EXHIBIT 2.(c)
CONFORMED COPY
AU Optronics Corp.
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250,000,000 Common Shares (NT$10.00 par value)
Represented by 25,000,000 American Depositary Shares
(Plus an option to purchase from the Selling Shareholders up to
35,000,000 additional Common Shares, represented by
3,500,000 American Depositary Shares to cover over-allotments)
International Underwriting Agreement
New York, New York
May 23 , 2002
Salomon Smith Barney Inc.
UBS AG, acting through its business group UBS Warburg ING Bank N.V. CLSA
Limited Daiwa Securities SMBC Hong Kong Limited Lehman Brothers Inc.
As International Representatives of the several
International Underwriters,
c/o Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
Ladies and Gentlemen:
AU Optronics Corp. (the "Company"), a corporation organized under the
laws of the Republic of China (the "ROC"), proposes to sell to the several
International Underwriters, for whom the International Representatives are
acting as representatives, 250,000,000 common shares, NT$10.00 par value
("Common Shares") (said shares to be issued and sold by the Company being
hereinafter called the "International Underwritten Shares") in the form of
American depositary shares ("ADSs"). The Selling Shareholders propose to grant
to the International Underwriters an option to purchase up to 35,000,000
additional Common Shares in the form of ADSs to cover over-allotments (the
"International Option Shares" and together with the International Underwritten
Shares, the "International Shares").
It is understood that the Company and the Selling Shareholders are
concurrently entering into the U.S. Underwriting Agreement (together with this
International Underwriting Agreement, the "Underwriting Agreements") providing
for the sale by the Company of 250,000,000 Common Shares (said shares to be
sold by the Company pursuant to the U.S. Underwriting Agreement being
hereinafter called the "U.S. Underwritten Shares") in the form of ADSs and
providing for the grant to the U.S. Underwriters of an option to purchase from
the Selling Shareholders up to 35,000,000 additional Common Shares (the "U.S.
Option Shares" and together with the "U.S. Underwritten Shares", the "U.S.
Shares") in the form of ADSs.
You have also advised the Company that the Shares to be sold by the
Company and the Selling Shareholders to the Underwriters shall be deposited by
the Company and the Selling Shareholders pursuant to the Deposit Agreement, to
be dated as of May 29, 2002 (the "Deposit Agreement"), to be entered into among
the Company, Citibank, N.A., as depositary (the "Depositary") and all holders
and beneficial owners from time to time of the ADSs. Upon deposit of any Common
Shares, the Depositary will issue American depositary shares representing the
Shares so deposited. The ADSs will be evidenced by American depositary receipts
(the "ADRs"). Each ADS will represent ten (10) Common Shares and each ADR may
represent any number of ADSs. Unless the context otherwise requires, the terms
"Underwritten Securities," "U.S. Underwritten Securities," "Option Securities",
"U.S. Option Securities," "International Underwritten Securities,"
"International Option Securities," "International Securities" and "Securities"
shall be deemed to refer, respectively, to Underwritten Shares, U.S.
Underwritten Shares, Option Shares, U.S. Option Shares, International
Underwritten Shares, International Option Shares, International Shares and
Shares as well as, in each case, to any ADSs representing such securities and
the ADRs evidencing such ADSs, and, in the case of the "Underwritten
Securities," to any Certificates of Payment (as hereinafter defined).
It is further understood and agreed that the U.S. Underwriters and the
International Underwriters have entered into an Agreement Between U.S.
Underwriters and International Underwriters dated the date hereof (the
"Agreement Between U.S. Underwriters and International Underwriters"), pursuant
to which, among other things, the International Underwriters may purchase from
the U.S. Underwriters a portion of the U.S. Securities to be sold pursuant to
the U.S. Underwriting Agreement and the U.S. Underwriters may purchase from the
International Underwriters a portion of the International Securities to be sold
pursuant to this International Underwriting Agreement.
To the extent there are no additional International Underwriters
listed on Schedule I other than you, the term International Representatives as
used in this Agreement shall mean you, as International Underwriters, and the
terms International Representatives and International Underwriters shall mean
either the singular or plural as the context requires. In addition, to the
extent that there is not more than one Selling Shareholder named in Schedule
II, the term Selling Shareholders shall mean the singular. The use of the
neuter in this Agreement shall include the feminine and masculine wherever
appropriate. Certain terms used in this Agreement are defined in Section 20
hereof.
1. Representations and Warranties.
(i) The Company represents and warrants to, and agrees with, each
International Underwriter as set forth below in this Section 1.
(a) The Company has prepared and filed with the Commission a
Registration Statement (file number 333-87418) on Form F-1, including
related preliminary prospectuses, for registration under the Act of the
offering and sale of the
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Securities. The Company may have filed one or more amendments thereto,
including the related preliminary prospectuses, each of which has
previously been furnished to you. The Company will next file with the
Commission either (1) prior to the Effective Date of the Registration
Statement, a further amendment to such registration statement (including
the form of final prospectuses) or (2) after the Effective Date of the
Registration Statement, final prospectuses in accordance with Rules 430A
and 424(b). In the case of clause (2), the Company has included in the
Registration Statement, as amended at the Effective Date, all information
(other than Rule 430A Information) required by the Act and the rules
thereunder to be included in the Registration Statement and the
Prospectuses with respect to the Securities and the offering thereof in
the form of ADSs. As filed, such amendment and form of final prospectuses,
as the case may be, or such final prospectuses, shall contain all Rule
430A Information, together with all other such required information with
respect to the Securities and the offering thereof in the form of ADSs,
and, except to the extent the International Representatives shall agree in
writing to a modification, shall be in all substantive respects in the
form furnished to you prior to the Execution Time or, to the extent not
completed at the Execution Time, shall contain only such specific
additional information and other changes (beyond that contained in the
latest Preliminary Prospectuses) as the Company has advised you, prior to
the Execution Time, will be included or made therein.
It is understood that two forms of prospectuses are to be used in
connection with the offering and sale of the Securities: one form of prospectus
relating to the U.S. Securities, which are to be offered and sold to United
States and Canadian Persons, and one form of prospectus relating to the
International Securities, which are to be offered and sold to persons other
than United States and Canadian Persons. The U.S. Prospectus and the
International Prospectus are identical except for the outside front cover page
and the outside back cover page.
(b) On the Effective Date, the Registration Statement did or will,
and when the Prospectuses are first filed (if required) in accordance with
Rule 424(b) and on the Closing Date (as defined in this Agreement ) and on
any date on which Option Securities are purchased, if such date is not the
Closing Date (a "settlement date"), each Prospectus (and any supplements
thereto) will comply in all material respects with the applicable
requirements of the Act and the rules thereunder; on the Effective Date
and at the Execution Time, the Registration Statement did not or will not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein not misleading; and, on the Effective Date, each
Prospectus, if not filed pursuant to Rule 424(b), will not, and on the
date of any filing pursuant to Rule 424(b) and on the Closing Date and any
settlement date, each Prospectus (together with any supplement thereto)
will not, include any untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided, however, that the Company makes no representations or warranties
as to the information contained in or omitted from the Registration
Statement, or the Prospectuses (or any supplement thereto) in reliance
upon and in conformity with information furnished in writing to the
Company by or on behalf of any Underwriter through the Representatives
specifically for
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inclusion in the Registration Statement or the Prospectuses (or any
supplement thereto).
(c) The Company has filed with the Commission a registration
statement (file number 333-88080) on Form F-6 for the registration under
the Act of the offering and sale of the ADSs. The Company may have filed
one or more amendments thereto, each of which has previously been
furnished to you. Such ADR Registration Statement at the time of its
effectiveness did or will comply, and on the Closing Date will comply, in
all material respects, with the applicable requirements of the Act and the
rules thereunder and at the time of its Effective Date and at the
Execution Time, did not and will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading.
(d) Upon issuance by the Depositary of ADSs evidenced by ADRs
against deposit of Underwritten Shares (initially in the form of
certificates of payment that represent the irrevocable right to receive
such Shares (the "Certificates of Payment")) in accordance with the
provisions of the Deposit Agreement, such ADRs will be duly and validly
issued and persons in whose names the ADRs are duly registered with the
Depositary will be entitled to the rights specified in the ADRs and in the
Deposit Agreement; the Deposit Agreement and the ADRs conform in all
material respects to the descriptions thereof contained in the
Prospectuses; and upon the sale and delivery to the International
Underwriters of the International Underwritten Securities, and payment
therefor pursuant to this Agreement, the International Underwriters will
acquire good, marketable and valid title to such International
Underwritten Securities, subject to the terms of the Deposit Agreement,
free and clear of all pledges, liens, security interests, charges, claims
or encumbrances of any kind.
(e) Other than as set forth in the Prospectuses and so long as this
Agreement, the Certificates of Payment, the cross receipt and any other
documents which are deemed "receipts" under the ROC Stamp Duty Law are
executed outside of the ROC, no stamp or other issuance or transfer taxes
or duties and no capital gains, income, withholding or other taxes (except
such income taxes as may be imposed by the ROC government or any political
subdivision or taxing authority thereof or therein on payments thereunder
to any Underwriter, or on payments under the Deposit Agreement to the
Depositary, where the net income of such Underwriter or of the Depositary
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 or to any political subdivision or taxing authority thereof or therein
in connection with (i) the issuance and delivery of the Certificates of
Payment or the sale and delivery of the Underwritten Shares in the manner
contemplated in the Prospectuses and pursuant to the terms of this
Agreement, (ii) the deposit with the Depositary or its custodian of the
Certificates of Payment or the Underwritten Shares against the issuance of
the ADRs evidencing the ADSs, (iii) the sale and delivery outside the ROC
by the Underwriters of the ADSs, as contemplated herein or (iv) the
execution and delivery of, or performance by any party of its obligations
under, this Agreement and the Deposit Agreement.
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(f) Except as described in the Prospectuses, all cash dividends and
other distributions declared and payable on the Common Shares may under
current ROC law and regulations be paid to the Depositary and to the
holders of Securities, as the case may be, in the ROC in New Taiwan
dollars ("NT dollars") without obtaining any government approvals and may
be converted into foreign currency that may be transferred out of the ROC
in accordance with the Deposit Agreement, and no other withholding or
other taxes under the laws and regulations of the ROC are currently
required to be imposed in connection with the declaration and payment by
the Company of dividends and other distributions in respect of its capital
stock.
(g) The Company believes that it 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 does not
expect to become a PFIC in the future.
(h) Each of the Company and the Subsidiaries has been duly
incorporated and is validly existing as a corporation, and where
applicable, in good standing under the laws of the jurisdiction in which
it is chartered or organized with full corporate power and authority to
own or lease, as the case may be, and to operate its properties and
conduct its business as described in the Prospectuses and is duly
qualified to do business as a foreign corporation and, where applicable,
is in good standing under the laws of each jurisdiction which requires
such qualification, except where the failure to be so qualified or be in
good standing would not, individually or in the aggregate, have a material
adverse effect on the condition (financial or otherwise), earnings,
business or properties of the Company and the Subsidiaries, taken as a
whole.
(i) All the outstanding shares of capital stock of each Subsidiary
have been duly and validly authorized and issued and are fully paid and
nonassessable, and, except as otherwise set forth in the Prospectuses, all
outstanding shares of capital stock of the Subsidiaries are owned by the
Company either directly or through wholly-owned subsidiaries free and
clear of any perfected security interest or any other security interests,
claims, liens or encumbrances.
(j) The Company's authorized equity capitalization is as set forth
in the Prospectuses; the capital stock of the Company conforms in all
material respects to the description thereof contained in the
Prospectuses; the outstanding Common Shares (including the Option Shares
being sold pursuant to the Underwriting Agreements by the Selling
Shareholders), have been duly and validly authorized and issued and are
fully paid and nonassessable; the Underwritten Shares being sold under the
Underwriting Agreements (including those represented by Certificates of
Payment) by the Company have been duly and validly authorized, and, when
issued and delivered against payment of the purchase price for the
Underwritten Securities by the International Underwriters pursuant to this
Agreement and by the U.S. Underwriters pursuant to the U.S. Underwriting
Agreement, will be fully paid and nonassessable; all of the issued and
outstanding Common Shares of the Company have been duly listed, and
admitted and authorized for trading, on the Taiwan Stock Exchange; the
Underwritten Shares will be duly listed and admitted for trading on the
Taiwan Stock Exchange upon the exchange of the Certificates of Payment;
the Securities being sold
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under the Underwriting Agreements by the Company are duly listed, and
admitted and authorized for trading, subject to official notice of
issuance, on the New York Stock Exchange; the certificates for the
Underwritten Securities are in valid and sufficient form; the holders of
outstanding shares of capital stock of the Company are not entitled to
preemptive or other rights to subscribe for the Securities, except for
such rights that have been effectively waived; and, except as set forth in
the Prospectuses, no options, warrants or other rights to purchase,
agreements or other obligations to issue, or rights to convert any
obligations into or exchange any securities for, shares of capital stock
of or ownership interests in the Company are outstanding.
(k) There is no franchise, contract or other document of a
character required to be described in the Registration Statement, ADR
Registration Statement or Prospectuses, or to be filed as an exhibit
thereto, which is not described or filed as required.
