Exhibit 2.3
SHARE SUBSCRIPTION AGREEMENT
THIS SHARE SUBSCRIPTION AGREEMENT (the "AGREEMENT") is entered into as of June
10, 2003 by and between XGI Technology Inc., a corporation organized under the
laws of the Republic of China, having its principal place of business located at
4th floor, Xx. 00, Xxxxx 00, Xxxx 00, Xxxxxxxx 0xx XX., Xxxxxxx Xxxx, Xxxxxx
300, R.O.C. (the "COMPANY"), and Trident Microsystems (Far East) Ltd., a Cayman
Islands, B.W.I. corporation, having its principal place of business located at
Xxxxxx House, South Church Street, Grand Cayman, Cayman Islands, B.W.I.
("TMFE").
RECITALS
WHEREAS, the Company and TMFE has entered into a Securities Purchase
Agreement pursuant to which the Company will acquire certain shares of XGI
Cayman Ltd. held by TMFE and desire to further strengthen the cooperative
relationship.
WHEREAS, TMFE wishes to subscribe shares to be issued by the Company and
the Company wishes issue shares to be subscribed by TMFE.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements, representations, warranties, conditions and covenants contained
herein, the parties hereto, intending to be legally bound, agree as follows:
ARTICLE 1
SALE AND ISSUANCE OF COMMON STOCK
1.1 ISSUANCE OF COMMON STOCK. Subject to the terms and conditions hereof,
the Company agrees to issue 45,000,000 shares of common shares (the "COMMON
STOCK") and TMFE agrees to subscribe from the Company for the Purchase Price
described in Section 1.2 hereof the Common Stock at the Closing as defined
herein below. The rights and obligations of the Common Stock are the same as
that of the commons shares issued in accordance with the Articles of
Incorporation of the Company as Exhibit C attached to this Agreement.
1.2 PURCHASE PRICE. The aggregate New Taiwan Dollar ("NT$") price to be
paid by TMFE to the Company shall be NT$450,000,000 (the "PURCHASE PRICE").
ARTICLE 2
CLOSING; DELIVERY
2.1 CLOSING. Unless otherwise provided in this Agreement, or in
any agreement to be executed in connection with this Agreement, the payment of
the Purchase Price (the "CLOSING") shall be made at July 15, 2003, or such other
place as the parties shall agree. The date of Closing shall be the earlier of
(i) 12:01 a.m., Taiwan Time, July 15, 2003, or (ii) three (3) days after
satisfaction of the conditions set forth in Section 4 have been met. The
Purchase Price delivered to the Company at the Closing shall be made by wire
transfer to the bank account designated by the Company.
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2.2 DELIVERY. Subject to applicable law and the terms of this
Agreement, forty-five days after the Closing the Company will deliver to TMFE
stock certificates representing the Common Stock.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to TMFE, and agrees, that, except as set forth on the
Schedule of Exceptions attached hereto as Exhibit A, which exceptions shall be
deemed to be representations and warranties as if made hereunder:
(a) Organization and Standing. The Company is duly organized,
validly existing and in good standing under the laws of Taiwan, the Republic of
China (the "ROC"), and it has all necessary authority and power to own its
property, to carry on its business as now owned or operated, and to conduct its
business.
(b) Corporate Power. The Company has all requisite legal and
corporate power to enter into this Agreement, to sell and transfer the Common
Stock hereunder, to consummate the Closing and to carry out and perform its
obligations under the terms of this Agreement.
(c) Capitalization. The authorized capital stock of the Company
consists of 170,000,000 shares, of which 20,000,000 will be warrants, with a par
value of Ten New Taiwan Dollars (NT$10), of which 90,000,000 shares are issued
and outstanding, fully paid, non-assessable and name-bearing shares. There are
no outstanding securities, or other agreements or commitments obligating the
Company to issue any additional shares, except as provided in Section 1.1 of
this Agreement. There are no outstanding rights, contingent or otherwise, to
acquire from or transfer to any other person any of the capital stock of the
Company.
