment requested: [***] indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to such omitted portions.
(b) No Public Sale or Distribution. Subject to the potential transfer to the
Permitted Transferee (as defined in Section 4(i)), the Buyer is acquiring the Securities for its
own account and not with a view towards, or for resale in connection with, the public sale or
distribution thereof, except pursuant to sales registered or exempted under the 0000 Xxx. The
Buyer does not presently have any agreement or
understanding, directly or indirectly, with any Person to distribute any of the Securities.
The Buyer is not a broker-dealer registered with the SEC under the U.S. Securities Exchange Act of
1934, as amended (the “1934 Act”) or an entity engaged in a business that would require it to be so
registered as a broker-dealer. “Person” means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated organization or a
government or any department or agency thereof.
(c) Reliance on Exemptions. The Buyer understands that the Securities are being
offered and sold to it in reliance on specific exemptions from the registration requirements of
United States federal and state securities laws and that the Company is relying upon the truth and
accuracy of, and the Buyer’s compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Buyer set forth herein in order to determine the
availability of such exemptions and the eligibility of the Buyer to acquire the Securities.
(d) Information. The Buyer has received all information that it believes is necessary
or appropriate in connection with its purchase of the Securities, apart from the contracts referred
to in Schedule B. The Buyer understands that its investment in the Securities involves a high
degree of risk and is able to afford a complete loss of such investment. The Buyer has conducted
its own investigations with respect to the Securities and the Company. The Buyer has such
knowledge and experience in financial and business matters that it is capable of evaluating the
merits and risks of prospective investment in the Securities.
(e) No Governmental Review. The Buyer understands that no United States federal or
state agency or any other government or governmental agency has passed on or made any
recommendation or endorsement of the Securities or the fairness or suitability of the investment in
the Securities nor have such authorities passed upon or endorsed the merits of the offering of the
Securities.
(f) Transfer or Resale. The Buyer understands that: (i) the Securities have not been
and are not being registered under the 1933 Act or any state securities laws, and may not be
offered for sale, sold, assigned or transferred within the United States or to or for the account
or benefit of a U.S. Person unless (A) subsequently registered thereunder, (B) the Buyer shall have
delivered to the Company an opinion of counsel, in form, scope and substance reasonably acceptable
to the Company, to the effect that such Securities to be sold, assigned or transferred may be sold,
assigned or transferred pursuant to an exemption from such registration, or (C) the Buyer provides
the Company with reasonable assurance that such Securities can be sold, assigned or transferred
pursuant to Rule 144 or Rule 144A promulgated under the 1933 Act, as amended, (or a successor rule
thereto) (collectively, “Rule 144”); (ii) any sale of the Securities made in reliance on Rule 144
may be made only in accordance with the terms of Rule 144 and further, if Rule 144 is not
applicable, any resale of the Securities under circumstances in which the seller (or the Person
through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the
0000 Xxx) may require compliance with some other exemption under the 1933 Act or the rules and
regulations of the SEC thereunder; and (iii) neither the Company nor any other Person is under any
obligation to register the Securities under the 1933 Act or any state securities laws or to comply
with the terms and conditions of any exemption thereunder.
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FOIA confidential treatment requested: [***] indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to such omitted portions.
(g) Legends. The Buyer understands that the certificates or other instruments
representing the Securities, until such time as the resale of the Securities have been registered
under the 1933 Act, shall bear any legend as required by the “blue sky” laws of any state and a
restrictive legend in substantially the following form (and a stop-transfer order may be placed
against transfer of such stock certificates):
“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE ACT, AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE
ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION
HEREOF, THE HOLDER, IF NOT A U.S. PERSON: (1) REPRESENTS THAT IT IS NOT A U.S.
PERSON AND IS ACQUIRING THESE SHARES IN AN OFFSHORE TRANSACTION; (2) AGREES THAT IT
WILL NOT RESELL OR OTHERWISE TRANSFER THESE SHARES EXCEPT (A) TO THE COMPANY OR ANY
SUBSIDIARY THEREOF, (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
ACT, (C) INSIDE THE UNITED STATES, TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE
WITH RULE 000X XXXXX XXX XXX, (X) XXXXXX XXX XXXXXX XXXXXX, TO AN ACCREDITED
INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE COMPANY A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON
TRANSFER OF THESE SHARES (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE
COMPANY), (E) OUTSIDE THE UNITED STATES, IN AN OFFSHORE TRANSACTION IN COMPLIANCE
WITH RULES 904 AND 905 UNDER THE ACT, OR (F) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE ACT (IF AVAILABLE); AND (3) AGREES THAT
IT WILL GIVE EACH PERSON TO WHOM THESE SHARES ARE TRANSFERRED A NOTICE SUBSTANTIALLY
TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THESE SHARES
PURSUANT TO CLAUSES (2)(C), (D) OR (F) ABOVE, THE HOLDER MUST, PRIOR TO SUCH
TRANSFER, FURNISH TO THE COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS, OR OTHER
INFORMATION AS THE COMPANY MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS
BEING MADE PURSUANT TO AN EXEMPTION OR IN A TRANSACTION NOT SUBJECT TO THE
REGISTRATION REQUIREMENTS OF THE ACT. AS USED HEREIN, THE TERMS ‘OFFSHORE
TRANSACTION’, ‘UNITED STATES’, AND ‘U.S. PERSON’ HAVE THE MEANING GIVEN TO THEM BY
REGULATION S UNDER THE ACT.”
(h) Validity; Enforcement. The Buyer is duly organized, validly existing and in good
standing under the laws of its jurisdiction of formation, and has all requisite corporate power and
authority to enter into and perform this Agreement and consummate the transactions contemplated
hereby. This Agreement has been duly and validly authorized, executed and delivered on behalf of
the Buyer and shall constitute the legal, valid and binding obligations of the Buyer enforceable
against the Buyer in accordance with its terms, except as such enforceability may be limited by
general principles of equity or to applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws
relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.
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FOIA confidential treatment requested: [***] indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to such omitted portions.
(i) No Conflicts. The execution, delivery and performance by the Buyer of this
Agreement and the consummation by the Buyer of the transactions contemplated hereby will not (i)
result in a violation of the organizational or constitutional documents of the Buyer (including the
Memorandum and Articles and Articles of Association of the Buyer), (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Buyer is a party, or (iii)
result in a violation of any law, rule, regulation, order, judgment or decree (including federal
and state securities laws) applicable to the Buyer, except in the case of clauses (ii) and (iii)
above, for such conflicts, defaults, rights or violations which would not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the ability of the Buyer to
perform its obligations hereunder; and no authorization, approval, consent and license from any
supranational, national, state, municipal, local or foreign government, any instrumentality,
subdivision, court, administrative agency or commission or other governmental authority or
regulatory body or instrumentality, or any quasi-governmental or private body exercising any
regulatory, taxing, importing or other governmental or quasi-governmental authority (a
“Governmental Entity”) is required for the entering into by Buyer of this Agreement and the
performance by the Buyer of its obligations under this Agreement, except for (i) such as have
already been obtained and are in full force and effect and (ii) those approvals and authorizations
specifically listed in Section 5(a) hereof.
(j) General Solicitation. The Buyer is not purchasing the Securities as a result of
any advertisement, article, notice or other communication regarding the Securities published in any
newspaper, magazine or similar media or broadcast over television or radio or presented at any
seminar or any general advertisement.
(k) Brokers and Finders. [***], no Person will have, as a result of
the transactions contemplated by the Transaction Documents, any valid right, interest or claim
against or upon the Company for any commission, fee or other compensation pursuant to any
agreement, arrangement or understanding with a placement agent entered into by or on behalf of the
Buyer.
(l) Prohibited Transactions. Since the time when the Buyer and the Company or the
Agent (as defined in Section 3A(f) below) first came into contact regarding the transactions
contemplated hereby, neither the Buyer nor any Affiliate of the Buyer nor any Person acting on
behalf of or pursuant to any understanding with the Buyer (collectively, “Trading Affiliates”) has,
directly or indirectly, effected or agreed to effect any short sale, whether or not against the
box, established any “put equivalent position” (as defined in Rule 16a-1(h) under the 0000 Xxx)
with respect to the Common Shares, granted any other right (including without limitation, any put
or call option) with respect to the Common Shares or with respect to any security that includes,
relates to or derived any significant part of its value from the Common Shares or otherwise sought
to hedge its position in the Common Shares (each, a “Prohibited Transaction”), and neither the
Buyer nor its Trading Affiliates will enter into a Prohibited Transaction after the date hereof
until the transactions contemplated hereby are publicly announced.
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FOIA confidential treatment requested: [***] indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to such omitted portions.
(m) Acknowledgement. The Buyer acknowledges and agrees that the foregoing
representations, warranties, covenants and acknowledgments are made by it with the intention that
they may be relied upon by the Company. The Buyer further agrees that by accepting delivery of the
New Common Shares at the Closing Date, it shall be representing and warranting that the foregoing
representations and warranties are true and correct as at the Closing Date with the same force and
effect as if they had been made by the Buyer at the Closing Date.