(l) Each of this Agreement and the Deposit Agreement has been duly
authorized, executed and delivered by the Company; and the Deposit
Agreement constitutes a valid and binding obligation of the Company
enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors' rights generally.
(m) The Company is not and, after giving effect to the offering and
sale of the Securities and the application of the proceeds thereof as
described in the Prospectuses, will not be, an "investment company" within
the meaning of and subject to regulation under the Investment Company Act
of 1940, as amended.
(n) No consent, approval, authorization, filing with, or order of,
any court or governmental agency or body is required in connection with
the transactions contemplated in this Agreement or in the Deposit
Agreement, except for (i) registration of the Securities under the Act and
any filings required under Rule 424 of the Act; (ii) registration of the
Securities under the Exchange Act; (iii) the approval of the Central Bank
of China in the ROC (the "CBC") of foreign exchange settlements and
payments contemplated by the Deposit Agreement; (iv) the filings and
approvals, if any, required under (A) the "Guidelines for Handling
Issuance and Offer of Overseas Securities by Issuers of the ROC (the
"Overseas Offering Rules"), and (B) the rules and regulations of the
Taiwan Stock Exchange, the Securities and Futures Commission of the ROC
(the "SFC") and the CBC; (v) the registration of the Underwritten Shares
with the Science-Based Industrial Park Administration of the ROC ("SIPA"),
which shall be filed by the Company within 15 days of the Closing Date;
(vi) any government authorizations as may be required under state
securities, or "blue sky" laws, of the U.S. or the laws of other
jurisdictions outside the ROC and the U.S. in connection with the purchase
and distribution of the Securities by the Underwriters in the manner
contemplated herein and in the Prospectuses; and (vii) 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 SIPA, the
approval of the CBC and the approvals of the SFC.
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(o) Neither the sale of the Underwritten Securities by the Company,
nor the execution and delivery of this Agreement or the Deposit Agreement,
nor the consummation of any other of the transactions contemplated herein
or in the Deposit Agreement, nor the fulfillment of the terms hereof or of
the Deposit Agreement, will conflict with, result in a breach or violation
of, or imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any of the Subsidiaries pursuant to, (i) the
articles of incorporation of the Company or the constituent documents of
any of the Subsidiaries, (ii) the terms of any indenture, contract, lease,
mortgage, deed of trust, note agreement, loan agreement or other
agreement, obligation, condition, covenant or instrument to which the
Company or any of the Subsidiaries is a party or bound or to which its or
their property is subject, or (iii) any statute, law, rule, regulation,
judgment, order or decree applicable to the Company or any of the
Subsidiaries of any court, regulatory body, administrative agency,
governmental body, arbitrator or other authority having jurisdiction over
the Company or any of the Subsidiaries or any of its or their properties,
except, with regard to clause (ii) or (iii) above, such as would not
individually or in the aggregate, have a material adverse effect on (A)
the performance by the Company of its obligations under this Agreement or
the Deposit Agreement or the consummation of any of the transactions
contemplated herein or therein or (B) the condition (financial or
otherwise), earnings, business or properties of the Company and the
Subsidiaries, taken as a whole.
(p) There are no contracts, agreements or understandings between
the Company and any person granting to such person the right to require
the Company to file a registration statement under the Act with respect to
any securities of the Company or to require the Company to include such
securities with the ADSs registered pursuant to the Registration
Statement.
(q) The consolidated historical financial statements and schedules
of the Company and its consolidated subsidiaries included in the
Prospectuses and the Registration Statement present fairly in all material
respects the financial condition, results of operations and cash flows of
the Company as of the dates and for the periods indicated, comply as to
form, in all material respects, with the applicable accounting
requirements of the Act and have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as otherwise noted therein). The
summary and selected financial data included in the Prospectuses and
Registration Statement fairly present, in all material respects, on the
basis stated in the Prospectuses and the Registration Statement, the
information included therein. The pro forma financial statements included
in the Prospectuses and the Registration Statement include assumptions
that provide a reasonable basis for presenting the significant effects
directly attributable to the transactions and events described therein,
the related pro forma adjustments give appropriate effect to those
assumptions, and the pro forma adjustments reflect the proper application
of those adjustments to the historical financial statement amounts in the
pro forma financial statements included in the Prospectuses and the
Registration Statement. The pro forma financial statements included in the
Prospectuses and the Registration Statement comply as to form in all
material respects with the applicable accounting requirements of
Regulation S-X under the Act and the pro forma
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adjustments have been properly applied to the historical amounts in the
compilation of those statements.
(r) Neither the Company nor any of the Subsidiaries has sustained
since the date of the latest audited financial statements included in the
Prospectuses 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, other than as set forth or contemplated in the
Prospectuses, and, since the respective dates as of which information is
given in the Registration Statement and the Prospectuses, there has not
been any material change in the capital stock or long-term debt of the
Company or the Subsidiaries or any change, or any development involving a
prospective change, that would have a material adverse effect on the
condition (financial or otherwise), earnings, business or properties of
the Company and the Subsidiaries taken as a whole, whether or not arising
from transactions in the ordinary course of business, except as set forth
or contemplated in the Prospectuses (exclusive of any supplement thereto).
(s) Except as set forth in or contemplated in the Prospectuses
(exclusive of any supplement thereto), there are no legal or governmental
proceedings pending or, to the knowledge of the Company after due inquiry,
threatened that (i) could reasonably be expected to have a material
adverse effect on the performance of this Agreement or the consummation of
any of the transactions contemplated hereby or (ii) could reasonably be
expected to have a material adverse effect on the condition (financial or
otherwise), earnings, business or properties of the Company and the
Subsidiaries, taken as a whole, whether or not arising from transactions
in the ordinary course of business.
(t) Each of the Company and each of the Subsidiaries owns or
leases all such properties as are necessary to the conduct of its
operations as presently conducted.
(u) The Company and the Subsidiaries have good and marketable
title to all real property and good and marketable title to all personal
property owned by them which is material to the business of the Company
and the Subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as are described in the Prospectuses
or such as do not materially affect the value of such property and do not
materially interfere with the use made and proposed to be made of such
property by the Company or the Subsidiaries; and any real property and
buildings held under lease by the Company or any of the Subsidiaries are
held under valid, subsisting and enforceable leases with such exceptions
as are not material and do not materially interfere with the use made and
proposed to be made of such property and buildings by the Company or such
Subsidiary, except as described in the Prospectuses.
(v) Neither the Company nor any of the Subsidiaries is in
violation or default of (i) any provision of its articles of incorporation
or bylaws, (ii) the terms of any indenture, contract, lease, mortgage,
deed of trust, note agreement, loan agreement or other agreement,
obligation, condition, covenant or instrument to which it is a party or
bound or to which its property is subject, or (iii) any statute, law,
rule,
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regulation, judgment, order or decree of any court, regulatory body,
administrative agency, governmental body, arbitrator or other authority
having jurisdiction over the Company or such Subsidiary or any of its
properties, as applicable, except such violations or defaults which,
individually or in the aggregate, would not have a material adverse effect
on the condition (financial or otherwise), earnings, business or
properties of the Company and the Subsidiaries, taken as a whole, whether
or not arising from transactions in the ordinary course business.
(w) Each of KPMG, who has certified certain financial statements
of the Company and its consolidated subsidiaries and delivered a report
with respect to the audited consolidated financial statements and
schedules included in the Prospectuses, and Diwan, Ernst and Young, who
has certified certain financial statements of Unipac Optoelectronics
Corporation and delivered reports with respect to the audited consolidated
financial statements and schedules included in the Prospectuses, are
independent public accountants with respect to the Company and Unipac
Optoelectronics Corporation, respectively, within the meaning of the Act
and the applicable published rules and regulations thereunder.
(x) No material labor dispute with the employees of the Company or
any of the Subsidiaries exists, or, to the knowledge of the Company, is
imminent, except as set forth in or contemplated in the Prospectuses.
(y) The Company and the Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in
such amounts as are prudent and customary in the businesses in which they
are engaged; neither the Company nor any Subsidiary has been refused any
insurance coverage sought or applied for; and the Company has no reason to
believe that either the Company or any of the Subsidiaries will be unable
to renew its existing insurance coverage as and when such coverage expires
or to obtain similar coverage from similar insurers as may be necessary to
continue their respective businesses at a cost that would not have a
material adverse effect on the condition (financial or otherwise),
earnings, business or properties of the Company and the Subsidiaries,
taken as a whole, whether or not arising from transactions in the ordinary
course of business, except as set forth in or contemplated in the
Prospectuses.
(z) Each of the Company and the Subsidiaries possesses all
licenses, certificates, permits and other authorizations issued by the
appropriate regulatory authorities necessary to own or lease their
respective properties and conduct their respective businesses, and neither
the Company nor any Subsidiary has received any notice of proceedings
relating to the revocation or modification of any such certificate,
authorization or permit which, singly or in the aggregate, if the subject
of an unfavorable decision, ruling or finding, would have a material
adverse effect on the condition (financial or otherwise), earnings,
business or properties of the Company and the Subsidiaries, taken as a
whole, whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Prospectuses
(exclusive of any supplement thereto).
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(aa) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions
are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access
to assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
(bb) Neither the Company nor any of the Subsidiaries has taken,
directly or indirectly, any action that has constituted or that was
designed to or might reasonably be expected to cause or result in, under
the Exchange Act or otherwise, the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of
the Securities.
(cc) Except as set forth or contemplated in the Prospectuses, the
Company and the Subsidiaries are (i) in compliance with any and all
applicable foreign, federal, state and local laws and regulations relating
to the environment or use, disposal or release or protection of human
exposure to hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws") (ii) have received and are in
compliance with all permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct their respective businesses
and (iii) have not received notice of any actual or potential liability
for the investigation or remediation of any disposal or release of
hazardous or toxic substances or wastes, pollutants or contaminants,
except where such non-compliance with Environmental Laws, failure to
receive required permits, licenses or other approvals, or liability would
not, individually or in the aggregate, have a material adverse effect on
the condition (financial or otherwise), earnings, business or properties
of the Company and the Subsidiaries, taken as a whole, whether or not
arising from transactions in the ordinary course of business.
(dd) The subsidiaries listed on Annex A attached hereto are the
only subsidiaries of the Company.
(ee) The Company and the Subsidiaries own, possess or are
licensed under, or can acquire on reasonable terms, all material patents,
patent rights, licenses, inventions, copyrights, know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service
marks and trade names ("Intellectual Property") currently employed by them
and reasonably necessary to conduct the business now operated by them and
as proposed in the Prospectuses to be conducted, and except as set forth
in the Prospectuses, none of the Company or the Subsidiaries has received
any notice of infringement of the foregoing Intellectual Property rights
or that the Company or the Subsidiaries is in conflict with asserted
rights of others, that if determined adversely to the Company would singly
or in the aggregate have a material adverse effect on the condition
(financial or otherwise), earnings, business or properties of the Company
and the Subsidiaries, taken as a whole.
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(ff) Except as disclosed in the Prospectuses and to the Company's
knowledge after due inquiry, no relationship, direct or indirect, exists
between or among any of the Company or the Subsidiaries on the one hand,
and the directors, officers, supervisors, shareholders, customers or
suppliers of any of the Company or the Subsidiaries on the other hand,
that is required by the Act to be described in the Prospectuses.
(gg) This Agreement, the Deposit Agreement, the Certificates of
Payment, the certificates evidencing the Underwritten Shares, and any
other documents to be furnished hereunder are in proper form under the
laws of the ROC for the enforcement thereof against the Company under the
laws of ROC; to ensure the legality, validity, enforceability and
admissibility into evidence in the ROC of each such agreement or document,
it is not necessary that any such agreement or document be filed or
recorded with any court or other authority in the ROC, other than the
filing of the Deposit Agreement as required under the Overseas Offering
Rules as set forth in Section 1 (i)(n) hereof, or that any stamp or
similar tax be paid in the ROC or in respect of any such agreement or
document, it being understood that in court proceedings in the ROC a
translation into the Chinese language may be required.
(hh) 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 the Depositary's nominee registered as representative of the
holders and beneficial owners of the ADRs in a direct suit, action or
proceeding against the Company.
(ii) The Company has complied with all provisions of Section
517.075, Florida Statutes relating to doing business with the Government
of Cuba or with any person or affiliate located in Cuba.
Any certificate signed by any officer of the Company, in his or her
capacity as an officer of the Company, and delivered to the Representatives or
counsel for the Underwriters in connection with the offering of the Securities
shall be deemed a representation and warranty by the Company, as to matters
covered thereby, to each International Underwriter.
(ii) Each Selling Shareholder represents and warrants to, and agrees
with, each International Underwriter that:
(a) Such Selling Shareholder has been duly incorporated and is
validly existing with limited liability under the laws of the jurisdiction
in which it is chartered or organized, and this Agreement and the Power of
Attorney appointing certain individuals as such Selling Shareholder's
attorneys-in-fact to the extent set forth therein, relating to the
transactions contemplated hereby and by the Registration Statement (the
"Power of Attorney") have been duly authorized, executed and delivered by
such Selling Shareholder and such Power of Attorney constitutes a valid
and binding obligation of such Selling Shareholder enforceable in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights
generally.
