EXHIBIT 1
TAIWAN SEMICONDUCTOR MANUFACTURING
COMPANY LIMITED
AMERICAN DEPOSITARY SHARES
REPRESENTING
COMMON SHARES
(PAR VALUE NT$10 PER SHARE)
UNDERWRITING AGREEMENT
----------
, 2005
Xxxxxxx Xxxxx International
Peterborough Court
000 Xxxxx Xxxxxx, Xxxxxx XX0X 0XX
Xxxxxxx
X.X. Xxxxxx Securities Ltd.
000 Xxxxxx Xxxx
Xxxxxx XX0X 0XX
Xxxxxxx
As representatives of the several Underwriters
named in Schedule II hereto,
Ladies and Gentlemen:
The shareholders named in Schedule I hereto (the "Selling
Shareholders") of Taiwan Semiconductor Manufacturing Company Limited, a company
limited by shares (the "Company") and duly organized and existing under the laws
of the Republic of China (the "ROC"), propose, subject to the terms and
conditions stated herein, to sell to the underwriters named in Schedule II
hereto (the "Underwriters") an aggregate of American Depositary Shares
representing common shares, par value NT$10 per share (the "Common Shares"),
of the Company. Certain of the Selling Shareholders propose, subject to the
terms of conditions stated herein, to sell to the Underwriters, at the election
of the Underwriters, up to additional American Depositary Shares
representing additional Common Shares. The aggregate of American
Depositary Shares representing Common Shares to be sold by the Selling
Shareholders are herein called the "Firm ADSs" and the aggregate of
additional American Depositary Shares representing additional Common Shares
to be sold by certain of the
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Selling Shareholders at the election of the Underwriters are herein called the
"Optional ADSs". The Firm ADSs and the Optional ADSs that the Underwriters elect
to purchase pursuant to Section 2 hereof are herein collectively called the
"ADSs". The Common Shares represented by the Firm ADSs are hereinafter called
the "Firm Shares" and the Common Shares represented by the Optional ADSs are
hereinafter called the "Optional Shares". The Firm Shares and the Optional
Shares are herein collectively called the "Shares". The Selling Shareholders
excluding Koninklijke Philips Electronics N.V. ("Philips") are hereinafter
called the "ROC Selling Shareholders". The Selling Shareholders excluding
Philips and the Development Fund of the Executive Yuan of the ROC (the
"Development Fund") are hereinafter called the "Management Selling
Shareholders".
The ADSs are to be issued pursuant to an amended and restated deposit
agreement (the "Deposit Agreement") dated as of April 13, 2005 among the
Company, Citibank N.A., as depositary (the "Depositary"), and holders and
beneficial owners from time to time of the American Depositary Receipts (the
"ADRs") issued by the Depositary and evidencing the ADSs. Each ADS will
initially represent the right to receive five Common Shares deposited pursuant
to the Deposit Agreement.
For purposes of this Agreement, the various parts of the registration
statement on Form F-3 (File No. 333-126380) and the Rule 462(b) Registration
Statement (as defined in Section 1(a)(i) hereof), if any, including all exhibits
thereto and including (i) the information contained in the form of final
prospectus filed with the United States Securities and Exchange Commission (the
"Commission") pursuant to Rule 424(b) under the United States Securities Act of
1933, as amended (the "Act") in accordance with Section 5(a) hereof and deemed
by virtue of Rule 430A under the Act to be part of the registration statement at
the time it was declared effective and (ii) the documents incorporated by
reference in the prospectus contained in the registration statement at the time
such registration statement became effective, each as amended at the time such
part of the registration statement became effective, or such part of the Rule
462(b) Registration Statement, if any, became or hereafter becomes effective,
are hereinafter collectively called the "Registration Statement"; such final
prospectus, in the form first filed pursuant to Rule 424(b) under the Act is
hereinafter called the "Prospectus"; and any reference herein to any Preliminary
Prospectus (as defined in Section 1(a)(i) hereof) or the Prospectus shall be
deemed to refer to and include the documents incorporated by reference therein
pursuant to Item 6 of Form F-3 under the Act, as of the date of such Preliminary
Prospectus or Prospectus, as the case may be; any reference to any amendment or
supplement to any Preliminary Prospectus or the Prospectus shall be deemed to
refer to and include any documents filed after the date of such Preliminary
Prospectus or Prospectus, as the case may be, under the United States Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and incorporated by
reference in such Preliminary Prospectus or Prospectus, as the case may be; and
any reference to any amendment to the Registration Statement shall be deemed to
refer to and include any annual report of the Company filed pursuant to Section
13(a) or 15(d) of the Exchange Act after the effective date of the initial
registration statement that is incorporated by reference in the Registration
Statement.
1. (a) The Company represents and warrants to, and agrees with, each of
the Underwriters that:
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(i) A registration statement on Form F-3 (File No. 333-126380) in
respect of the Shares has been filed with the Commission; such
registration statement and any post-effective amendment thereto, each
in the form heretofore delivered to Xxxxxxx Xxxxx International and
X.X. Xxxxxx Securities Ltd., on behalf of the Underwriters (the
"Representatives"), and, excluding exhibits thereto but including all
documents incorporated by reference in the prospectus contained
therein, to the Representatives for each of the other Underwriters,
have been declared effective by the Commission in such form; other than
a registration statement, if any, increasing the size of the offering
(a "Rule 462(b) Registration Statement"), filed pursuant to Rule 462(b)
under the Act, which became effective upon filing, no other document
with respect to such registration statement or document incorporated by
reference therein has heretofore been filed with the Commission; and no
stop order suspending the effectiveness of such registration statement,
any post-effective amendment thereto or the Rule 462(b) Registration
Statement, if any, has been issued and, to the knowledge of the
Company, no proceeding for that purpose has been initiated or
threatened by the Commission (any preliminary prospectus included in
such registration statement or filed with the Commission pursuant to
Rule 424(a) of the rules and regulations of the Commission under the
Act is hereinafter called a "Preliminary Prospectus");
(ii) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary
Prospectus, at the time of filing thereof, conformed in all material
respects to the requirements of the Act and the rules and regulations
of the Commission thereunder, and each Preliminary Prospectus did not
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that this representation
and warranty shall not apply to any statements or omissions made in
reliance upon and in conformity with information furnished in writing
to the Company by an Underwriter through the Representatives or by any
Selling Shareholder expressly for use therein;
(iii) The documents incorporated by reference in the Prospectus, when
they became effective or were filed with the Commission, as the case
may be, conformed in all material respects to the requirements of the
Act or the Exchange Act, as applicable, and the rules and regulations
of the Commission thereunder, and none of such documents contained an
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading; and any further documents so filed and
incorporated by reference in the Prospectus or any further amendment or
supplement thereto, when such documents become effective or are filed
with the Commission, as the case may be, will conform in all material
respects to the requirements of the Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission thereunder
and will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading; provided, however, that
this representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information
furnished in writing to the Company
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by an Underwriter through the Representatives or by any Selling
Shareholder expressly for use therein;
(iv) The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements
of the Act and the rules and regulations of the Commission thereunder,
and the Registration Statement and the Prospectus will not, as of the
applicable effective date of the Registration Statement and any
amendment thereto and as of the applicable filing date as to the
Prospectus and any amendment or supplement thereto, contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon
and in conformity with information furnished in writing to the Company
by an Underwriter through the Representatives or by any Selling
Shareholder expressly for use therein;
(v) Registration statements on Form F-6 (File Nos. 333-123814 and
333-126397) in respect of the ADSs have been filed with the Commission;
such registration statements and any post-effective amendment thereto,
each in the form heretofore delivered to the Representatives and,
excluding exhibits, to the Representatives for each of the other
Underwriters, have been declared effective by the Commission in such
form; no other document with respect to such registration statements
has heretofore been filed with the Commission; no stop order suspending
the effectiveness of such registration statements has been issued and,
to the knowledge of the Company, no proceeding for that purpose has
been initiated or threatened by the Commission (the various parts of
such registration statements, including all exhibits thereto, each as
amended at the time such part of the registration statement(s) became
effective, being hereinafter collectively called the "ADR Registration
Statement"); and the ADR Registration Statement when it became
effective conformed, and any further amendments thereto will conform,
in all material respects to the requirements of the Act and the rules
and regulations of the Commission thereunder, and did not, as of the
applicable effective date, contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading;
(vi) The Company has not sustained since the date of the latest audited
financial statements included in the Prospectus any material loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Prospectus, and, since the
respective dates as of which information is given in the Registration
Statement and the Prospectus, there has not been any change in the
capital stock or long-term debt of the Company or any material adverse
change or any development involving a prospective material adverse
change in or affecting the general affairs, management, financial
position, shareholders' equity or results of operations of the Company,
otherwise than as set forth or contemplated in the Prospectus; the
Company has no subsidiary that as of the date of the Registration
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Statement and Prospectus is a "significant subsidiary" as defined in
Regulation S-X under the Act;
(vii) The Company has good and marketable title to all real property
and good and marketable title to all personal property owned by it, in
each case free and clear of all liens, encumbrances and defects except
such as are described in the Prospectus or such as do not materially
affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company; and any
real property and buildings held under lease by the Company are held by
it under valid, subsisting and enforceable leases with such exceptions
as are not material and do not interfere with the use made and proposed
to be made of such property and buildings by the Company;
(viii) The Company has been duly incorporated and is validly existing
as a company limited by shares under the laws of the ROC, with
corporate power and authority to own its properties and conduct its
business as described in the Prospectus, and has been duly qualified as
a foreign corporation for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it owns or
leases properties or conducts any business so as to require such
qualification, except where the failure to be so qualified would not,
individually or in the aggregate, have a material adverse effect on the
general affairs, management or current or future consolidated financial
position, shareholders' equity or results of the operations of the
Company taken as a whole (a "Material Adverse Effect");
(ix) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the
Company (including the Shares) have been duly and validly authorized
and issued, are fully paid and non-assessable and all of the issued and
outstanding Common Shares conform in all material respects to the
description of the Common Shares contained in the Prospectus; all of
the issued and outstanding Common Shares (including the Shares) have
been duly listed and admitted for trading on the Taiwan Stock Exchange
of the ROC (the "TSE"); the holders of outstanding shares of capital
stock of the Company are not entitled to preemptive or other rights to
acquire the Shares or the ADSs in connection with the transactions
contemplated hereby or otherwise; there are no outstanding securities
convertible into or exchangeable for, or warrants, rights or options to
purchase from the Company, or obligations of the Company to issue,
Common Shares or any other class of capital stock of the Company,
except as set forth in the Prospectus under the captions "Foreign
Investment in the ROC", "Item 6. Directors, Senior Management and
Employees" and "Item 10. Additional Information--Description of Common
Shares"; the Shares may be freely deposited by the Selling Shareholders
with the Depositary against issuance of ADRs evidencing ADSs; the ADSs
are freely transferable by the Selling Shareholders to or for the
account of the several Underwriters and (to the extent described in the
Prospectus) the initial purchasers thereof;
(x) The Deposit Agreement has been duly authorized, executed and
delivered by the Company and, assuming it has been duly authorized,
executed and delivered by the Depositary, constitutes a valid and
legally binding agreement of the Company,
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enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors'
rights and to general equity principles; upon issuance by the
Depositary of ADRs evidencing ADSs against the deposit of the Shares in
respect thereof in accordance with the provisions of the Deposit
Agreement, such ADRs will be duly and validly issued and the persons in
whose names the ADRs are registered will be entitled to the rights
specified therein and in the Deposit Agreement; the terms and
conditions of the Deposit Agreement and the ADRs conform in all
material respects to the descriptions thereof contained in the
Prospectus as of the date hereof; and there are no restrictions on
subsequent transfers of the Shares or ADSs under the laws of the ROC
and of the United States except as described in the Prospectus under
the captions "Description of American Depositary Receipts", "Foreign
Investment in the ROC" and "Item 10. Additional
Information--Description of Common Shares";
(xi) This Agreement has been duly authorized, executed and delivered by
the Company;
(xii) Other than as set forth or contemplated in the Prospectus, no
consent, approval, authorization, order of, or clearance by, or
registration or filing with any governmental agency or body or any
court or any stock exchange authorities (hereinafter referred to as a
"Governmental Agency") having jurisdiction over the Company is required
for the consummation of the transactions contemplated by the Deposit
Agreement and this Agreement, the deposit of the Shares with the
Depositary by the Selling Shareholders, or the issuance and sale of
ADRs evidencing the ADSs representing the Shares at each Time of
Delivery, except for (A) registration of the Shares and ADSs under the
Act, and any filings required under Rule 424 of the Act, (B) the
approval of the Central Bank of China of the ROC ("CBC") of foreign
exchange settlements and payments contemplated by the Deposit
Agreement, (C) the filings and approvals, if any, required under the
Guidelines for Handling Issuance and Offer of Overseas Securities by
Issuers of the ROC (the "Overseas Offering Rules"), the Securities and
Exchange Law of the ROC and the Company Law of the ROC and as required
by the Financial Supervisory Commission of the ROC (the "ROC FSC") and
the CBC, (D) any governmental authorizations as may be required under
state securities or Blue Sky laws or any laws of jurisdictions outside
the ROC and the United States in connection with the purchase and
distribution of the ADSs by or for the account of the Underwriters and
(E) those approvals which have been obtained under the laws of the ROC
and are in full force and effect as of the date hereof, including the
approval of the Science-Park Administration ("SPA"), the CBC and the
ROC FSC;
(xiii) Other than as set forth in the Prospectus, no governmental
approvals are currently required in the ROC in order for the Company to
pay dividends or other distributions declared by the Company to holders
of Common Shares, including the Depositary, or for the conversion by
the Depositary of any dividends paid in New Taiwan dollars ("NT
dollars") to U.S. dollars or the repatriation thereof out of the ROC
and no other withholding or other taxes under the current laws and
regulations of the ROC are
6
imposed in connection with the declaration and payment by the Company
of dividends and other distributions in respect of shares of its
capital stock;
(xiv) The compliance by the Company with all of the provisions of this
Agreement and the Deposit Agreement and the consummation of the
transactions herein and therein contemplated will not conflict with or
result in a breach or violation of any of the terms or provisions of,
or constitute a default under, any indenture, mortgage, deed of trust,
loan agreement or other material agreement or instrument to which the
Company is a party or by which the Company is bound or to which any of
the property or assets of the Company is subject, other than any such
conflicts, breaches, violations or defaults which, individually or in
the aggregate, would not have a Material Adverse Effect, nor will such
action result in any violation of the provisions of the Articles of
Incorporation of the Company or any statute or any order, rule or
regulation of any Governmental Agency having jurisdiction over the
Company or any of its properties, including the Company Law of the ROC
and the Securities and Exchange Law of the ROC and the regulations
promulgated thereunder;
(xv) Other than as set forth in the Prospectus, the Company is not in
violation of its constituent documents or in default in the performance
or observance of any material obligation, agreement, covenant or
condition contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other material agreement or instrument to which it
is a party or by which it or any of its properties may be bound, except
such violations or defaults which, individually or in the aggregate,
would not have a Material Adverse Effect;
(xvi) Neither the Company nor any of its subsidiaries has taken,
directly or indirectly, any action which was designed to or which has
constituted or which might reasonably be expected to cause or result in
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Shares and ADSs;
(xvii) Other than as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company is a party or of
which any property of the Company is the subject which, if determined
adversely to the Company, would individually or in the aggregate have a
Material Adverse Effect; and, to the best of the Company's knowledge,
no such proceedings are threatened or contemplated by any Governmental
Agency or threatened by others;
(xviii) The Company is not and, after giving effect to the offering and
sale of the ADSs, will not be required to register as an "investment
company" under the Investment Company Act of 1940, as amended (the
"Investment Company Act");
(xix) Except as otherwise disclosed in the Prospectus, the Company has
all licenses, franchises, permits, authorizations, approvals and orders
and other concessions of and from all Governmental Agencies having
jurisdiction over the Company that are necessary to own or lease its
properties and conduct its businesses as described in the Prospectus
other than any such licenses, franchises, authorizations, approvals,
orders or
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concessions the absence of which would not individually or in the
aggregate have a Material Adverse Effect;
(xx) The Company is not a Passive Foreign Investment Company ("PFIC")
within the meaning of Section 1297 of the United States Internal
Revenue Code of 1986, as amended, and is not likely to become a PFIC;
(xxi) Deloitte & Touche, who has certified certain financial statements
of the Company and its subsidiaries, is an independent registered
public accounting firm as required by the Act and the rules and
regulations of the Commission thereunder;
(xxii) The audited consolidated financial statements (and the notes
thereto) (the "Consolidated Financial Statements") of the Company
incorporated by reference in the Prospectus present fairly the
financial position of the Company as of the dates indicated and the
results of operations and changes in financial position of the Company
for the periods specified, and the Consolidated Financial Statements
have been prepared in conformity with generally accepted accounting
principles in the ROC ("ROC GAAP") applied on a consistent basis
throughout the periods presented (other than as described therein); the
interim consolidated financial information (the "Interim
Consolidated Financial Information") of the Company included or
incorporated by reference in the Prospectus present fairly the
financial position of the Company as of the dates indicated and the
results of operations and changes in financial position of the Company
for the periods specified, and the Interim Consolidated Financial
Information has been prepared in conformity with ROC GAAP applied on a
consistent basis throughout the periods presented (other than as
described therein); the interim unconsolidated financial information
(the "Interim Unconsolidated Financial Information") of the Company
included or incorporated by reference in the Prospectus present fairly
the unconsolidated financial position of the Company as of the dates
indicated and the unconsolidated results of operations and changes in
unconsolidated financial position of the Company for the periods
specified, and the Interim Unconsolidated Financial Information has
been prepared in conformity with ROC GAAP applied on a consistent basis
throughout the periods presented (other than as described therein); the
summary and selected financial data included in the Prospectus present
fairly the information shown therein and have been compiled on a basis
consistent with that of the Consolidated Financial Statements, except
as otherwise indicated in the Prospectus;
(xxiii) With the understanding among the Company and the Underwriters
that (a) the semiconductor industry is characterized by frequent
litigation regarding Intellectual Property (as defined below); (b) the
Company has received, from time-to-time, communications from third
parties asserting that the Company may infringe upon their Intellectual
Property; and (c) because of the complexity of the technologies used
and the multitude and overlapping of Intellectual Property, it is often
difficult for semiconductor companies such as the Company to determine
infringement, the Company reasonably believes that it owns or possesses
the patents, patent licenses, licenses, trademarks,
8
service marks, trade names, service names, copyrights and other
intellectual property rights ("Intellectual Property") necessary to
conduct its business as presently conducted and as proposed to be
conducted; and the Company reasonably believes that it has not received
notice or claim of infringement of or conflict with asserted rights of
others with respect to any Intellectual Property, which notice or claim
remains in dispute and which is reasonably likely (and not merely
remotely possible) to have a Material Adverse Effect;
(xxiv) Under the laws of the ROC, each holder of ADRs evidencing ADSs
issued pursuant to the Deposit Agreement shall be entitled, subject to
the Deposit Agreement, to seek enforcement of its rights through the
Depositary or its nominee registered as representative of the holders
of the ADRs in a direct suit, action or proceeding against the Company;
(xxv) Except as described in the Prospectus or this Agreement, all
amounts payable by the Company in respect of the ADRs evidencing the
ADSs or the underlying Shares shall be made free and clear of and
without deduction for or on account of any taxes imposed, assessed or
levied by the ROC or any authority thereof or therein (except such
income taxes as may be imposed by the ROC on payments hereunder to any
Underwriter or withholding, if any, with respect to any such income
tax;
(xxvi) This Agreement and the Deposit Agreement are in proper form
under the laws of the ROC for the enforcement thereof against the
Company under the laws of the ROC; to ensure the legality, validity,
enforceability and admissibility into evidence in the ROC of the
Deposit Agreement, it is not necessary that the Deposit Agreement be
filed or recorded with any court or other authority in the ROC or that
any stamp or similar tax be paid in the ROC or in respect of the
Deposit Agreement or any other document to be furnished thereunder, it
being understood that in court proceedings in the ROC a translation
into the Chinese language may be required; to ensure the legality,
validity, enforceability and admissibility into evidence in the ROC of
this Agreement, it is not necessary that any stamp or similar tax be
paid in the ROC or in respect of any other document to be furnished
hereunder, so long as this Agreement or any documents which are deemed
"receipts" under the ROC stamp tax law are executed by all parties
outside the ROC (including by Power of Attorney, provided such Power of
Attorney shall not be required to be executed outside the ROC), it
being understood that in court proceedings in the ROC a translation
into the Chinese language may be required;
(xxvii) The section entitled "Item 5. Operating and Financial Review
and Prospects" in the Prospectus accurately and fully describes in all
material respects (A) accounting policies which the Company believes
are the most important in the portrayal of the Company's financial
condition and results of operations and which require management's most
difficult, subjective or complex judgments ("critical accounting
policies"); (B) judgments and uncertainties affecting the application
of critical accounting policies; and (C) the likelihood that materially
different amounts would be
9
reported under different conditions or using different assumptions and
an explanation thereof;
(xxviii) The Company's Audit Committee and management have reviewed and
agreed with the selection, application and disclosure of critical
accounting policies and the management has consulted with its legal
advisors and independent accountants with regards to such disclosure;
(xxix) (A) The sections entitled "Recent Developments" and "Item 5.