3. | A. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. |
The Company represents and warrants to the Buyer that, except as set forth in its Public
Documents (as defined in Section 3A(h) below) (excluding disclosures of non-specific risks faced by
the Group (as defined in Section 4(i)) included in any forward-looking statement, disclaimer, risk
factor disclosure or other similarly non-specific statements that are similarly predictive or
forward-looking in nature; provided, however that (i) any historical facts related to the Group and
(ii) any specific exposure or effect faced by the Group emanating from specifically disclosed facts
contained within any such disclosure shall be deemed disclosed for purposes of the representations
and warranties set forth in this Article 3A):
(a) Organization and Qualification. The Company is a corporation duly incorporated
and validly existing in good standing under the laws of the jurisdiction in which it is
incorporated, and has the requisite corporate power and authorization to own its properties and to
carry on its business as now being conducted. The Company is duly qualified as a foreign
corporation to do business and is in good standing in every jurisdiction in which its ownership of
property or the nature of the business conducted by it makes such qualification necessary, except
to the extent that the failure to be so qualified or be in good standing would not reasonably be
expected to have a Material Adverse Effect. As used in this Agreement, “Material Adverse Effect”
means any material adverse effect on (i) the business, properties, assets, liabilities, operations,
results of operations or financial condition of the Company and its subsidiaries, taken as a whole,
or (ii) the authority or ability of the Company to perform its obligations under the Transaction
Documents (as defined in Section 3A(b) below); provided, however, that for purposes of clause (i)
above, in no event shall any of the following exceptions, alone or in combination with the other
enumerated exceptions below, be deemed to constitute, nor shall be taken into account in
determining whether there has been or will be, a Material Adverse Effect: (A) any effect resulting
from compliance with the terms and conditions of, or from the announcement of the transactions
contemplated by this Agreement, (B) any effect that results from changes affecting any of the
industries in which the Company operates generally or the economy generally, (C) any effect that
results from changes affecting general worldwide economic or capital market conditions, provided
that any such changes in (B) and (C) do not substantially disproportionately affect the Company in
any material respect, or (D) any change in the Company’s stock price or trading volume, in and of
itself, primarily resulting from any of the effects or changes described in the foregoing clauses
(A), (B) or (C). Each subsidiary of the Company that is a “significant subsidiary” within the
meaning of Rule 1-01(w) of Regulation S-X under the Securities Act (individually a “Significant
Subsidiary” and collectively the “Significant Subsidiaries”) has been duly organized and is validly
existing in good standing under the laws of its jurisdiction of organization except to the extent
that the failure to be in good standing would not reasonably be expected to have a Material Adverse
Effect.
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FOIA confidential treatment requested: [***] indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to such omitted portions.
(b) Authorization; Enforcement; Validity. The Company has the requisite corporate
power and authority to enter into and perform its obligations under this Agreement and each of the
other agreements entered into by the parties hereto in connection with the transactions
contemplated by this Agreement (collectively, the “Transaction Documents”) and to issue the
Securities in accordance with the terms hereof and thereof. The issuance of the Securities is
within the scope of the general mandate granted to the Board by the Company’s shareholders at the
Company’s annual general meeting held on June 2, 2008 to allot, issue, grant, distribute and
otherwise deal with additional securities in the Company, not exceeding twenty percent of the
issued share capital of the Company at the date of such resolution. The execution and delivery of
the Transaction Documents by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby, including, without limitation, the issuance of the Securities has
been duly authorized by the Board and no further filing, consent or authorization is required by
the Board, except for the filing, consent or authorization in connection with the satisfaction of
the conditions in Sections 5(a) and (b) below and any required filings regarding the issuance or
listing of additional securities with The Stock Exchange of Hong Kong Limited (the “SEHK”) or the
New York Stock Exchange (the “NYSE”). This Agreement and the other Transaction Documents when duly
executed and delivered by the Company constitute the legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with their respective terms, except as such
enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the
enforcement of applicable creditors’ rights and remedies.
(c) Issuance of Securities. The Securities are duly authorized and, when issued and
paid for in accordance with the terms hereof, shall be validly issued and free from all preemptive
or similar rights, taxes, liens and charges with respect to the issue thereof and the Securities
shall be fully paid with the holders being entitled to all rights accorded to a holder of the
Common Shares. Assuming the accuracy of each of the representations and warranties set forth in
Section 2 of this Agreement, the offer and issuance by the Company of the Securities is exempt from
registration under the 1933 Act.
(d) No Conflicts. The execution, delivery and performance of the Transaction Documents
by the Company and the consummation by the Company of the transactions contemplated hereby and
thereby (including, without limitation, the issuance of the Securities) will not (i) result in a
violation of the Articles, (ii) conflict with, or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to
which the Company or any Significant Subsidiary is a party, or (iii) subject to the terms of this
Agreement, result in a violation of any law, rule, regulation, order, judgment or decree (including
the Hong Kong Codes on Takeovers and Mergers, foreign, U.S. federal and state securities laws and
regulations and the rules and regulations of the SEHK or of the NYSE applicable to the Company or
by which any property or asset of the Company or any Significant Subsidiary is bound or affected),
except in the case of clauses (ii) and (iii) above, for such conflicts, defaults, rights or
violations which would not reasonably be expected to result in a Material Adverse Effect.
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FOIA confidential treatment requested: [***] indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to such omitted portions.
(e) Consents. The Company is not required to obtain any consent, authorization or
order of, or make any filing or registration with, (i) any court, Governmental Entity or any
regulatory or self-regulatory agency in order for it to execute, deliver or perform any of its
obligations under or
contemplated by the Transaction Documents or (ii) any third party pursuant to any agreement,
indenture or instrument to which the Company or any Significant Subsidiary is a party, in each case
in accordance with the terms hereof or thereof other than such as have been made or obtained, and
except for the filings or notifications in connection with the satisfaction of the conditions set
forth in Sections 5(a) and (b) below and any required filings or notifications regarding the
issuance or listing of additional securities with the SEHK or the NYSE or such consents as will be
obtained by the Company on or before Closing. The Company has no knowledge of any facts or
circumstances that might prevent the Company from obtaining or effecting any of the filings or
notifications described in the preceding sentence. The Company is not in violation of the listing
requirements of the SEHK or the NYSE and has no knowledge of any facts that would reasonably lead
to delisting or suspension of its Common Shares from the SEHK or of its American depository
receipts from the NYSE in the foreseeable future, apart from such suspension from SEHK and/or NYSE
in connection with or resulting from the entering into of this Agreement. As used herein,
“knowledge” shall mean actual knowledge of the executive officers (as defined in Rule 405 under the
0000 Xxx) of the Company after due inquiry.
(f) No General Solicitation; Agent. Neither the Company, nor any of its affiliates,
nor any Person acting on its or their behalf, has engaged in any form of general solicitation or
general advertising (within the meaning of Regulation D) in connection with the offer or sale of
the Securities. The Company acknowledges that it has engaged Xxxxxx Xxxxxxx Asia Limited as
financial advisor (the “Agent”) in connection with the sale of the Securities. Other than the
Agent, no Person will have, as a result of the transactions contemplated by the Transaction
Documents, any valid right, interest or claim against or upon the Company, the Buyer or HKCo for
any commission, fee or other compensation pursuant to any agreement, arrangement or understanding
with a placement agent entered into by or on behalf of the Company.
(g) No Integrated Offering. Assuming the accuracy of the Buyer’s representations and
warranties set forth in Section 2 hereof, none of the Company, any of its affiliates, or any Person
acting on their behalf has, directly or indirectly, made any offers or sales of any security or
solicited any offers to buy any security, under circumstances that would require registration of
the issuance of any of the Securities under the 1933 Act, whether through integration with prior
offerings or otherwise, or cause the offering of Securities hereunder to require approval of
shareholders of the Company for purposes of any applicable shareholder approval provisions,
including, without limitation, under the rules and regulations of the SEHK and the NYSE. None of
the Company, their affiliates and any Person acting on their behalf will take any action or steps
referred to in the preceding sentence that would require registration of the issuance of any of the
Securities under the 1933 Act or cause the offering of the Securities to be integrated with other
offerings for purposes of any such applicable shareholder approval provisions.
(h) Public Documents. The Company has timely filed all reports, schedules, forms,
statements and other documents required to be filed by it with the SEC pursuant to the reporting
requirements of the 1934 Act or with the SEHK and has timely issued all announcements and circulars
required to be issued by it by the SEHK or the NYSE (all of the foregoing filed or announced prior
to the date of this Agreement and all exhibits included therein and financial statements, notes and
schedules thereto and documents and incorporated by reference therein being hereinafter referred to
as the “Public Documents”). As of their respective filing or issuance dates, the Public Documents
complied in all
material respects with the requirements of the 1934 Act and the rules and regulations of the
SEC promulgated thereunder and the rules and regulations of the SEHK and the NYSE, as applicable,
to the respective Public Documents, and, other than as corrected or clarified in a subsequent
Public Document, none of the Public Documents, at the time they were filed or issued, contained any
untrue statement of a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
- 10 -
FOIA confidential treatment requested: [***] indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to such omitted portions.