11
(b) The International Option Shares being sold under this
Agreement by such Selling Shareholder have been duly and validly
authorized and are fully paid and nonassessable; upon issuance by the
Depositary of ADSs evidenced by ADRs against deposit in accordance with
the provisions of the Deposit Agreement of the International Option Shares
to be sold by such Selling Shareholder to the International Underwriters,
such ADRs will be duly and validly issued, and persons in whose names such
ADRs are duly registered with the Depositary will be entitled to the
rights specified in the ADRs and in the Deposit Agreement; upon the sale
and delivery to the International Underwriters of the International
Securities to be purchased from such Selling Shareholder, and payment
therefor pursuant to this Agreement, the International Underwriters will
acquire good, marketable and valid title to such International Securities
subject to the terms of the Deposit Agreement, free and clear of all
pledges, liens, security interests, charges, claims or encumbrances of any
kind; assuming the Deposit Agreement has been duly authorized and
delivered by the parties thereto, the International Option Shares to be
deposited by the Selling Shareholders may be freely deposited with the
Depositary against issuance of ADRs evidencing ADSs and the ADSs delivered
at the settlement date will be freely transferable by such Selling
Shareholder to or for the account of the several International
Underwriters and (to the extent described in the Prospectuses) the initial
purchasers thereof; and there are no restrictions on subsequent transfers
of the International Option Securities under the laws of the ROC and of
the United States except as described in the Prospectuses under the
captions "Description of Our Share Capital," "Description of American
Depositary Shares" or "Foreign Investment and Exchange Controls in
Taiwan."
(c) Such Selling Shareholder is the beneficial owner of the
International Option Shares to be deposited with the Depositary against
issuance of the ADRs evidencing the ADSs to be sold by such Selling
Shareholder hereunder, and has, and immediately prior to any settlement
date will have, good and valid title to such International Option Shares,
in each case free and clear of all liens, encumbrances, equities and
claims.
(d) No consent, approval, authorization or order of any court or
governmental agency or body having jurisdiction over such Selling
Shareholder is required for the deposit of Shares by such Selling
Shareholder in accordance with the terms of the Deposit Agreement with the
Depositary against issuance of the ADRs evidencing the ADSs to be
delivered at the settlement date for the sale and delivery of the ADSs to
be sold by such Selling Shareholder hereunder, and for the execution,
delivery and performance by such Selling Shareholder of this Agreement,
except (i) such as may have been obtained under the Act, (ii) such as may
be required under the "blue sky" laws of any state, (iii) such as may be
required under the securities laws of any jurisdiction outside the United
States or the ROC in connection with the purchase and distribution of the
Securities by the Underwriters, (iv) the filings, if any, required under
(A) the "Guidelines for Handling Issuance and Offer of Overseas Securities
by Issuers of the ROC (the "Overseas Offering Rules"), and (B) the rules
and regulations of the Taiwan Stock Exchange, the Securities and Futures
Commission of the ROC (the "SFC") and the CBC; and (v) such other
approvals as have been obtained and are in full force and effect.
12
(e) None of the execution and delivery of this Agreement or the
Power of Attorney of such Selling Shareholder, the deposit of the
International Option Shares to be sold by such Selling Shareholder with
the Depositary in accordance with the terms of the Deposit Agreement, the
sale of the ADSs to be sold by the Selling Shareholder, or the
consummation of any other of the transactions contemplated in this
Agreement by such Selling Shareholder or the fulfillment of the terms
hereof by such Selling Shareholder, will conflict with, result in a breach
or violation of, or constitute a default under any law or articles of
incorporation or other constitutive documents of such Selling Shareholder
or the terms of any indenture or other agreement or instrument to which
such Selling Shareholder is a party or bound, or any judgment, order or
decree applicable to such Selling Shareholder or any of its subsidiaries
of any court, regulatory body, administrative agency, governmental body or
arbitrator having jurisdiction over such Selling Shareholder, other than
any such conflict, breach or violation that would not have a material
adverse effect on the ability of such Selling Shareholder to perform its
obligations under this Agreement.
(f) Other than the securities transfer tax required to be paid by
the Selling Shareholders under ROC laws and so long as this Agreement, the
Certificates of Payment, the cross-receipt and any other documents which
are deemed "receipts" under ROC Stamp Duty 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 such income taxes as may
be imposed by the ROC government or any political subdivision or taxing
authority thereof or therein on payments thereunder to any Underwriter, or
on payments under the Deposit Agreement to the Depositary, where the net
income of such Underwriter or of the Depositary 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 or to any political
subdivision of taxing authority thereof or therein, in connection with (i)
the delivery of the Option Shares to be sold by the Selling Shareholder in
the manner contemplated by this Agreement, (ii) the deposit with the
Depositary or its custodian of the Option Shares against issuance of the
ADRs evidencing the ADSs, (iii) the sale and delivery outside the ROC by
the Underwriters of the ADSs, as contemplated herein or (iv) the execution
and delivery of, or the performance by any party of its obligations under
this Agreement and the Deposit Agreement.
(g) This Agreement is in proper legal form under the laws of the
jurisdiction of the organization of the Selling Shareholder for the
enforcement thereof against such Selling Shareholder; and to ensure the
legality, validity, enforceability and admissibility into evidence in such
jurisdiction, it is not necessary that this Agreement be filed or recorded
with any court or other authority therein or that any stamp or similar tax
be paid therein or in respect of this Agreement.
(h) Such Selling Shareholder has not taken, directly or
indirectly, any action that has constituted or that was designed to or
might reasonably be expected to cause or result in, under the Exchange Act
or otherwise, the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Option
Securities; it being understood that neither the sale during April 2002 by
United Microelectronics Corporation of 80,000,000 Common Shares on April
23,
13
2002 in a public offering in the Republic of China nor the issuance by it
on May 10, 2002 of bonds that will be exchangeable, at the option of the
holders thereof, into Common Shares which are held by United
Microelectronics Corporation shall constitute actions that are the subject
of this paragraph (h).
Any certificate signed by any officer of any Selling Shareholder, in
his or her capacity as an officer of such Selling Shareholder, and delivered to
the Representatives or counsel for the Underwriters in connection with the
offering of the Securities shall be deemed a representation and warranty by
such Selling Shareholder, as to matters covered thereby, to each International
Underwriter.
2. Purchase and Sale.
(a) Subject to the terms and conditions and in reliance upon the
representations and warranties set forth in this Agreement, the Company
agrees to sell to each International Underwriter, and each International
Underwriter agrees, severally and not jointly, to purchase from the
Company, at a purchase price of US$11.2055 per ADS, the amount of the
International Underwritten Securities set forth opposite such
International Underwriter's name in Schedule I to this Agreement.
(b) Subject to the terms and conditions and in reliance upon the
representations and warranties set forth in this Agreement, the Selling
Shareholders hereby grant an option to the several International
Underwriters to purchase, severally and not jointly, up to 35,000,000
additional Common Shares represented by ADSs, in the aggregate, at the
same purchase price per ADS as the International Underwriters shall pay
for the International Underwritten Securities. Said option may be
exercised only to cover over-allotments in the sale of the International
Underwritten Securities by the International Underwriters. Said option may
be exercised in whole or in part at any time (but not more than once) on
or before the 30th day after the date of the International Prospectus upon
written or telegraphic notice by the International Representatives to the
Company and such Selling Shareholders setting forth the number of shares
of the International Option Securities as to which the several
International Underwriters are exercising the option and the settlement
date. In the event that the International Underwriters exercise less than
their full over-allotment option, the number of International Option
Securities to be sold by each Selling Shareholder shall be, as nearly as
practicable, in the same proportion to each other as are the number of
International Option Securities listed opposite their names on Schedule
II. The number of International Option Securities to be purchased by each
International Underwriter shall be the same percentage of the total number
of International Option Securities to be purchased by the several
International Underwriters as such International Underwriter is purchasing
of the International Underwritten Securities, subject to such adjustments
as you in your absolute discretion shall make to eliminate any fractional
shares.
3. Delivery and Payment. Delivery of and payment for the International
Underwritten Securities and the International Option Securities (if the option
provided for in Section 2(b) hereof shall have been exercised on or before the
third Business Day prior to the Closing Date) shall be made at 10:00 AM, New
York City time, on May 29, 2002, or at such
14
time on such later date not more than three Business Days after the foregoing
date as the U.S. Representatives and the International Representatives shall
designate, which date and time may be postponed by agreement among the
International Representatives, the U.S. Representatives and the Company or as
provided in Section 9 hereof (such date and time of delivery and payment for
the International Securities being called in this Agreement the "Closing
Date"). Delivery of the International Securities shall be made to the
International Representatives for the respective accounts of the several
International Underwriters against payment by the several International
Underwriters through the International Representatives of the respective
aggregate purchase prices of the International Securities being sold by the
Company and each of the Selling Shareholders to or upon the order of the
Company and the Selling Shareholders by wire transfer payable in same-day funds
to the accounts specified by the Company and the Selling Shareholders. Delivery
of the International Underwritten Securities and the International Option
Securities shall be made through the facilities of The Depository Trust Company
unless the International Representatives shall otherwise instruct.
If the option provided for in Section 2(b) hereof is exercised after
the third Business Day prior to the Closing Date, the Selling Shareholders will
deliver (at the expense of the Selling Shareholders) to the International
Representatives, c/o Salomon Smith Barney at 388 Greenwich Street, New York,
New York, on the date specified by the International Representatives (which
shall be within three Business Days after the exercise of said option), ADR
certificates representing the International Option Securities in such names and
denominations as the International Representatives shall have requested for the
respective accounts of the several International Underwriters, against payment
by the several International Underwriters through the International
Representatives of the purchase price thereof to or upon the order of the
Selling Shareholders by wire transfer payable in same-day funds to the accounts
specified by the Selling Shareholders. If settlement for the International
Option Securities occurs after the Closing Date, such Selling Shareholders will
deliver to the International Representatives on the settlement date for the
International Option Securities, and the obligation of the International
Underwriters to purchase the International Option Securities shall be
conditioned upon receipt of, supplemental opinions, certificates and letters
confirming as of such date the opinions, certificates and letters delivered on
the Closing Date pursuant to Section 6 hereof.
The ADR certificates evidencing the International Underwritten
Securities and International Option Securities shall be registered in such
names and in such denominations as the International Representatives may
request not less than two full Business Days prior to the applicable Closing
Date and any settlement date.
It is understood and agreed that the Closing Date shall occur
simultaneously with the "Closing Date" under the U.S. Underwriting Agreement,
and that the settlement date for any International Option Securities occurring
after the Closing Date shall occur simultaneously with the "settlement date"
under the U.S. Underwriting Agreement for any U.S. Option Securities occurring
after the Closing Date.
4. Offering by Underwriters. It is understood that the several
International Underwriters propose to offer the International Securities for
sale to the public as set forth in the International Prospectus.
15
5. Agreements.
(i) The Company agrees with the several International Underwriters that:
(a) The Company will use its best efforts to cause the
Registration Statement and the ADR Registration Statement, if not
effective at the Execution Time, and any amendment thereof, to become
effective. Prior to the termination of the offering of the Securities, the
Company will not file any amendment of the Registration Statement or the
ADR Registration Statement or supplement to the Prospectuses or any Rule
462(b) Registration Statement unless the Company has furnished you a copy
for your review prior to filing and will not file any such proposed
amendment or supplement to which you reasonably object. Subject to the
foregoing sentence, if the Registration Statement or the ADR Registration
Statement has become or becomes effective pursuant to Rule 430A, or filing
of the Prospectuses is otherwise required under Rule 424(b), the Company
will cause the Prospectuses, properly completed, and any supplement
thereto, to be filed with the Commission pursuant to the applicable
paragraph of Rule 424(b) within the time period prescribed and will
provide evidence satisfactory to the International Representatives of such
timely filing. The Company will promptly advise the International
Representatives (1) when the Registration Statement and the ADR
Registration Statement, if not effective at the Execution Time, shall have
become effective, (2) when the Prospectuses, and any supplement thereto,
shall have been filed (if required) with the Commission pursuant to Rule
424(b) or when any Rule 462(b) Registration Statement or ADR Registration
Statement shall have been filed with the Commission, (3) when, prior to
termination of the offering of the Securities, any amendment to the
Registration Statement or the ADR Registration Statement shall have been
filed or become effective, (4) of any request by the Commission or its
staff for any amendment of the Registration Statement, or any Rule 462(b)
Registration Statement or the ADR Registration Statement, or for any
supplement to the Prospectuses or for any additional information, (5) of
the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the ADR Registration
Statement or the institution or threatening of any proceeding for that
purpose and (6) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Securities for sale
in any jurisdiction or the institution or threatening of any proceeding
for such purpose. The Company will use its best efforts to prevent the
issuance of any such stop order or the suspension of any such
qualification and, if issued, to obtain as soon as possible the withdrawal
thereof.