Operating and Financial Review and Prospects--Liquidity and Capital
Resources" in the Prospectus accurately and fully describe in all
material respects: all material trends, demands, commitments, events,
uncertainties and risks, and the potential effects thereof, that the
Company believes would materially affect liquidity and are reasonably
likely to occur, and (B) neither the Company nor any of its
subsidiaries is engaged in any transactions with, or has any
obligations to, any unconsolidated entities that are contractually
limited to narrow activities that facilitate the transfer of or access
to assets by the Company or its subsidiaries, including, without
limitation, structured finance entities and special purpose entities,
or is otherwise engaged in, or has any obligations under, any
off-balance sheet transactions or arrangements. As used herein, the
phrase "reasonably likely" refers to a disclosure threshold lower than
"more likely than not";
(xxx) Except as set forth in the Prospectus, the Company is not engaged
in any material transactions with its directors, officers, management,
shareholders, or any other person, including persons formerly holding
such positions, on terms that are not available to other parties on an
arm's-length basis; and
(xxxi) The Company has not, directly or indirectly, including through
any subsidiary, extended credit, arranged to extend credit, or renewed
any extension of credit, in the form of a personal loan, to or for any
director or executive officer of the Company, or to or for any family
member or affiliate of any director or executive officer of the
Company.
(b) Philips represents and warrants to, and agrees with, each of the
Underwriters and the Company that:
(i) Philips has been duly incorporated and is validly existing as a
company with limited liability under the laws of The Netherlands;
(ii) Each of this Agreement and the Philips Custody Agreement (as
defined in subsection (b)(xiv) below) has been duly authorized,
executed and delivered by Philips and constitutes a valid and legally
binding agreement of Philips, enforceable in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles;
(iii) No consent, approval, authorization, order of, clearance by or
registration or filing with any Governmental Agency having jurisdiction
over Philips is required for the
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deposit of the Shares with the Depositary against issuance of the ADRs
evidencing the ADSs to be delivered at each Time of Delivery, for the
sale and delivery of the ADSs to be sold by Philips hereunder and for
the execution, delivery and performance by Philips of this Agreement
and the Philips Custody Agreement, except for such consents, approvals,
authorizations, orders, clearances, filings or registrations (A) as
have been obtained or made prior to the date of this Agreement and are
in full force and effect, (B) as may be required under the Act, the
rules and regulations of the Commission and under state securities or
Blue Sky laws, (C) as may be required by the laws of or any
Governmental Agency in the ROC or (D) as may be required by the laws of
or any Governmental Agency in any jurisdiction outside The Netherlands,
the United States or the ROC in connection with equity offerings
generally; and Philips has full right, power and authority to enter
into and perform under this Agreement and the Philips Custody Agreement
and to sell, assign, transfer and deliver the Shares to the Depositary
for deposit against issuance of the ADRs evidencing the ADSs to be sold
by Philips hereunder;
(iv) The sale of the ADSs to be sold by Philips hereunder, the deposit
of the Shares with the Depositary against issuance of the ADRs
evidencing the ADSs to be delivered at each Time of Delivery, the
compliance by Philips with all of the provisions of this Agreement, the
Deposit Agreement and the Philips Custody Agreement and the
consummation of the transactions herein and therein contemplated will
not conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other material agreement or
instrument to which Philips is a party or by which Philips is bound, or
to which any of the property or assets of Philips is subject, other
than any such conflict, breach or violation that would not have a
material adverse effect on the ability of Philips to perform its
obligations under this Agreement, the Deposit Agreement and the Philips
Custody Agreement, nor will such action result in any violation of any
statute or any order, rule or regulation of any Governmental Agency
having jurisdiction over Philips or the property of Philips other than
any such violation that would not have a material adverse effect on the
ability of Philips to perform its obligations under this Agreement, the
Deposit Agreement and the Philips Custody Agreement;
(v) Philips has, and immediately prior to each Time of Delivery Philips
will have, good and valid title to the Shares to be deposited with the
Depositary against issuance of the ADRs evidencing the ADSs to be sold
by Philips hereunder, free and clear of all liens, encumbrances,
equities or claims;
(vi) Assuming the Deposit Agreement has been duly authorized and
delivered by the parties thereto, the ADSs delivered at each Time of
Delivery by Philips will be freely transferable by Philips to or for
the account of the several Underwriters and (to the extent described in
the Prospectus) the initial purchasers thereof; and there are no
restrictions on subsequent transfers of the Shares or ADSs under the
laws of the ROC and of the United States except as described in the
Prospectus under the captions "Description of American Depositary
Receipts", "Foreign Investment in the ROC" or "Item 10. Additional
11
Information--Description of Common Shares" (or under such other
captions as may be applicable in any amendment or supplement to the
Prospectus);
(vii) Philips has not taken, directly or indirectly, any action which
was designed to or which has constituted or which might reasonably be
expected to cause or result in stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale
of the Shares and ADSs;
(viii) To the extent that any statements made in the Registration
Statement, any Preliminary Prospectus, the Prospectus or any amendment
or supplement thereto are made in reliance upon and in conformity with
specific written instructions furnished to the Company by Philips
expressly for use therein or any information is omitted therefrom in
reliance on and in conformity with specific written instructions
provided by Philips expressly for use therein (all such written
information provided pursuant to such specific written instructions,
"Philips Shareholder Information"), the Registration Statement and the
Prospectus will not, as of the applicable effective date as to the
Registration Statement and any amendment thereto and as of the
applicable filing date as to the Prospectus and any amendment or
supplement thereto, contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein made in reliance upon and in
conformity with Philips Shareholder Information not misleading;
(ix) Other than as set forth in the Prospectus and so long as this
Agreement and the cross receipt to be delivered hereunder are executed
outside the ROC (including by Power of Attorney, provided such Power of
Attorney shall not be required to be signed outside the ROC), no stamp
or other issuance or transfer taxes or duties and no capital gains,
income or other taxes (except such income taxes as may be imposed by
the ROC or The Netherlands on payments hereunder to any Underwriter or
withholding, if any, with respect to any such income tax) are payable
by or on behalf of the Underwriters to the government of the ROC or The
Netherlands or any political subdivision or taxing authority thereof or
therein in connection with: (A) the deposit with the Depositary of the
Shares by Philips against the issuance of ADRs evidencing ADSs or (B)
the sale and delivery by Philips of the ADSs to or for the respective
accounts of the Underwriters as contemplated in the Prospectus and
pursuant to the terms of this Agreement or (C) the sale and delivery
outside the ROC by the Underwriters of the ADSs to the initial
purchasers thereof pursuant to the terms of this Agreement;
(x) Pursuant to paragraph 2 of the Supplement dated June 24, 2004 to
the Ruling (Ministry of Finance Ref. No. Xxx-Xxxx-Shui 0000000000,
dated May 18, 2004), Philips is not required to withhold tax on the
underwriting fee under Article 88 of the Republic of China Income Tax
Act on the basis that the Representatives have appointed a business
agent in the ROC and that appointment covers the transaction
contemplated under this Agreement. The Representatives represent that
they have appointed a business agent in the ROC and that appointment
covers the transaction contemplated under this Agreement;
12
(xi) All amounts payable by Philips under this Agreement shall be made
free and clear of and without deduction for or on account of any taxes
imposed, assessed or levied by the ROC or The Netherlands (except such
income taxes as may be imposed by the ROC or The Netherlands on
payments hereunder to any Underwriter or withholding, if any, with
respect to any such income tax) or any authority thereof or therein
except as described in the Prospectus, nor are any taxes imposed in the
ROC or The Netherlands on, or by virtue of the execution or delivery
of, this Agreement, so long as this Agreement is executed by all
parties outside the ROC (including by Power of Attorney, provided such
Power of Attorney shall not be required to be signed outside the ROC);
(xii) This Agreement is in proper legal form under the laws of The
Netherlands in order to bring a proceeding for the enforcement thereof
against Philips under the laws of The Netherlands; and in connection
with any such proceeding, it is not necessary that this Agreement be
filed or recorded with any court or other authority in The Netherlands
or that any stamp or similar tax be paid in The Netherlands or in
respect of this Agreement, it being understood that in court
proceedings in The Netherlands a translation into the Dutch language by
a sworn translator may be required and that normal document production
requirements will have to be complied with;
(xiii) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 with respect to the transactions herein
contemplated, Philips will deliver to the Representatives, prior to or
at the First Time of Delivery (as defined in Section 4(a) below), a
properly completed and executed United States Treasury Department Form
W-8BEN or W-9 (or other applicable form or statement specified by
Treasury Department regulations in lieu thereof); and
(xiv) Certificates in negotiable form representing all of the Shares to
be represented by ADSs to be sold by Philips hereunder will be placed
in custody under a Philips Custody Agreement (the "Philips Custody
Agreement"), in the form heretofore furnished to the Representatives,
to be duly executed and delivered by Philips to Citibank, N.A., Taipei
Branch, as custodian (the "Custodian").
(c) Each of the ROC Selling Shareholders represents and warrants to,
and agrees with, each of the Underwriters and the Company that:
(i) This Agreement has been duly authorized, executed and delivered by
such ROC Selling Shareholder and constitutes a valid and legally
binding agreement of such ROC Selling Shareholder, enforceable in
accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to
general equity principles;
(ii) No consent, approval, authorization, order of, clearance by or
registration or filing with any Governmental Agency having jurisdiction
over such ROC Selling Shareholder is required for the deposit of the
Shares with the Depositary against issuance of the ADRs evidencing the
ADSs to be delivered at each Time of Delivery, for the sale and
delivery of the ADSs to be sold by such ROC Selling Shareholder
hereunder and for
13
the execution, delivery and performance by such ROC Selling Shareholder
of this Agreement, except for such consents, approvals, authorizations,
orders, clearances, filings or registrations (A) as have been obtained
or made prior to the date of this Agreement and are in full force and
effect, (B) as may be required under the Act, the rules and regulations
of the Commission and under state securities or Blue Sky laws, (C) as
may be required by the laws of or any Governmental Agency in the ROC or
(D) as may be required by the laws of or any Governmental Agency in any
jurisdiction outside the United States or the ROC in connection with
equity offerings generally; and such ROC Selling Shareholder has full
right, power and authority to enter into and perform under this
Agreement and to sell, assign, transfer and deliver the Shares to the
Depositary for deposit against issuance of the ADRs evidencing the ADSs
to be sold by such ROC Selling Shareholder hereunder;
(iii) The sale of the ADSs to be sold by such ROC Selling Shareholder
hereunder, the deposit of the Shares with the Depositary against
issuance of the ADRs evidencing the ADSs to be delivered at each Time
of Delivery, the compliance by such ROC Selling Shareholder with all of
the provisions of this Agreement and the Deposit Agreement and the
consummation of the transactions herein and therein contemplated will
not conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other material agreement or
instrument to which such ROC Selling Shareholder is a party or by which
such ROC Selling Shareholder is bound, or to which any of the property
or assets of such ROC Selling Shareholder is subject, other than any
such conflict, breach or violation that would not have a material
adverse effect on the ability of such ROC Selling Shareholder to
perform its obligations under this Agreement and the Deposit Agreement,
nor will such action result in any violation of any statute or any
order, rule or regulation of any Governmental Agency having
jurisdiction over such ROC Selling Shareholder or the property of such
ROC Selling Shareholder other than any such violation that would not
have a material adverse effect on the ability of such ROC Selling
Shareholder to perform its obligations under this Agreement and the
Deposit Agreement;
(iv) Such ROC Selling Shareholder has, and immediately prior to each
Time of Delivery such ROC Selling Shareholder will have, good and valid
title to the Shares to be deposited with the Depositary against
issuance of the ADRs evidencing the ADSs to be sold by such ROC Selling
Shareholder hereunder free and clear of all liens, encumbrances,
equities or claims;
(v) Assuming the Deposit Agreement has been duly authorized and
delivered by the parties thereto, the ADSs delivered at each Time of
Delivery by such ROC Selling Shareholder will be freely transferable by
such ROC Selling Shareholder to or for the account of the several
Underwriters and (to the extent described in the Prospectus) the
initial purchasers thereof; and there are no restrictions on subsequent
transfers of the Shares or ADSs under the laws of the ROC and of the
United States except as described in the Prospectus under the captions
"Description of American Depositary Receipts", "Foreign Investment in
the ROC" or "Item 10. Additional Information--Description of Common
Shares";
14
(vi) Such ROC Selling Shareholder has not taken, directly or
indirectly, any action which was designed to or which has constituted
or which might reasonably be expected to cause or result in
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Shares and ADSs;
(vii) Other than as set forth in the Prospectus and so long as this
Agreement and the cross-receipt to be delivered hereunder are executed
outside the ROC, no stamp or other issuance or transfer taxes or duties
and no capital gains, income or other taxes (except such income taxes
as may be imposed by the ROC on payments hereunder to any Underwriter
or withholding, if any, with respect to any such income tax) are
payable by or on behalf of the Underwriters to the government of the
ROC or any political subdivision or taxing authority thereof or therein
in connection with: (A) the deposit with the Depositary of the Shares
by such ROC Selling Shareholder against the issuance of ADRs evidencing
ADSs or (B) the sale and delivery by such ROC Selling Shareholder of
the ADSs to or for the respective accounts of the Underwriters as
contemplated in the Prospectus and pursuant to the terms of this
Agreement or (C) the sale and delivery outside the ROC by the
Underwriters of the ADSs to the initial purchasers thereof pursuant to
the terms of this Agreement;
(viii) Pursuant to paragraph 2 of the Supplement dated June 24, 2004 to
the Ruling (Ministry of Finance Ref. No. Xxx-Xxxx-Shui 0000000000,
dated May 18, 2004), the ROC Selling Shareholders are not required to
withhold tax on the underwriting fee under Article 88 of the Republic
of China Income Tax Act if the Representatives have appointed a
business agent in the ROC and that appointment covers the transaction
contemplated under this Agreement. The Representatives represent that
they appointed a business agent in the ROC and that appointment covers
the transaction contemplated under this Agreement;
(ix) All amounts payable by such ROC Selling Shareholder under this
Agreement shall be made free and clear of and without deduction for or
on account of any taxes imposed, assessed or levied by the ROC (except
such income taxes as may be imposed
15
by the ROC on payments hereunder to any Underwriter or withholding, if
any, with respect to any such income tax) or any authority thereof or
therein except as described in the Prospectus, nor are any taxes
imposed in the ROC on, or by virtue of the execution or delivery of,
this Agreement so long as this Agreement is executed by all parties
outside the ROC (including by Power of Attorney, provided such Power of
Attorney shall not be required to be signed outside the ROC);
(x) This Agreement is in proper legal form under the laws of the ROC
for the enforcement thereof against such ROC Selling Shareholder under
the laws of the ROC; and to ensure the legality, validity,
enforceability and admissibility into evidence in the ROC thereof, it
is not necessary that this Agreement be filed or recorded with any
court or other authority in the ROC or that any stamp or similar tax be
paid in the ROC or in respect of this Agreement, so long as this
Agreement or any documents which are deemed "receipts" under the ROC
stamp tax law are executed by all parties outside the ROC (including by
Power of Attorney, provided such Power of Attorney shall not be
required to be signed outside the ROC), it being understood that in
court proceedings in the ROC a translation into the Chinese language
may be required; and
(xi) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 with respect to the transactions herein
contemplated, such ROC Selling Shareholder will deliver to the
Representatives, prior to or at the First Time of Delivery, a properly
completed and executed United States Treasury Department Form W-8BEN or
W-9 (or other applicable form or statement specified by Treasury
Department regulations in lieu thereof).