(i) Financial Statements. The consolidated financial statements (including any related
notes thereto) included or incorporated by reference in the Public Documents fairly presented in
all material respects the consolidated financial position of the Company and its consolidated
subsidiaries as of the dates indicated therein and the consolidated results of their operations for
the periods specified therein, other than as corrected or clarified in a subsequent Public
Document. Such financial statements were prepared in material conformity with accounting
principles generally accepted in the United States of America (“GAAP”) applied on a materially
consistent basis (except as may be noted therein). The financial statements of the Company as of
and for the nine months ended September 30, 2008 included in the Public Documents are hereinafter
referred to as the “Results”. Since December 31, 2007, the Company and its subsidiaries do not
have any material liabilities or obligations required under GAAP to be set forth on a consolidated
balance sheet (accrued, absolute, contingent or otherwise), other than (i) liabilities or
obligations reflected on, reserved against, or disclosed in the Company’s balance sheet as of
September 30, 2008, (ii) liabilities or obligations that would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect, and (iii) liabilities incurred
since September 30, 2008 in the ordinary course of business consistent with past practices and any
liabilities incurred pursuant to this Agreement.
(j) Internal Controls and Procedures. The Company maintains disclosure controls and
procedures as such terms are defined in, and required by, Rule 13a-15 and Rule 15d-15 under the
1934 Act. Such disclosure controls and procedures are effective to ensure that all material
information required to be disclosed by the Company in the reports that it files or furnishes under
the 1934 Act is recorded, processed, summarized and reported within the time periods specified in
the rules and forms of the SEC. The Company maintains a system of internal controls over financial
reporting sufficient to provide reasonable assurance that (i) transactions are executed in
accordance with management’s general or specific authorizations; and (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with GAAP. The Company’s
management has completed an assessment of the effectiveness of the Company’s system of internal
controls over financial reporting for the fiscal year ended December 31, 2007 in compliance with
the requirements of Section 404 of the Xxxxxxxx-Xxxxx Act, and such assessment concluded that such
controls were effective and the Company’s independent registered accountant has issued (and not
subsequently withdrawn or qualified) an attestation report concluding that the Company maintained
effective internal control over financial reporting as of December 31, 2007. As of the date
hereof, to the knowledge of the Company, there is no reason that its chief executive officer and
chief financial officer will not be able to give the certifications and attestations required
pursuant to the rules and regulations adopted pursuant to Section 404 of the Xxxxxxxx-Xxxxx Act of
2002, without qualification, when next due.
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FOIA confidential treatment requested: [***] indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to such omitted portions.
(k) No Material Adverse Effect. Since December 31, 2007, no event or circumstance has
occurred that, individually or in the aggregate, has had or could reasonably be expected to have a
Material Adverse Effect.
(l) Litigation. There are no claims, suits, actions or proceedings pending or, to the
Company’s knowledge, threatened against the Company or any of its Significant Subsidiaries before
any court, governmental department, commission, agency, instrumentality or authority, or any
arbitrator that seeks to restrain or enjoin the consummation of the transactions contemplated by
this Agreement or which could reasonably be expected, to have, individually or in the aggregate, a
Material Adverse Effect. Except for evidence or materials subject to a protective order,
attorney-client privilege or otherwise made available to the Buyer or its counsel, no existing
facts or developments related to the Company’s pending litigation, taken as a whole, have been
omitted from the Public Documents that would reasonably be expected to have a Material Adverse
Effect (it being understood that this representation and warranty shall not be taken as a guarantee
as to the outcome of such litigation).
(m) Compliance with Applicable Laws. The Company and each of its Significant
Subsidiaries have conducted their businesses in compliance with all applicable federal, state and
foreign laws, regulations and applicable stock exchange requirements, except where the failure to
be in compliance could not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
The Company and each of its Significant Subsidiaries (apart from SMIC (Shenzhen) Company
Limited
have all permits, licenses, authorizations, orders
and approvals of, and have made all filings, applications and registrations with, any Governmental
Entities that are required in order to carry on their business as presently conducted, except where
the failure to have such permits, licenses, authorizations, orders and approvals or the failure to
make such filings, applications and registrations, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect; and all such permits, licenses,
certificates of authority, orders and approvals are in full force and effect and, to the knowledge
of the Company, no suspension or cancellation of any of them is threatened, and all such filings,
applications and registrations are current, except where such absence, suspension or cancellation,
individually or in the aggregate, could not reasonably be expected to have a Material Adverse
Effect.
![(CHINESE CHARACTERS)](https://www.sec.gov/Archives/edgar/data/1267482/000114554908001966/h02622h0262201.gif)
The Company entered into a cooperation agreement for the construction of production lines for
integrated circuit chips (the “Cooperation Agreement”) and the Company will set up production lines
for integrated circuit chips in Shenzhen, the PRC pursuant and subject to the terms and conditions
of the Cooperation Agreement. SMIC (Shenzhen) Company Limited
has been duly incorporated under the relevant PRC laws,
regulations and rules, has properly paid its registered capital and has completed tax and foreign
exchange registrations to the extent required under applicable PRC laws, regulations and rules for
the current stage of the construction of the production lines for integrated circuit chips. Its
businesses are within the scope of businesses as stated in its business license.
![(CHINESE CHARACTERS)](https://www.sec.gov/Archives/edgar/data/1267482/000114554908001966/h02622h0262202.gif)
- 12 -
FOIA confidential treatment requested: [***] indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to such omitted portions.
(n) Equity Capitalization. As of October 31, 2008, the authorized share capital of
the Company consists of (A) 50,000,000,000 Common Shares, of which as of such date, 18,622,191,008
shares are issued, (as at September 30, 2008, 1,847,934,815 shares may be issued pursuant to the
Company’s employee incentive plan and other options and warrants outstanding) and no agreement or
commitment outstanding which calls for the allotment or issue or accords to any person the right to
call for the allotment or issue of any shares (including shares issued pursuant to securities
exercisable or exchangeable for, or convertible into, or agreements relating to the issuance of
Common Shares), and (B) 5,000,000,000 Preferred Shares, of which none are issued. All of such
issued shares have been validly issued and are fully paid.
(o) Information provided. All information given in connection with the transactions
contemplated by this Agreement by the Company or on its behalf by the Company’s advisers, to the
Buyer or the Buyer’s advisers, relating to the Company, its Significant Subsidiaries or their
respective business, activities, affairs, or assets or liabilities (including all documents
attached thereto) was, when given, and is now accurate in all material respects and not misleading
in any material respect, and there is no material omission that would render the information given
misleading in any material respect, provided that nothing herein shall constitute any obligation on
the Company to disclose any information over and above what is required to be disclosed by the
Company under the requirements of applicable laws and regulations (including, but not limited to,
the Hong Kong Listing Rules) or requirements of regulatory bodies (including, but not limited to
the SEHK and the SEC).
(p) Ownership of assets. Save as disclosed publicly or to the Buyer or its advisors
as stated in Schedule C, as may be updated by the Company in writing prior to Closing (provided
that all such updates shall be made subject to the provisions of Schedule C), so far as the Company
is aware, there are no mortgages, charges, pledges, liens (other than liens arising in the ordinary
course of trading) or other forms of security or encumbrances, over or affecting the whole or any
part of the material assets of the Company or any of its Significant Subsidiaries.
(q) Intellectual Property. To the knowledge as of the date hereof of the Company, the
Company owns or possesses sufficient legal rights including but not limited to trade secrets,
licenses, confidential information and proprietary rights and manufacturing processes and all
copyrights, mask work rights, all patents and patent rights, as are necessary to the conduct of the
business as now conducted or presently proposed to be conducted on such products xx 0.00xx, 00xx,
00xx, and/or 65nm processes (or as presently proposed to be conducted on products) by the Company
or any of its Significant Subsidiaries, without any known conflict with, or known infringement of,
the rights of others except as would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect, other than the Company’s present pending litigation. To the
knowledge as of the date hereof of the Company, no products manufactured, marketed or sold (or
products proposed to be manufactured, marketed or sold) by the Company or any of its Significant
Subsidiaries violates any license or infringes any intellectual property rights of any other party
which could reasonably be expected to have, individually or in the aggregate, a Material Adverse
Effect, other than the Company’s present pending litigation. The representation and warranty set
forth in Section 3(m) (Compliance with Applicable Laws) shall not be deemed or interpreted to apply
to matters related to intellectual property and intellectual property rights. Notwithstanding the
definition of “knowledge,” the Company has not, nor shall the
definition of “knowledge” be interpreted to require an analysis of the Company’s freedom to
operate in a particular field with respect to ownership and use of intellectual property rights.
- 13 -
FOIA confidential treatment requested: [***] indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to such omitted portions.
3. B. LIMITATIONS ON REPRESENTATIONS AND WARRANTIES.
The Buyer agrees and acknowledges that all claims made by the Buyer under any of the
representations and warranties set out in Section 3A above shall not, whether individually or in
the aggregate, exceed the Aggregate Purchase Price (it being understood that any assessment of
damages shall not include any special, consequential or punitive damages and shall only be limited
to actual damages suffered including any diminution in the value of the Securities purchased as a
result of any breaches).