(b) If, at any time when a prospectus relating to the Securities,
in the opinion of counsel for the Underwriters, is required to be
delivered by an underwriter or dealer under the Act, any event occurs as a
result of which either of the Prospectuses as then supplemented would
include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, or if it
shall be necessary to amend the Registration Statement or the ADR
Registration Statement or supplement either of the Prospectuses to comply
with the Act or the rules thereunder, the Company promptly will (1) notify
the Representatives of any such
16
event; (2) prepare and file with the Commission, subject to the second
sentence of paragraph (i)(a) of this Section 5, an amendment or supplement
which will correct such statement or omission or effect such compliance;
and (3) supply any supplemented Prospectuses to you in such quantities as
you may reasonably request.
(c) As soon as practicable, the Company will make generally
available to its security holders and to the International Representatives
an earnings statement or statements of the Company and the Subsidiaries
which will satisfy the provisions of Section 11(a) of the Act and Rule 158
under the Act.
(d) The Company will furnish to the International Representatives
and counsel for the International Underwriters signed copies of the
Registration Statement and the ADR Registration Statement (including
exhibits thereto) and to each other International Underwriter a copy of
the Registration Statement and the ADR Registration Statement (without
exhibits thereto) and, so long as delivery of a prospectus by an
Underwriter or dealer may be required by the Act, as many copies of each
International Preliminary Prospectus and the International Prospectus and
any supplement thereto as the International Representatives may reasonably
request.
(e) The Company will arrange, if necessary, for the qualification
of the Securities for sale under the laws of such jurisdictions as the
International Representatives may designate and will maintain such
qualifications in effect so long as required for the distribution of the
International Securities; provided, however, that in no event shall the
Company be obligated to qualify to do business in any jurisdiction where
it is not now so qualified or to take any action that would subject it to
service of process in suits, other than those arising out of the offering
or sale of the Securities, in any jurisdiction where it is not now so
subject.
(f) Except as contemplated pursuant to this Agreement, the
Company will not, without the prior written consent of Salomon Smith
Barney Inc., offer, sell, contract to sell, pledge, or otherwise dispose
of (or enter into any transaction which is designed to, or might
reasonably be expected to, result in the disposition (whether by actual
disposition or effective economic disposition due to cash settlement or
otherwise) by the Company or any affiliate of the Company or any person in
privity with the Company or any affiliate of the Company) directly or
indirectly, including the filing (or participation in the filing) of a
registration statement with the Commission in respect of, or establish or
increase a put equivalent position or liquidate or decrease a call
equivalent position within the meaning of Section 16 of the Exchange Act,
any Common Shares or ADSs or any securities convertible into, or
exercisable, or exchangeable for, Common Shares or ADSs, or publicly
announce an intention to effect any such transaction, for a period of 180
days after the date of this Agreement; provided, however, that the Company
may issue and sell Common Shares pursuant to any employee stock option
plan, stock ownership plan or dividend reinvestment plan of the Company in
effect at the Execution Time and the Company may issue Common Shares
issuable upon the conversion of securities or the exercise of warrants
outstanding at the Execution Time, and the Company may take certain
actions as described in the third paragraph of the UMC Letter relating to
the offering by United Microelectronics Corporation of bonds that will be
exchangeable into Common
17
Shares or ADSs of the Company; it being understood that the preparation
(or participation in the preparation) of a registration statement shall
not constitute the filing (or participation in the filing) of a
registration statement under this paragraph (f).
(g) Until the later of (i) the end of a period of 180 days
following the Closing Date and (ii) the completion of distribution of the
Securities, the Company will not take, directly or indirectly, any action
designed to, or which might reasonably be expected to cause or result,
under the Exchange Act or otherwise, in stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale
of the Common Shares or the ADSs.
(h) The Company will deposit Underwritten Shares or Certificates
of Payment with the Depositary in accordance with the terms of the Deposit
Agreement and will comply with the terms of this Agreement and the Deposit
Agreement so that ADRs evidencing ADSs representing deposited Underwritten
Shares or Certificates of Payment, as the case may be, will be executed by
the Depositary and delivered to the U.S. Underwriters as required hereby.
(i) The Company will notify the International Representatives
promptly upon becoming aware of any event or development making untrue, or
of any change affecting, any of its representations, warranties,
agreements or indemnities herein at any time prior to payment being made
to the Company on the Closing Date and will take such steps as may be
reasonably requested by the International Representatives to remedy the
same.
(j) Between the date hereof and the Closing Date (inclusive), the
Company will, and will cause the Subsidiaries and all other parties acting
on its behalf to, notify and consult with the International
Representatives prior to issuing any announcement (unless prevented by
applicable law or regulation or it is impracticable in light of the
circumstances) concerning the Securities or which, in the reasonable
judgment of Company, could be material in the context of the offering and
distribution of the Securities.
(k) The Company will use the net proceeds received by it from the
sale of the ADSs pursuant to this Agreement in the manner specified in the
Prospectuses under the caption "Use of Proceeds."
(l) In connection with listing the Shares on the Taiwan Stock
Exchange and the application to list the ADSs on the New York Stock
Exchange, the Company will furnish from time to time any and all
documents, instruments, information and undertakings and publish all
advertisements or other material that may be necessary in order to effect
such listings and maintain such listings.
(m) The Company will pay any stamp, issue, registration,
documentary, transfer or other taxes and duties, including interest and
penalties, on or in connection with the creation, issue, offering or sale
by the Company of the Certificates of Payment, the Underwritten Shares and
the ADSs (including the deposit by the
18
Company of the Underwritten Shares or Certificates of Payment, as the case
may be, with the Depositary and the issuance and delivery of the ADRs
evidencing ADSs in exchange therefor by the Depositary to or for the
account of the Underwriters), the offer, sale and delivery outside the ROC
by the Underwriters of such ADSs and the execution or delivery of this
Agreement, including, in any such case, any ROC withholding, transfer or
similar tax asserted against an Underwriter by reason of the purchase and
sale of ADSs pursuant to this Agreement (except such income taxes that may
be imposed by the ROC government or any political subdivision or taxing
authority thereof or therein on any Underwriter whose net income is
subject to tax by the ROC or withholding, if any, with respect to any such
income tax).
(n) The Company, or one or more agents thereof acting on its
behalf, will make all filings and registrations, obtain all approvals and
submit all reports, if any, required for the issuance of the Underwritten
Shares and Certificates of Payment, the issuance and sale of the ADSs, the
compliance by the Company with all of the provisions of, and the
performance by the Company of its obligations under, this Agreement and
the Deposit Agreement, and the consummation of the transactions
contemplated herein and therein, including, but not limited, to all
filings, registrations, approvals and reports set forth in paragraph
(i)(o) of Section 1 hereof, on or prior to the date on which such filings,
registrations, approvals or reports, if any, are required to be made,
obtained or submitted.
(o) The Underwriters will pay, or reimburse the Company or the
Selling Shareholders, as the case may be, for amounts paid by the Company
or the Selling Shareholders in respect of: (i) the fees and expenses of
KPMG as the Company's accountants and of Diwan, Ernst & Young as the
accountants of Unipac Optoelectronics Corporation and the fees and
expenses of counsel (including local and special counsel) for the Company
and the Selling Shareholders, in each case incurred in connection with the
initial public offering of the ADSs; (ii) the printing (or reproduction)
and delivery (including postage, air freight charges and charges for
counting and packaging) of such copies of the Registration Statement, each
Preliminary Prospectus, each Prospectus, the ADR Registration Statement,
and all amendments or supplements to any of them, as may, in each case, be
requested for use in connection with the offering and sale of the
Securities; and (iii) the transportation, meeting, lodging and other
roadshow expenses incurred by or on behalf of Company representatives in
connection with presentations to prospective purchasers of the Securities;
it being understood that the Underwriters shall not be required to pay, or
reimburse the Company for amounts paid in respect of, and the Company
shall pay or cause to be paid: (i) any registration fees payable to the
Commission in connection with the registration of the Securities with the
Commission, (ii) any listing fees and expenses payable in connection with
the listing of the ADSs on the New York Stock Exchange, (iii) any filing
fees payable in respect of any filings required to be made with the
National Association of Securities Dealers, Inc., (iv) the internal costs
and out-of-pocket fees and expenses incurred by employees of the Company,
the Selling Shareholders and their respective subsidiaries in connection
with the initial public offering of the Securities, and (v) any amounts
payable by the Company under Section 5(i)(m) hereof; and provided further,
that the Underwriters shall not be required to pay, or reimburse the
Company or the Selling Shareholders for amounts paid in
19
respect of, and the Selling Shareholders shall, jointly and severally, pay
or cause to be paid, amounts payable by the Selling Shareholders under
Section 5(v)(g) hereof.
(p) Except as described in the Prospectuses 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
deducting 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 whose
net income is subject to tax by the ROC or withholding, if any, with
respect to any such income tax).
(ii) Each International Underwriter agrees that (i) it is not
purchasing any of the International Securities for the account of any United
States or Canadian Person, (ii) it has not offered or sold, and will not offer
or sell, directly or indirectly, any of the International Securities or
distribute any International Prospectus to any person in the United States or
Canada, or to any United States or Canadian Person, and (iii) any dealer to
whom it may sell any of the International Securities will represent that it is
not purchasing for the account of any United States or Canadian Person and
agree that it will not offer or resell, directly or indirectly, any of the
International Securities in the United States or Canada, or to any United
States or Canadian Person or to any other dealer who does not so represent and
agree; provided, however, that the foregoing shall not restrict (A) purchases
and sales between the U.S. Underwriters on the one hand and the International
Underwriters on the other hand pursuant to the Agreement Between U.S.
Underwriters and International Underwriters, (B) stabilization transactions
contemplated under the Agreement Between U.S. Underwriters and International
Underwriters, conducted through Salomon Smith Barney Inc. (or through the U.S.
Representatives and International Representatives) as part of the distribution
of the Securities, and (C) sales to or through (or distributions of
International Prospectuses or International Preliminary Prospectuses to)
persons not United States or Canadian Persons who are investment advisors, or
who otherwise exercise investment discretion, and who are purchasing for the
account of any United States or Canadian Person.
(iii) The agreements of the International Underwriters set forth in
paragraph (ii) of this Section 5 shall terminate upon the earlier of the
following events:
(a) a mutual agreement of the U.S. Representatives and the
International Representatives to terminate the selling restrictions set
forth in paragraph (ii) of this Section 5 and in Section 5(ii) of the U.S.
Underwriting Agreement.
(b) the expiration of a period of 30 days after the Closing Date,
unless (A) the International Representatives shall have given notice to
the Company and the U.S. Representatives that the distribution of the
International Securities by the International Underwriters has not yet
been completed, or (B) the U.S. Representatives shall have given notice to
the Company and the International Underwriters that the distribution of
the U.S. Securities by the U.S. Underwriters has not yet been completed.
If such notice by the U.S. Representatives or the International
Representatives is given, the agreements set forth in such paragraph (ii)
shall survive until the earlier of (1) the event referred to in clause (a)
of this subsection (ii) or (2) the expiration of an additional period of
30 days from the date of any such notice.
20
(iv) Each International Underwriter agrees that:
(a) it has not offered or sold and, prior to the expiry of a
period of six months from the Closing Date, will not offer or sell, any
Securities to persons in the United Kingdom except to persons whose
ordinary activities involve them in acquiring, holding, managing or
disposing of investments (as principal or agent) for the purpose of their
businesses or otherwise in circumstances which have not resulted and will
not result in an offer to the public in the United Kingdom within the
meaning of the Public Offers of Securities Regulations 1995.
(b) it has only communicated or caused to be communicated and
will only communicate or cause to be communicated any invitation or
inducement to engage in investment activity (within the meaning of Section
21 of the Financial Services and Markets Act 2000 (the "FSMA") received by
it in connection with the issue or sale of any Securities in circumstances
in which Section 21(1) of the FSMA does not apply to the Company.
(c) it has complied and will comply with all applicable
provisions of the FSMA with respect to anything done by it in relation to
the Securities in, from or otherwise involving the United Kingdom.
(d) the Securities which it purchases are purchased by it as
principal and it has not offered or sold, and agrees not to offer or sell,
directly or indirectly, in Japan or to or for the account of any resident
thereof, any of the Securities acquired in connection with the
distribution contemplated hereby, except pursuant to any exemption from
the registration requirements of the Securities and Exchange Law of Japan
and otherwise in compliance with applicable provisions of Japanese law.
(e) it has not offered or sold and agrees not to offer or sell in
the Hong Kong Special Administrative Region of the People's Republic of
China ("Hong Kong"), by means of any document, any Securities other than
to persons whose ordinary business it is to buy or sell shares or
debentures, whether as principal or agent, or in circumstances which do
not constitute an offer to the public within the meaning of the Companies
Ordinance (CAP32) of Hong Kong.
(f) except as permitted under the securities laws of Hong Kong,
it has not issued and will not issue in Hong Kong any document, invitation
or advertisement relating to the Securities other than with respect to
Securities which are intended to be disposed of to persons outside Hong
Kong or only to persons whose business involves the acquisition, disposal
or holding of securities, whether as principal or agent.