(d) Each of the Management Selling Shareholders represents and warrants
to, and agrees with, each of the Underwriters and the Company that:
(i) No consent, approval, authorization, order of, clearance by or
registration or filing with any Governmental Agency having jurisdiction
over such Management Selling Shareholder is required for the execution,
delivery and performance by such Management Selling Shareholder of the
Management Custody Agreement (as defined in subsection (d)(iii) below),
except for such consents, approvals, authorizations, orders,
clearances, filings or registrations (A) as have been obtained or made
prior to the date of this Agreement and are in full force and effect,
(B) as may be required under the Act, the rules and regulations of the
Commission and under state securities or Blue Sky laws, (C) as may be
required by the laws of or any Governmental Agency in the ROC or (D) as
may be required by the laws of or any Governmental Agency in any
jurisdiction outside the United States or the ROC in connection with
equity offerings generally; and such Management Selling Shareholder has
full right, power and authority to enter into and perform under the
Management Custody Agreement;
(ii) The compliance by such Management Selling Shareholder with all of
the provisions of the Management Custody Agreement and the consummation
of the transactions therein contemplated will not conflict with or
result in a breach or violation
16
of any of the terms or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, loan agreement or other
material agreement or instrument to which such Management Selling
Shareholder is a party or by which such Management Selling Shareholder
is bound, or to which any of the property or assets of such Management
Selling Shareholder is subject, other than any such conflict, breach or
violation that would not have a material adverse effect on the ability
of such Management Selling Shareholder to perform its obligations under
the Management Custody Agreement, nor will such action result in any
violation of any statute or any order, rule or regulation of any
Governmental Agency having jurisdiction over such Management Selling
Shareholder or the property of such Management Selling Shareholder
other than any such violation that would not have a material adverse
effect on the ability of such Management Selling Shareholder to perform
its obligations under the Management Custody Agreement;
(iii) To the extent that any statements made in the Registration
Statement, any Preliminary Prospectus, the Prospectus or any amendment
or supplement thereto are made in reliance upon and in conformity with
written information furnished to the Company by such Management Selling
Shareholder expressly for use therein or any information is omitted
therefrom in reliance on and in conformity with written information
provided by such Management Selling Shareholder expressly for use
therein (all such written information, "Management Shareholder
Information"), the Registration Statement and the Prospectus will not,
as of the applicable effective date as to the Registration Statement
and any amendment thereto and as of the applicable filing date as to
the Prospectus and any amendment or supplement thereto, contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein made in reliance upon and in conformity with Management
Shareholder Information not misleading; and
(iv) Certificates in negotiable form representing all of the Shares to
be represented by ADSs to be sold by such Management Selling
Shareholder hereunder will be placed in custody under a custody
agreement (the "Management Custody Agreement"), in the form heretofore
furnished to the Representatives, to be duly executed and delivered by
such Management Selling Shareholder to the Custodian, and such
Management Selling Shareholder has duly executed and delivered a Power
of Attorney (the "Power of Attorney"), in the form heretofore furnished
to the Representatives, appointing the person indicated in Schedule I
hereto, as the attorney-in-fact of such Management Selling Shareholder
(the "Attorney-in-Fact") with authority to execute and deliver this
Agreement and the Management Custody Agreement on behalf of such
Management Selling Shareholder, to determine the purchase price to be
paid by the Underwriters to the Selling Shareholders as provided in
Section 2 hereof, to authorize the delivery of the Shares to be sold by
such Management Selling Shareholder hereunder and otherwise to act on
behalf of such Management Selling Shareholder in connection with the
transactions contemplated by this Agreement and the Management Custody
Agreement.
(e) The Development Fund represents and warrants to, and agrees with,
each of the Underwriters and the Company that:
(i) No consent, approval, authorization, order of, clearance by or
registration or filing with any Governmental Agency having jurisdiction
over the Development Fund is required for the execution, delivery and
performance by the Development Fund of the DF Custody Agreement (as
defined in subsection (e)(iii) below), except for such consents,
approvals, authorizations, orders, clearances, filings or registrations
(A) as have been obtained or made prior to the date of this Agreement
and are in full force and effect, (B) as may be required under the Act,
the rules and regulations of the Commission and under state securities
or Blue Sky laws, (C) as may be required by the laws of or any
Governmental Agency in the ROC or (D) as may be required by the laws of
or any Governmental Agency in any jurisdiction outside the United
States or the ROC in connection with equity offerings generally; and
the Development Fund has full right, power and authority to enter into
and perform under the DF Custody Agreement;
17
(ii) The compliance by the Development Fund with all of the provisions
of the DF Custody Agreement and the consummation of the transactions
therein contemplated will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement or other
material agreement or instrument to which the Development Fund is a
party or by which the Development Fund is bound, or to which any of the
property or assets of the Development Fund is subject, other than any
such conflict, breach or violation that would not have a material
adverse effect on the ability of the Development Fund to perform its
obligations under the DF Custody Agreement, nor will such action result
in any violation of any statute or any order, rule or regulation of any
Governmental Agency having jurisdiction over the Development Fund or
the property of the Development Fund other than any such violation that
would not have a material adverse effect on the ability of the
Development Fund to perform its obligations under the DF Custody
Agreement;
(iii) To the extent that any statements made in the Registration
Statement, any Preliminary Prospectus, the Prospectus or any amendment
or supplement thereto are made in reliance upon and in conformity with
written information furnished to the Company by such the Development
Fund expressly for use therein or any information is omitted therefrom
in reliance on and in conformity with written information provided by
the Development Fund expressly for use therein (all such written
information, "DF Shareholder Information" and, together with Philips
Shareholder Information and Management Shareholder Information,
"Shareholder Information"), the Registration Statement and the
Prospectus will not, as of the applicable effective date as to the
Registration Statement and any amendment thereto and as of the
applicable filing date as to the Prospectus and any amendment or
supplement thereto, contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein made in reliance upon and in
conformity with DF Shareholder Information not misleading; and
(iv) Certificates in negotiable form representing all of the Shares to
be represented by ADSs to be sold by the Development Fund hereunder
will be placed in custody under a custody agreement (the "DF Custody
Agreement"), in the form heretofore furnished to the Representatives,
to be duly executed and delivered by the Development Fund to the
Custodian.
2. Subject to the terms and conditions herein set forth, (a) the
Selling Shareholders severally and not jointly agree to sell to each of the
Underwriters the number of Firm ADSs set forth opposite the name of each of the
Selling Shareholders, respectively, in Schedule I hereto, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Selling
Shareholders, at a purchase price per ADS of US$ , the number of Firm ADSs set
forth opposite the name of such Underwriter in Schedule II hereto and (b) in the
event and to the extent that the Underwriters shall exercise the election to
purchase Optional ADSs as provided below, certain of the Selling Shareholders
agree, severally and not jointly, to sell to each of the Underwriters and each
of the Underwriters agrees, severally and not jointly, to purchase from such
Selling Shareholders, at the purchase price per ADS set forth in clause (a) of
this Section 2, that portion of the number of Optional ADSs as to which such
election shall have been exercised (to be adjusted by the Representatives so as
to eliminate fractional shares) determined by multiplying such number of
Optional ADSs by a fraction, the numerator of which is the maximum number of
Optional ADSs which such Underwriter is entitled to purchase as set forth
opposite the name of such Underwriter in Schedule II hereto and the denominator
of which is the maximum number of Optional ADSs that all of the Underwriters are
entitled to purchase hereunder.
The Selling Shareholders as set forth in Schedule I hereto,
severally and not jointly, hereby grant to the Underwriters the right to
purchase at their election up to the number of Optional ADSs set forth opposite
the name of each of such Selling Shareholders, respectively, in Schedule I
hereto, at the purchase price per ADS set forth in the paragraph above, for the
sole purpose of covering overallotments in the sale of the Firm ADSs. Any such
election to purchase Optional ADSs may be exercised only once and by written
notice from the Representatives to such Selling Shareholders and the Company,
given within a period of 30 calendar days after the
18
date of this Agreement and setting forth the aggregate number of Optional ADSs
to be purchased and the date on which such Optional ADSs are to be delivered, as
determined by the Representatives but in no event earlier than the First Time of
Delivery or, unless the Representatives, such Selling Shareholders and the
Company otherwise agree in writing, earlier than two or later than ten business
days after the date of such notice.
3. Upon the authorization by the Representatives of the release of the
Firm ADSs, the several Underwriters propose to offer the Firm ADSs for sale upon
the terms and conditions set forth in the Prospectus.
4. (a) ADRs evidencing the ADSs to be purchased by each Underwriter
hereunder, in definitive form, and in such authorized denominations and
registered in such names as the Representatives or their United States selling
agents may request upon at least forty-eight hours' notice to the Company and
the Selling Shareholders prior to each Time of Delivery (the "Notification
Time"), shall be delivered by or on behalf of the Selling Shareholders to the
Representatives or their United States selling agents, through the facilities of
the Depositary or The Depository Trust Company ("DTC"), for the account of such
Underwriter, against payment by or on behalf of such Underwriter of the purchase
price therefor by wire transfer to the accounts designated by the Selling
Shareholders, payable to the order of the Selling Shareholders in Federal (same
day) funds. The Selling Shareholders will cause the certificates representing
ADRs evidencing the ADSs to be made available for checking at least twenty-four
hours prior to the Time of Delivery with respect thereto at the office of the
Depositary or DTC, as applicable, or its designated custodian.
The time and date of such delivery and payment shall be, with respect
to the Firm ADSs, 9:30 a.m., New York time, on , 2005 or such other time and
date as the Representatives and the Selling Shareholders may agree upon in
writing, and, with respect to the Optional ADSs, 9:30 a.m. New York time, on the
date specified by the Representatives in the written notice given by the
Representatives of the Underwriters' election to purchase such Optional ADSs, or
such other time and date as the Representatives and the Selling Shareholders
selling such Optional ADSs may agree upon in writing. Such time and date for
delivery of the Firm ADSs is herein called the "First Time of Delivery", such
time and date for delivery of the Optional ADSs, if not the First Time of
Delivery, is herein called the "Second Time of Delivery", and each such time and
date for delivery is herein called a "Time of Delivery".
(b) The documents to be delivered at each Time of Delivery by or on
behalf of the parties hereto pursuant to Section 7 hereof, including the
cross-receipt for the Shares and ADSs and any 'additional documents requested by
the Underwriters pursuant to Section 7(q) hereof will be delivered at the
offices of Xxxxxx Xxxxxxxx Xxxxx & Xxxxxxxx LLP, Bank of Xxxxx Xxxxx, Xxx Xxxxxx
Xxxx, Xxxxxxx, Xxxx Xxxx (the "Closing Location"), and the ADSs will be
delivered as specified in subsection (a) above, all at such Time of Delivery. A
meeting will be held at the Closing Location at 10:00 a.m., Hong Kong time, on
the business day next preceding such Time of Delivery, at which meeting the
final drafts of the documents to be delivered pursuant to the preceding sentence
will be available for review by the parties hereto. For the purposes of this
Section 4, "Business Day" shall mean each Monday, Tuesday, Wednesday,
19
Thursday and Friday which is not a day on which banking institutions in New
York, Taiwan or The Netherlands are generally authorized or obligated by law or
executive order to close.
5. (a) The Company agrees with each of the Underwriters:
(i) To prepare the Prospectus in a form approved by the Representatives
and to file such Prospectus pursuant to Rule 424(b) under the Act not
later than the Commission's close of business on the second New York
business day following the execution and delivery of this Agreement,
or, if applicable, such earlier time as may be required by Rule
430A(a)(3) under the Act; to make no further amendment or any
supplement to the Registration Statement or Prospectus prior to the
last Time of Delivery which shall be disapproved by the Representatives
promptly after reasonable notice thereof; to advise the
Representatives, promptly after it receives notice thereof, of the time
when any amendment to the Registration Statement has been filed or
becomes effective or any supplement to the Prospectus or any amended
Prospectus has been filed and to furnish the Representatives with
copies thereof; to file promptly all reports required to be filed by
the Company with the Commission pursuant to Section 13(a), 13(c) or
15(d) of the Exchange Act subsequent to the date of the Prospectus and
for so long as the delivery of a prospectus is required in connection
with the offering or sale of the ADSs; to advise the Representatives,
promptly after it receives notice thereof, of the issuance by the
Commission of any stop order or of any order preventing or suspending
the use of any Preliminary Prospectus or Prospectus, of the suspension
of the qualification of the ADSs for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for
any such purposes, or of any request by the Commission for the amending
or supplementing of the Registration Statement or Prospectus or for
additional information; and, in the event of the issuances of any stop
order or of any order preventing or suspending the use of any
Preliminary Prospectus or Prospectus or suspending any such
qualification, promptly to use its best efforts to obtain the
withdrawal of such order;
(ii) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify the ADSs for offering
and sale under the securities laws of such jurisdictions as the
Representatives may request and to comply with such laws so as to
permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the
distribution of the ADSs, provided that in connection therewith the
Company shall not be required to qualify as a foreign corporation or to
file a general consent to service of process in any jurisdiction;
(iii) Prior to 12:00 noon, New York City time, on the New York business
day next succeeding the date of this Agreement and from time to time,
to furnish the Underwriters with copies of the Prospectus in New York
City or such other place as the Representatives may specify in such
quantities as the Representatives may reasonably request, and, if the
delivery of a Prospectus is required at any time prior to the
expiration of nine months after the time of issue of the Prospectus in
connection with the offering or sale of the ADSs and if at such time
any events shall have occurred as a result of which the Prospectus as
then amended or supplemented would include an untrue statement of a
material fact or omit to state any material fact necessary in order to
make the statements
20
therein, in the light of the circumstances under which they were made
when such Prospectus is delivered, not misleading, or, if for any other
reason it shall be necessary during such period to amend or supplement
the Prospectus or to file under the Exchange Act any document
incorporated by reference in the Prospectus in order to comply with the
Act or the Exchange Act, to notify the Representatives and upon their
request to file such document and to prepare and furnish without charge
to each Underwriter and to any dealer in securities as many copies as
the Representatives may from time to time reasonably request of an
amended Prospectus or a supplement to the Prospectus which will correct
such statement or omission or effect such compliance, and in case any
Underwriter is required to deliver a prospectus in connection with
sales of any of the ADSs at any time nine months or more after the time
of issue of the Prospectus, upon the Representatives' request but at
the expense of such Underwriter, to prepare and deliver to such
Underwriter as many copies as the Representatives may request of an
amended or supplemented Prospectus complying with Section 10(a)(3) of
the Act;
(iv) To make generally available to its security holders as soon as
practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as defined in Rule 158(c)
under the Act), an earnings statement of the Company and its
subsidiaries (which need not be audited) complying with Section 11(a)
of the Act and the rules and regulations of the Commission thereunder
(including, at the option of the Company, Rule 158);
(v) During the period beginning from the date hereof to and including
the date 90 days after the date of the Prospectus, not to, and not to
announce an intention to, issue any Common Shares, including Common
Shares represented by ADSs (other than pursuant to employee stock
option plans that may have been adopted or may be adopted by the
Company or any Common Shares to be issued as an annual dividend to
shareholders or annual bonus issue to employees which is approved by
the Company's shareholders, without the prior written consent of the
Representatives. The Company further represents to the Underwriters
that it will not effect any conversions or exchanges of Common Shares
into ADSs during this 90-day period; provided, however, that the
Company may, during such 90-day period, commence preparatory work,
including making public announcements, engaging in the application
process and other activities prior to any actual sale of ADSs, pursuant
to the Company's "Policy for TSMC Conversion Sale Program--Sale of
Shares in ADS Form by Eligible Common Shares Holders" as publicly
announced;
(vi) To furnish to the Depositary for mailing to all holders of record
of ADRs as soon as practicable after the end of each fiscal year an
annual report (in English) (including a balance sheet and statements of
income, shareholders' equity and cash flows of the Company and its
consolidated subsidiaries certified by independent public accountants
and prepared in conformity with ROC GAAP) and to file with the
Commission on a timely basis for each year an annual report on Form
20-F that includes a reconciliation of net income, total shareholders'
equity and other financial statement items as required by the rules and
regulations of the Commission to generally accepted accounting
principles in the United States ("U.S. GAAP");
21
(vii) During a period of two years from the effective date of the
Registration Statement, to furnish to the Representatives as soon as
they are available copies of any reports and financial statements
furnished to or filed with the Commission or any securities exchange on
which any class of securities of the Company is listed and which are
not otherwise publicly available directly on the Company's or the
Commission's website;
(viii) Until the distribution of the ADSs has been completed, not to
(and to cause its subsidiaries not to) take, directly or indirectly,
any action which is designed to or which constitutes or which might
reasonably be expected to cause or result in stabilization or
manipulation of the price of any security of the Company to facilitate
the sale or resale of the Shares and the ADSs; and
(ix) To use its best efforts to list, subject to notice of issuance,
the ADSs on the New York Stock Exchange (the "Exchange").
(b) Philips agrees with each of the Underwriters:
(i) During the period beginning from the date hereof to and including
December 31, 2006, not to, and not to announce an intention to, offer,
sell, contract to sell or otherwise dispose of, or file a registration
statement or similar document relating to, any Common Shares or
depositary shares representing Common Shares, or any securities that
are substantially similar to Common Shares or ADSs representing Common
Shares, including but not limited to any securities that are
convertible into or exchangeable for, or that represent the right to
receive, any of these securities or any substantially similar
securities, without the prior written consent of the Representatives;
(ii) Until the distribution of the ADSs has been completed, not to (and
to cause its affiliates, if any, not to) take, directly or indirectly,
any action which is designed to or which constitutes or which might
reasonably be expected to cause or result in stabilization or
manipulation of the price of any security of the Company to facilitate
the sale or resale of the Shares or the ADSs;
(iii) To indemnify and hold the Underwriters harmless against any
documentary, stamp or similar issuance or transfer taxes, duties or
fees and any transaction levies, commissions or brokerage charges,
including any interest and penalties, payable in the ROC or The
Netherlands, which are or may be required to be paid in connection with
the creation, allotment, issuance, offer and distribution of the ADSs
to be sold by Philips and the execution and delivery of this Agreement
and the Deposit Agreement; provided, however, that Philips shall not be
responsible for any such taxes, duties, fees, levies or charges that
arise as a result of the distribution of the ADSs by the Underwriters
in a manner other than that as is customary in such transactions or
that relate to the ADSs to be sold by the other Selling Shareholders;
and hold the Underwriters harmless against any TSE transaction levy
that may be required to be paid in connection with the Shares to be
sold by Philips; and
22
(iv) Prior to each Time of Delivery, to deposit, or cause to be
deposited on its behalf pursuant to the Philips Custody Agreement, the
Shares with the Depositary in accordance with the provisions of the
Deposit Agreement and otherwise to comply with the Deposit Agreement so
that ADRs evidencing ADSs to be sold by Philips will be executed (and,
if applicable, countersigned) and issued by the Depositary against
receipt of such Shares and delivered to the Underwriters at such Time
of Delivery.