4. | COVENANTS. |
(a) Best Efforts. Each party shall use its best efforts to satisfy each of the
covenants and conditions to be satisfied by it as provided in Sections 5, 6 and 7 of this Agreement
on a timely basis.
(b) Regulatory Filings. Without limiting the generality of Section 4(a) above, the
Buyer shall use its best efforts to obtain all governmental approvals required for Buyer to
complete the transactions contemplated by this Agreement and, as promptly as practicable after the
date hereof, the Buyer shall make all filings, notices, petitions, statements, registrations,
submissions of information, application or submission of other documents required by any
Governmental Entity required in connection with this Agreement and the transactions contemplated
hereby. Buyer will notify the Company promptly upon the receipt of (i) any comments from any
officials of any Governmental Entity in connection with any filings made pursuant hereto, and (ii)
any requests by any officials of any Governmental Entity for amendments or supplements to, or
additional information in connection with, any filings made pursuant hereto. In addition, the
Buyer shall use best endeavors to furnish such information, supply such documents, give such
undertakings and do all such acts and things as may reasonably be required by the SEHK and/or any
other Governmental Entity in relation to or arising out of the transactions contemplated hereby.
(c) Listing. The Company shall use reasonable best efforts to promptly secure the
listing of, and permission to deal in, all of the New Common Shares on the SEHK and shall use
reasonable efforts to maintain such listing of and permission to deal in such Common Shares, so
long as any other shares of the Common Shares shall be so listed. The Company shall pay all fees
and expenses in connection with satisfying its obligations under this Section 4(c).
(d) Fees. In the event that the transactions contemplated by this Agreement are not
consummated, each party to this Agreement shall bear its own expenses in connection with the sale
of the Securities to the Buyer; in the event that the transactions contemplated by this Agreement
are consummated, the Company shall bear its own expenses [***].
- 14 -
FOIA confidential treatment requested: [***] indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to such omitted portions.
(e) Standstill. At any time following the date of this Agreement and until the second
anniversary of the Closing Date:
(i) Except with the prior written consent of the Board (which shall, for the purposes of this
Section 4(e), exclude the Buyer Nominees (as defined below), the Buyer (and, to the extent any
Securities are transferred to its Permitted Transferee (as defined in Section 4(i) hereof), its
Permitted Transferee) shall not and shall procure HKCo to not, directly or indirectly, acquire or
agree to acquire any Voting Securities, except:
(A) | Voting Securities acquired by way of share
splits, share dividends or other distributions or offerings made
available to holders of Voting Securities generally; |
||
(B) | the Securities purchased by Buyer pursuant to
this Agreement; |
||
(C) | Voting Securities acquired in compliance with
Section 4(m) hereof; and |
||
(D) | additional Voting Securities acquired or
agreed to be acquired directly or indirectly by Buyer not to exceed
(when aggregated together with all other Voting Securities directly or
indirectly held or agreed to be acquired by Buyer and its Permitted
Transferee) the lesser of thirty (30%) percent of the Company’s issued
Voting Securities, or such other threshold that may trigger a
mandatory offer obligation as set out in the Hong Kong Codes on
Takeovers and Mergers (the “Hong Kong Takeovers Code”). |
“Voting Securities” shall mean the Common Shares of the Company, and any other security carrying
voting rights and any outstanding convertible securities, options, warrants or other rights which
are convertible into or exchangeable or exercisable or carrying rights of subscription for
securities carrying voting rights in the Company.
(ii) Except with the prior written consent of the Board (which shall, for purposes of this
Section 4(e), exclude the Buyer Nominees (as defined below)) or as specifically permitted by
Section 4(e)(i) above, the Buyer (and, to the extent any Voting Securities are transferred to its
Permitted Transferee, its Permitted Transferee) shall not and shall procure HKCo to not:
(A) make, effect, initiate, cause or in any way participate directly or indirectly in (i) any
acquisition of beneficial ownership of any Voting Securities of the Company or any Voting
Securities of any subsidiary or other affiliate of the Company such that the Buyer’s (and, to the
extent any Voting Securities are transferred to its Permitted Transferee, its Permitted
Transferee’s) aggregate direct and indirect interest in the issued share capital of the Company
will exceed the lesser of 30% and such other threshold that may trigger a mandatory offer
obligation as set out in the Hong Kong Takeovers Code, (ii) any acquisition of any assets of
the Company or any assets of any subsidiary or other affiliate of the Company, or (iii) any
tender offer, exchange offer, merger, business combination, recapitalization, restructuring,
liquidation, dissolution or extraordinary transaction involving the Company or any subsidiary or
other affiliate of the Company, or involving any securities or assets of the Company or any
securities or assets of any subsidiary or other affiliate of the Company;
- 15 -
FOIA confidential treatment requested: [***] indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to such omitted portions.
(B) make, effect, initiate, cause or in any way participate directly or indirectly in any
“solicitation” of “proxies” (as such terms are used in the rules of the SEC) to vote any Voting
Securities of the Company or any subsidiary thereof, or seek to advise or influence any Person with
respect to the voting of any Voting Securities of the Company or any subsidiary thereof except that
Buyer may retain the right to vote any securities transferred to its Permitted Transferee (for the
avoidance of doubt, the Company will not be concerned with effecting any such voting arrangements
between the Buyer and its Permitted Transferee and will regard the voting rights of any such Voting
Securities to adhere to the registered holder thereof as shall appear on the register of members of
the Company);
(C) make any public announcement with respect to, or submit a proposal for or offer of (with
or without conditions) any merger, recapitalization, reorganization, business combination or other
extraordinary transaction involving the Company or any subsidiary thereof or any of their
securities or assets;
(D) enter into any discussions, negotiations, arrangements or understandings with any third
party with respect to any of the foregoing, or otherwise form, join or in any way engage in
discussions relating to the formation of, or participate in, any “group”, as such term is
interpreted under Rule 13d-5(b)(1) under the 1934 Act in connection with any of the foregoing;
(E) take any action that might require the Company to make a public announcement regarding any
of the types of matters set forth in clause “(A)”, clause “(B)” or clause “(C)” of this sentence;
(F) agree or offer to take, or encourage or propose (publicly or otherwise) the taking of, any
action referred to in clause “(A)”, clause “(B)”, clause “(C)”, clause “(D)”, or clause “(E)” of
this sentence;
(G) assist, induce or encourage any other Person to take any action of the type referred to in
clause “(A)”, clause “(B)”, clause “(C)”, clause “(D)”, clause “(E)” or clause “(F)” of this
sentence;
(H) deposit any Voting Securities in a voting trust or subject them to a voting agreement or
other arrangement of similar effect;
(I) enter into any discussions, negotiations, arrangement or agreement with any other Person
related to any of the foregoing; or
(J) request the Company or any of its representatives, directly or indirectly, to amend or
waive any provision of this Section 4(e).
- 16 -
FOIA confidential treatment requested: [***] indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to such omitted portions.
For the avoidance of doubt, the Buyer or the HKCo shall not be deemed to be in breach of this
Section 4(e) to the extent that:
any of the actions as contemplated by the foregoing provisions are taken by any of the Buyer
Nominees (as defined below) (and, to the extent any Voting Securities are transferred to its
Permitted Transferee, its Permitted Transferee) as a representative of the Board or otherwise
solely in furtherance of his fiduciary duties as a director to the Company and to the shareholders
of the Company as a whole,
provided that nothing in the above sub-paragraph shall give the Buyer or any Buyer Nominees (as
defined below) any right to participate in any discussion, decision, consent or action of the Board
that is contemplated under Article 4(e)(ii) (A) to (J) of this Agreement to be taken by the Board
(but excluding the Buyer Nominees(as defined below)).
(iii) The restrictions imposed by this Section 4(e) shall terminate on the earlier of such
time as (A) a tender offer is made by another Person for not less than 50% of the Voting Securities
where such tender offer is not subject to financing conditions and is evidenced by applicable
filings with appropriate regulatory agencies and tender offer materials have been disseminated to
security holders, or (B) another Person acquires greater than 30% of the Voting Securities, except
by way of stock splits, stock dividends or other distributions or offerings made available to
holders of Voting Securities generally.
(f) Board Nominees. Subject to the authorized size of the Board being set at nine
members pursuant to the Articles and subject to compliance with the rules, regulations and
requirements of the SEHK, the Buyer shall have the right to nominate two members of the Board (each
such nominee, a “Buyer Nominee”); provided that:
(i) the number of Buyer Nominees shall decrease to one if the Buyer (together with HKCo and
the Permitted Transferee) hold less than 1,849,547,150 shares (as appropriately adjusted for stock
splits, stock consolidation, stock dividends, recapitalizations and the like) of the total issued
nominal share capital of the Company or the Buyer (together with HKCo) holds less than 924,773,575
shares (as appropriately adjusted for stock splits, stock consolidation, stock dividends,
recapitalizations and the like) of the total issued nominal share capital of the Company; and
(ii) the Buyer shall not be entitled to nominate any directors in the event that the Buyer
(together with the HKCo and the Permitted Transferee) hold less than 924,773,575 shares (as
appropriately adjusted for stock splits, stock consolidation, stock dividends, recapitalizations
and the like) of the total issued nominal share capital of the Company or the Buyer (together with
HKCo) holds less than 462,386,788 shares (as appropriately adjusted for stock splits, stock
consolidation, stock dividends, recapitalizations and the like) of the total issued nominal share
capital of the Company.