(d) Corporate Documents, Business Records. The Company has made
available to TMFE for its examination true, correct and complete copies of the
Articles of Incorporation, Shareholders' Roster, Company Registration, Company
License and Business License of the Company, and have made available for TMFE's
review the minute books, or records of activities of the Company. To the
knowledge of the Company, such information contains all the material information
required to set forth the significant and material proceedings and actions of
the Company's shareholders and board of directors.
(e) Compliance with other Instruments. The Company is not in
violation of or in default with respect to any term or provision of (i) its
Articles of Incorporation; (ii) any material contract, agreement or instrument
to which the Company may be a party or by which the Company may be bound, or
(iii) any judgment, order o writ, injunction or degree of any court or
arbitration, or of any administrative or governmental agency or authority, and
the Company is not now in violation of any ordinance or other statute, rule,
license, permit or regulation of any governmental or quasi-governmental agency,
applicable to the Company or by which it may be bound in any case or in any
manner so as presently or at any future times to affect the Company adversely in
any respect.
(f) Financial Statements. All financial statements provided to
TMFE before the Closing (i) have been and shall have been prepared in accordance
with ROC generally accepted accounting principles consistently applied
throughout the periods indicated and in prior periods, (ii) fairly and
accurately present the financial position of the Company as of the respective
dates indicated and the results of its operations for the respective periods
indicated, and (iii) were prepared from the books and records of the Company,
which books and records are complete and correct and fairly represent the
operations and transactions of the Company.
(g) Negative Changes. Prior to the Closing there shall have been
no occurrence of any event or series of events the cumulative negative effect of
which has, or results in, material adverse effects on the financial condition
and/or business of the Company.
(h) Tax Returns and Payments. The Company has duly completed and
will continue to duly comply with its obligations to account to the ROC tax
authorities for all amounts for which it is or may become
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accountable in respect of taxation. All returns in connection with taxation that
should have been made by the Company have been made correctly and on a proper
basis and will continue to be so made.
(i) Liabilities and Debts, Etc. Except as reflected in the
financial statements or arising in the ordinary course of business, the Company
has no liabilities, debts, obligation or responsibilities, known or unknown,
fixed or contingent, liquidated or unliquidated, secured or unsecured, or of any
kind. All salaries and compensation, including without limitation any bonuses or
other variable compensation, of all officers, employees and others who perform
personal service for the Company has been paid when due.
(j) Litigation and Claims. Neither the Company nor any officer,
director, employee or agent of the Company, is a party to or affected by any
pending, and has no notice or knowledge of any threatened, action, suit,
proceeding, arbitration, or investigation in, before or by any court or any
governmental board, commission, agency, department or officer, arising from any
act by the Company, the directors, or any of its shareholders, or in the case of
an individual, his/her acts in his/her capacity as an officer, director,
employee, or agent of the Company, in which settlement, determination, judgment,
ruling or decree would have any adverse effect on the business assets or
financial condition of the Company.
(k) Brokers or Finders; Other Offers. The Company has not
incurred, and will not incur, directly or indirectly, as a result of any action
taken by the Company, any liability for brokerage or finders' fees or agents'
commissions or any similar charges in connection with this Agreement.
(l) System Integrated Systems Corp. ("SIS") Business. Prior to the
Closing, SIS shall have licensed the Company all intellectual property used by
SIS in such graphics business.
3.2 REPRESENTATIONS AND WARRANTIES OF TMFE. TMFE represents and warrants to
the Company that, except as set forth on TMFE Schedule of Exceptions attached
hereto as Exhibit B, which exceptions shall be deemed to be representations and
warranties as if made hereunder:
(a) Organization and Standing. TMFE is a corporation duly
organized and validly existing under, and by virtue of, the laws of Cayman
Island and is in good standing under such laws. TMFE has the requisite corporate
power to own and operate its properties and Assets and to carry on its business
as presently conducted and as proposed to be conducted.