(c) Each of the ROC Selling Shareholders agrees with each of the
Underwriters:
(i) With respect to each Management Selling Shareholder, during the
period beginning from the date hereof to and including the date 90 days
after the date of the Prospectus and, with respect to the Development
Fund, during the period beginning from the date hereof to and including
December 31, 2006, not to, and not to announce an intention to, offer,
sell, contract to sell or otherwise dispose of, or file a registration
statement or similar document relating to, any Common Shares or
depositary shares representing Common Shares, or any securities that
are substantially similar to Common Shares or ADSs representing Common
Shares, including but not limited to any securities that are
convertible into or exchangeable for, or that represent the right to
receive, any of these securities or any substantially similar
securities, without the prior written consent of the Representatives;
(ii) Until the distribution of the ADSs has been completed, not to (and
to cause his, her or its affiliates, if any, not to) take, directly or
indirectly, any action which is designed to or which constitutes or
which might reasonably be expected to cause or result in stabilization
or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares or the ADSs; and
(iii) To indemnify and hold the Underwriters harmless against any
documentary, stamp or similar issuance or transfer taxes, duties or
fees and any transaction levies, commissions or brokerage charges,
including any interest and penalties, payable in the ROC, which are or
may be required to be paid in connection with the creation, allotment,
issuance, offer and distribution of the ADSs to be sold by such ROC
Selling Shareholder and the execution and delivery of this Agreement
and the Deposit Agreement; provided, however, that such ROC Selling
Shareholder shall not be responsible for any such taxes, duties, fees,
levies or charges that arise as a result of the distribution of the
ADSs by the Underwriters in a manner other than that as is customary in
such transactions or that relate to the ADSs to be sold by the other
Selling Shareholders. In addition, such ROC Selling Shareholder agrees
to indemnify and hold the Underwriters harmless against any TSE
transaction levy that may be required to be paid in connection with the
Shares to be sold by such ROC Selling Shareholder.
(d) Each of the Management Selling Shareholders agrees with each of the
Underwriters:
(i) Prior to each Time of Delivery, to deposit, or cause to be
deposited on such Management Selling Shareholder's behalf pursuant to
the Management Custody Agreement, the Shares with the Depositary in
accordance with the provisions of the
23
Deposit Agreement and otherwise to comply with the Deposit Agreement so
that ADRs evidencing ADSs to be sold by such Management Selling
Shareholder will be executed (and, if applicable, countersigned) and
issued by the Depositary against receipt of such Shares and delivered
to the Underwriters at such Time of Delivery; and
(ii) To indemnify and hold the Underwriters harmless against any
documentary, stamp or similar issuance or transfer taxes, duties or
fees and any transaction levies, commissions or brokerage charges,
including any interest and penalties, payable in the ROC, which are or
may be required to be paid in connection with the execution and
delivery of the Management Custody Agreement; provided, however, that
such Management Selling Shareholder shall not be responsible for any
such taxes, duties, fees, levies or charges that arise as a result of
the distribution of the ADSs by the Underwriters in a manner other than
that as is customary in such transactions or that relate to the ADSs to
be sold by the other Selling Shareholders.
(e) The Development Fund agrees with each of the Underwriters:
(i) Prior to each Time of Delivery, to deposit, or cause to be
deposited on its behalf pursuant to the DF Custody Agreement, the
Shares with the Depositary in accordance with the provisions of the
Deposit Agreement and otherwise to comply with the Deposit Agreement so
that ADRs evidencing ADSs to be sold by the Development Fund will be
executed (and, if applicable, countersigned) and issued by the
Depositary against receipt of such Shares and delivered to the
Underwriters at such Time of Delivery; and
(ii) To indemnify and hold the Underwriters harmless against any
documentary, stamp or similar issuance or transfer taxes, duties or
fees and any transaction levies, commissions or brokerage charges,
including any interest and penalties, payable in the ROC, which are or
may be required to be paid in connection with the execution and
delivery of the DF Custody Agreement; provided, however, that the
Development Fund shall not be responsible for any such taxes, duties,
fees, levies or charges that arise as a result of the distribution of
the ADSs by the Underwriters in a manner other than that as is
customary in such transactions or that relate to the ADSs to be sold by
the other Selling Shareholders.
6. The Selling Shareholders and the several Underwriters agree to bear,
reimburse and pay such fees, disbursements, expenses and costs in connection
with the offering and sale of the ADSs as may be separately agreed among them
and the Company.
7. The obligations of the Underwriters hereunder as to the ADSs to be
delivered at each Time of Delivery shall be subject to the condition that all
representations and warranties and other statements of the Company and of the
Selling Shareholders herein are, at and as of such Time of Delivery, true and
correct, the condition that the Company and the Selling Shareholders shall have
performed in all material respects all of their respective obligations hereunder
theretofore to be performed, and the following additional conditions (which
condition or conditions may be waived by the Underwriters in their discretion):
24
(a) The Prospectus shall have been filed with the Commission pursuant
to Rule 424(b) within the applicable time period prescribed for such filing by
the rules and regulations under the Act and in accordance with Section 5(a)
hereof; no stop order suspending the effectiveness of the Registration Statement
or any part thereof shall have been issued and no proceeding for that purpose
shall have been initiated or threatened by the Commission; and all requests for
additional information on the part of the Commission shall have been complied
with to the Representatives' reasonable satisfaction;
(b) Xxxxxx Xxxxxxxx Xxxxx & Xxxxxxxx LLP, United States counsel for the
Underwriters, shall have furnished to the Representatives such opinion or
opinions, dated such Time of Delivery, with respect to the matters covered in
paragraphs (c)(i), (c)(ii) and (c)(iii) below (as qualified by sub-paragraphs
(1) and (2) thereunder) and the paragraph immediately following sub-paragraph
(2) under subsection (c) below, as well as such other related matters as the
Representatives may reasonably request, and such counsel shall have received
such papers and information as they may reasonably request to enable them to
pass upon such matters;
(c) Xxxxxxxx & Xxxxxxxx LLP, special United States counsel for the
Company, shall have furnished to the Representatives their written opinion,
dated such Time of Delivery, in form and substance satisfactory to the
Representatives, to the effect that:
(i) This Agreement has been duly executed and delivered by the Company
and each of the Management Selling Shareholders;
(ii) The Deposit Agreement has been duly executed and delivered by the
Company and constitutes a valid and legally binding obligation of the
Company enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium
and similar laws of general applicability relating to or affecting
creditors' rights generally and to general principles of equity;
provided, however, that such counsel need not express any opinion on
Section 5.10 of the Deposit Agreement;
(iii) Upon due issuance by the Depositary of ADRs evidencing the ADSs
being delivered at such Time of Delivery against the deposit of the
underlying Shares to be deposited by the Management Selling
Shareholders in respect thereof in accordance with the provisions of
the Deposit Agreement, such ADRs evidencing the ADSs will be duly and
validly issued and the holders thereof will be entitled to the rights
specified therein and in the Deposit Agreement;
(iv) The Management Custody Agreement has been duly executed and
delivered by each of the Management Selling Shareholders and
constitutes a valid and legally binding obligation of each of the
Management Selling Shareholders, enforceable in accordance with its
terms, subject as to enforcement to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights generally and
to general principles of equity;
(v) Under the laws of the State of New York relating to the submission
to jurisdiction, each of the Company and the Management Selling
Shareholders has,
25
pursuant to Section 14 of this Agreement, validly and irrevocably
submitted to the non-exclusive personal jurisdiction of any state or
federal court located in the Borough of Manhattan, The City of New
York, New York (each a "New York Court"), in any action arising out of
or relating to this Agreement or the transactions contemplated hereby
brought by any Underwriter or any person who controls an Underwriter,
has validly and irrevocably waived any objection to the venue of a
proceeding in any such court, and has validly appointed the Authorized
Agent (as defined in Section 14 hereof) as its authorized agent for the
purpose described in Section 14 hereof; and service of process effected
on such agent in the manner set forth in Section 14 hereof will be
effective to confer valid personal jurisdiction over the Company and
the Management Selling Shareholders in the New York Courts;
(vi) Under the laws of the State of New York relating to personal
jurisdiction, the Company has, pursuant to Section 7.06 of the Deposit
Agreement, validly and irrevocably submitted to the personal
jurisdiction of any federal court located in the Borough of Manhattan,
The City of New York, New York, in any action arising out of or
relating to the Deposit Agreement or the transactions contemplated
thereby, has validly and irrevocably waived any objection to the venue
of a proceeding in any such court, and has validly appointed the
Authorized Agent as its authorized agent for the purpose described in
Section 7.06 of the Deposit Agreement;
(vii) The Registration Statement has been declared effective under the
Act and the rules and regulations thereunder, the Prospectus either has
been filed with the Commission pursuant to Rule 424(b) under the Act or
has been included in the Registration Statement (as the case may be),
and such counsel has no knowledge of any stop order having been issued
suspending the effectiveness of the Registration Statement or of any
proceedings for that purpose having been instituted or threatened or
pending by the Commission;
(viii) Each of (A) the sale of the Shares being delivered at such Time
of Delivery to be sold in the form of ADSs by the Management Selling
Shareholders, (B) the deposit of the Shares by the Management Selling
Shareholders with the Depositary against the issuance of ADSs pursuant
to the Deposit Agreement and (C) the performance by the Company and the
Management Selling Shareholders of their respective obligations under
this Agreement and the performance by the Management Selling
Shareholders of their obligations under the Management Custody
Agreement will not violate any existing Federal law of the United
States or law of the State of New York applicable to the Company or the
Management Selling Shareholders; provided, however, that for the
purposes of this clause (viii), such counsel need not express any
opinion with respect to Federal or state securities laws, other
antifraud laws, fraudulent transfer laws and laws that restrict
transactions between United States persons and citizens or residents of
certain foreign countries or specially designated nationals and
organizations; provided, further, that insofar as performance by the
Company and the Management Selling Shareholders of their respective
obligations under this Agreement and, in the case of the Management
Selling Shareholders, the Management Custody Agreement, is concerned,
such counsel need not express any opinion as to bankruptcy, insolvency,
reorganization,
26
moratorium and similar laws of general applicability relating to or
affecting creditors' rights;
(ix) All regulatory consents, authorizations, approvals and filings
required to be obtained or made by the Company and the Management
Selling Shareholders under the Federal laws of the United States and
the laws of the State of New York for the issuance of the ADRs
evidencing the ADSs, the sale and delivery of ADSs by the Management
Selling Shareholders to the Underwriters under this Agreement and the
deposit with the Depositary of the Shares against the issuance of ADSs
pursuant to the Deposit Agreement have been obtained or made; and
(x) The Company is not required to be registered as an "investment
company" under the Investment Company Act.
Such counsel may also state in such opinion to the effect that:
(1) the foregoing opinion is limited to the Federal laws of the United
States and the laws of the State of New York, that such counsel is expressing no
opinion as to the effect of the laws of any other jurisdiction, and with respect
to all matters of the laws of the ROC, such counsel understands that the
Representatives are relying on the opinions of Xxx and Li, Xxxxx and XxXxxxxx
and Tsar & Tsai delivered to them pursuant to Sections 7(e), 7(g) and 7(j) of
this Agreement, respectively, and with respect to all matters of the laws of The
Netherlands, such counsel understands that the Representatives are relying on
the opinion of Prof. Dr. A.F. Verdam and Xxxxxxxx Chance delivered to them
pursuant to Sections 7(f) and 7(k) of this Agreement; and
(2) with the Representatives' approval, such counsel has relied as to
certain matters on information obtained from public officials, officers of the
Company and the Selling Shareholders and other sources believed by such counsel
to be responsible, and such counsel has assumed that: (A) the Deposit Agreement
has been duly authorized, executed and delivered by the Depositary, (B) this
Agreement has been duly authorized by the Company and the Selling Shareholders,
(C) the Deposit Agreement has been duly authorized by the Company, (D) insofar
as the laws of the ROC are concerned, this Agreement and the Deposit Agreement
have been duly executed and delivered by the Company and the Selling
Shareholders as applicable, (E) the Management Custody Agreement has been duly
authorized, executed and delivered by the Custodian, (F) the Power of Attorney
has been duly executed and delivered by the Management Selling Shareholders and
constitutes a valid and binding agreement enforceable in accordance with its
terms, (G) insofar as the laws of the ROC are concerned, the Management Custody
Agreement has been duly executed and delivered by the Management Selling
Shareholders, (H) insofar as the laws of The Netherlands are concerned, this
Agreement has been duly executed and delivered by Philips, (I) the Deposit
Agreement is a valid and legally binding obligation of the Company insofar the
laws of the ROC are concerned, (J) the ADRs conform to the specimens thereof
examined by such counsel, have been duly executed by one of the Depositary's
authorized officers and have been duly issued by the Depositary in accordance
with the provisions of the Deposit Agreement, (K) the Shares have been duly
authorized and validly
27
issued, and (L) the signatures on all documents examined by such counsel are
genuine, assumptions which such counsel has not independently verified.
In addition, the following shall be included in a separate letter to be
delivered by Xxxxxxxx & Xxxxxxxx LLP to the Representatives at the same time or
times as the foregoing opinion is required to be delivered by such counsel
pursuant to this Agreement. The letter shall state that such counsel has
reviewed the Registration Statement, the Prospectus and the ADR Registration
Statement, participated in discussions with the Representatives'
representatives, those of the Representatives' United States and ROC counsel,
those of the Company, its ROC counsel and its accountants, and those of the
Selling Shareholders and their respective United States and ROC counsel, advised
the Company as to the requirements of the Act and the applicable rules and
regulations thereunder, and between the effectiveness of the Registration
Statement and the time of the delivery of the letter, such counsel participated
in further discussions with the Representatives' representatives, those of the
Company, its ROC counsel and its accountants, and those of the Selling
Shareholders and their United States and ROC counsel regarding the contents of
certain portions of the Prospectus and related matters, and such counsel
reviewed certificates of certain officers of the Company and the Selling
Shareholders, opinions addressed to the Representatives from ROC counsel for the
Company regarding certain portions of the Prospectus and related matters,
opinions addressed to the Representatives from their United States, Dutch and
ROC counsel, opinions from respective ROC counsel for the Selling Shareholders
and the Dutch legal advisor for Philips and letters addressed to the
Representatives from the Company's independent accountants; on the basis of the
information that such counsel gained in the course of the performance of such
services, considered in the light of their understanding of the applicable law
(including the requirements of Form F-3 and the character of the prospectus
contemplated thereby) and the experience they have gained through their practice
under the Act, they confirm to the Representatives that, in their opinion, the
Registration Statement, as of its effective date, the ADR Registration
Statement, as of its effective date, and the Prospectus, as of the date of the
Prospectus, appeared on their face to be appropriately responsive in all
material respects to the requirements of the Act and the applicable rules and
regulations of the Commission thereunder; nothing that came to such counsel's
attention in the course of such review has caused such counsel to believe that
the Registration Statement, as of the effective date of the Registration
Statement, contained any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary in order to make
the statements therein not misleading or that the Prospectus, as of the date of
the Prospectus, contained any untrue statement of a material fact or omitted to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
nothing that came to such counsel's attention in the course of the limited
procedures described in such letter has caused them to believe that the
Prospectus, as of the time of delivery of such letter, contained any untrue
statement of a material fact or omitted to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading; and such counsel does not know of any
documents that are required to be filed as exhibits to the Registration
Statement and are not so filed or of any documents that are required to be
summarized in the Prospectus and are not so summarized. Such counsel may state
that the limitations inherent in the independent verification of factual matters
and the character of determinations involved in the registration process are
such that they do not assume any
28
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement, the Prospectus or the ADR Registration
Statement except for those made under the caption "Description of American
Depositary Receipts" in the Prospectus insofar as they purport to constitute a
summary of the material terms of the Deposit Agreement and the ADRs therein
described, and under the caption "Taxation--United States Federal Income
Taxation" in the Prospectus insofar as they relate to provisions of U.S. Federal
tax law therein described; that such counsel does not express any opinion or
belief as to the financial statements or other financial data derived from
accounting records contained in the Registration Statement or the Prospectus;
that such letter is furnished by such counsel, as United States counsel to the
Company, to the Representatives, solely for the benefit of the Underwriters in
their capacity as such, and may not be relied upon by any other person; and that
such letter may not be quoted, referred to or furnished to any purchaser or
prospective purchaser of the ADSs and may not be used in furtherance of any
offer or sale of the ADSs.