(g) it has not offered for subscription or sold, and will not
offer for subscription or sell, any Securities or issue, circulate or
distribute any document or other material relating to the Securities,
either directly or indirectly, to the public or any member of the public
in Singapore, other than (i) to an institutional investor or other person
specified in Section 106C of the Companies Act, Chapter 50 of Singapore
(the "Singapore Companies Act"), (ii) to a sophisticated investor, and in
accordance with the conditions specified in Section 106D of the Singapore
Companies Act, or (iii) otherwise pursuant to, and in
21
accordance with the conditions of, any other provision of the Singapore
Companies Act, in each case subject to compliance with the conditions set
forth in the Singapore Companies Act.
(h) it has not offered or sold, and will not offer or sell, any
Securities, directly or indirectly, in the ROC.
(i) it will not offer, distribute, sell, transfer or deliver the
International Securities, directly or indirectly, in or from the
Netherlands, to any person other than individuals or legal entities which
trade or invest in securities in the conduct of their profession or
business within the meaning of article 2 of the Exemption Regulation
issued pursuant to the Securities Transactions Supervision Act 1995
("Vrijstellingsregeling Wet toezicht effectenverkeer 1995"), which
includes, but is not limited to banks, brokers, dealers, pension funds,
insurance companies, securities institutions, investment institutions and
other institutional investors, including, among others, treasuries of
large enterprises.
(v) Each Selling Shareholder agrees with the several International
Underwriters that:
(a) Such Selling Shareholder will not, without the prior written
consent of Salomon Smith Barney Inc., offer, sell, contract to sell,
pledge or otherwise dispose of (or enter into any transaction which is
designed to, or might reasonably be expected to, result in the disposition
(whether by actual disposition or effective economic disposition due to
cash settlement or otherwise) by such Selling Shareholder or any Affiliate
of such Selling Shareholder or, except in the case of Kuang-Hwa Investment
Holding Co. Ltd., any person in privity with such Selling Shareholder or
any Affiliate of such Selling Shareholder) directly or indirectly, or file
(or participate in the filing of) a registration statement with the
Commission in respect of, or establish or increase a put equivalent
position or liquidate or decrease a call equivalent position within the
meaning of Section 16 of the Exchange Act with respect to, any Common
Shares or ADSs (other than Common Shares or ADSs disposed of as bona fide
gifts approved by Salomon Smith Barney Inc.) or any securities convertible
into or exercisable or exchangeable for Common Shares or ADSs, or publicly
announce an intention to effect any such transaction, for a period of 90
days after the date of this Agreement; provided, however, that United
Microelectronics Corporation shall not be -------- ------- restricted
pursuant to this paragraph (a) from exchanging its exchangeable bonds
issued on May 10, 2002 into Common Shares after June 19, 2002 pursuant to
the terms of such bonds.
(b) Until the later of (i) the end of a period of 90 days
following the Closing Date and (ii) the completion of distribution of the
Securities, such Selling Shareholder will not take any action designed to
or which might reasonably be expected to cause or result, under the
Exchange Act or otherwise, in stabilization or manipulation of the price
of any security of the Company to facilitate the sale or resale of the
Common Shares or the ADSs.
(c) Such Selling Shareholder will advise you promptly, and if
requested by you, will confirm such advice in writing, so long as delivery
of a prospectus
22
relating to the Securities by an underwriter or dealer is, in the opinion
of counsel for the Underwriters, required under the Act, of any change in
the information in the Registration Statement, the ADR Registration
Statement or the Prospectuses relating to such Selling Shareholder.
(d) No later than the second Business Day in the ROC (such date,
the "Deposit Date") after the receipt of the notice of exercise of the
Underwriters' over-allotment option pursuant to Section 2(b) hereof, to
deposit, or cause to be deposited on its behalf, the Option Shares to be
sold by such Selling Shareholder hereunder 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 such Selling Shareholder will be executed (and, if applicable,
countersigned) and issued by the Depositary against receipt of such Option
Shares and delivered to the Underwriters at the Closing Date or the
settlement date, as applicable.
(e) Such Selling Shareholder will advise you promptly upon
becoming aware of any event or development making untrue, or of any change
affecting, any of its representations, warranties, agreements or
indemnities herein at any time prior to payment being made to such Selling
Shareholder on the settlement date and will take such steps as may be
reasonably requested by you to remedy the same.
(f) Between the date hereof and the settlement date (inclusive),
such Selling Shareholder will, and will cause its Affiliates and all other
parties acting on its behalf to, notify and consult with you prior to
issuing any announcement (unless such notification and consultation is
prevented by applicable law or regulation or is impractical in light of
circumstances) concerning the Securities or which could be material in the
context of the offering and distribution of the Securities; provided that
such Selling Shareholder, such Affiliates and such other parties shall not
be restricted, following such notification and consultation, from issuing
any such announcement that any of them is required to issue under
applicable law or regulation.
(g) Such Selling Shareholder will pay any stamp, issue,
registration, documentary, transfer or other taxes and duties, including
interest and penalties, on or in connection with the offering or sale of
Shares and ADSs by such Selling Shareholder pursuant to this Agreement
(including the deposit by such Selling Shareholder of Option Shares with
the Depositary and the issuance and delivery of the ADRs evidencing ADSs
in exchange therefor by the Depositary to or for the account of the
Underwriters), the offer, sale and delivery outside the ROC by the
Underwriters of such ADSs and the execution or delivery of this Agreement,
including, in any such case, any ROC withholding, transfer or similar tax
asserted against an Underwriter by reason of the purchase and sale of ADSs
pursuant to this Agreement (except such income taxes that may be imposed
by the ROC government or any political subdivision or taxing authority
thereof or therein on any Underwriter whose net income is subject to tax
by the ROC or withholding, if any, with respect to any such income tax).
(h) Such Selling Shareholder will pay, or cause to be paid, any
securities transfer tax payable on the transfer of the Option Shares
represented by the ADSs to
23
be sold by such Selling Shareholder pursuant to the Underwriting
Agreements to the appropriate taxing authorities in the Republic of China
no later than the first Business Day in the ROC following any date on
which Option Shares are purchased pursuant to the Underwriting Agreements,
and shall deliver, no later than on the Deposit Date to the Depositary a
New Taiwan dollar Bank of Taiwan cheque payable to the ROC taxing
authority, dated as of such date, in the amount of such securities
transfer tax.
(i) Any amounts payable by such 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 jurisdiction of
its organization or any political subdivision thereof or therein except as
described in the Prospectuses (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 such
income tax).
6. Conditions to the Obligations of the Underwriters. The obligations of
the International Underwriters to purchase the International Underwritten
Securities and the International Option Securities, as the case may be, shall
be subject to the accuracy of the representations and warranties on the part of
the Company and the Selling Shareholders contained in this Agreement as of the
Execution Time, the Closing Date and any settlement date pursuant to Section 3
hereof, to the accuracy of the statements of the Company and the Selling
Shareholders made in any certificates pursuant to the provisions hereof, to the
performance by the Company and the Selling Shareholders of their respective
obligations under this Agreement and to the following additional conditions:
(i) If the Registration Statement and the ADR Registration Statement have
not become effective prior to the Execution Time, unless the U.S.
Representatives and the International Representatives agree in writing to a
later time, the Registration Statement and the ADR Registration Statement will
become effective not later than (a) 6:00 PM New York City time on the date of
determination of the public offering price, if such determination occurred at
or prior to 3:00 PM New York City time on such date or (b) 9:30 AM New York
City time on the Business Day following the day on which the public offering
price was determined, if such determination occurred after 3:00 PM New York
City time on such date; if filing of either of the Prospectuses, or any
supplement thereto, is required pursuant to Rule 424(b), the Prospectuses, and
any such supplement, will be filed in the manner and within the time period
required by Rule 424(b); and no stop order suspending the effectiveness of the
Registration Statement or the ADR Registration Statement shall have been issued
and no proceedings for that purpose shall have been instituted or threatened.
(ii) On each of the Closing Date and any settlement date, the Company
shall have requested and caused Simpson Thacher & Bartlett, United States
counsel for the Company, to have furnished to the Representatives their
opinion, dated the Closing Date or the settlement date, as the case may be, to
the effect that:
(a) The Underwriting Agreements have been duly executed and
delivered by the Company in accordance with the laws of the State of New
York.
24
(b) The Deposit Agreement has been duly executed and delivered by
the Company in accordance with the laws of the State of New York and,
assuming that the Deposit Agreement is the valid and legally binding
obligation of the Depositary, constitutes a valid and legally binding
obligation of the Company, enforceable against the Company in accordance
with its terms, subject to (i) the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, (ii) general
equitable principles (whether considered in a proceeding in equity or at
law), (iii) an implied covenant of good faith and fair dealing and (iv)
the effects of the possible judicial application of foreign laws or
foreign governmental or judicial action affecting creditors' rights, and
also subject to the qualification that enforceability of the
indemnification provisions of the Deposit Agreement may be limited by
considerations of public policy. Upon issuance by the Depositary of the
ADRs evidencing ADSs against the deposit of the Underlying Shares
(initially in the form of Certificates of Payment) in accordance with the
provisions of the Deposit Agreement, the ADRs will be duly and validly
issued pursuant to the laws of the State of New York and the persons in
whose names such ADRs are registered will be entitled to the rights
specified therein and in the Deposit Agreement.
(c) The compliance by the Company with all of the provisions of
the Underwriting Agreements and the Deposit Agreement will not breach or
result in a default by the Company under any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument that is expressly
governed by the laws of the State of New York and filed as an exhibit to
the Registration Statement, nor will such action violate any United States
federal or New York state statute or any order known to such counsel
issued pursuant to any United States federal or New York state statute by
any court or governmental agency or body having jurisdiction over the
Company or any of its subsidiaries or any of their properties.
(d) No consent, approval, authorization, order, registration or
qualification of or with any United States federal or New York state
governmental agency or body or, to the knowledge of such counsel, any
United States federal or New York state court is required for the
compliance by the Company with all of the provisions of the Underwriting
Agreements and the Deposit Agreement, except for the registration under
the Act and the Exchange Act of the Shares and the ADSs or the offering
and sale thereof, and such consents, approvals, authorizations,
registrations or qualifications as may be required under state securities
or "blue sky" laws in connection with the purchase and distribution of the
Shares and the ADSs by the Underwriters.
(e) The statements made in the Prospectuses under the captions
"Description of American Depositary Shares," "Shares Eligible for Future
Sale" and "Underwriting", insofar as they purport to constitute summaries
of the terms of New York state or United States federal statutes or rules
and regulations thereunder or English language contracts or other
documents therein described, constitute accurate summaries of the terms of
such statutes, rules and regulations or contracts and other documents in
all material respects.
25
(f) The statements made in the Prospectuses under the caption
"Tax Considerations for Investors in Our ADSs or Shares - United States
Federal Income Tax Considerations for United States Holders," insofar as
they purport to constitute summaries of matters of United States federal
tax laws and regulations or legal conclusions with respect thereto,
constitute accurate summaries of matters described therein in all material
respects.
(g) To the knowledge of such counsel, there are no contracts or
documents of a character required to be described in the Registration
Statement, the ADR Registration Statement or the Prospectuses or to be
filed as exhibits to the Registration Statement or the ADR Registration
Statement that are not described or filed as required.
(h) The Company is not and, after giving effect to the offering
and sale of the Securities and the application of the proceeds thereof as
described in the Prospectuses, will not be an "investment company" within
the meaning of and subject to regulation under the United States
Investment Company Act of 1940, as amended.
(i) The Registration Statement and the ADR Registration Statement
have become effective under the Act; any required filing with the
Commission of the Prospectuses, and any supplement thereto, pursuant to
Rule 424(b) has been made in the manner and within the time period
required by Rule 424(b); and, to the knowledge of such counsel, no stop
order suspending the effectiveness of the Registration Statement and the
ADR Registration Statement has been issued or proceeding for that purpose
initiated or threatened by the Commission.
(j) Assuming the validity of such actions under the laws of the
ROC and any other non-United States jurisdiction (and subject to the
limitations and provisions of Sections 1331, 1332 and 1404(a) of Title 28
of the United States Code and Section 510 of the New York Civil Practice
Law and Rules), under the laws of the State of New York relating to
personal jurisdiction, and pursuant to Section 15 of the Underwriting
Agreements and Section 7.6 of the Deposit Agreement, the Company has: (A)
validly submitted to the non-exclusive personal jurisdiction of the New
York Courts in any action, suit or proceeding arising out of or based upon
the Underwriting Agreements or the Deposit Agreement or the transactions
contemplated thereby; and (B) validly appointed CT Corporation System in
New York, New York as its authorized agent for the purpose described in
Section 15 of the Underwriting Agreements and Section 7.6 of the Deposit
Agreement; the waiver by the Company of any objection to the venue of any
proceeding in the New York Courts is valid (subject to customary
limitations under New York state and Federal laws); and service of process
effected in the manner set forth in Section 15 of the Underwriting
Agreements and Section 7.6 of the Deposit Agreement will be effective
under the laws of the State of New York to confer valid personal
jurisdiction over the Company.