(b) Corporate Power. TMFE has all requisite right, power and
authority to enter into and perform TMFE's obligations under this Agreement, and
this Agreement constitutes a valid and binding obligation of TMFE enforceable
against it in accordance with its terms except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application relating to or affecting enforcement of creditors' rights and rules
or laws concerning equitable remedies.
(c) No Governmental Approval Required. No Consent, approval or
authorization of or designation, declaration or filing with any Governmental
Authority on the part of TMFE is required in connection with the valid execution
and delivery of this Agreement.
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ARTICLE 4
OBLIGATIONS BEFORE CLOSING
4.1 GOVERNMENT APPROVALS. Promptly after the execution of this Agreement,
TMFE shall submit the necessary applications and notifications to the
appropriate ROC government agencies for the requisite approvals under the
applicable ROC laws and regulations for:
(a) purchase by TMFE of the Common Stock pursuant to this
Agreement;
(b) payment for the Common Stock by TMFE with funds which require
ROC government approval to qualify for foreign investment and foreign exchange
rights under the foreign investment and foreign exchange laws and regulations of
the ROC;
(c) validation of the rights of TMFE to convert into foreign
exchange and to repatriate interest, dividends and other profits distributions
to TMFE from the Company, and
(d) validation of the rights of TMFE to convert into
foreign exchange and to repatriate funds utilized by TMFE in the purchase of the
Common Stock, and otherwise invested by TMFE in the Company as equity
contributions, including equity contributions which are made from dividends and
other profit distributions to TMFE by the Company.
4.2 ACCESS TO INFORMATION. TMFE and its representatives shall be entitled
to have full access during normal business hours to all the Company's
properties, books, accounts, records, contracts and documents. The Company shall
furnish or cause to be furnished to TMFE and its representatives all data and
information concerning its business.
4.3 BUSINESS IN NORMAL COURSE. The Company shall carry on its business and
activities diligently and in substantially the same manner as the Company has
represented to TMFE that they will be conducted.
4.4 NEW TRANSACTIONS. The Company shall not do or agree to do any of the
following acts:
(a) sell or dispose of any assets of the Company other than
inventory without the prior written consent of TMFE, and
(b) except in the ordinary course of business of the Company or
with the prior written notice of TMFE, make any capital expenditures in excess
of NT$100,000,000.
ARTICLE 5
CONDITIONS TO TMFE'S PERFORMANCE
5.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties provided pursuant to this agreement shall be true at and as of the
Closing as though made at and as that time.
5.2 ARTICLES OF INCORPORATION. The Company shall have reserved sufficient
authorized common shares for the issuance of Common Stock representing paid-up
capital of NT$1.5 billion in form and substance similar to Exhibit C.
5.3 CAPITAL INCREASE. The Board of Directors of the Company has passed a
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resolution of making a capital increase for cash by issuing the Common Stock at
a par value of NT$ 10 per share and the Company shall have obtained valid
written consents from all its shareholders and employees not to purchase Common
Stock pursuant to the exercise of their preemptive rights under the ROC Company
law.
5.4 THE COMPANY'S PERFORMANCE. The Company shall have performed, satisfied
and complied with all covenants, agreements and conditions required by this
Agreement or pursuant to this Agreement to be performed, satisfied or complied
with by it at or before the Closing.
5.5 THE COMPANY'S CAPITAL. Immediately prior to the Closing, the Company
will have intellectual property valued at least at NT$200,000,000. On the record
date of the capital increase by issuing the Common Stock and other common shares
of the Company (the "Record Date"), (i) TMFE will hold thirty percent (30%) of
the outstanding stock of the Company, (ii) and the Company will have an amount
of paid-in capital in the form of cash in excess of NT$820,000,000.
5.6 CERTIFICATIONS. TMFE shall have received a certificate, dated as of the
Closing signed and sealed by the Chairman of the Company, certifying that the
conditions specified in this Agreement have been fulfilled.