(d) Xxxxxxxx & Xxxxxxxx LLP, special United States counsel for Philips,
shall have furnished to the Representatives their written opinion, dated such
Time of Delivery, in form and substance satisfactory to the Representatives, to
the effect that:
(i) This Agreement has been duly executed and delivered by Philips;
(ii) Upon due issuance by the Depositary of ADRs evidencing the ADSs
being delivered at such Time of Delivery against the deposit of the
underlying Shares to be deposited by Philips in respect thereof in
accordance with the provisions of the Deposit Agreement, such ADRs
evidencing the ADSs will be duly and validly issued and the holders
thereof will be entitled to the rights specified therein and in the
Deposit Agreement;
(iii) The Philips Custody Agreement has been duly executed and
delivered by Philips and constitutes a valid and legally binding
obligation of Philips, enforceable in accordance with its terms,
subject as to enforcement to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights generally and
to general principles of equity;
(iv) Under the laws of the State of New York relating to the submission
to jurisdiction, Philips has, pursuant to Section 14 of this Agreement,
validly and irrevocably submitted to the non-exclusive personal
jurisdiction of a New York Court in any action arising out of or
relating to this Agreement or the transactions contemplated hereby
brought by any Underwriter or any person who controls an Underwriter,
has validly and irrevocably waived any objection to the venue of a
proceeding in any such court, and has effectively appointed the
Authorized Agent (as defined in Section 14 hereof) as its authorized
agent for the purpose described in Section 14 hereof; and service of
process effected on such agent in the manner set forth in Section 14
hereof will be effective to confer valid personal jurisdiction over
Philips in the New York Courts;
(v) Each of (A) the sale of the Shares being delivered at such Time of
Delivery to be sold in the form of ADSs by Philips, (B) the deposit of
the Shares by Philips with the
29
Depositary against the issuance of ADSs pursuant to the Deposit
Agreement, and (C) the performance by Philips of its obligations under
this Agreement and the Philips Custody Agreement will not violate any
existing Federal law of the United States or law of the State of New
York applicable to Philips; provided, however, that for the purposes of
this clause (vi), such counsel need not express any opinion with
respect to Federal or state securities laws, other antifraud laws,
fraudulent transfer laws and laws that restrict transactions between
United States persons and citizens or residents of certain foreign
countries or specially designated nationals and organizations;
provided, further, that insofar as performance by Philips of its
obligations under this Agreement is concerned, such counsel need not
express any opinion as to bankruptcy, insolvency, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditors' rights; and
(vi) All regulatory consents, authorizations, approvals and filings
required to be obtained or made by Philips under the Federal laws of
the United States and the laws of the State of New York for the
issuance of the ADRs evidencing the ADSs, the deposit with the
Depositary of the Shares against the issuance of ADSs pursuant to the
Deposit Agreement and the sale and delivery of the ADSs by Philips to
the Underwriters under this Agreement and have been obtained or made.
Such counsel may also state in such opinion to the effect that:
(1) the foregoing opinion is limited to the Federal laws of the United
States and the laws of the State of New York, that such counsel is expressing no
opinion as to the effect of the laws of any other jurisdiction, and with respect
to all matters of the laws of the ROC, such counsel understands that the
Representatives are relying on the opinions of Xxx and Li, Xxxxx and XxXxxxxx
and Tsar & Tsai delivered to them pursuant to Sections 7(e), 7(g) and 7(j) of
this Agreement, respectively, and with respect to all matters of the laws of The
Netherlands, such counsel understands that the Representatives are relying on
the opinion of Prof. Dr. A.F. Verdam and Xxxxxxxx Chance delivered to them
pursuant to Sections 7(f) and 7(k) of this Agreement; and
(2) with the Representatives' approval, such counsel has relied as to
certain matters on information obtained from public officials, officers of the
Company and Philips and other sources believed by such counsel to be
responsible, and such counsel has assumed that: (A) the Deposit Agreement has
been duly authorized, executed and delivered by the Company and the Depositary,
(B) this Agreement has been duly authorized by the Company and the Selling
Shareholders, (C) the Philips Custody Agreement has been duly authorized,
executed and delivered by the Custodian and has been duly authorized by Philips,
(D) the Deposit Agreement has been duly authorized by the Company, (E) insofar
as the laws of the ROC are concerned, this Agreement and the Deposit Agreement
have been duly executed and delivered by the Company and the Selling
Shareholders, as applicable, (F) insofar as the laws of the ROC are concerned,
the Philips Custody Agreement has been duly executed and delivered by Philips,
(G) insofar as the laws of The Netherlands are concerned, this Agreement has
been duly executed and delivered by Philips, (H) the Deposit Agreement is a
valid and legally binding obligation of the Company insofar the laws of the ROC
are concerned, (I) the ADRs conform to the
30
specimens thereof examined by such counsel, have been duly executed by one of
the Depositary's authorized officers and have been duly issued by the Depositary
in accordance with the provisions of the Deposit Agreement, (J) the Shares have
been duly authorized and validly issued by the Company, and (K) the signatures
on all documents examined by such counsel are genuine, assumptions which such
counsel has not independently verified.
(e) Xxx and Li special ROC counsel for the Company and Philips, shall
have furnished to the Representatives their written opinion, dated such Time of
Delivery, in form and substance satisfactory to the Representatives, to the
effect that:
(i) The Company has been duly incorporated and is validly existing
under the laws of the ROC, with corporate power and authority to own or
lease its properties and conduct its business as described in the
Prospectus and to perform its obligations under this Agreement and the
Deposit Agreement;
(ii) The Company has an authorized capitalization as set forth in the
Prospectus which conforms as to legal matters to the description
thereof contained in the Prospectus; the outstanding Common Shares of
the Company (including the Firm Shares and the Optional Shares) have
been duly authorized and validly issued, and no holder thereof is, or
will be, subject to personal liability by reason of being such holder;
the holders of outstanding shares of capital stock of the Company are
not entitled to preemptive or other rights to acquire the Shares or the
ADSs in connection with the transactions contemplated hereby or
otherwise; the Shares to be deposited by Philips and the Management
Selling Shareholders may be freely deposited with the Depositary
against issuance of ADRs evidencing ADSs; the ADSs are freely
transferable by Philips and the Management Selling Shareholders to or
for the account of the Underwriters; and there are no restrictions on
subsequent transfers of the Shares, except as described in the
Prospectus under the captions "Description of American Depositary
Receipts", "Foreign Investment in the ROC" or "Item 10. Additional
Information--Description of Common Shares"; the Shares and the ADSs
conform to the description of the Common Shares and the ADSs (as to
matters of ROC law), respectively, contained in the Prospectus; the
authorized, issued and outstanding capital stock of the Company is as
set forth in the Prospectus under the heading "Capitalization";
(iii) To the best of such counsel's knowledge after making an inquiry
which they have deemed reasonable and based on a certificate of the
Company, there is no pending or threatened action, suit or proceeding
before any court or governmental agency, authority or body or any
arbitrator involving the Company that, if determined adversely to the
Company, would individually or in the aggregate have a material adverse
effect on the consolidated financial position, shareholders' equity or
results of operations of the Company or would materially adversely
affect the ability of the Company to perform its obligations under this
Agreement or the Deposit Agreement; and, to the best of such counsel's
knowledge after making an inquiry which they have deemed reasonable and
based on a certificate of the Company, no such proceedings are
threatened or contemplated by any governmental agency or threatened by
others;
31
(iv) This Agreement and the Deposit Agreement have been duly
authorized, executed and delivered by the Company and each constitutes
a valid and legally binding agreement of the Company, enforceable in
accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and other
laws of general applicability relating to or affecting creditors'
rights; this Agreement has been duly executed and delivered by each of
the Management Selling Shareholders and constitutes a valid and legally
binding agreement of each of Philips and the Management Selling
Shareholders, enforceable in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and other laws of general applicability
relating to or affecting creditors' rights; the voting arrangement set
forth in the Deposit Agreement is valid, binding and enforceable
against owners and beneficial owners of the ADSs under ROC laws; the
Depositary will not be deemed under ROC law to be authorized to
exercise any discretion when voting in accordance with the Deposit
Agreement and such voting arrangement does not violate any applicable
ROC law. For the purpose of this paragraph, we have assumed that
Philips has duly executed and delivered this Agreement and this
Agreement constitutes a valid and legally binding agreement of Philips
and is enforceable against Philips in accordance with its terms under
the governing law of this Agreement and the laws of the place of its
incorporation;
(v) Neither the execution and delivery of this Agreement or the Deposit
Agreement, the deposit of the Shares with the Depositary by Philips and
the Management Selling Shareholders as contemplated herein, the issue
and sale of the ADSs being delivered at such Time of Delivery to be
sold by Philips and the Management Selling Shareholders, nor, to the
best of such counsel's knowledge, the consummation of any other
transaction contemplated by this Agreement will conflict with, result
in a breach of, or constitute a default under the Articles of
Incorporation of the Company or any applicable ROC law, rule or
regulation or, to the best of such counsel's knowledge after making any
inquiry which they have deemed reasonable and based on a certificate of
the Company as to matters of fact, the terms of any indenture, trust
deed, mortgage or other agreement or instrument to which the Company is
a party or by which the Company is bound, or to which any of the
properties or assets of the Company is subject, other than any such
conflicts, breaches, violations or defaults which, individually or in
the aggregate, would not have a Material Adverse Effect, or any order
or regulation applicable to the Company of any ROC court or government
agency, authority or body or any arbitrator;
(vi) Except as disclosed in the Prospectus, no consent, approval,
authorization, order, filing, registration or qualification of or with
any court or governmental agency or body in the ROC is required for the
consummation of the transactions contemplated by the Deposit Agreement
or this Agreement, for the deposit of the Shares with the Depositary
against issuance of the ADRs evidencing the ADSs to be delivered at
such Time of Delivery, for the sale and delivery of Shares and ADSs to
be sold by each of Philips and the Management Selling Shareholders
hereunder and for the execution, delivery and performance by each of
the Company, Philips and the Management Selling Shareholders of this
Agreement and the Deposit Agreement to be duly and validly authorized,
except such as have been obtained and copies of which have been
furnished to the
32
Representatives, including those approvals which have been obtained
under the laws of the ROC and are in full force and effect as of the
date hereof, such as the approval of the SPA, the CBC and the ROC FSC,
and except for: (A) the approval of CBC of foreign exchange settlements
and payments contemplated by the Deposit Agreement and (B) the filings
and approvals, if any, required under the Overseas Offering Rules, the
Securities and Exchange Law of the ROC and the Company Law of the ROC
and as required by the ROC FSC and the CBC; provided that the failure
to comply with sub-clauses (A) and (B) will not affect the
enforceability or validity of the ADSs, the Deposit Agreement or this
Agreement;
(vii) To the best of such counsel's knowledge after making an inquiry
which such counsel deemed reasonable and based on a certificate of the
Company, the Company is not in violation of its Articles of
Incorporation or in default in the performance or observance of any
material obligation, agreement, covenant or condition contained in any
indenture, mortgage, deed of trust, loan agreement, lease or other
agreement or instrument to which it is a party or by which it or any of
its properties may be bound except such violations or default which,
individually or in the aggregate, would not have a Material Adverse
Effect;
(viii) The statements in the Prospectus under "Enforceability of Civil
Liabilities", "Risk Factors-- Risks Relating to Ownership of ADSs" and
"-- Risks Relating to the ROC", "Foreign Investment in the ROC",
"Taxation-- ROC Taxation", "Description of American Depositary
Receipts", "Underwriting", "Item 8. Financial Information--Dividends
and Dividend Policy", "Item 10. Additional Information--Description of
Common Shares", "Item 10. Additional Information--Exchange Controls in
the ROC" and "Item 10. Additional Information--Voting of Deposited
Securities", to the extent such statements constitute summaries of law
or regulation of the ROC or relate to the provisions of documents
therein describing the laws and regulations of the ROC or constitutive
documents of the Company, are true and accurate in all material
respects;
(ix) No facts have come to the attention of such counsel, based upon
their participation in the preparation of the Registration Statement
and the Prospectus and their review and discussion of the contents
thereof, and participation in conferences with officers and other
representatives and counsel of the Company and the Representatives'
representatives and the Representatives' counsel in connection with the
preparation thereof, but without any independent check or verification
except with respect to the matters to which their opinion relates, that
cause them to believe that, as of its effective date, the Registration
Statement or any further amendment thereto made by the Company prior to
such Time of Delivery (other than the financial statements and related
schedules therein and other financial data contained therein, as to
which such counsel need not express any opinion) contained an untrue
statement of a material fact or omitted to state a material fact
necessary to make the statements therein not misleading or that, as of
its date, the Prospectus or any further amendment or supplement thereto
made by the Company prior to such Time of Delivery (other than the
financial statements and related schedules therein and other financial
data contained therein, as to which such counsel need not express any
opinion) contained an untrue statement of a material fact or omitted
33
to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading or that, as of such Time of Delivery, either the
Registration Statement or the Prospectus or any further amendment or
supplement thereto made by the Company prior to such Time of Delivery
(other than the financial statements and related schedules therein and
other financial data contained therein, as to which such counsel
expresses no opinion) contains an untrue statement of a material fact
or omits to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; however, such counsel does not assume any
responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement, the Prospectus or
any further amendment or supplement thereto made by the Company prior
to such Time of Delivery, except for the opinion stated in paragraph
(viii) above;
(x) Other than as set forth in the Prospectus and so long as this
Agreement, the cross-receipt, if any, or any other documents which are
deemed "receipts" under the ROC Stamp Tax Law are executed by all
parties thereto outside the ROC, no stamp or other issuance or transfer
taxes or duties and no capital gains, income, withholding or other
taxes (except a securities transaction tax and income tax on stock
dividends which has been deferred pursuant to law (as applicable) to be
payable by Philips and the Management Selling Shareholders and except
such income taxes as may be imposed by the ROC on payments hereunder to
any Underwriter or withholding, if any, with respect to any such income
tax) are payable by or on behalf of the Underwriters to the ROC
government or to any political subdivision or taxing authority thereof
or therein in connection with: (A) the deposit with the Depositary of
Shares by each of Philips and the Management Selling Shareholders
against the issuance of ADRs evidencing the ADSs, (B) the sale and
delivery by each of Philips and the Management Selling Shareholders of
the ADSs to or for the respective accounts of the Underwriters pursuant
to the terms of this Agreement or (C) the sale and delivery outside the
ROC by the Underwriters of the ADSs to the initial purchasers thereof
in the manner contemplated herein pursuant to the terms of this
Agreement;
(xi) The agreement of the Company to the choice of law provisions set
forth in Section 20 of this Agreement and Section 7.06 of the Deposit
Agreement will be recognized by the courts of the ROC provided that the
relevant provisions of the laws of the State of New York will not be
applied to the extent such courts hold that such provisions of the laws
of the State of New York are contrary to the public order or good
morals of the ROC; the Company can xxx and be sued in its own name
under the laws of the ROC; the irrevocable submission by the Company to
the non-exclusive personal jurisdiction of a New York Court as set
forth in Section 14 hereof and Section 7.06 of the Deposit Agreement
and the irrevocable waiver by the Company of any objection to the
laying of venue of a proceeding in a New York Court are legal, valid
and binding; and the irrevocable appointment of TSMC North America as
its Authorized Agent for service of process for the purposes described
in Section 14 hereof and Section 7.06 of the Deposit Agreement is
legal, valid and binding (according to a letter of the Ministry of
Foreign Affairs dated February 1979); and a judgment obtained in a New
York Court arising out of or in relation to the obligations of the
Company under this Agreement or
34
the Deposit Agreement would be enforceable against the Company in the
courts of the ROC without review of the merits; provided that the court
of the ROC in which the enforcement is sought is satisfied that (A) the
court rendering the judgment has jurisdiction over the subject matter
according to the laws of the ROC, (B) the judgment and the court
procedures resulting in the judgment are not contrary to the public
order or good morals of the ROC, (C) if the judgment was rendered by
default by the court rendering the judgment, (i) the Company was duly
served within a reasonable period of time within the jurisdiction of
such court in accordance with the laws and regulations of such
jurisdiction, or (ii) process was served on the Company with judicial
assistance of the ROC; and (D) judgments of the courts of the ROC are
recognized and enforceable in the jurisdiction of the court rendering
the judgment on a reciprocal basis. Such counsel should state that it
is not aware of (i) any ROC treaties, statutes or regulations that
would indicate the recognition and enforcement in the ROC of such a
judgment would be contrary to the public order or good morals of the
ROC, or of any reported cases in the ROC of a court refusing to
recognize or enforce such a judgment, (ii) any interpretations of any
statutes in the ROC that would indicate that the recognition and
enforcement in the ROC of such a judgment would be contrary to the
public order or good morals of the ROC (other than a judgment relating
to rights exercised by a party under the relevant agreements in bad
faith or contradictory to the public interest of the ROC) and (iii) any
reason why any of the aforementioned courts in the State of New York
(assuming that such courts have jurisdiction over the subject matter
under New York law) would not have jurisdiction over the subject matter
according to the laws of the ROC;
(xii) To the best of such counsel's knowledge after making due inquiry
and based on a certificate of the Company, the Company owns or
possesses the Intellectual Property necessary to conduct its business
as presently conducted and as proposed to be conducted; and the Company
has not received notice or claim of infringement of or conflict with
asserted rights of others with respect to any Intellectual Property,
which notice or claim remains in dispute, and which is reasonably
likely to have a material adverse effect on the current or future
consolidated financial position, shareholders' equity or results of
operations of the Company; and, to the best of such counsel's knowledge
after making due inquiry and based on a certificate of the Company, the
Company has good and marketable title to all real property owned by it,
in each case free and clear of any liens, encumbrances or defects
except such as are described in the Prospectus or such as do not
materially affect the value of such property and do not interfere with
the use made and proposed to be made of such property by the Company;
and, to the best of such counsel's knowledge after making due inquiry
and based on a certificate of the Company, any real property and
buildings held under lease by the Company are held by it under valid,
subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made
of such property and buildings by the Company;
(xiii) The signing and filing of each of the Registration Statement and
Prospectus have been duly authorized by and on behalf of the Company;
35
(xiv) The Company is not entitled to any immunity on the basis of
sovereignty or otherwise in respect of its obligations under this
Agreement or the Deposit Agreement and could not successfully interpose
any such immunity as a defense to any suit or action brought or
maintained in respect of its obligations under this Agreement or the
Deposit Agreement;
(xv) This Agreement and the Deposit Agreement are in proper form under
the laws of the ROC for the enforcement thereof against the Company
under the laws of the ROC; and to ensure the legality, validity,
enforceability and admissibility into evidence in the ROC of each of
this Agreement and the Deposit Agreement, it is not necessary that such
agreement be filed or recorded with any court or other authority in the
ROC or that any stamp or similar tax be paid in the ROC or in respect
thereof so long as this Agreement is executed, including by Power of
Attorney, by all parties outside the ROC, it being understood that in
court proceedings in the ROC a translation into the Chinese language
may be required;
(xvi) Under the laws of the ROC, each holder of ADRs evidencing ADSs
issued pursuant to the Deposit Agreement shall be entitled, subject to
the Deposit Agreement, to seek enforcement of its rights as legal owner
of the Shares underlying the ADSs through the Depositary or its nominee
registered as representative of the holders of the ADRs in a direct
suit, action or proceeding against the Company;
(xvii) Other than as set forth in the Prospectus, there are no
limitations under ROC law on the rights of holders of Shares, ADSs or
ADRs evidencing ADSs to hold or vote or transfer their respective
securities; and no other governmental approvals are currently required
in the ROC in order for the Company to pay dividends or other
distributions declared by the Company to holders of Common Shares,
including the Depositary, or for the conversion by the Depositary of
any dividends paid in NT dollars to U.S. dollars or the repatriation
thereof out of the ROC and no other withholding or other taxes under
the laws and regulations of the ROC will be imposed in connection with
the declaration and payment by the Company of dividends and other