Such opinion may be subject to customary assumptions, qualifications and
limitations and, in rendering such opinion, such counsel may state that (i)
they do not express any opinion therein concerning any law other than the law
of the State of New York and the federal law of the United States of America
and (ii) with respect to all matters governed by the
26
laws of the ROC, such counsel understand that the Representatives are relying
on the applicable opinion of Russin & Vecchi referred to below. Such opinion
shall also include language confirming the extent of such counsel's
participation in the preparation of the Registration Statement, the ADR
Registration Statement and the Prospectuses and confirming that based on such
participation: (i) such counsel are of the opinion that the Registration
Statement and the ADR Registration Statement, as of their respective effective
dates, and the Prospectuses, as of May 23, 2002, complied as to form in all
material respects with the requirements of the Act (except in each case for the
financial statements and other financial data contained therein, as to which
such counsel need express no opinion); and (ii) such counsel have no reason to
believe that the Registration Statement and the ADR Registration Statement, as
of their respective effective dates (except in each case for the financial
statements and other financial data contained therein, as to which such counsel
need express no belief), contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading or that the Prospectuses
(except for the financial statements and other financial data contained
therein, as to which such counsel need express no belief) contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The foregoing opinion and statement may be
qualified by a statement to the effect that such counsel have not independently
verified the accuracy, completeness or fairness of the statements made or
included in the Registration Statement, the ADR Registration Statement or the
Prospectuses and take no responsibility therefor, except as and to the extent
set forth in clauses (e) and (f) above.
(iii) On each of the Closing Date and any settlement date, the Company
and each of Benq Corporation ("Benq"), Acer, Inc. ("Acer") and Kuang-Hwa
Investment Holding Co., Ltd. ("Kuang-Hwa"), shall have requested and caused
Russin & Vecchi, ROC counsel for the Company and for Benq, Acer and Kuang-Hwa
as Selling Shareholders, to have furnished to the Representatives their
opinion, dated the Closing Date or the settlement date, as the case may be, and
addressed to the Representatives, to the effect that:
(a) The Company has been duly incorporated, is validly existing
as a corporation under the laws of the ROC, has the corporate power and
authority to own or lease its property and to conduct its business as
described in the Prospectuses and is duly qualified to transact business
and to own or lease its properties in the ROC.
(b) The Company's authorized and issued share capital is as set
forth in the Prospectuses; the capital stock of the Company conforms in
all material respects to the description thereof contained in the
Prospectuses; the outstanding Common Shares (including the Option Shares)
have been duly and validly authorized and issued ,fully paid and
non-assessable; the Underwritten Shares (including the Certificate of
Payment) have been duly authorized and, when issued and delivered in
accordance with the terms of the Underwriting Agreements and the Deposit
Agreement, will be validly issued , fully paid and non-assessable with no
personal liability for the obligations of the Company attaching to the
ownership thereof; the issuance of the Underwritten Shares will not be
subject to any preemptive or similar rights except such as have been duly
and validly waived; all of the Common Shares outstanding prior to the
issuance of the Underwritten Shares (including the Option Shares) have
been duly listed and admitted for trading on the Taiwan Stock Exchange;
the Underwritten Shares will be duly listed and admitted for trading on
the Taiwan Stock
27
Exchange upon exchange of the Certificate of Payment; the holders of
outstanding Common Shares of the Company are not entitled to preemptive or
other rights to acquire the ADSs in connection with the transactions
contemplated by the Underwriting Agreements; the Option Shares to be
deposited by the Selling Shareholders may be freely deposited with the
Depositary against issuance of ADRs evidencing ADSs; there are no
restrictions on subsequent transfer of the Shares underlying the ADSs
except as described in the Prospectuses under the captions "Description of
Our Share Capital", "Description of American Depositary Shares" and
"Foreign Investment and Exchange Controls in Taiwan"; and, except as set
forth in the Prospectuses, 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. The Company's authorized
equity capitalization is as set forth in the Prospectuses; the capital
stock of the Company conforms in all material respects to the description
thereof contained in the Prospectuses; the outstanding Common Shares
(including the Securities being sold pursuant to the Underwriting
Agreements by the Selling Shareholders) and all the Shares of the Company
to be deposited in the ADR facility pursuant to the terms of the
Underwriting Agreements, have been duly and validly authorized and issued
and are fully paid and nonassessable and no holder thereof is, or will be,
subject to personal liability by reason of being such holder; the
Securities being sold under the Underwriting Agreements (including any
Certificates of Payment) by the Company have been duly and validly
authorized, and, when issued and delivered to and paid for by the
Underwriters pursuant to this Agreement, will be fully paid and
nonassessable; all of the issued and outstanding Common Shares of the
Company have been duly listed, and admitted and authorized for trading, on
the Taiwan Stock Exchange; the Underlying Shares will be duly listed and
admitted for trading on the Taiwan Stock Exchange upon the exchange of the
Certificates of Payment; the holders of outstanding shares of capital
stock of the Company are not entitled to preemptive or other rights to
subscribe for the Securities; assuming the Deposit Agreement has been duly
authorized and delivered by the parties thereto, the Option Shares to be
deposited by the Selling Shareholders may be freely deposited with the
Depositary against issuance of ADRs evidencing ADSs and the ADSs delivered
at the settlement date will be freely transferable by the Selling
Shareholders to or for the account of the several Underwriters and (to the
extent described in the Prospectuses) the initial purchasers thereof;
there are no restrictions on subsequent transfers of the Option Securities
except as described in the Prospectuses under the captions "Description of
Our Share Capital," "Description of American Depositary Shares" or
"Foreign Investment and Exchange Controls in Taiwan"; and, except as set
forth in the Prospectuses, no options, warrants or other rights to
purchase, agreements or other obligations to issue, or rights to convert
any obligations into or exchange any securities for, shares of capital
stock of or ownership interests in the Company are outstanding.
(c) The Underwriting Agreements and the Deposit Agreement have
been duly authorized, executed and delivered by the Company and constitute
valid and legally binding obligations of the Company, enforceable in
accordance with their terms; the Certificate of Payment evidencing the
Underwritten Shares has been duly authorized and, when executed and
delivered by the Company, will constitute valid and legally binding
obligations of the Company, enforceable in accordance with its terms.
28
(d) No consent, approval, authorization, filing with, or order
of, or qualification with, any governmental body or agency of the
government of the ROC is required in connection with the transactions
contemplated in the Underwriting Agreements or in the Deposit Agreement,
except for (i) the approvals of the CBC and reports to the CBC of the
foreign exchange settlements and payments contemplated by the Deposit
Agreement (the "CBC Conversion Filings"); (ii) the filings and approvals,
if any, required under (A) the "Guidelines For Handling Issuance and Offer
of Overseas Securities by Issuers of the ROC (the "Overseas Offering
Rules"), and (B) the rules and regulations of the Taiwan Stock Exchange,
the ROC SFC and the CBC; (iii) completion of the corporate amendment
registration reflecting the issuance of the Underwritten Shares with the
SIPA which registration is required to be filed by the Company with
fifteen (15) days after the Closing Date and (iv) the 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 SIPA Approval, the CBC Approvals and
the ROC SFC Approvals.
(e) Except as disclosed in the Prospectuses and except for the
securities transaction tax payable by the Selling Shareholders under the
ROC laws and so long as the Underwriting Agreements, the Certificate of
Payment, the cross receipt and any other documents which would be deemed
"receipts" under the ROC Stamp Duty Law are executed outside of the ROC,
no stamp or other issuance or transfer taxes or duties and no capital
gains, income, withholding or other taxes are payable by or on behalf of
the Underwriters to the government of the ROC or any political subdivision
or taxing authority thereof or therein in connection with (A) the issuance
and delivery of the Certificate of Payment or sale and delivery of the
Underwritten Shares and the Option Shares in accordance with the
Underwriting Agreements and the Deposit Agreement, (B) the deposit with
the Depositary or its custodian of the Certificate of Payment, the
Underwritten Shares and the Option Shares against the issuance of the ADRs
evidencing the ADSs, (C) the sale and delivery outside of the ROC by the
Underwriters of the ADSs pursuant to the terms of and in the manner
contemplated in the Underwriting Agreements or (D) the execution and
delivery of the Underwriting Agreements and the Deposit Agreement.
(f) Subject to the qualification that litigation and arbitration
in the ROC are not necessarily a matter of public record, to the best of
our knowledge, except as described in the Prospectuses, we are not aware
of any ROC legal or governmental proceedings pending or threatened to
which the Company or any Subsidiary is a party or to which any of the
properties of the Company or any of the Subsidiaries is subject that could
reasonably be expected to have a material adverse effect on the Company
and the Subsidiaries, taken as a whole ("Material Adverse Effect").
(g) Neither the execution and delivery by the Company of, the
performance by the Company of its obligations under, and the consummation
of any of the other transactions contemplated in the Underwriting
Agreements and the Deposit Agreement, nor the application of the proceeds
from the sale of Underwritten Securities as described in the Prospectuses,
will contravene or result in a breach or violation of any provision of
applicable laws and regulations of the ROC or the Articles of
Incorporation or other constitutive documents of the Company, or, to the
best of our knowledge, any agreement or other instrument binding upon the
Company that is material to the Company and the Subsidiaries, taken as a
whole, or, to the best of our knowledge, any judgment, order or
29
decree of any governmental body, agency or court of the ROC having
jurisdiction over the Company or any of the Subsidiaries; neither the
execution and delivery by each of Benq, Acer and Kuang-Hwa of, nor the
performance by each of Benq, Acer and Kuang-Hwa of, their respective
obligations under the Underwriting Agreements and the Powers of Attorney
will contravene or result in a breach or violation of any provision of
applicable laws and regulations of the ROC or the articles of
incorporation or other constitutive documents of Benq, Acer and Kuang-Hwa.
(h) We have reviewed the statements in the Prospectuses under the
captions "Risk Factors", "Dividends", "Our Business", "Management",
"Related Party Transactions", "Description of Our Share Capital",
"Description of American Depositary Shares", "The Securities Markets of
Taiwan", "Foreign Investment and Exchange Controls in Taiwan", "Shares
Eligible for Future Sale", "Enforceability of Civil Liabilities" and "Tax
Considerations for Investors in Our ADSs or Shares - ROC Tax
Considerations" and confirm that, insofar as such statements constitute
summaries of the legal matters, legal documents or legal proceedings
referred to therein, to the extent, and only to the extent, governed by
the laws of the ROC, fairly present the information called for with
respect to such legal matters, documents and proceedings and fairly
summarize the matters described therein.
(i) Nothing has come to our attention that would lead us to
believe that (except for the financial statements and other financial or
statistical data contained therein, as to which we need not express any
opinion or belief) the Registration Statement or the ADR Registration
Statement as of the respective dates thereof contained any untrue
statement of a material fact or omitted to state any material fact
necessary in order to make the statements therein not misleading; and the
Prospectuses as of their respective dates and as of the date hereof,
contained or contain any untrue statement of a material fact or omitted or
omits 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.
(j) The Underwriting Agreements, the Deposit Agreement, the
Certificate of Payment and the documents to be furnished thereunder are in
proper legal form under the laws of the ROC for the enforcement thereof
against the Company, Benq, Acer and Kuang-Hwa, as applicable, under the
laws of the ROC. Except for the filings and registrations referred to in
opinion (d) above, it is not necessary, required, or advisable, to ensure
the legality, validity, enforceability or admissibility in evidence of any
of such agreement or document that such agreement or document be filed or
recorded with any court or other authority in the ROC or that any stamp or
similar tax be paid, it being understood that in court proceedings in the
ROC a translation into Chinese language may be required.
(k) None of the parties to the Underwriting Agreements or the
Deposit Agreement in order to enforce any of their respective rights under
the Underwriting Agreements or the Deposit Agreement or any other document
to be furnished thereunder , and none of the holders of the ADSs in order
to enforce any of their respective rights under the ADRs or the Deposit
Agreement or any other document to be furnished thereunder (other than
such parties or holders that are established under the laws of the ROC)
need be licensed, qualified or entitled to do business in the ROC
30
(l) None of the parties to the Underwriting Agreements or the
Deposit Agreement (other than those parties established under the laws of
the ROC) and none of the holders of the ADSs are or will be deemed to be
resident, domiciled, carrying on business or, subject to taxation in the
ROC or be required to be licensed, qualified or otherwise entitled to do
business in the ROC solely by reason of the ownership of the ADSs or the
entry into, performance and/or enforcement of the Underwriting Agreements
and/or the Deposit Agreement, as applicable.
(m) The choice of New York Law to govern the Underwriting
Agreements and the Deposit Agreement is a valid choice of law. Under the
Law Governing the Application of Laws to Civil Matters Involving Foreign
Elements of the ROC (i.e., the ROC conflicts of law rules), if any claim
with respect to the obligations of the Company, Benq, Acer or Kuang-Hwa
under the Underwriting Agreement or the Deposit Agreement, as applicable
comes under the jurisdiction of the ROC courts, New York Law is to be
applied.