5.7 GOVERNMENT APPROVALS. Approvals of the ROC government pursuant to
Section 4.1 shall have been received in form and substance reasonably
satisfactory to TMFE and the Company.
5.8 OFFICERS AND EMPLOYEES. As of the Closing, the Company is not aware of
any of the management or supervisory employees of the Company who have indicated
his or her unwillingness to continue employment with the Company after the
Closing on terms substantially similar to his or her current terms of
employment, and there shall have been no indication of any such unwillingness on
the part of other employees of the Company which TMFE deems to have a material
adverse effects on the Company.
5.9 LITIGATION. There shall be no investigation, notice, litigation
arbitration or proceeding pending or threatened for the purpose of preventing
the consummation of this Agreement, or the transactions contemplated herein, or
otherwise claiming that the consummation of this Agreement is illegal or
improper which, if decided adversely, would materially adversely affect TMFE's
rights hereunder.
ARTICLE 6
MISCELLANEOUS
6.1 ENTIRE AGREEMENT. This Agreement and the exhibits and
schedules referenced or attached hereto, constitutes the entire agreement
between the parties with respect to the subject matter hereof and shall
supersede all prior written and oral and all contemporaneous oral agreements and
understandings with respect to the subject matter hereof.
6.2 GOVERNING LAW. This Agreement shall be construed in accordance
with and all disputes hereunder shall be governed by the ROC laws.
6.3 NOTICES. Notices, offers, requests or other communications
required or permitted to be given by either party pursuant to the terms of this
Agreement shall be given in writing to the respective parties to the following
addresses:
if to TMFE:
Trident Microsystems (Far East) Ltd.
Attn: President
Xxxx 0-0, 0/X
Xxxxxx Xxxxx
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111-113 How Ming Street
Xxxx Xxxx, Kowloon
Hong Kong
with a copy to:
Xxxx Xxxx Xxxx & Freidenrich LLP
Attn: J. Xxxxxx Xxxxxx
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
if to the Company:
XGI Technology, Inc.
Attn: President
4th floor, Xx. 00, Xxxxx 00
Xxxx 00, Xxxxxxxx 0xx XX.
Xxxxxxx Xxxx, Xxxxxx 300
R.O.C.
or to such other address as the party to whom notice is given may have
previously furnished to the other in writing as provided herein. Any notice
involving non-performance, termination, or renewal shall be sent by hand
delivery, recognized overnight courier or, within the United States, may also be
sent via certified mail, return receipt requested. All other notices may also be
sent by fax, confirmed by first class mail. All notices shall be deemed to have
been given and received on the earlier of actual delivery or three (3) days from
the date of postmark.
6.4 PARTIES IN INTEREST. This Agreement, including the exhibits
and schedules hereto, and the other documents referred to herein, shall be
binding upon and inure to the benefit of TMFE, its parent and affiliates and the
Company and their legal representatives and successors, and nothing in this
Agreement, express or implied, is intended to confer upon any other Person any
rights or remedies of any nature whatsoever under or by reason of this
Agreement.
6.5 COUNTERPARTS. This Agreement, including the exhibits and
schedules hereto, and the other documents referred to herein, may be executed in
counterparts, each of which shall be deemed to be an original but all of which
shall constitute one and the same agreement.
6.6 ASSIGNMENT. Neither party may assign this Agreement or any
rights or obligations hereunder, without the prior written consent of the other
party, and any such assignment shall be void; provided, however, either party
may assign this Agreement to a successor entity in conjunction with such party's
reincorporation, or in conjunction with a change of control event. Any permitted
assignee shall agree to perform the obligations of the assignor of this
Agreement, and this Agreement shall inure to the benefit of and be binding upon
any permitted assignee.
6.7 SEVERABILITY. If any term or other provision of this Agreement
or the exhibits or schedules attached hereto is determined by a nonappealable
decision by a court, administrative agency or arbitrator to be invalid, illegal
or incapable of being enforced by any rule of law or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the fullest extent possible.