distributions in respect of shares of its capital stock;
(xviii) Immediately prior to the Time of Delivery, each of Philips and
the Management Selling Shareholders had good and valid title to the
Common Shares represented by the ADSs to be sold by Philips and such
Management Selling Shareholders under this Agreement, free and clear of
all liens, encumbrances, equities or claims; and upon delivery of such
Common Shares, properly endorsed for transfer, registration of such
transfer with the Company, and payment therefor pursuant hereto, good
and valid title to such Common Shares, free and clear of all liens,
encumbrances, equities or claims, will pass to the Depositary or its
nominee (if applicable) for the benefit of the several Underwriters;
(xix) The indemnification and contribution provisions set forth in
Section 8 of this Agreement and Section 5.10 of the Deposit Agreement
do not contravene the laws of the ROC;
36
(xx) The Management Custody Agreement has been duly executed and
delivered by each of the Management Selling Shareholders and
constitutes a valid and binding agreement of each of the Management
Selling Shareholders, enforceable in accordance with its terms subject
to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditors' rights generally;
(xxi) The deposit of the Shares with the Depositary under the Deposit
Agreement as contemplated herein, the sale by the Management Selling
Shareholders to the Underwriters of the ADSs hereunder, the performance
by the Management Selling Shareholders of their obligations under the
provisions of this Agreement and the performance by the Management
Selling Shareholders of their obligations under the provisions of the
Management Custody Agreement will, based on the certificates of the
Management Selling Shareholders, not conflict with or result in a
breach or violation of any terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement
or other material agreement or instrument known to such counsel to
which any of the Management Selling Shareholders is a party or by which
any of the Management Selling Shareholders is bound, or to which any of
the property or assets of the Management Selling Shareholders is
subject, other than any such conflict, breach or violation that would
not have a material adverse effect on the ability of the Management
Selling Shareholders to perform their obligations under this Agreement
or the Management Custody Agreement, nor will the deposit of the Shares
with the Depositary under the Deposit Agreement as contemplated herein,
the sale by each of Philips and the Management Selling Shareholders to
the Underwriters of the ADSs hereunder, the performance by each of
Philips and the Management Selling Shareholders of their obligations
under the provisions of this Agreement and the performance by the
Management Selling Shareholders of their obligations under the
provisions of the Management Custody Agreement result in any violation
of the provisions of any statute, order, rule or regulation known to
such counsel of any court or governmental agency or body in the ROC
having jurisdiction over Philips or the Management Selling Shareholders
or the property of Philips or the Management Selling Shareholders other
than any such violation that would not have a material adverse effect
on the ability of Philips or the Management Selling Shareholders to
perform their obligations under this Agreement or the Management
Selling Shareholders to perform their obligations under the Management
Custody Agreement;
(xxii) Immediately prior to such Time of Delivery, each of the
Management Selling Shareholders had full right, power and authority (A)
to deposit the Shares with the Depositary as contemplated hereby, and
(B) to sell, assign, transfer and deliver the ADSs to be sold by such
Management Selling Shareholder hereunder;
(xxiii) It is not necessary in order to enable any Underwriter to
exercise its rights under this Agreement in the ROC that all or any of
the Underwriters should be licensed, qualified or entitled to do
business in the ROC;
37
(xxiv) This Agreement is in proper form under the laws of the ROC for
the enforcement thereof against each of Philips and the Management
Selling Shareholders under the laws of the ROC; the Management Custody
Agreement is in proper form under the laws of the ROC for the
enforcement thereof against the Management Selling Shareholders under
the laws of the ROC; and to ensure the legality, validity,
enforceability and admissibility into evidence in the ROC of such
agreements, it is not necessary that such agreements be filed or
recorded with any court or other authority in the ROC or that any stamp
or similar tax be paid in the ROC or in respect thereof so long as the
Agreement is executed by all parties outside the ROC (including by
Power of Attorney, provided such Power of Attorney shall not be
required to be signed outside the ROC), it being understood that in
court proceedings in the ROC a translation into the Chinese language
may be required;
(xxv) The Management Selling Shareholders' agreement that this
Agreement shall be governed by and construed in accordance with the
laws of the State of New York as set forth in Section 20 hereof is
legal, valid and binding and will be recognized by the courts of the
ROC, provided that the relevant provisions of the laws of the State of
New York will not be applied to the extent such courts hold that such
provisions of the laws of the State of New York are contrary to the
public order or good morals of the ROC; the Management Selling
Shareholders can xxx and be sued in their own names under the laws of
the ROC; the irrevocable submission by the Management Selling
Shareholders to the non-exclusive personal jurisdiction of a New York
Court as set forth in Section 14 hereof and the irrevocable waiver by
the Management Selling Shareholders of any objection to the laying of
venue of a proceeding in a New York Court are legal, valid and binding;
the irrevocable appointment of TSMC North America as the Authorized
Agent for service of process for the Management Selling Shareholders
for the purpose described in Section 14 hereof is legal, valid and
binding (according to a letter of the Ministry of Foreign Affairs dated
February 1979); and a judgment obtained in a New York Court arising out
of or in relation to the obligations of any of the Management Selling
Shareholders under this Agreement would be enforceable against such
Management Selling Shareholder in the courts of the ROC without review
of merits, provided that the court of the ROC in which the enforcement
is sought is satisfied that (A) the court rendering the judgment has
jurisdiction over the subject matter according to the laws of the ROC,
(B) the judgment and the court procedures resulting in the judgment are
not contrary to the public order or good morals of the ROC, (C) if the
judgment was rendered by default by the court rendering the judgment,
(i) the relevant Management Selling Shareholder was duly served within
a reasonable period of time within the jurisdiction of such court in
accordance with the laws and regulations of such jurisdiction, or (ii)
process was served on such relevant Management Selling Shareholder with
judicial assistance of the ROC; and (D) judgments of the courts of the
ROC are recognized and enforceable in the jurisdiction of the court
rendering the judgment on a reciprocal basis; and
(xxvi) Each of the Management Selling Shareholders has duly authorized,
executed and delivered an irrevocable Power of Attorney, and each such
Power of Attorney is valid, legally binding and enforceable against
such Management Selling Shareholder in accordance with its terms under
the laws of the ROC.
38
(xxvii) There are no reporting obligations under ROC law on any ADS
holder (assuming such ADS holder does not hold ADSs or the Shares, in
the aggregate, exceeding 10% of the issued share capital of the
Company) that have not been disclosed in the Deposit Agreement and in
the Prospectus and the form of receipt attached to the Deposit
Agreement.
In rendering such opinion, such counsel may state that they express no
opinion as to the laws of any jurisdiction outside the ROC and that such counsel
relies on certificates from the Management Selling Shareholders as to factual
matters.
(f) Prof. Dr. A.F. Verdam, legal advisor for Philips, shall have
furnished to the Representatives his written opinion, dated such Time of
Delivery, in form and substance satisfactory to the Representatives, to the
effect that:
(i) Philips has been duly incorporated and is validly existing as a
company with limited liability under the laws of The Netherlands;
(ii) This Agreement has been duly authorized, executed and delivered by
Philips and constitutes a valid and legally binding agreement of
Philips, enforceable against Philips in accordance with its terms;
(iii) No consent, approval, authorization, order, filing, registration
or qualification of or with any court or governmental agency or body in
The Netherlands is required for the consummation of the transactions by
Philips contemplated by this Agreement, for the deposit of the Shares
with the Depositary against issuance of the ADRs evidencing the ADSs to
be delivered at the Time of Delivery, for the sale and delivery of
Shares and ADSs to be sold by Philips hereunder and for the execution,
delivery and performance by Philips of its obligations under this
Agreement to be duly and validly authorized;
(iv) Immediately prior to the Time of Delivery, Philips had good and
valid title to the Shares, free and clear of all liens, encumbrances,
equities or claims; and upon delivery of the Shares in accordance with
this Agreement, the Deposit Agreement and the Philips Custody
Agreement, properly endorsed for transfer, registration of such
transfer with the Company, and payment therefor pursuant hereto, good
and valid title to the Shares, free and clear of all liens,
encumbrances, equities or claims, will pass to the Depositary or its
nominee (if applicable) for the benefit of the several Underwriters;
(v) The Philips Custody Agreement has been duly authorized, executed
and delivered by Philips and constitutes a valid and binding agreement
of Philips, enforceable in accordance with its terms;
(vi) The deposit of the Shares with the Depositary as contemplated
herein, the sale by Philips to the Underwriters of the ADSs in the
manner contemplated hereunder and the performance by Philips of its
obligations under the provisions of this Agreement and the performance
by Philips of its obligations under the Philips Custody Agreement do,
to the best of such counsel's knowledge after making an inquiry which
such counsel deemed reasonable and based on the certificates of
Philips, not conflict with or result in a breach
39
or violation of any terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement or other
material agreement or instrument known to such counsel to which Philips
is a party or by which it is bound, or to which any of the property or
assets of Philips is subject, other than any such conflict, breach or
violation that would not have a material adverse effect on the ability
of Philips to perform its obligations under this Agreement or the
ability of Philips to perform its obligations under the Philips Custody
Agreement, nor will such action result in any violation of the
provisions of the Articles of Association of Philips or any statute,
order, rule or regulation known to such counsel of any court or
governmental agency or body in The Netherlands having jurisdiction over
Philips or the property of Philips other than any such violation that
would not have a material adverse effect on the ability of Philips to
perform its obligations under this Agreement or under the Philips
Custody Agreement;
(vii) Immediately prior to the Time of Delivery, Philips had full
corporate power and authority to deposit the Shares with the Depositary
as contemplated hereby and to sell, assign, transfer and deliver the
ADSs to be sold by Philips hereunder;
(viii) Each of this Agreement and the Philips Custody Agreement is in
proper legal form under the laws of The Netherlands in order to bring a
proceeding for the enforcement thereof against Philips under the laws
of The Netherlands; and in connection with such proceeding, it is not
necessary that such agreements be filed or recorded with any court or
other authority in The Netherlands or that any stamp or similar tax be
paid in The Netherlands or in respect thereof; it being understood that
in court proceedings in The Netherlands a translation into the Dutch
language by a sworn translator may be required and that normal document
production requirements will have to be complied with;
(ix) The agreement by Philips that this Agreement shall be governed by
and construed in accordance with the laws of the State of New York as
set forth in Section 20 hereof is legal, valid and binding and will be
recognized by the courts of The Netherlands subject to possible
application of mandatory rules (if any) as referred to in Article 7 of
the Convention on the Law applicable to contractual obligations (Rome,
1980); Philips can xxx and be sued in its own name under the laws of
The Netherlands; the irrevocable submission of Philips to the
non-exclusive personal jurisdiction of a New York Court and the waiver
by Philips of any objection to the venue of a proceeding of a New York
Court is legal, valid and binding; and the irrevocable appointment of
Philips Electronics North America Corporation as the Authorized Agent
for service of process for Philips for the purpose described in Section
14 hereof is legal, valid and binding; and
(x) The United States and The Netherlands do not currently have a
treaty providing for reciprocal recognition and enforcement of
judgments (other than arbitration awards) in civil and commercial
matters. Therefore, a final judgment for payment of money rendered by
any federal or state court in the United States based on civil
liability, whether or not predicated solely upon the federal securities
laws of the United States, would not be directly enforceable in The
Netherlands. However, if the party in whose favor such final judgment
is rendered brings a new suit in a competent court in The
40
Netherlands, such party may submit to the Netherlands court the final
judgment that has been rendered in the United States. If the
Netherlands court finds that the jurisdiction of the federal or state
court in the United States has been based on grounds that are
internationally acceptable and that proper legal procedures have been
observed, the court in The Netherlands would under current practice
give binding effect to the final judgment that has been rendered in the
United States unless such judgment contravenes The Netherlands' public
policy.
The opinion expressed above is subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general equity
principles, such as the principle of "reasonableness and fairness"
("redelijkheid en billijkheid").
In rendering such opinion, Prof. Dr. A.F. Verdam may state that he
expresses no opinion as to the laws of any jurisdiction outside The Netherlands
and that he relies on certificates from public officials, officers of Philips or
other sources as to factual matters.
(g) Xxxxx & XxXxxxxx, ROC counsel for the Development Fund, shall have
furnished to the Representatives their written opinion, dated such Time of
Delivery, in form and substance satisfactory to the Representatives, to the
effect that:
(i) This Agreement has been duly authorized, executed and delivered by
the Development Fund and constitutes a valid and legally binding
agreement of the Development Fund, enforceable in accordance with its
terms, subject, as to enforcement, to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and other laws of
general applicability relating to or affecting creditors' rights;
(ii) Except as disclosed in the Prospectus, no consent, approval,
authorization, order, filing, registration or qualification of or with
any court or governmental agency or body in the ROC is required for the
consummation of the transactions contemplated by this Agreement, for
the deposit of the Shares with the Depositary against issuance of the
ADRs evidencing the ADSs to be delivered at such Time of Delivery, for
the sale and delivery of Shares and ADSs to be sold by the Development
Fund hereunder and for the execution, delivery and performance by the
Development Fund of this Agreement to be duly and validly authorized,
except such as have been obtained and copies of which have been
furnished to the Representatives, including those approvals which have
been obtained under the laws of the ROC and are in full force and
effect as of the date hereof, such as the approval of the SPA, the CBC
and the ROC FSC; and except for: (A) the approval of CBC of foreign
exchange settlements and payments contemplated by the Deposit Agreement
and (B) the filings and approvals required under the Overseas Offering
Rules, the Securities and Exchange Law of the ROC and the Company Law
of the ROC; provided that the failure to comply with sub-clauses (A)
and (B) will not affect the enforceability or validity of the ADSs or
this Agreement;
(iii) Other than as set forth in the Prospectus and so long as this
Agreement, the cross-receipt, if any, or any other documents which are
deemed "receipts" under the ROC
41
Stamp Tax Law are executed outside the ROC, no stamp or other issuance
or transfer taxes or duties and no capital gains, income, withholding
or other taxes [(except a securities transaction tax and income tax on
stock dividends (as applicable) to be payable by the Development Fund
and except such income taxes as may be imposed by the ROC on payments
hereunder to any Underwriter whose net income is subject to tax by the
ROC or withholding, if any, with respect to any such income tax)] are
payable by or on behalf of the Underwriters to the ROC government or to
any political subdivision or taxing authority thereof or therein in
connection with: (A) the deposit with the Depositary of Shares by the
Development Fund against the issuance of ADRs evidencing the ADSs, (B)
the sale and delivery by the Development Fund of the ADSs to or for the
respective accounts of the Underwriters pursuant to the terms of this
Agreement or (C) the sale and delivery outside the ROC by the
Underwriters of the ADSs to the initial purchasers thereof in the
manner contemplated herein pursuant to the terms of this Agreement;
(iv) Immediately prior to such Time of Delivery, the Development Fund
had good and valid title to the Common Shares represented by the ADSs
to be sold by it under this Agreement, free and clear of all liens,
encumbrances, equities or claims; and upon delivery of such Common
Shares, properly endorsed for transfer, registration of such transfer
with the Company, and payment therefor pursuant hereto, good and valid
title to such Common Shares, free and clear of all liens, encumbrances,
equities or claims, will pass to the Depositary or its nominee (if
applicable) for the benefit of the several Underwriters;
(v) The DF Custody Agreement has been duly executed and delivered by
the Development Fund and constitutes a valid and binding agreement of
the Development Fund, enforceable in accordance with its terms subject
to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditors' rights generally and to general principles of
equity;
(vi) This Agreement has been duly executed and delivered by or on
behalf of the Development Fund; the deposit of the Shares with the
Depositary as contemplated herein, the sale by the Development Fund to
the Underwriters of the ADSs hereunder and the performance by the
Development Fund of its obligations under the provisions of this
Agreement and the performance by the Development Fund of its
obligations under the DF Custody Agreement will, to the best of such
counsel's knowledge after making an inquiry which such counsel deemed
reasonable and based on the certificates of the Development Fund, not
conflict with or result in a breach or violation of any terms or
provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, loan agreement or other material agreement or instrument
known to such counsel to which the Development Fund is a party or by
which it is bound, or to which any of the property or assets of the
Development Fund is subject, other than any such conflict, breach or
violation that would not have a material adverse effect on the ability
of the Development Fund to perform its obligations under this Agreement
or the ability of the Development Fund to perform its obligations under
the DF Custody Agreement, nor will such action result in any violation
of the provisions of any statute, order, rule or regulation known to
42
such counsel of any court or governmental agency or body in the ROC
having jurisdiction over the Development Fund or the property of the
Development Fund other than any such violation that would not have a
material adverse effect on the ability of the Development Fund to
perform its obligations under this Agreement or under the DF Custody
Agreement;
(vii) No consents, approvals, authorizations, orders, registrations,
clearances and filings of or with any Governmental Agency in the ROC
are required for the performance by the Development Fund of its
obligations under this Agreement in connection with the deposit of the
Shares with the Depositary as contemplated herein or the delivery and
sale by the Development Fund to the Underwriters of the ADSs; except
for: (A) the approval of the CBC of foreign exchange settlements and
payments contemplated by the Deposit Agreement, (B) the filings and
approvals required under the Overseas Offering Rules and as required by
the CBC, (C) the approvals for the sale by the Development Fund of the
ADSs and (D) the off-exchange trading approval of the ROC FSC, which
have all been obtained under the laws of the ROC and are in full force
and effect as of the date hereof;
(viii) Immediately prior to such Time of Delivery, the Development Fund
had full right, power and authority to deposit the Shares with the
Depositary as contemplated hereby and to sell, assign, transfer and
deliver the ADSs to be sold by the Development Fund hereunder;
(ix) This Agreement is in proper form under the laws of the ROC for the
enforcement thereof against the Development Fund under the laws of the
ROC and the DF Custody Agreement is in proper form under the laws of
the ROC for the enforcement thereof against the Development Fund under
the laws of the ROC; and to ensure the legality, validity,
enforceability and admissibility into evidence in the ROC of such
agreements, it is not necessary that such agreements be filed or
recorded with any court or other authority in the ROC or that any stamp
or similar tax be paid in the ROC or in respect thereof, it being
understood that in court proceedings in the ROC a translation into the
Chinese language may be required; and
(x) The agreement by the Development Fund that this Agreement shall be
governed by and construed in accordance with the laws of the State of
New York as set forth in Section 20 hereof is legal, valid and binding
and will be recognized by the courts of the ROC, provided that the
relevant provisions of the laws of the State of New York will not be
applied to the extent such courts hold that such provisions of the laws
of the State of New York are contrary to the public order or good
morals of the ROC; the Development Fund can xxx and be sued in its own
name under the laws of the ROC; the irrevocable submission of the
Development Fund to the non-exclusive personal jurisdiction of a New
York Court and the waiver by the Development Fund of any objection to
the venue of a proceeding of a New York Court is legal, valid and
binding; the irrevocable appointment of CT Corporation System, New
York, New York as the Authorized Agent for service of process for the
Development Fund for the purpose described in Section 14 hereof is
legal, valid and binding; and a judgment obtained in a New York Court
arising out of or in relation to the obligations of the
43
Development Fund under this Agreement would be enforceable against the
Development Fund in the courts of the ROC without review of merits,
provided that the court of the ROC in which the enforcement is sought
is satisfied that (A) the court rendering the judgment has jurisdiction
over the subject matter according to the laws of the ROC, (B) the
judgment and the court procedures based on which such judgment was
rendered are not contrary to the public order or good morals of the
ROC, (C) if the judgment was rendered by default by the court, (i) the
Development Fund was duly served during a reasonable time within the
jurisdiction of such court in accordance with the laws and regulations
of such jurisdiction or (ii) process was served on the Development Fund
with judicial assistance of the ROC, and (D) judgments of the courts of
the ROC are recognized and enforceable in the jurisdiction of the court
rendering the judgment on a reciprocal basis.