(n) The submission in the Underwriting Agreements and the Deposit
Agreement by each of the Company, Benq, Acer and Kuang-Hwa, as applicable,
to the non-exclusive jurisdiction of and the irrevocable waiver of
objection to venue of a proceeding in the U.S. federal and New York state
courts in New York City is valid and binding upon each of the Company,
Benq, Acer and Kuang-Hwa. The irrevocable appointment by each of the
Company, Benq, Acer and Kuang-Hwa of CT Corporation System in New York as
its authorized agent for the purpose described in the Underwriting
Agreements and the Deposit Agreement, as applicable, is legal, valid and
binding on each of the Company, Benq, Acer and Kuang-Hwa.
(o) A judgment obtained against the Company, Benq, Acer or
Kuang-Hwa in the courts of the ROC in respect of any sum payable by the
Company, Benq, Acer or Kuang-Hwa under the Underwriting Agreements or the
Deposit Agreement, as applicable may be expressed in United States dollars
or New Taiwan dollars. However, if such judgment is enforced against
assets of the Company, Benq, Acer or Kuang-Hwa located in the ROC, the
fact that the judgment is rendered and expressed in United States dollars
does not, for foreign exchange control purposes, itself, create a right to
convert the New Taiwan dollar proceeds of such enforcement into United
States dollars.
(p) Except as described in the Prospectuses, all cash dividends
and other distributions declared and payable on the Common Shares may be
paid by the Company to each such holder in New Taiwan dollars that may be
converted into foreign currency and freely transferred out of the ROC
without the necessity of obtaining any governmental authorizations of, or
from, any governmental agency in the ROC. However, the CBC Conversion
Filings will be required to be made by the Company in connection with such
conversion and transfer and similar filings by holders of Common Shares
withdrawn from the ADS facility or their designated agents in the ROC will
be required in connection with such conversion and transfer. Other than as
described in the Prospectuses, all such dividends and other distributions
made to holders of ADSs who are non-residents of the ROC will not be
subject to the ROC income, withholding or other taxes under the laws and
regulations of the ROC and are otherwise free and clear of any other tax,
duty, withholding or deduction in the ROC.
31
(q) To the best of our knowledge, and except as otherwise
disclosed in the Prospectuses, (i) the Company owns or possesses or is
licensed to use all material patents, patent applications, trademarks,
service marks, trade names, licenses, copyrights and proprietary or other
confidential information ("Intellectual Property Rights") currently
utilized by the Company in connection with its business and proposed to be
utilized in connection with its business, and (ii) the Company has not
received any notice of material infringement of or conflict with asserted
rights of any third party with respect to any Intellectual Property Rights
which, if determined adversely to the Company, would have a Material
Adverse Effect.
(r) To the best of our knowledge, the Company holds all, and is
not in material violation of any, ROC governmental licenses and approvals
necessary to own its property and conduct its business as described in the
Prospectuses except to the extent that the failure to hold such licenses
or approvals and/or the violation thereof would not have a Material
Adverse Effect.
(s) With respect to the Company's obligations and those of Benq,
Acer and Kuang-Hwa under the Underwriting Agreements and the Deposit
Agreement, as applicable, in the event a judgment of the courts of a
country other than the ROC, including without limitation a judgment
obtained in a New York court, were obtained, and enforcement of such
judgment were sought in the ROC, such judgment would be recognized and
enforced by the courts of the ROC without retrial or examination of the
merits of the case only if the ROC courts are satisfied that: (i) the
court rendering the judgment had subject matter jurisdiction under the
laws of the ROC; (ii) the judgment was not contrary to public order or
good morals of the ROC; (iii) the judgment was a final judgment for which
the period for appeal had expired or from which no appeal could be taken;
(iv) if the Company , Benq, Acer or Kuang-Hwa did not appear in the
proceedings in such court and a judgment by default was entered, process
was served either personally on the Company, Benq, Acer or Kuang-Hwa in
the country of litigation or with the assistance of the judicial
authorities of the ROC; and (v) judgments of the courts of the ROC would
be enforceable in the jurisdiction of the court rendering such judgment on
a reciprocal basis.
(t) The performance by the Underwriters or the Depositary of any
of their respective duties, obligations or responsibilities under the
Underwriting Agreements or the Deposit Agreement in the manner
contemplated thereby will not violate any applicable ROC law.
(u) The voting arrangements set forth under "Description of
American Depositary Shares" as described in the Prospectuses and the
voting arrangements as set forth in the Deposit Agreement are legal and
conform to the requirements of ROC law and constitute a valid and binding
agreement by the holders of interests in the ADSs as to their voting
rights.
(v) The Depositary will not be deemed to be authorized to
exercise any discretion when voting in accordance with the Deposit
Agreement under ROC law, and the Depositary will not (in the absence of
negligence, bad faith or breach of contract, and subject to general
principles of agency) be subject to any liability under ROC law for losses
32
arising from the exercise of the voting arrangements set out in the
Deposit Agreement on the grounds that voting in accordance with the
Deposit Agreement is in violation of ROC law.
(w) So long as no single owner of the ADSs holds or owns, as
applicable, ADSs (or ADSs, Certificate of Payment and Common Shares in the
aggregate) representing more than 10% of the Company's outstanding Common
Shares, there will be no reporting obligations under the ROC law on the
part of the Depositary or its nominee or owner of the ADSs (i) by virtue
of the Depositary being a party to the Deposit Agreement and exercising
its rights and performing its obligations thereunder or (ii) in connection
with the ADSs and the Certificate of Payment or Common Shares represented
by the ADSs.
(x) Each of the Company, Benq, Acer and Kuang-Hwa can sue and be
sued in its own name under the laws of the ROC and an ROC court would have
jurisdiction in any suit, action or proceedings brought against the
Company, Benq, Acer and Kuang-Hwa arising out of or in connection with the
Underwriting Agreements or the Deposit Agreement, as applicable.
(y) Each of Benq, Acer and Kuang-Hwa has been duly incorporated
and is validly existing as a corporation under the laws of the ROC.
(z) The Underwriting Agreements and the Powers of Attorney have
been duly authorized, executed and delivered by each of Benq, Acer and
Kuang-Hwa and constitute valid and legally binding obligations of each of
Benq, Acer and Kuang-Hwa, enforceable in accordance with the terms
thereof.
(aa) To the best of our knowledge, the Company is not in
violation of the Articles of Incorporation or other constitutive 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 agreement or instrument to
which it is a party or by which it or any of its properties may be bound.
(bb) Each of Benq, Acer and Kuang-Hwa has, and immediately prior
to the Closing Date or any settlement date, as applicable, will have, full
right, power and authority to deposit the Option Shares with the
Depositary as contemplated in the Underwriting Agreements and to sell,
assign, transfer and deliver the Option Shares in the form of ADSs to be
sold by Benq, Acer and Kuang-Hwa under the Underwriting Agreements.
(cc) Each of Benq, Acer and Kuang-Hwa is the beneficial owner of
the Option Shares to be deposited with the Depositary against issuance of
the ADRs evidencing the ADSs to be sold by Benq, Acer and Kuang-Hwa
pursuant to the Underwriting Agreements, has, and immediately prior to the
Closing Date or any settlement date, as applicable, will have, good and
valid title to such Option Shares, in each case free and clear of all
liens, encumbrances, equities and claims; and upon delivery of such Option
Shares and payment therefor pursuant to the Underwriting Agreements, good
and valid title to such Option Shares, free and clear of all liens,
encumbrances, equities or claims, will pass to the Depositary or its
nominee for the benefit of the several Underwriters.
(dd) To the best of our knowledge, the Company has good and
marketable title to all real property and good and marketable title to all
personal Property owned by them
33
which is material to the business of the Company, in each case free and
clear of all liens, encumbrances and defects except such as are described
in the Prospectuses or such as do not materially affect the value of such
property and do not materially 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 under valid, subsisting
and enforceable leases with such exceptions as are not material and do not
materially interfere with the use made and proposed to be made of such
property and buildings by the Company and except as described in the
Prospectuses.
(ee) The Registration Statement and the Prospectuses have been
duly authorized by and on behalf of the Company; the Registration
Statements have been signed for and on behalf of the Company by officers
thereunto duly authorized and by directors duly elected or appointed.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the ROC, to
the extent they deem proper and specified in such opinion, upon the opinion of
other counsel of good standing whom they believe to be reliable and who are
satisfactory to counsel for the Underwriters and (B) as to matters of fact, to
the extent they deem proper, on certificates of responsible officers of the
Company and public officials. References to the Prospectuses in this paragraph
(iii) include any supplements thereto at the Closing Date.
(iv) On each of the Closing Date and any settlement date, the
Depositary shall have requested and caused Patterson, Belknap, Webb & Tyler
LLP, counsel for the Depositary, to have furnished to the Representatives their
opinion dated the Closing Date or the settlement date, as the case may be, and
addressed to the Representatives, to the effect that:
(a) The Deposit Agreement has been duly authorized, executed and
delivered by the Depositary and constitutes a legal, valid and binding
instrument enforceable against the Depositary in accordance with its terms
(subject, as to enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency, moratorium or other laws affecting creditors'
rights generally from time to time in effect); the statements in the
Prospectuses under the heading "Description of American Depositary
Shares," insofar as such statements purport to describe the Depositary and
summarize certain provisions of the Deposit Agreement, the ADSs and the
ADRs, are fair and accurate.
(b) The Depositary has full power and authority and legal right
to execute and deliver the Deposit Agreement and to perform its
obligations thereunder.
(c) The ADRs and the ADSs evidenced thereby are in valid and
sufficient form and, when issued under the Deposit Agreement, the ADRs
will be duly and validly issued and will entitle the holders and
beneficial owners thereof to the rights specified therein and in the
Deposit Agreement.
(d) The ADR Registration Statement has become effective under the
Act and, to the knowledge of such counsel, no stop order suspending the
effectiveness of the ADR Registration Statement has been issued, no
proceedings for that purpose
34
have been instituted or threatened, and the ADR Registration Statement,
and each amendment comply as to form in all material respects with the
applicable requirements of the Act and the rules thereunder.
(v) On each of the Closing Date and any settlement date, the Selling
Shareholders shall have requested and caused Simpson Thacher & Bartlett, United
States counsel for the Selling Shareholders, to have furnished to the
Representatives their opinion dated the Closing Date or the settlement date, as
the case may be, addressed to the Representatives, to the effect that:
(a) The Underwriting Agreements have been duly executed and
delivered by or on behalf of the Selling Shareholders in accordance with
the laws of the State of New York.
(b) The compliance by the Selling Shareholders with all of the
provisions of the Underwriting Agreements will not violate any United
States federal or New York state statute or any order known to such
counsel issued pursuant to any United States federal or New York state
statute by any court or governmental agency or body having jurisdiction
over any Selling Shareholder.
(c) No consent, approval, authorization, order, registration or
qualification of or with any United States federal or New York state
governmental agency or body or, to the knowledge of such counsel, any
United States federal or New York state court is required for the
compliance by the Selling Shareholders with all of the provisions of the
Underwriting Agreements, except for the registration under the Act and the
Exchange Act of the Shares and the ADSs or the offering and sale thereof,
and such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or "blue sky"
laws in connection with the purchase and distribution of the Shares and
the ADSs by the Underwriters.
(d) Assuming the validity of such actions under the laws of the
ROC and any other non-United States jurisdiction (and subject to the
limitations and provisions of Sections 1331, 1332 and 1404(a) of Title 28
of the United States Code and Section 510 of the New York Civil Practice
Laws and Rules), under the laws of the State of New York relating to
personal jurisdiction, and pursuant to Section 15 of the Underwriting
Agreements, each Selling Shareholder has: (A) validly submitted to the
non-exclusive personal jurisdiction of the New York Courts in any action,
suit or proceeding arising out of or based upon the Underwriting
Agreements or the transactions contemplated thereby; and (B) in the case
of Benq, Acer and Kuang-Hwa, validly appointed CT Corporation System in
New York, New York, and in the case of UMC (as defined below), validly
appointed Law+, P.C., as its authorized agent for the purpose described in
Section 15 of the Underwriting Agreements, the waiver by each Selling
Shareholder of any objection to the venue of any proceeding in the New
York Courts is valid (subject to customary limitations under New York
state and federal laws), and service of process effected in the manner set
forth in Section 15 of the Underwriting Agreements will be effective under
the laws of the State of New York to confer valid personal jurisdiction
over such Selling Shareholder.
35
(e) Upon payment for and transfer of the security entitlements to
the ADSs representing Option Shares as contemplated in the Underwriting
Agreements, DTC will be a protected purchaser who acquires its interest
free of any adverse claim (within the meaning of Section 8-303 of the New
York UCC), and an action based on an adverse claim to the security
entitlements to such ADSs may not be asserted against the Underwriters.
The opinion of such counsel may be subject to customary assumptions,
qualifications and limitations and, in rendering such opinion, such counsel may
state that (i) they do not express any opinion therein concerning any law other
than the law of the State of New York and the federal law of the United States
of America and (ii) with respect to all matters governed by the laws of the
ROC, such counsel understand that the Representatives are relying on an opinion
of Russin & Vecchi. References to the Prospectuses in this paragraph (v)
include any supplements thereto at the Closing Date.