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FOIA confidential treatment requested: [***] indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to such omitted portions.
The Buyer Nominees shall initially be appointed to the Board as follows:
(i) One Buyer Nominee shall be appointed by the Board to fill the Class I vacancy, effective
as of the Closing Date; and
(ii) One Buyer Nominee shall be appointed by the Board to fill the Class II vacancy, effective
as of the Closing Date.
For the avoidance of doubt, the Buyer acknowledges that the Buyer Nominees shall not be entitled to
vote at any Board meeting and reference to the Board shall not include the Buyer Nominees, in each
case (A) prior to his/her appointment and (B) after his/her appointment in relation to matters
falling within the scope of this Agreement.
(g) Vice President in Charge of TD-SCDMA. For so long as the Buyer (together with
HKCo and the Permitted Transferee) holds at least 924,773,575 shares (as appropriately adjusted for
stock splits, stock consolidation, stock dividends, recapitalizations and the like) of the total
nominal share capital of the Company from time to time, provided that the Buyer (together with
HKCo) holds at least 462,386,788 shares (as appropriately adjusted for stock splits, stock
consolidation, stock dividends, recapitalizations and the like) of the total nominal share capital
of the Company from time to time, subject to compliance with the rules, regulations and
requirements of the SEHK, the Buyer shall be entitled to nominate the Company’s Vice President in
Charge of TD-SCDMA, subject to the approval of the Board (which shall, for the purposes of this
Section 4(g), exclude Buyer Nominees), which approval shall not be unreasonably withheld or delayed
and the appointment of the Vice President in Charge of TD-SCDMA shall be made by the Company within
two (2) weeks after the Buyer’s written notice to the Company containing such nomination together
with the details of the candidate.
(h) Strategic Cooperation Agreement. The Company and the Buyer will conduct TD-SCDMA
related businesses based on customary market practice and arms length pricing. The Company and the
Buyer acknowledge their mutual desire to enter into a strategic cooperation agreement on mutually
agreeable terms, and hereby agree to use commercially reasonable efforts to enter into such
agreement on or before the Closing Date on the terms and conditions set forth in the memorandum of
understanding between the Company and the Buyer, of which the Buyer acknowledges receipt (the
“Strategic MOU”).
(i) Lock-Up.
(i) The Buyer (and to the extent any Securities are Transferred to the Permitted Transferee in
accordance with the provisions of Section 4(i)(iii), the Permitted Transferee) shall not and shall
procure HKCo not to offer, pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or
otherwise transfer or dispose of, directly or indirectly, any of the Securities purchased hereunder
or enter into any swap, hedging or other arrangement that transfers to another, in whole or in
part, any of the economic consequences of ownership of any of such securities (any of the
foregoing, a “Transfer”) without the prior written consent of the Company for a period of two (2)
years from the Closing Date (the “Lock-Up Period”), provided that nothing herein shall restrict the
Buyer or HKCo from pledging any of the Securities purchased hereunder with the Permitted Transferee
and the rights of the Buyer and HKCo under this Agreement shall not be affected by such pledge.
- 18 -
FOIA confidential treatment requested: [***] indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to such omitted portions.
(ii) The Buyer (and, to the extent any Securities are Transferred to the Permitted Transferee
in accordance with the provisions of Section 4(i)(iii), the Permitted Transferee) shall
and shall procure HKCo to refrain at all times (including with respect to time periods after
the expiration of the Lock-Up Period) from selling the New Common Shares to any person or entity
that in any manner, directly or indirectly, is in competition with the Company, except in a genuine
open market sale where the identity of the purchaser of the Common Shares is not known to, and
cannot reasonably be determined by, the Buyer or its agent effecting such sale.
(iii) Notwithstanding the foregoing, the Company hereby agrees that the Buyer or HKCo may,
subject to compliance with the rules (including the Hong Kong Listing Rules), regulations, laws of
Hong Kong and the requirements of the SEHK, transfer New Common Shares amounting to less than
1,849,547,150 shares (as appropriately adjusted for stock splits, stock consolidation, stock
dividends, recapitalizations and the like) of the total nominal share capital of the Company to a
permitted transferee as approved in writing by the Board (which shall, for the avoidance of doubt,
exclude the Buyer Nominees) prior to such transfer (it being acknowledged by the Company that the
identity of one potential transferee indicated prior to the date hereof by the Buyer to the Company
has been approved by the Board, subject to the other terms and conditions of this Agreement) (the
“Permitted Transferee”) provided, that, as a condition to any such transfer:
(A) | the Buyer shall inform the Company in writing
of the proposed Transfer to the Permitted Transferee before effecting
it; |
||
(B) | the Permitted Transferee shall be a non-PRC
incorporated entity, provided that if (1) the Buyer shall have
provided the Company in writing with good and valid reason(s) to
justify the need to Transfer to a PRC incorporated entity one (1)
month prior to such Transfer; and (2) the Company’s Board (which
shall, for purposes of this Section 4(i), exclude the Buyer Nominees)
determines that such Transfer is not expected to be prejudicial to the
interests of, or have an adverse impact on, the Company or its
subsidiaries and associated companies (the “Group”) (for the purposes
of this sub-paragraph, an “adverse impact” shall include any adverse
implication that may arise as a result of such Transfer on the Company
or its Group under relevant U.S. technology transfer requirements
and/or PRC securities law); and |
||
(C) | the Permitted Transferee shall furnish the
Company with a written agreement in a form satisfactory to the Company
similar to that given by the HKCo pursuant to Section 1(c)(ii)(B)
(except that references to the “HKCo” in relation to the
representations and warranties to the Company and Section 9, as
amended in the written agreement to be executed by, inter alia, the
HKCo, shall be replaced with references to the “Permitted Transferee”
and, in addition, that the Permitted Transferee shall not be entitled
to further transfer the Securities to any other person during the
remaining period of the
Lock-up Period such that the provision relating to transfer to
“Permitted Transferee” in Section 4(i) shall not apply). |
- 19 -
FOIA confidential treatment requested: [***] indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to such omitted portions.
(j) Public Disclosure. Without limiting any other provision of this Agreement, the
Company and Buyer (and to the extent any Securities are Transferred to the Permitted Transferee in
accordance with the provisions of this Section 4(i), the Permitted Transferee), to the extent
permitted by applicable law, will consult with each other before issuance, and provide each other
the opportunity to review, comment upon and concur with, and use all reasonable efforts to agree on
any press release or public statement with respect to this Agreement and the transactions
contemplated hereby, and will not (to the extent practicable) issue any such press release or make
any such public statement prior to such consultation and agreement, except as may be required by
law, rules, regulations or any listing agreement with or requirement of the NYSE, SEHK or any other
applicable securities exchange, provided that the disclosing party shall, to the extent permitted
by applicable law, rules, regulations or any listing agreement with or requirement of the NYSE,
SEHK or any other applicable securities exchange and if reasonably practicable, inform the other
parties about the disclosure to be made pursuant to such requirements prior to the disclosure.
(k) Conduct of Business. Save as disclosed in this Agreement or any public disclosure
made by the Company prior to the date of this Agreement, or consented in writing by the Buyer,
during the period from the date of this Agreement and continuing until the earlier of the
termination of this Agreement pursuant to Section 8(a) hereof or the Closing, the Company shall,
except as permitted and contemplated by the terms of this Agreement or disclosed in any public
disclosure made by the Company prior to the date of this Agreement, carry on its business, in all
material respects, in the ordinary and normal course and, not (i) undertake any construction of any
new plants and buildings, (ii) enter into any notifiable transactions (as such term is defined
under the Hong Kong Listing Rules) ; (iii) approve any capital expenditures that are not reflected
in the updated annual budget, sent to the Buyer’s financial advisors on October 23, 2008 and
updated on October 30 2008 or (iv) agree to, either verbally or in writing, authorize or approve
any of the foregoing.
For the avoidance of doubt, the Company may continue to be involved in the existing construction of
plants and buildings, as the Board may consider appropriate from time to time.
(l) Use of Proceeds. The Company shall, consistent with past practice of the Company,
continue to submit an annual budget (including budgeted capital expenditure) (the “Annual Budget”)
for review and approval by the Board on an annual basis and shall update the Board quarterly as to
its capital expenditure plan in respect of the relevant quarter. Save as otherwise included in the
Annual Budget as approved by the Board or in any quarterly update to such Annual Budget as approved
by the Board or disclosed pursuant to this Agreement or any public disclosure made by the Company
prior to the date of this Agreement, the Company shall not use the proceeds received from the sale
of the Securities hereunder, in whole or in part, to engage in a line of business substantially
different from the existing lines of business of the Company.
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FOIA confidential treatment requested: [***] indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to such omitted portions.
For the avoidance of doubt, the Company may continue to be involved in its existing businesses, and
may continue to make such further investments in, and to further develop and expand, its existing
businesses, in each case as the Board may consider appropriate from time to time.
(m) Pre-emptive Rights.