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6.8 FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on the
part of any party hereto in the exercise of any right hereunder shall impair
such right or be construed to be a waiver of, or acquiescence in, any breach of
any representation, warranty or agreement herein, nor shall any single or
partial exercise of any such right preclude other or further exercise thereof or
of any other right.
6.9 AMENDMENT. Except as otherwise explicitly set forth herein, no
change, waiver or amendment will be made to this Agreement except by an
instrument in writing signed on behalf of each of the parties to such agreement.
6.10 TERMINATION. This Agreement may be terminated prior to the
Closing:
(a) by mutual written consent of TMFE and the Company;
(b) by either TMFE or the Company if the Closing shall
not have been consummated by June 30, 2004 (unless the failure to consummate the
Closing is attributable to a failure on the part of the party seeking to
terminate this Agreement to perform any material obligation required to be
performed by such party at or prior to the Closing);
(c) by either TMFE or the Company if a court of competent
jurisdiction or other governmental body shall have issued a final and
nonappealable order, decree or ruling, or shall have taken any other action,
having the effect of permanently restraining, enjoining or otherwise prohibiting
the Closing.
6.11 STOCK TRANSFER. The Company hereby agrees that after the
Closing of this transaction, TMFE may transfer in accordance with the laws of
the R.O.C. 15,000,0000 shares of Common Stock to a third party without
restriction and that the Company will use reasonable efforts to assist TMFE with
such transaction.
6.12 ARTICLES OF INCORPORATION. Promptly after the Record Date, the
Company will amend Article 15 of the Articles of Incorporation to provide that
the total number of directors shall be five (5). The Company further agrees that
TMFE or its affiliates shall be entitled to elect two of the five directors.
6.13 INTERPRETATION. The headings contained in this Agreement, in
any exhibit or schedule hereto and in the table of contents to this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Any capitalized term used in any schedule or
exhibit but not otherwise defined therein, shall have the meaning assigned to
such term in this Agreement. When a reference is made in this Agreement to an
Article or a Section, Exhibit or Schedule, such reference shall be to an Article
or Section of, or an exhibit or schedule to, this Agreement unless otherwise
indicated.
6.14 CONFLICTING AGREEMENTS. In the event of conflict between this
Agreement or other agreement executed in connection herewith, the provisions of
such other agreement shall prevail (other than as otherwise provided herein).
6.15 PAYMENT OF EXPENSES. Except as otherwise provided in this
Agreement or any other agreement between the parties relating to the Closing,
all costs and expenses of the parties hereto in connection with the Closing, the
preparation of this Agreement and the transactions contemplated hereby shall be
paid by the party which incurs such costs or expenses.
6.16 AUDITORS AND AUDITS; ANNUAL AND QUARTERLY STATEMENTS AND
ACCOUNTING. Each party hereto agrees to cooperate in providing the other with
such financial information as may be required in order to meet financial
reporting obligations of the other party in a timely manner.
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WHEREFORE, the parties have signed this Securities Purchase Agreement
effective as of the Effective Date.
XGI TECHNOLOGY, INC. TRIDENT MICROSYSTEMS (FAR EAST) LTD.
a Taiwanese corporation a Cayman Islands, B.W.I. corporation
By: /s/ Xxxxx Xxx By: /s/ Xxxxx Xxx
------------------------ -------------------------------------------------
Name: Xxxxx Xxx Name: Xxxxx Xxx
Title: President Title: President and Chief Executive Officer
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LIST OF EXHIBITS
A The Company's Schedule of Exceptions
B TMFE Schedule of Exceptions
C Articles of Incorporation of XGI Technology Inc.
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EXHIBIT A
THE COMPANY'S SCHEDULE OF EXCEPTIONS
NONE.
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EXHIBIT B
TMFE SCHEDULE OF EXCEPTIONS
NONE.
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EXHIBIT C
ARTICLES OF INCORPORATION OF XGI TECHNOLOGY INC.
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