In rendering such opinion, such counsel may state that they express no
opinion as to the laws of any jurisdiction outside the ROC and that such counsel
relies on certificates from the Development Fund as to factual matters.
(h) Patterson, Belknap, Xxxx & Tyler LLP, counsel for the Depositary,
shall have furnished to the Representatives their written opinion, dated such
Time of Delivery, in form and substance satisfactory to the Representatives, to
the effect that:
(i) The Deposit Agreement has been duly authorized, executed and
delivered by the Depositary and constitutes the valid and legally
binding agreement of the Depositary, enforceable against the Depositary
in accordance with its terms except to the extent that (a) enforcement
thereof may be limited by (1) bankruptcy, insolvency (including,
without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or similar laws now or hereafter in effect
relating to or affecting creditors' rights generally, and (2) general
principles of equity (regardless of whether enforceability is
considered in a proceeding in law or in equity), and (b) rights to
indemnity and contribution may be limited by United States federal or
state securities laws or public policy; and
(ii) ADRs issued in accordance with the terms and conditions of the
Deposit Agreement and the Registration Statement to evidence ADSs
issued upon deposit of Shares in connection with the sale of ADSs
described under this Agreement will be duly and validly issued and will
entitle the holders thereof to the rights specified therein and in the
Deposit Agreement, assuming that (a) the Shares represented by the ADSs
(which are in turn evidenced by the ADRs) have been duly authorized and
validly issued and are fully paid and non-assessable, and that any
preemptive rights with respect to such Shares have been validly waived
or exercised, and (b) such Shares have been duly deposited with the
Custodian (as defined in the Deposit Agreement), in each case in
accordance with all applicable laws and regulations.
(i) Xxxxxx Erhman LLP, special United States counsel for the
Development Fund, shall have furnished to the Representatives their written
opinion, dated such Time of Delivery, in form and substance satisfactory to the
Representatives, to the effect that:
(i) This Agreement has been duly executed and delivered by the
Development Fund;
44
(ii) Upon due issuance by the Depositary of ADRs evidencing the ADSs
being delivered at such Time of Delivery against the deposit of the
underlying Shares to be deposited by the Development Fund in respect
thereof in accordance with the provisions of the Deposit Agreement,
such ADRs evidencing the ADSs will be duly and validly issued and the
holders thereof will be entitled to the rights specified therein and in
the Deposit Agreement;
(iii) The DF Custody Agreement has been duly executed and delivered by
the Development Fund and constitutes a valid and legally binding
obligation of the Development Fund, enforceable in accordance with its
terms, subject as to enforcement to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights generally and
to general principles of equity;
(iv) Under the laws of the State of New York relating to the submission
to jurisdiction, the Development Fund has, pursuant to Section 14 of
this Agreement, validly and irrevocably submitted to the non-exclusive
personal jurisdiction of a New York Court in any action arising out of
or relating to this Agreement or the transactions contemplated hereby
brought by any Underwriter or any person who controls an Underwriter,
has validly and irrevocably waived any objection to the venue of a
proceeding in any such court, and has effectively appointed the
Authorized Agent (as defined in Section 14 hereof) as its authorized
agent for the purpose described in Section 14 hereof; and service of
process effected on such agent in the manner set forth in Section 14
hereof will be effective to confer valid personal jurisdiction over the
Development Fund in the New York Courts;
(v) Each of (A) the issue and sale of the Shares being delivered at
such Time of Delivery to be sold in the form of ADSs by the Development
Fund, (B) the deposit of the Shares being deposited by the Development
Fund with the Depositary pursuant to the Deposit Agreement and (C) the
performance by the Development Fund of its obligations under this
Agreement will not violate any existing Federal law of the United
States or law of the State of New York applicable to the Development
Fund; provided, however, that for the purposes of this clause (vi),
such counsel need not express any opinion with respect to Federal or
state securities laws, other antifraud laws and fraudulent transfer
45
laws; provided, further, that insofar as performance by the Development
Fund of its obligations under this Agreement is concerned, such counsel
need not express any opinion as to bankruptcy, insolvency,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights; and
(vi) All regulatory consents, authorizations, approvals and filings
required to be obtained or made by the Development Fund under the
Federal laws of the United States and the laws of the State of New York
for the issuance of the ADRs evidencing the ADSs, the sale and delivery
of ADSs by the Development Fund to the Underwriters under this
Agreement and the deposit with the Depositary of the Shares underlying
the ADSs have been obtained or made;
Such counsel may also state in such opinion to the effect that:
(1) the foregoing opinion is limited to the federal laws of the United
States and the laws of the State of New York, that such counsel is expressing no
opinion as to the effect of the laws of any other jurisdiction, and with respect
to all matters of the laws of the ROC, such counsel understands that the
Representatives are relying on the opinions of Xxx and Li, Xxxxx and XxXxxxxx
and Tsar & Tsai delivered to them pursuant to Sections 7(e), 7(g) and 7(j) of
this Agreement, respectively, and with respect to all matters of the laws of The
Netherlands, such counsel understands that the Representatives are relying on
the opinion of Prof. Dr. A.F. Verdam and Xxxxxxxx Chance delivered to them
pursuant to Sections 7(f) and 7(k) of this Agreement; and
(2) with the Representatives' approval, such counsel has relied as to
certain matters on information obtained from public officials, officers of the
Company and the Selling Shareholders and other sources believed by such counsel
to be responsible, and such counsel has assumed that: (A) the Deposit Agreement
has been duly authorized, executed and delivered by the Depositary, (B) this
Agreement has been duly authorized by the Company and the Selling Shareholders,
(C) the Deposit Agreement, the Shares and the ADSs have been duly authorized by
the Company, (D) insofar as the laws of the ROC are concerned, this Agreement
and the Deposit Agreement have been duly executed and delivered by the Company
and the Selling Shareholders as applicable, (E) insofar as the laws of The
Netherlands are concerned, this Agreement has been duly executed and delivered
by Philips, (F) the Deposit Agreement is a valid and legally binding obligation
of the Company insofar the laws of the ROC are concerned, and (G) the signatures
on all documents examined by such counsel are genuine, assumptions which such
counsel has not independently verified.
(j) Tsar & Tsai, ROC counsel for the Underwriters, shall have furnished
to the Representatives such opinion or opinions, dated such Time of Delivery,
with respect to such matters as the Representatives may reasonably request, and
such counsel shall have received such papers and information as they may
reasonably request to enable them to pass upon such matters;
(k) Xxxxxxxx Chance, Dutch counsel for the Underwriters, shall have
furnished to the Representatives their written opinion, dated such Time of
Delivery, in form and substance satisfactory to the Representatives, to the
effect that:
46
(i) No withholding, income or capital gains or other similar taxes
are payable by or on behalf of the Underwriters to The
Netherlands or any political subdivision or taxing authority
thereof or therein in connection with: (A) the deposit with
the Depositary of the Shares by Philips against the issuance
of ADRs evidencing ADSs or (B) the sale and delivery by
Philips of the ADSs to or for the respective accounts of the
Underwriters as contemplated in the Prospectus and pursuant to
the terms of this Agreement or (C) the sale and delivery by
the Underwriters of the ADSs to the initial purchasers thereof
pursuant to the terms of this Agreement, unless an Underwriter
(i) is resident or deemed to be resident in The Netherlands
for Netherlands tax purposes or (ii) has an enterprise or an
interest in an enterprise that is, in whole or in part,
carried on through a permanent establishment or a permanent
representative in The Netherlands to which enterprise or part
of enterprise, as the case may, its activities in connection
with this Agreement are attributable;
(ii) No stamp or other issuance or transfer taxes
(overdrachtsbelasting) or duties, or other similar taxes or
duties are payable by or on behalf of the Underwriters to The
Netherlands or any political subdivision or taxing authority
thereof or therein in connection with: (A) the deposit with
the Depositary of the Shares by Philips against the issuance
of ADRs evidencing ADSs or (B) the sale and delivery by
Philips of the ADSs to or for the respective accounts of the
Underwriters as contemplated in the Prospectus and pursuant to
the terms of this Agreement or (C) the sale and delivery by
the Underwriters of the ADSs to the initial purchasers thereof
pursuant to the terms of this Agreement; and
(iii) It is not necessary in order to enable any Underwriter to
exercise its rights under this Agreement in The Netherlands
that all or any of the Underwriters should be licensed,
qualified or entitled to do business in The Netherlands.
(l) On the date hereof, at 9:30 a.m. New York time, on the effective
date of any post-effective amendment to the Registration Statement filed
subsequent to the date of this Agreement and also at each Time of Delivery,
Deloitte & Touche shall have furnished to the Representatives a letter or
letters, dated the respective dates of delivery thereof, in form and substance
satisfactory to the Representatives, to the effect set forth in Annex I hereto;
(m) The Company shall not have sustained since the date of the latest
audited financial statements included in the Prospectus any loss or interference
with its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental action,
order or decree, other than as set forth or contemplated in the Prospectus that
would have or would reasonably be expected to have a Material Adverse Effect,
and since the respective dates as of which information is given in the
Prospectus there shall not have been any decrease in the capital stock or
increase in long-term debt or short-term debt of the Company or any change, or
any development involving a prospective change, in or affecting the general
affairs, management, financial position, shareholders' equity or results of
operations of the Company, other than as set forth or contemplated in the
Prospectus, the effect of which, in any such case is in the reasonable judgment
of the Representatives so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the
47
delivery of the ADSs being delivered at such Time of Delivery on the terms and
in the manner contemplated in the Prospectus;
(n) On or after the date hereof there shall not have occurred any of
the following: (i) a suspension or material limitation in trading in securities
generally on the Exchange or the TSE; (ii) a suspension or material limitation
in trading in the Company's securities or the ADSs on the Exchange or the TSE;
(iii) a general moratorium on commercial banking activities in New York, the ROC
or the United Kingdom, declared by the relevant authorities, or a material
disruption in commercial banking or securities settlement or clearance services
in the United States; (iv) a change or development involving a prospective
change (except as set forth in the Prospectus) in the ROC taxation materially
adversely affecting the Company, the ADSs or the transfer thereof or the
imposition of exchange controls by the United States or the ROC affecting the
Company or its shareholders; (v) the outbreak or escalation of hostilities
involving the United States or the ROC or the declaration by the United States
or the ROC of a national emergency or war, if the effect of any such event
specified in this clause (v), in the reasonable judgment of the Representatives,
makes it impracticable or inadvisable to proceed with the offering or the
delivery of the ADSs on the terms and in the manner contemplated in the
Prospectus or (vi) the occurrence of any material adverse change in the existing
financial, political or economic conditions in the United States or the ROC
which, in the reasonable judgment of the Representatives, would materially and
adversely affect the market for the ADSs;
(o) The ADSs to be sold by the Selling Shareholders at such Time of
Delivery shall have been duly listed, subject to official notice of issuance, on
the Exchange;
(p) The Depositary shall have furnished or caused to be furnished to
the Representatives at such Time of Delivery certificates satisfactory to the
Representatives evidencing the deposit with it of the Shares being so deposited
against issuance of ADRs evidencing the ADSs to be delivered by the Selling
Shareholders at such Time of Delivery, and the execution, countersignature (if
applicable), issuance and delivery of ADRs evidencing such ADSs pursuant to the
Deposit Agreement;
(q) The Company and the Selling Shareholders shall have furnished or
caused to be furnished to the Representatives at such Time of Delivery
certificates of officers of the Company and of the Selling Shareholders,
respectively, satisfactory to the Representatives as to the accuracy in all
material respects, of the representations and warranties of the Company and the
Selling Shareholders, respectively, herein at and as of such Time of Delivery,
as to the performance in all material respects, by the Company and the Selling
Shareholders of all of their respective obligations hereunder to be performed at
or prior to such Time of Delivery, and as to such other matters as the
Representatives may reasonably request, and the Company shall have furnished or
caused to be furnished certificates as to the matters set forth in subsections
(a) and (m) of this Section, and as to such other matters as the Representatives
may reasonably request;
(r) (i) The Philips Custody Agreement shall have been executed by
Philips and (ii) certificates in negotiable form representing all of the Shares
to be represented by ADSs to be sold at such Time of Delivery by Philips shall
have been placed in custody under the Philips
48
Custody Agreement, duly executed and delivered by Philips to the Custodian, at
or prior to the date at least one business day prior to such Time of Delivery;
(s) (i) The Management Custody Agreement shall have been executed by
each of the Management Selling Shareholders and (ii) certificates in negotiable
form representing all of the Shares to be represented by ADSs to be sold at such
Time of Delivery by each Management Selling Shareholder shall have been placed
in custody under the Management Custody Agreement, duly executed and delivered
by the appropriate Management Selling Shareholder to the Custodian, at or prior
to the date at least one business day prior to such Time of Delivery; and
(t) (i) The DF Custody Agreement shall have been executed by the
Development Fund and (ii) certificates in negotiable form representing all of
the Shares to be represented by ADSs to be sold at such Time of Delivery by the
Development Fund shall have been placed in custody under the DF Custody
Agreement, duly executed and delivered by the Development Fund to the Custodian,
at or prior to the date at least one business day prior to such Time of
Delivery.
8. (a) (i) The Company will indemnify and hold harmless each
Underwriter against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement, the ADR Registration Statement or the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse each Underwriter for any legal or other expenses reasonably incurred
by such Underwriter in connection with investigating or defending any such
action or claim as such expenses are incurred; provided, however, that the
Company shall not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in any Preliminary
Prospectus, the Registration Statement, the ADR Registration Statement or the
Prospectus or any such amendment or supplement in reliance upon and in
conformity with Shareholder Information or written information furnished to the
Company by any Underwriter through the Representatives or their agents expressly
for use therein and, provided, further, that the Company shall not be liable to
any Underwriter under the indemnity agreement in this subsection (a)(i) with
respect to any Preliminary Prospectus or to the extent that any such loss,
claim, damage or liability of such Underwriter results from the fact that such
Underwriter sold ADSs to a person as to whom it shall be established that there
was not sent or given, at or prior to the written confirmation of such sale, a
copy of the Prospectus or the Prospectus as then amended or supplemented in any
case where such delivery is required by the Act if the Company has previously
furnished copies thereof in sufficient quantity to such Underwriter and the
loss, claim, damage or liability of such Underwriter results from an untrue
statement or omission of a material fact contained in the Preliminary Prospectus
which was identified in writing at such time to such Underwriter and corrected
in the Prospectus or in the Prospectus as then amended or supplemented.
49
(ii) Each of the Selling Shareholders, severally and not jointly, will
indemnify and hold harmless the Underwriters against any losses, claims, damages
or liabilities to which each Underwriter may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement, the ADR Registration Statement or the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in any Preliminary
Prospectus, the Registration Statement, the ADR Registration Statement or the
Prospectus or any such amendment or supplement in reliance upon and in
conformity with any Shareholder Information provided by such Selling
Shareholder; provided, however, that the Selling Shareholders shall not be
liable to any Underwriter under the indemnity agreement in this subsection
(a)(ii) with respect to any Preliminary Prospectus or to the extent that any
such loss, claim, damage or liability of such Underwriter results from the fact
that such Underwriter sold ADSs to a person as to whom it shall be established
that there was not sent or given, at or prior to the written confirmation of
such sale, a copy of the Prospectus or the Prospectus as then amended or
supplemented in any case where such delivery is required by the Act if the
Company has previously furnished copies thereof in sufficient quantity to such
Underwriter and the loss, claim, damage or liability of such Underwriter results
from an untrue statement or omission of a material fact contained in the
Preliminary Prospectus which was identified in writing at such time to such
Underwriter and corrected in the Prospectus or in the Prospectus as then amended
or supplemented.
(b) Each Underwriter will indemnify and hold harmless the Company and
the Selling Shareholders against any losses, claims, damages or liabilities to
which the Company or the Selling Shareholders may become subject, under the Act
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement, the ADR Registration Statement or the
Prospectus, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in any
Preliminary Prospectus, the Registration Statement, the ADR Registration
Statement or the Prospectus or any such amendment or supplement in reliance upon
and in conformity with written information furnished to the Company by such
Underwriter through the Representatives or their agents expressly for use
therein; and will reimburse the Company and the Selling Shareholders for any
legal or other expenses reasonably incurred by the Company or the Selling
Shareholders in connection with investigating or defending any such action or
claim as such expenses are incurred.