(i) If the Company proposes, following the Closing, to issue any new Common Shares, any
securities convertible into or exchangeable into Common Shares or any warrants or other rights to
subscribe for Common Shares (“Relevant Securities”), the Company shall notify Buyer in writing of
such proposal (an “Issue Notice”). The Issue Notice shall specify the number and type of Relevant
Securities to be offered by the Company and the material terms of the proposed offer (including the
proposed price per Relevant Security to be paid by the proposed third party purchaser(s)).
(ii) Subject to sub-paragraph (vii) below, the Buyer shall have the right to purchase or to
purchase through HKCo such number of the Relevant Securities which are the subject of the Issue
Notice so as to enable the Buyer (together with HKCo) to hold, after the issue of the Relevant
Securities:
(A) | in the case of the
Relevant Securities that would result in a single investor
or investor group acting in concert (other than an
underwriter that is placing on behalf of the Company the
Relevant Securities in a bona fide capital markets
transaction) (collectively, the “Prospective Largest
Shareholder”) beneficially owning more than the Buyer and
HKCo in the aggregate, one share more than the number of
shares in the Company proposed to be beneficially owned by
such Prospective Largest Shareholder; unless: |
(1) | the
Buyer and HKCo holding less than 2,774,320,725
shares (as appropriately adjusted for stock
splits, stock consolidation, stock dividends,
recapitalizations and the like) of the total
nominal share capital of the Company (excluding
Securities transferred to the Permitted
Transferee); or |
||
(2) | at
least two-thirds (2/3) of the Company’s Board
(which shall, for the purposes of this Section
4(m)(ii), exclude the Buyer Nominees) in good
faith resolving in writing that the
implementation of this Section 4(m)(ii)(A) is not
in the best interests of the Company and its
shareholders as a whole; or |
(B) | a pro rata portion of the
Relevant Securities equal to the percentage of the issued share
capital of the Company then
beneficially owned by the Buyer (together with the HKCo) prior
to the issuance of the Relevant Securities, provided that the
Buyer and HKCo maintains an ownership interest equal to at
least 1,849,547,150 shares (as appropriately adjusted for stock
splits, stock consolidation, stock dividends, recapitalizations
and the like) of the total nominal share capital of the
Company, |
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FOIA confidential treatment requested: [***] indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to such omitted portions.
in each case upon the same terms and conditions set forth in the Issue Notice, by giving written
notice to the Company of the exercise of this right within ten (10) Business Days (as defined
below) of the giving of the Issue Notice. If such notice is not given by the Buyer within such ten
(10) Business Days (as defined below), the Buyer shall be deemed to have elected not to exercise
its rights under this Section 4(m)(ii) with respect to the issuance described in that specific
Issue Notice (it being understood that if the Buyer is not permitted to exercise its rights under
Section 4(m)(ii)(A)(2) due to the failure to reach the necessary threshold specified therein, the
Buyer shall be entitled to exercise its rights under Section 4(m)(ii)(B) by giving notice within
ten (10) Business Days (as defined below) of receiving written notice of the Board’s action). The
parties acknowledge that any rights of the Buyer to purchase the Relevant Securities pursuant to
this Section 4(m)(ii) will lapse if completion thereof does not occur simultaneously with the
Buyer’s completion of the offering of Relevant Securities or at such other time and place as shall
be mutually agreed by the Company and the Buyer, provided that if the reason for the Buyer’s
failure to complete by the time specified above is solely due to a delay of the Governmental Entity
in granting the relevant authorizations, approvals, permits, qualifications or exemptions, the
Buyer shall notify the Company in writing at least seven (7) days prior to the completion of the
offering of the Relevant Securities to extend the completion date for Buyer to a date within three
(3) months or such other reasonable period as may be mutually agreed between the parties following
the completion of the issue of the Relevant Securities, after such period the right to the Buyer to
purchase the Relevant Securities pursuant to this Section 4(m)(ii) shall lapse. A notice given by
the Buyer pursuant to this section shall be irrevocable.
(iii) Subject to Section 4(m)(ii) above, the completion of the Buyer’s purchase of Relevant
Securities pursuant to section (ii) above shall occur simultaneously with the completion of the
offering of Relevant Securities. For the avoidance of doubt, the completion by the Company of the
offering of the Relevant Securities shall not be affected by the timing of the completion of any
issue of the Relevant Securities to the Buyer or HKCo. The Buyer shall execute and deliver to the
Company all transaction documents related to Buyer’s purchase of Relevant Securities as may be
reasonably requested by the Company prior to the completion of the Buyer’s purchase of Relevant
Securities. At such completion, the Buyer shall deliver the aggregate purchase price for the
Relevant Securities to be purchased by the Buyer pursuant to Section 4(m)(ii) above.
(iv) Any Common Shares issued to the Buyer pursuant to this Section 4(m)(ii) above shall be
issued on the same terms and subject to the same conditions as the Relevant Securities are issued
to any proposed third party purchaser(s), such terms and conditions being set out in the Issue
Notice.
(v) The provisions of Section 4(m)(i) to (iv) shall not apply to:
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FOIA confidential treatment requested: [***] indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to such omitted portions.
(1) the grant of any options, or the issue of any Relevant Securities pursuant to the exercise
of share options granted (whether prior to or after the date of this Agreement), pursuant to any
share purchase or share option plans of the Company in effect from time to time;
(2) the issue of any Relevant Securities pursuant to any share incentive scheme operated by
the Company from time to time;
(3) the issue of any Common Shares or other securities pursuant to the conversion, exchange or
exercise of any securities that were previously offered and/or issued to Buyer (including HKCo and
its Permitted Transferee, if applicable) as Relevant Securities;
(4) any offer of the Relevant Securities open for a period fixed by the Board to holders of
Common Shares on the register of members on a fixed record date in proportion to their then
holdings of Common Shares; provided that such offer of Relevant Securities is also made to Buyer
(including HKCo, if applicable), unless the Board considers necessary or expedient to exclude it on
account either of the legal restrictions under the laws of the relevant place or the requirements
of the relevant regulatory body or stock exchange in that place;
(5) an issue of Common Shares as fully paid to holders of Common Shares (including without
limitation, Common Shares paid up out of distributable profits or reserves and/or share premium
account issued in lieu of the whole or any part of any cash dividend and free distributions or
bonus issue of Common Shares); provided that such issuance of Common Shares is also made to Buyer
(including HKCo, if applicable) ;
(6) an issue of the Relevant Securities pursuant to the acquisition of another corporation by
the Company by merger, purchase of substantially all of the assets or other reorganization or to a
joint venture agreement; provided, that such issuance is approved by the Board;
(7) an issue of the Relevant Securities to banks, equipment lessors or other financial
institutions pursuant to a commercial leasing or commercial loan transaction approved by at least
two-thirds (2/3) of the Board (which shall, for the purposes of this Section 4(m)(v)(7), exclude
the Buyer Nominees);
(8) an issue of Relevant Securities in connection with sponsored research, collaboration,
technology license, development, OEM, marketing or other similar agreements or strategic
partnerships approved by at least two-thirds (2/3) of the Board (which shall, for the purposes of
this Section 4(m)(v)(8), exclude the Buyer Nominees);
(9) an issue of Relevant Securities to suppliers or third party service providers in
connection with the provisions of goods or services pursuant to transactions approved by at least
two-thirds (2/3) of the Board (which shall, for the purposes of this Section 4(m)(v)(9), exclude
the Buyer Nominees);
(10) the issue of any Relevant Securities the issuance of which is specifically excluded from
the provisions of this Section 4(m) by unanimous vote or unanimous written consent of the Board.
- 23 -
FOIA confidential treatment requested: [***] indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to such omitted portions.
(vi) The rights set forth in this Section 4(m) shall not apply with respect to and shall
expire immediately prior to a transaction that would result in a change of control (as such term is
defined under the Hong Kong Takeovers Code).
“Business Day” shall mean a day that is not a Saturday, Sunday or a public holiday in Hong Kong or
the People’s Republic of China.
(vii) The Company and Buyer acknowledge and agree that the Buyer’s exercise of the rights in
this Section 4(m) shall in all cases be subject to compliance with the rules, regulations, laws and
requirements of applicable government and regulatory bodies, including the Hong Kong Listing Rules,
the Hong Kong Takeovers Code, the Stock Exchange of Hong Kong Limited and the Securities and
Futures Commission of Hong Kong (including, where applicable any requirements to obtain the
approval of the shareholders of the Company), and shall take such steps reasonably necessary to
give effect to the rights contained in this Section 4(m) in compliance with rules, regulations,
laws and requirements of applicable government and regulatory bodies, provided that all costs and
expenses (including, without limitation, reasonable legal fees and expenses) incurred by the
Company shall be resolved in a manner consistent with any terms agreed to by the Company and the
other potential investor(s) with respect to the issuance described in the relevant Issue Notice.