(c) Each of Philips and the Development Fund, severally and not
jointly, will indemnify and hold harmless the Company against any losses,
claims, damages or liabilities to which the Company may become subject, under
the Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof)
50
arise out of or are based upon an untrue statement or alleged untrue statement
of a material fact contained in any Preliminary Prospectus, the Registration
Statement, the ADR Registration Statement or the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in any Preliminary
Prospectus, the Registration Statement, the ADR Registration Statement or the
Prospectus or any such amendment or supplement in reliance upon and in
conformity with Philips Shareholder Information or DF Shareholder Information,
as applicable.
(d) Promptly after receipt by an indemnified party under subsection
(a), (b) or (c) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against an
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission to so notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (which shall not,
except with the consent of the indemnified party, be counsel to the indemnifying
party), and, after notice from the indemnifying party to such indemnified party
of its election to so assume the defense thereof, the indemnifying party shall
not be liable to such indemnified party under such subsection for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation. No indemnifying party shall, without a
written consent of the indemnified party, effect the settlement or compromise
of, or consent to the entry of any judgment with respect to, any pending or
threatened action or claim in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified party is an actual or
potential party to such action or claim) unless such settlement, compromise or
judgment: (i) includes an unconditional release of the indemnified party from
all liability arising out of such action or claim and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act by or
on behalf of any indemnified party.
(e) If the indemnification provided for in this Section 8 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Selling Shareholders on the
one hand and the Underwriters on the other from the offering of the ADSs. If,
however, the allocation provided by the immediately preceding sentence is not
permitted by applicable law or if the indemnified party failed to give the
notice required under subsection (d) above, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such
51
relative benefits but also the relative fault of the Company and the Selling
Shareholders on the one hand and the Underwriters on the other in connection
with the statements or omissions which resulted in such losses, claims, damages
or liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Selling Shareholders on the one hand and the Underwriters on the other shall be
deemed to be in the same proportion as the total net proceeds from the offering
of the ADSs purchased under this Agreement (before deducting expenses) received
by the Selling Shareholders bear to the total underwriting discounts and
commissions received by the Underwriters with respect to the ADSs purchased
under this Agreement, in each case as set forth in the table on the cover page
of the Prospectus. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Selling Shareholders on the one hand
or the Underwriters on the other and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company, the Selling Shareholders and the Underwriters agree that
it would not be just and equitable if contributions pursuant to this subsection
(e) were determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to above in
this subsection (e). The amount paid or payable by an indemnified party as a
result of the losses, claims, damages or liabilities (or actions in respect
thereof) referred to above in this subsection (e) shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (e), (i) no Underwriter shall
be required to contribute any amount in excess of the amount by which the total
price at which the ADSs underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such Underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission and (ii) each Selling Shareholder
shall not be required to contribute any amount in respect of any losses, claims,
damages or liabilities (or actions in respect thereof) unless, and in such case
only to the extent that, such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of an untrue statement or alleged untrue statement
of material fact or omission or alleged omission to state a material fact
required to be stated or necessary to make the statements not misleading that
was made or omitted in reliance upon and in conformity with such Selling
Shareholder's Shareholder Information in any Preliminary Prospectus, the
Registration Statement, the ADR Registration Statement or the Prospectus or any
such amendment or supplement. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this subsection (e) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(f) (i) The obligations of the Company or the Selling Shareholders,
respectively, under this Section 8 shall be in addition to any liability which
the Company or the Selling Shareholders, respectively, may otherwise have and
shall extend, upon the same terms and conditions, to each person, if any, who
controls any Underwriter within the meaning of the Act;
52
(ii) The obligations of the Underwriters under this Section 8 shall be
in addition to any liability which the respective Underwriters may otherwise
have and shall extend, upon the same terms and conditions, to each officer and
director of the Company and of the Selling Shareholders (if applicable) and to
each person, if any, who controls the Company or the Selling Shareholders within
the meaning of the Act; and
(iii) The obligations of Philips and the Development Fund under this
Section 8 shall be in addition to which Philips may otherwise have and shall
extend, upon the same terms and conditions, to each officer and director of the
Company and to each person, if any, who controls the Company within the meaning
of the Act.
9. (a) If any Underwriter shall default in its obligation to purchase
ADSs which it has agreed to purchase hereunder at a Time of Delivery, the
Representatives may in their discretion arrange for either or both of the
Representatives or, subject to the approval of the Company in the case of any
party or parties other than the Underwriters (which approval shall not be
unreasonably delayed or withheld), another party or other parties to purchase
such ADSs on the terms contained herein. If within thirty-six hours after such
default by any Underwriter the Representatives do not arrange for the purchase
of such ADSs, then the Selling Shareholders shall be entitled to a further
period of thirty-six hours within which to procure another party or other
parties satisfactory to the Representatives to purchase such ADSs on such terms.
In the event that, within the respective prescribed periods, the Representatives
notify the Company and the Selling Shareholders that the Representatives have so
arranged for the purchase of such ADSs, or the Selling Shareholders notify the
Representatives that they have so arranged for the purchase of such ADSs, the
Representatives or the Selling Shareholders shall have the right to postpone
such Time of Delivery for a period of not more than seven days, in order to
effect whatever changes may thereby be made necessary in the Registration
Statement or the ADR Registration Statement, the Prospectus, or in any other
documents or arrangements, and the Company agrees to file promptly any
amendments to the Registration Statement, the ADR Registration Statement or the
Prospectus which in the Representatives' opinion or in the opinion of the
Selling Shareholders may thereby be made necessary. The term "Underwriter" as
used in this Agreement shall include any person substituted under this Section
9(a) with like effect as if such person had originally been a party to this
Agreement with respect to such ADSs.
(b) If, after giving effect to any arrangements for the purchase of the
ADSs of a defaulting Underwriter or Underwriters by the Representatives and the
Selling Shareholders as provided in subsection (a) above, the aggregate number
of such ADSs which remains unpurchased does not exceed one-eleventh of the
aggregate number of all of the ADSs to be purchased at such Time of Delivery,
then the Selling Shareholders shall have the right to require each
non-defaulting Underwriter to purchase the number of ADSs which such Underwriter
agreed to purchase hereunder at such Time of Delivery and, in addition, to
require each non-defaulting Underwriter to purchase its pro rata share (based on
the number of ADSs which such Underwriter agreed to purchase hereunder) of the
ADSs of such defaulting Underwriter or Underwriters for which such arrangements
have not been made; but nothing herein shall relieve a defaulting Underwriter
from liability for its default.
53
(c) If, after giving effect to any arrangements for the purchase of
ADSs of a defaulting Underwriter or Underwriters by the Representatives and the
Selling Shareholders as provided in subsection (a) above, the aggregate number
of such ADSs which remains unpurchased exceeds one-eleventh of the aggregate
number of all of the ADSs to be purchased at such Time of Delivery, or if the
Selling Shareholders shall not exercise the right described in subsection (b)
above to require non-defaulting Underwriters to purchase ADSs of a defaulting
Underwriter or Underwriters, then this Agreement (or, with respect to the Second
Time of Delivery, the obligations of the Underwriters to purchase and of the
Selling Shareholders to sell the Optional ADSs) shall thereupon terminate,
without liability on the part of any non-defaulting Underwriter, the Company or
the Selling Shareholders, except for the expenses to be borne by the Company,
the Selling Shareholders and the Underwriters as provided in Section 6 hereof
and the indemnity and contribution agreements in Section 8 hereof; but nothing
herein shall relieve a defaulting Underwriter from liability for its default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Company, the Selling Shareholders and the several
Underwriters, as set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall remain in full force and effect,
regardless of any investigation (or any statement as to the results thereof)
made by or on behalf of any Underwriter or any controlling person of any
Underwriter, or the Company, or the Selling Shareholders, or any officer or
director or controlling person of the Company or any Selling Shareholder (if
applicable), and shall survive delivery of and payment for the ADSs.
11. If this Agreement shall be terminated pursuant to Section 9 hereof,
neither the Company nor the Selling Shareholders shall then be under any
liability to any Underwriter except as provided in Sections 6 and 8 hereof; but
if for any other reason any ADSs are not delivered by or on behalf of the
Selling Shareholders as provided herein, the Selling Shareholders will reimburse
the Underwriters through the Representatives for all reasonable out-of-pocket
expenses approved in writing by the Representatives, including fees and
disbursements of counsel, incurred by the Underwriters in making preparations
for the purchase, sale and delivery of the ADSs not so delivered, but the
Company and the Selling Shareholders shall then be under no further liability to
any Underwriter in respect of the ADSs not so delivered except as provided in
Sections 6 and 8 hereof.
12. In all dealings hereunder, the Representatives shall act on behalf
of each of the Underwriters, and the parties hereto shall be entitled to act and
rely upon any statement, request, notice or agreement on behalf of any
Underwriter made or given by the Representatives; and in all dealings with the
Selling Shareholders hereunder, the Representatives and the Company shall be
entitled to act and rely upon any statement, request, notice or agreement on
behalf of the Selling Shareholders made or given the Selling Shareholders. All
statements, requests, notices and agreements hereunder shall be in writing, and
if to the Underwriters shall be delivered or sent by mail, telex or facsimile
transmission to the Representatives at c/o Goldman Xxxxx (Asia) L.L.C., 68th
Floor, Xxxxxx Kong Center, 0 Xxxxx'x Xxxx Xxxxxxx, Xxxx Xxxx, Xxxxxxxxx: Xxxx
Xxx, fax number: x000 0000 0000 and X.X. Xxxxxx Securities Ltd., 000 Xxxxxx
Xxxx, Xxxxxx XX0X 0XX, Xxxxxxx, Attention: Equity Syndicate Desk, fax number:
x00 000 000 0000; if to Philips shall be delivered or sent by mail, telex or
facsimile transmission to [Mr. A.
54
Westerlaken, General Secretary, Koninklijke Philips Electronics N.V., Xxxxxxxx
Center, Amestelplein 2, X.X. Xxx 00000, 0000 XX, Xxxxxxxxx, Xxx Xxxxxxxxxxx, fax
number: (00) 00 0000000]; if to the Development Fund shall be delivered or sent
by mail, telex or facsimile transmission to [the Development Fund, Attention:
Xx. Xxxxx Xxxx, fax number: (8862) 0000-0000]; and if to the Company or the
Management Selling Shareholders shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Company set forth in the
Registration Statement, Attention: Xxxx Xx; provided, however, that any notice
to an Underwriter pursuant to Section 8(d) hereof shall be delivered or sent by
mail, telex or facsimile transmission to such Underwriter at its address set
forth in its underwriters' questionnaire or telex constituting such
questionnaire, which address will be supplied to the Company or the Selling
Shareholders by the Representatives upon request. Any such statements, requests,
notices or agreements shall take effect upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriters, the Company and the Selling Shareholders and, to
the extent provided in Sections 8 and 10 hereof, the officers and directors of
the Company and each person who controls the Company, each of the Selling
Shareholders or any Underwriter, and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. No purchaser of any of the
ADSs from any Underwriter shall be deemed a successor or assign by reason merely
of such purchase.
14. Each of the parties hereto irrevocably (i) agrees that any legal
suit, action or proceeding against the Company or the Selling Shareholders
brought by any Underwriter or by any person who controls any Underwriter, or
against any Underwriter brought by the Selling Shareholders or the Company,
arising out of or based upon this Agreement or the transactions contemplated
hereby may be instituted in any New York Court, (ii) 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 proceeding and (iii) submits to the
non-exclusive personal jurisdiction of such courts in any such suit, action or
proceeding arising out of or based upon this Agreement or the transactions
contemplated hereby. The Company has appointed, for a duration of six years,
TSMC North America as its authorized agent, each of the Management Selling
Shareholders has appointed, for a duration of six years, CT Corporation System,
New York, New York, as its authorized agent, Philips has appointed Philips
Electronics North America Corporation as its authorized agent and the
Development Fund has appointed CT Corporation System, New York, New York, as its
authorized agent (each, an "Authorized Agent") upon whom process may be served
in any such action arising out of or based on this Agreement or the transactions
contemplated hereby which may be instituted in any New York Court by any
Underwriter or by any person who controls any Underwriter, expressly consents to
the jurisdiction of any such court in respect of any such action, and waives any
other requirements of or objections to personal jurisdiction with respect
thereto. Such appointment shall not be revoked without the prior written consent
of the Representatives. Each of the Company and the Selling Shareholders
represents and warrants that its respective Authorized Agent has agreed to act
as such agent for service of process and agrees to take any and all action,
including the filing of any and all documents and instruments, that may be
necessary to continue such appointment in full force and effect as aforesaid.
Service of process upon the Authorized Agent and written notice of such service
to the party that has appointed it shall be deemed, in every respect, effective
service of process upon such party, as the case may be.
55
15. Each reference in this Agreement to U.S. dollars (the "relevant
currency") is of the essence. To the fullest extent permitted by law, the
obligation of the Company and the Selling Shareholders in respect of any amount
due under this Agreement will, notwithstanding any payment in any other currency
(whether pursuant to a judgment or otherwise), be discharged only to the extent
of the amount in the relevant currency that the party entitled to receive such
payment may, in accordance with its normal procedures, purchase with the sum
paid in such other currency (after any premium and costs of exchange) on the
business day immediately following the day on which such party receives such
payment. If the amount in the relevant currency that may be so purchased for any
reason falls short of the amount originally due, the Company and the Selling
Shareholders, as the case may be, will pay such additional amounts, in the
relevant currency, as may be necessary to compensate for the shortfall. Any
obligation of the Company and the Selling Shareholders not discharged by such
payment will, to the fullest extent permitted by applicable law, be due as a
separate and independent obligation and, until discharged as provided herein,
will continue in full force and effect.
16. Each of the Company and the Selling Shareholders acknowledges and
agrees that (i) the purchase and sale of the Shares pursuant to this Agreement
is an arm's-length commercial transaction between the Company and the Selling
Shareholders, on the one hand, and the several Underwriters, on the other, (ii)
in connection therewith and with the process leading to such transaction each
Underwriter is acting solely as a principal and not the agent or fiduciary of
the Company or the Selling Shareholders, (iii) no Underwriter has assumed an
advisory or fiduciary responsibility in favor of the Company or the Selling
Shareholders with respect to the offering contemplated hereby or the process
leading thereto (irrespective of whether such Underwriter has advised or is
currently advising the Company or the Selling Shareholders on other matters) or
any other obligation to the Company or the Selling Shareholders except the
obligations expressly set forth in this Agreement and (iv) each of the Company
and the Selling Shareholders has consulted its own legal and financial advisors
to the extent it deemed appropriate. Each of the Company and the Selling
Shareholders agrees that it will not claim that the Underwriters, or any of
them, has rendered advisory services of any nature or respect, or owes a
fiduciary or similar duty to it, in connection with such transaction or the
process leading thereto.
17. This Agreement supersedes all prior agreements and understandings
(whether written or oral) between the Company and the Selling Shareholders, on
the one hand, and the Underwriters, or any of them, on the other, with respect
to the subject matter hereof; provided, however, that this Agreement does not
supersede or amend the standstill agreement dated the date hereof between the
Representatives and the Company.
18. Each of the Company, the Selling Shareholders and the Underwriters
hereby irrevocably waives, to the fullest extent permitted by applicable law,
any and all right to trial by jury in any legal proceeding arising out of or
relating to this Agreement or the transactions contemplated hereby.
19. Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
56
20. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
21. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
57
If the foregoing is in accordance with the Representatives'
understanding, please sign and return to us one original or counterpart hereof
for each of the Company, the Selling Shareholders and the representative of the
Underwriters plus one for each counsel and the Depositary, and upon the
acceptance hereof by the Representatives, on behalf of each of the Underwriters,
this letter and such acceptance hereof shall constitute a binding agreement
among each of the Underwriters, the Company and the Selling Shareholders. It is
understood that the Representatives' acceptance of this letter on behalf of each
of the Underwriters is pursuant to the authority set forth in a form of
Agreement among Underwriters, the form of which shall be submitted to the
Company and the Selling Shareholders for examination upon request, but without
warranty on the Representatives' part as to the authority of the signers
thereof.
Very truly yours,
Taiwan Semiconductor Manufacturing
Company Limited
By:
-------------------------------------
Name: Xxxx Xx
Title: Vice President and Chief
Financial Officer
The Development Fund of the Executive Yuan
By:
-------------------------------------
Name:
Title:
Koninklijke Philips Electronics N.V.
By:
-------------------------------------
Name:
Title:
58
Xxxxxx Xxxxx
X.X. Xxxxx
Xxxxxxx X. Xxx
X.X. Xxxx
X.X. Xxxxx
Xxxxxxx Xxxxxxxx
By:
-------------------------------------
Name: Xxxx Xx
Title: Attorney-in-Fact for each of
the above parties
Accepted as of the date hereof:
Xxxxxxx Xxxxx International
By:
--------------------------
Name:
Title:
X.X. Xxxxxx Securities Ltd.
By:
--------------------------
Name:
Title:
On behalf of each of the Underwriters
named in Schedule II hereto
59
SCHEDULE I
NUMBER OF
OPTIONAL ADSs
TOTAL NUMBER OF TO BE SOLD IF
FIRM ADSs MAXIMUM
SELLING SHAREHOLDERS(1) TO BE SOLD OPTION EXERCISED
----------------------- --------------- ----------------
Koninklijke Philips Electronics N.V 104,450,000 15,667,500
The Development Fund of the Executive Yuan 40,643,000 6,096,450
Xxxxxx Xxxxx 3,571,000 535,650
X.X. Xxxxx 857,000 128,550
Xxxxxxx X. Xxx 286,000 42,900
X.X. Xxxx 86,000 12,900
X.X. Xxxxx 86,000 12,900
Xxxxxxx Xxxxxxxx 21,000 3,150
Total: 150,000,000 22,500,000
=========== ==========
----------
(1) All of the Management Selling Shareholders have appointed Xxxx Xx as their
Attorney-in-Fact.
SCHEDULE II
NUMBER OF
OPTIONAL ADSs TO
TOTAL NUMBER BE PURCHASED IF
OF FIRM ADSs MAXIMUM
UNDERWRITER TO BE PURCHASED OPTION EXERCISED
----------- --------------- ----------------
Xxxxxxx Sachs International [o] [o]
X.X. Xxxxxx Securities Ltd. [o] [o]
Total 150,000,000 22,500,000
=========== ==========
ANNEX I
FORM OF COMFORT LETTER