(n) Exclusivity. During the period from the date of this Agreement and continuing
until the earliest of (A) the termination of this Agreement pursuant to Section 8(a) hereof, (B)
the Closing, or (C) November 15, 2008, the Company agrees not to initiate, solicit, encourage or
engage in any discussion or negotiation of any type with, provide any information to, accept and
proposal from, or enter into any letter of intent, purchase contract or any other similar
agreement, or consummate any transaction, with any persons or entities other than the Buyer with
respect to any equity or convertible debt instrument in the Company or with respect to any sale of
substantially all of the assets of the Company or any Significant Subsidiary, provided that nothing
in this section shall prohibit the Company from carrying out any normal investor or public
relations activities in its ordinary course of business.
(o) Discussion. Subject to applicable law, rules, regulations and requirements
(including the Hong Kong Listing Rules and the requirements of the SEHK and NYSE), during the
period from the date of this Agreement and continuing until the earlier of the termination of this
Agreement pursuant to Section 8(a) hereof or the Closing, the Company will use its reasonable
efforts to meet with, and/or communicate with representatives of the Buyer upon reasonable request
and to discuss any material operational matters in good faith and to consider whether and how to
exercise its discretion to implement any reasonable suggestions from the Buyer.
(p) Shenzhen company. The Company shall use reasonable efforts and upon reasonable
request, within a reasonable period, obtain all the necessary approval and consent for the
commencement of the construction of the project pursuant to the Cooperation Agreement and shall
obtain all the necessary approvals from PRC authorities for the Cooperation Agreement.
- 24 -
FOIA confidential treatment requested: [***] indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to such omitted portions.
(q) [***]. As soon as reasonably practicable after the Vice President in Charge
of TD-SCDMA nominated by the Buyer becomes an employee of the Company, the Company [***] the Vice
President in Charge of TD-SCDMA nominated by the Buyer, at such time as such individual becomes an
employees of the Company. The Buyer shall nominate the Vice President in Charge of TD-SCDMA prior
to the Closing.
5. | CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL AND TO THE BUYER’S OBLIGATION TO
PURCHASE. |
The obligation of the Company hereunder to issue and sell the New Common Shares to the Buyer
at the Closing and the obligation of the Buyer hereunder to purchase the New Common Shares from the
Company hereunder are each subject to the satisfaction, at or before the Closing Date, of each of
the following conditions, provided that these conditions may be waived, in whole or in part, by
either party hereto only as regards the obligations of the other party to procure the relevant
conditions, at any time in its sole discretion by providing the other party hereto with prior
written notice thereof:
(a) Governmental Approvals. The Buyer and the Company shall have obtained all
authorizations, approvals, permits, qualifications or exemptions, if any, of any Governmental
Entity that are required in connection with the lawful issuance and sale of the Securities
hereunder by the Company, the lawful purchase of the Securities hereunder by the Buyer through HKCo
and the performance of the parties’ other obligations hereunder, and such authorizations,
approvals, permits, qualifications or exemptions including, in relation to the Buyer, those from
the National Development and Reform Commission (NDRC), the State Administration of Foreign Exchange
and the Ministry of Commerce, in each case of the PRC) shall be in effect as of the date of the
Closing.
(b) SEHK Listing. Approval for the listing of, and permission to deal in the New
Common Shares shall have been duly obtained from the SEHK and such approval not subsequently being
revoked prior to Closing.
(c) No Governmental Prohibition. The sale of the Securities by the Company and the
purchase of the Securities by the Buyer shall not be prohibited by any law or governmental order or
regulation.
- 25 -
FOIA confidential treatment requested: [***] indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to such omitted portions.
6. | CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL. |
The obligation of the Company hereunder to issue and sell the New Common Shares to the Buyer
at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the
following conditions, provided that these conditions are for the Company’s sole benefit and may be
waived by the Company, in whole or in part, at any time in its sole discretion by providing the
Buyer with prior written notice thereof:
(a) Execution of Transaction Documents and other documents. The Buyer shall have
executed each of the Transaction Documents to which it is a party and delivered the same to the
Company and the documents set forth in Section 1(c)(ii)(B).
(b) Delivery of Purchase Price. The Buyer shall have delivered to the Company the
Aggregate Purchase Price for the Securities at the Closing by wire transfer of immediately
available funds pursuant to the wire instructions provided by the Company as set forth in Section
1(c)(ii)(A) [***].
(c) Representations and Warranties; Covenants. The representations and warranties of
the Buyer shall be true and correct in all material respects (except for those representations and
warranties that are qualified by materiality or material adverse effect, which shall be true and
correct to such extent) as of the date of this Agreement and as of the Closing Date as though made
at that time (except for representations and warranties that speak as of a specific date, which
shall be true and correct as of such specified date), and the Buyer shall have performed, satisfied
and complied in all material respects with the covenants, agreements and conditions required by
this Agreement to be performed, satisfied or complied with by the Buyer at or prior to the Closing
Date.
(d) Absence of Litigation. No proceeding challenging this Agreement or the
transactions contemplated hereby, or seeking to prohibit, alter, prevent or delay the Closing,
shall have been instituted or be pending before any court, arbitrator, governmental body, agency or
official.
7. | CONDITIONS TO THE BUYER’S OBLIGATION TO PURCHASE. |
The obligation of the Buyer hereunder to purchase the New Common Shares at the Closing is
subject to the satisfaction, at or before the Closing Date, of each of the following conditions,
provided that these conditions are for the Buyer’s sole benefit and may be waived by the Buyer, in
whole or in part, at any time in its sole discretion by providing the Company with prior written
notice thereof:
(a) Execution of Transaction Documents and other documents. The Company shall have
duly executed and delivered to the Buyer each of the Transaction Documents and the documents set
forth in Section 1(c)(ii)(C).
(b) Representations and Warranties; Covenants. The representations and warranties of
the Company contained in this Agreement shall be true and correct in all material respects (except
for those representations and warranties that are qualified by materiality or Material Adverse
Effect, which shall be true and correct to such extent) as of the date of this Agreement and as of
the Closing Date as though made at that time (except for representations and warranties that speak
as of a specific date, which shall be true and correct as of such specified date), and the Company
shall have performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by the Transaction Documents to be performed, satisfied or
complied with by the Company at or prior to the Closing Date.
(c) Strategic Cooperation Agreement. The Company and the Buyer shall have entered
into a strategic cooperation agreement on mutually agreeable terms as set forth in the Strategic
MOU on or before the Closing Date and such agreement shall be in full force and effect as of the
Closing Date.
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FOIA confidential treatment requested: [***] indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to such omitted portions.
8. | TERMINATION. |
(a) Subject to Section 8(b) below, this Agreement may be terminated and the transactions
contemplated by this Agreement abandoned at any time prior to the Closing:
(i) by mutual agreement of the Company and the Buyer;
(ii) by the Company or the Buyer if the Closing Date shall not have occurred by November 30,
2008 or any other date as may be agreed between the parties; provided, however,
that the right to terminate this Agreement under this Section 8(a)(ii) shall not be available to a
party if such party’s action or failure to act has been a principal cause of or resulted in the
failure of the Closing to occur on or before such date and such action or failure to act
constitutes breach of this Agreement;
(iii) by the Company or the Buyer if any legislative body, court, administrative agency or
commission or other governmental authority, instrumentality, agency or commission shall have
enacted, issued, promulgated, enforced or entered any law or governmental regulation or order which
has the effect of prohibiting the sale and issuance of the Securities;
(iv) by the Buyer if there has been a material breach of any representation or warranty of the
Company hereunder that would have a Material Adverse Effect on the Company or any material breach
of any covenant or agreement of the Company hereunder; and
(v) by the Company if there has been a material breach of any representation, warranty,
covenant or agreement of the Buyer contained in this Agreement.
(b) In the event of termination of this Agreement as provided in Section 8(a) above, this
Agreement shall forthwith become void and there shall be no liability or obligation on the part of
the parties hereto and, as applicable, the officers, directors and shareholders of each party;
provided that each party hereto shall remain liable for any breaches of this Agreement or
of any certificate or other instruments delivered pursuant to this Agreement prior to its
termination; and provided further that the provisions of Sections 8 and 9 hereof
shall remain in full force and effect and survive any termination of this Agreement pursuant to the
terms of this Section 8.
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FOIA confidential treatment requested: [***] indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to such omitted portions.
9. | MISCELLANEOUS. |
(a) Governing Law; Arbitration. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and construed in accordance
with the laws of Hong Kong. Any dispute, controversy or claim arising out of or relating to this
Agreement, or the interpretation, breach, termination or validity hereof, shall be submitted to
arbitration upon the request of any party with notice to the other parties. The arbitration shall
be conducted in Hong Kong under the auspices of the Hong Kong International Arbitration Centre (the
“HKIAC”) in accordance with the
UNCITRAL Arbitration Rules (“UNCITRAL Rules”) in effect, which rules are deemed to be
incorporated by reference into this Section 9(a). There shall be three (3) arbitrators. The
complainant and the respondent to such dispute shall each select one arbitrator within thirty (30)
days after giving or receiving the demand for arbitration. The Chairman of the HKIAC shall select
the third arbitrator, who shall be qualified to practice law in Hong Kong. If either party to the
arbitration does not appoint an arbitrator who has consented to participate within thirty (30) days
after selection of the first arbitrator, the relevant appointment shall be made by the Chairman of
the HKIAC. The arbitration proceedings shall be conducted in English. Each party hereto shall
cooperate with any party to the dispute in making full disclosure of and providing complete access
to all information and documents requested by such party in connection with such arbitration
proceedings, subject only to any confidentiality obligations binding on the party receiving the
request. Each party irrevocably waives, to the fullest extent it may effectively do so, any
objection which it may now or hereafter have to the laying of venue of any such arbitration in Hong
Kong and the HKIAC, and hereby submits to the exclusive jurisdiction of HKIAC in any such
arbitration. The award of the arbitration tribunal shall be conclusive and binding upon the
disputing parties, and any party to the dispute may apply to a court of competent jurisdiction for
enforcement of such award. Any party to the dispute shall be entitled to seek preliminary
injunctive relief, if possible, from any court of competent jurisdiction pending the constitution
of the arbitral tribunal.
(b) Effect of Completion. Without prejudice to other provisions of this Agreement,
the representation, warranty, covenant or undertaking (the “Warranties”) contained in this
Agreement shall remain in full force and effect notwithstanding Closing except as terminated
pursuant to the terms hereof or by a waiver or release by the party entitled to enforce such
Warranties.
(c) Remedies and waivers. No delay or omission by any party to this Agreement in
exercising any right, power or remedy provided by law or under this Agreement or any other
documents referred to in it shall: (i) affect that right, power or remedy; or (ii) operate as a
waiver thereof. The single or partial exercise of any right, power or remedy provided by law or
under this Agreement shall not preclude any other or further exercise or any other right, power or
remedy. Except as otherwise expressly provided in this Agreement, the rights, powers and remedies
provided in this Agreement are cumulative and not exclusive of any rights, powers and remedies
provided by law.
(d) Counterparts. This Agreement may be executed in two or more identical
counterparts, all of which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the other party. A
facsimile signature shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original, not a facsimile
signature.
(e) Languages. This Agreement is being executed in both the English and Chinese
languages, and both language versions shall have equal force.
(f) Headings. The headings of this Agreement are for convenience of reference and
shall not form part of, or affect the interpretation of, this Agreement.
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FOIA confidential treatment requested: [***] indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to such omitted portions.
(g) Severability. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the
validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity
or enforceability of any provision of this Agreement in any other jurisdiction.
(h) Confidentiality. The parties hereto acknowledge that the Company and Buyer have
previously executed a Confidentiality Agreement dated June 18, 2007 (the “Confidentiality
Agreement”), which Confidentiality Agreement will continue in full force and effect in accordance
with its terms and shall survive any termination of this Agreement. The Buyer shall procure that
the HKCo and its Permitted Transferee shall observe the terms of the Confidentiality Agreement.
(i) Entire Agreement; Amendments. This Agreement, the other Transaction Documents and
the Confidentiality Agreement supersede all other prior oral or written agreements between the
Buyer, the Company, their affiliates and Persons acting on their behalf with respect to the matters
discussed herein, and this Agreement, the other Transaction Documents and the instruments
referenced herein and therein contain the entire understanding of and agreement between the parties
with respect to the matters covered herein and therein and, except as specifically set forth herein
or therein, neither the Company nor the Buyer makes any representation, warranty, covenant or
undertaking with respect to such matters. In entering into this Agreement and the other
Transaction Documents, each part to such agreements acknowledges that it is not relying upon any
pre-contractual statement which is not expressly set out in them. No provision of this Agreement
may be amended other than by an instrument in writing signed by the Company and the Buyer. No
provision hereof may be waived other than by an instrument in writing signed by the party against
whom enforcement is sought.
Without prejudice to Section 3A(o) above pursuant to which the Company represents and warrants that
all information given in connection with the transactions contemplated by this Agreement by the
Company or on its behalf by the Company’s advisers, to the Buyer or the Buyer’s advisers, relating
to the Company, its Significant Subsidiaries or their respective business, activities, affairs, or
assets or liabilities (including all documents attached thereto) was, when given, and is now
accurate in all material respects and not misleading in any material respect, and there is no
material omission that would render the information given misleading in any material respect,
except in the case of fraud, no party shall have any right of action against any other party to
this Agreement or the other Transaction Documents arising out of or in connection with any
pre-contractual statement except to the extent that it is repeated in this Agreement and/or the
other Transaction Documents.
For the purposes of this section, “pre-contractual statement” means any draft, agreement,
undertaking, representation, warranty, promise, assurance or arrangement of any nature whatsoever,
whether or not in writing, relating to the matters covered in this Agreement and/or the other
Transaction Documents made or given by any person at any time prior to the date of this Agreement
or the other Transaction Documents.
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FOIA confidential treatment requested: [***] indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to such omitted portions.
(j) Notices. Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Agreement must be in writing and will be deemed to
have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by
facsimile (provided
confirmation of transmission is mechanically or electronically generated and kept on file by
the sending party); or (iii) one Business Day after deposit with an overnight courier service, in
each case properly addressed to the party to receive the same. The addresses and facsimile numbers
for such communications shall be:
If to the Company:
Semiconductor Manufacturing International Corporation | ||
Address:
|
Suite 3003, 30th Floor | |
Xx. 0 Xxxxx’x Xxxx Xxxxxxx | ||
Xxxx Xxxx | ||
Telephone:
|
(000) 0000-0000 | |
Facsimile:
|
(000) 0000 0000 | |
Attention:
|
Xxxx Xxxx/Blondie Poon |
with a copy (for informational purposes only) to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, P.C. | ||
Address:
|
Xxx Xxx Tower, 38F | |
00 Xxxxxxx Xxxxxxxxx | ||
Xxxxxx Xxx Xxxx, Xxxxxxxx 000000 | ||
People’s Republic of China | ||
Telephone:
|
(00-00) 0000-0000 | |
Facsimile:
|
(00-00) 0000-0000 | |
Attention:
|
Xxxxxx Xxxxx, Esq. |
If to the Buyer:
Datang Telecom Technology & Industry Holdings Limited | ||
Address:
|
Xx. 00 Xxxxxxx Xxxx, 000000, Xxxxxxx | |
Telephone:
|
x000000000000 | |
Facsimile:
|
x000000000000 | |
Attention:
|
Xxxxx Xxxxxxxx/Chen Shanzhi |
with a copy (for informational purposes only) to:
DLA Piper UK, LLP | ||
Address:
|
00xx Xxxxx, Xxxxx Xxxxx, Xxxxxxx
Xxxxx Center 0 Xxxxxxxx Xxxx, Xxxxxxxx Xxxxxxxx Xxxxxxx 000000, Xxxxx |
|
Telephone:
|
+8610 0000 0000 | |
Facsimile:
|
+8610 6561 5158 | |
Attention:
|
Dr. Xxx Xxx/Xxxxxx Xxx |
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FOIA confidential treatment requested: [***] indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to such omitted portions.
(k) Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and assigns. Neither party hereto shall not
assign this Agreement or any rights or obligations hereunder without the prior written consent of
the other party hereto.
(l) No Third Party Beneficiaries. This Agreement is intended for the benefit of the
parties hereto and their respective permitted successors and assigns, and is not for the benefit
of, nor may any provision hereof be enforced by, any other Person, except that the Agent may rely
upon the representations and warranties contained in Section 2 hereof.
(m) Non-Survival. Unless this Agreement is terminated under Section 8, the
representations and warranties of the Company and the Buyer in Sections 2 and 3, or in any
instrument delivered pursuant to this Agreement, shall survive the Closing until the expiration of
the applicable statute of limitations, it being understood that no claim may be brought for a
breach of representations or warranties following such time. Only the agreements and covenants set
forth in Section 4 that by their terms survive the Closing and this Section 9 shall survive the
Closing.
(n) Further Assurances. Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as any other party may reasonably request in
order to carry out the intent and accomplish the purposes of this Agreement and the consummation of
the transactions contemplated hereby.
(o) Agent for Service. The Buyer irrevocably appoints DLA Piper Hong Kong of 40th
Floor, Bank of China Tower 0 Xxxxxx Xxxx, Xxxxxxx, Xxxx Xxxx (Attn: Dr. Xxx Xxx) for the receipt of
service of process in Hong Kong.
[Signature Page Follows]
- 31 -
FOIA confidential treatment requested: [***] indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to such omitted portions.
IN WITNESS WHEREOF, the Buyer and the Company have caused its respective signature page to
this Share Purchase Agreement to be duly executed as of the date first written above.
Semiconductor Manufacturing International Corp. |
||||
By: | /s/ Xxxxxxx X. Xxxxx | |||
Name: | Xxxxxxx X. Xxxxx | |||
Title: | President & Chief Executive Officer |
SIGNATURE PAGE TO SHARE PURCHASE AGREEMENT
FOIA confidential treatment requested: [***] indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to such omitted portions.
IN WITNESS WHEREOF, the Buyer and the Company have caused their respective signature page to
this Share Purchase Agreement to be duly executed as of the date first written above.
Datang Telecom Technology & Industry Holdings Limited |
||||
By: | /s/ Xxx Xxxxxxxx | |||
Name: | Xxx Xxxxxxxx | |||
Title: | Director & Senior Vice President |
SIGNATURE PAGE TO SHARE PURCHASE AGREEMENT