(vi) On each of the Closing Date and any settlement date, United
Microelectronics Corporation ("UMC") shall have requested and caused Chen &
Lin, ROC counsel for UMC as a Selling Shareholder, to have furnished to the
Representatives their opinion dated the Closing Date or the settlement date, as
the case may be, addressed to the Representatives, to the effect that:
(a) UMC has been duly incorporated and is validly existing as a
corporation under the laws of the ROC.
(b) The Underwriting Agreements and the Power of Attorney of UMC
have been duly authorized, executed and delivered by UMC and constitute
valid and legally binding obligations of UMC enforceable in accordance
with the terms thereof, and UMC has the full legal right and authority to
sell, transfer and deliver the Option Shares in the form of ADSs to be
sold by UMC under the Underwriting Agreements.
(c) UMC is the beneficial owner of the Option Shares to be
deposited by UMC with the Depositary against issuance of the ADRs
evidencing the ADSs to be sold by UMC hereunder, and has, and immediately
prior to the Closing Date or any settlement date will have, good and valid
title to such Option Shares, in each case free and clear of all liens,
encumbrances, equities and claims.
(d) Upon delivery of the Option Shares to be purchased from UMC,
and payment therefor, pursuant to the Underwriting Agreements, good and
valid title to such Option Shares, free and clear of all liens,
encumbrances, equities or claims, will pass to the Depositary or its
nominee for the benefit of the several Underwriters; assuming the Deposit
Agreement has been duly authorized and delivered by the parties thereto,
the Option Shares to be deposited by UMC may be freely deposited with the
Depositary against issuance of ADRs evidencing ADSs and the ADSs delivered
at the settlement date will be freely transferable by UMC to or for the
account of the several Underwriters and (to the extent described in the
Prospectuses) the initial purchasers thereof; and there are no
restrictions on subsequent transfers of the Option Securities to be sold
by UMC except as described in the Prospectuses
36
under the captions "Description of Our Share Capital," "Description of
American Depositary Shares" or "Foreign Investment and Exchange Controls
in Taiwan".
(e) No consent, approval, authorization, filing with, or order
of, or qualification with, any governmental body or agency of the
government of the ROC is required in connection with the transactions
contemplated in the Underwriting Agreements or in the Deposit Agreement,
except for (i) the approvals of the CBC and reports to the CBC of the
foreign exchange settlements and payments contemplated by the Deposit
Agreement (the "CBC Conversion Filings"); (ii) the filings and approvals,
if any, required under (A) the "Guidelines For Handling Issuance and Offer
of Overseas Securities by Issuers of the ROC (the "Overseas Offering
Rules"), and (B) the rules and regulations of the Taiwan Stock Exchange,
the ROC SFC and the CBC; (iii) completion of the corporate amendment
registration reflecting the issuance of the Underwritten Shares with the
SIPA which registration is required to be filed by the Company with
fifteen (15) days after the Closing Date and (iv) the 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 SIPA Approval, the CBC Approvals and
the ROC SFC Approvals
(f) None of the execution and delivery of the Power of Attorney
of UMC or of the Underwriting Agreements by UMC, and the performance by
UMC of its obligations under the Underwriting Agreements and the Power of
Attorney of UMC, will conflict with, or result in a breach or violation
of, any applicable laws of the ROC or the articles of incorporation or any
other constitutive documents of UMC.
(g) The choice of law provision set forth in Section 15 of the
Underwriting Agreements will be recognized by the courts of the ROC and
such counsel knows of no reason why the courts of the ROC would not give
effect to the choice of New York law as the proper law of the Underwriting
Agreements, 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 and an ROC court would have jurisdiction
in any suit, action or proceedings brought against UMC arising out of or
in connection with the Underwriting Agreements; UMC has the legal capacity
to sue and be sued in its own name under the laws of the ROC; UMC has
validly and irrevocably appointed Law+, P.C. as its authorized agent for
the purpose described in Section 15 of the Underwriting Agreements under
the laws of the ROC; the irrevocable submission of UMC to the
non-exclusive jurisdiction of the New York Courts and the waivers by UMC
of any objection to the venue of the proceeding in a New York Court in the
Underwriting Agreements are legal, valid and binding under the laws of the
ROC; and any final and conclusive judgment against UMC obtained in a New
York Court arising out of or in relation to the obligations of UMC under
the Underwriting Agreements would be enforceable against UMC in the courts
of the ROC, provided that the court of the ROC in which the enforcement is
sought is satisfied that (A) the court rendering the judgment had
jurisdiction over the subject matter according to the laws of the ROC, (B)
the judgment is 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, UMC was served while within the jurisdiction of
37
such court or process was served on UMC with judicial assistance of the
ROC; and (D) judgments of the courts of the ROC are recognized and
enforceable in the court rendering the judgment on a reciprocal basis.
(h) A judgment obtained against UMC in the courts of the ROC in
respect of any sum payable by UMC under the Underwriting Agreements or the
Deposit Agreement, as applicable may be expressed in United States dollars
or New Taiwan dollars.
(i) The Underwriting Agreements and the documents to be furnished
thereunder are in proper legal form under the laws of the ROC for the
enforcement thereof against UMC, as applicable, under the laws of the ROC.
Except for the filings and registrations referred to in paragraph (e)
above, it is not necessary, required, or advisable, to ensure the
legality, validity, enforceability or admissibility in evidence of any of
such agreement or document that such agreement or document be filed or
recorded with any court or other authority in the ROC or that any stamp or
similar tax be paid, it being understood that in court proceedings in the
ROC a translation into Chinese language may be required.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the ROC, to
the extent they deem proper and specified in such opinion, upon the opinion of
other counsel of good standing whom they believe to be reliable and who are
satisfactory to counsel for the Underwriters and (B) as to matters of fact, to
the extent they deem proper, on certificates of responsible officers of the
Company and public officials. References to the Prospectuses in this paragraph
(vi) include any supplements thereto at the Closing Date.
(vii) On each of the Closing Date and any settlement date, the
Representatives shall have received from Davis Polk & Wardwell, United States
counsel for the Underwriters, such opinion or opinions, dated the Closing Date
or the settlement date, as the case may be, addressed to the Representatives,
with respect to the issuance and sale of the Securities, the Registration
Statement, the ADR Registration Statement, the Prospectuses (together with any
supplement thereto) and other related matters as the Representatives may
reasonably require, and the Company and each Selling Shareholder shall have
furnished to such counsel such documents as they reasonably request for the
purpose of enabling them to pass upon such matters.
(viii) On each of the Closing Date and any settlement date, the
Representatives shall have received from Lee & Li, ROC counsel for the
Underwriters, such opinion or opinions, dated the Closing Date or the
settlement date, as the case may be, and addressed to the Representatives, with
respect to the issuance and sale of the Securities, the Registration Statement,
the ADR Registration Statement, the Prospectuses (together with any supplement
thereto) and other related matters as the Representatives may reasonably
require, and the Company and each Selling Shareholder shall have furnished to
such counsel such documents as they reasonably request for the purpose of
enabling them to pass upon such matters.
(ix) On each of the Closing Date and any settlement date, the Company
shall have furnished to the Representatives a certificate of the Company,
signed by the Chairman of the
38
Board or the President and the principal financial or accounting officer of the
Company, dated the Closing Date or the settlement date, as the case may be, to
the effect that the signers of such certificate have carefully examined the
Registration Statement, the ADR Registration Statement, the Prospectuses, any
supplements to the Prospectuses and this Agreement and that:
(a) The representations and warranties of the Company in the
Underwriting Agreements are true and correct on and as of the Closing Date
or the settlement date, as the case may be, with the same effect as if
made on the Closing Date or the settlement date, as the case may be, and
the Company has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied under the Underwriting
Agreements at or prior to the Closing Date or the settlement date, as the
case may be.
(b) No stop order suspending the effectiveness of the
Registration Statement or the ADR Registration Statement has been issued
and no proceedings for that purpose have been instituted or, to the
Company's knowledge, threatened.
(c) Since the date of the most recent financial statements
included in the Prospectuses (exclusive of any supplement thereto), there
has not been any change, or any development involving a prospective
change, that would have a material adverse effect on the condition
(financial or otherwise), earnings, business or properties of the Company
and the Subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in or
contemplated in the Prospectuses (exclusive of any supplement thereto).
(x) On each of the Closing Date and any settlement date, each Selling
Shareholder shall have furnished to the Representatives a certificate, signed
by a duly authorized signatory dated the Closing Date or the settlement date,
as the case may be, to the effect that the signer of such certificate has
carefully examined the Registration Statement, the ADR Registration Statement,
the Prospectuses, any supplement to either of the Prospectuses and this
Agreement and the U.S. Underwriting Agreement and that the representations and
warranties of such Selling Shareholder in this Agreement and the U.S.
Underwriting Agreement are true and correct in all material respects on and as
of the Closing Date or the settlement date, as the case may be, to the same
effect as if made on the Closing Date, or the settlement date, as the case may
be.
(xi) The Company shall have requested and caused KPMG to have
furnished to the Representatives letters, dated respectively as of the
Execution Time as of the Closing Date, and as of any settlement date, in form
and substance satisfactory to the Representatives, confirming that they are
independent accountants within the meaning of the Act and the applicable rules
and regulations adopted by the Commission thereunder and that they have
performed a review of the unaudited interim financial information of the
Company for the three-month period ended March 31, 2002 and as at March 31,
2002, in accordance with generally accepted auditing standards applicable in
the ROC and statement on Auditing Standards No. 71, provided that the letter
delivered on the Closing Date shall use a "cut-off" date not earlier than the
date hereof and the letter delivered on any settlement date shall use a
39
"cut off" date not earlier than the date of the third Business Day prior to
such settlement date, and stating in effect that:
(a) In their opinion the audited financial statements and
financial statement schedules included in the Registration Statement and
the Prospectuses and reported on by them comply as to form in all material
respects with the applicable accounting requirements of generally accepted
accounting principles in the ROC and the applicable accounting
requirements of the Act and the related rules and regulations adopted by
the Commission; and all necessary adjustments to net income and
shareholders' equity for the periods presented that would be required if
U.S. generally accepted accounting principles had been applied have been
made.
(b) On the basis of a reading of the latest unaudited financial
statements made available by the Company and the Subsidiaries; their
limited review, in accordance with generally accepted auditing standards
applicable in the ROC and standards established under Statement on
Auditing Standards No. 71, of the unaudited interim financial information
for the three-month period ended March 31, 2002, and as at March 31, 2002;
carrying out certain specified procedures (but not an examination in
accordance with generally accepted auditing standards) which would not
necessarily reveal matters of significance with respect to the comments
set forth in such letter; a reading of the minutes of the meetings of the
stockholders and directors of the Company and the Subsidiaries; and
inquiries of certain officials of the Company who have responsibility for
financial and accounting matters of the Company and the Subsidiaries as to
transactions and events subsequent to December 31, 2001, nothing came to
their attention which caused them to believe that:
(i) any unaudited financial statements included in the
Registration Statement and the Prospectuses do not comply as to form
in all material respects with generally accepted accounting
principles and the regulations in the ROC and applicable accounting
requirements of the Act and with the related rules and regulations
adopted by the Commission with respect to registration statements on
Form F-1; and said unaudited financial statements are not in
conformity with generally accepted accounting principles applied on a
basis substantially consistent with that of the audited financial
statements included in the Registration Statement and the
Prospectuses; and all necessary adjustments to net income and
shareholders' equity for such interim period that would be required
if U.S. generally accepted accounting principles had been applied
have not been made.
(ii) with respect to the period subsequent to March 31, 2002,
there were any changes, at a specified date not more than five days
prior to the date of the letter, in the long-term debt of the Company
and the Subsidiaries or capital stock of the Company or decreases in
the consolidated net current assets or stockholders' equity of the
Company as compared with the amounts shown on the March 31, 2002,
consolidated balance sheet included in the Registration Statement and
the Prospectuses, or for the period from April 1, 2002 to such
specified date there were any decreases, as compared with the
corresponding period in the preceding year in
40
consolidated net sales or in the total or per-share amounts of net
income of the Company and the Subsidiaries, except in all instances
for changes or decreases set forth in such letter, in which case the
letter shall be accompanied by an explanation by the Company as to
the significance thereof unless said explanation is not deemed
necessary by the Representatives.
(c) They have performed certain other specified procedures as a
result of which they determined that certain information of an accounting,
financial or statistical nature (which is limited to accounting, financial
or statistical information derived from the general accounting records of
the Company and its subsidiaries) set forth in the Registration Statement
and the Prospectuses, including the information set forth under the
captions "Prospectus Summary - Summary Financial and Operational Data" and
"Selected Financial and Operational Data" in the Prospectuses, agrees with
the accounting records of the Company and its subsidiaries, excluding any
questions of legal interpretation.
(d) On the basis of a reading of the unaudited pro forma
financial statements included in the Registration Statement and the
Prospectuses (the "pro forma financial statements"); carrying out certain
specified procedures; inquiries of certain officials of the Company and
Unipac Optoelectronics Corporation, who have responsibility for financial
and accounting matters; and proving the arithmetic accuracy of the
application of the pro forma adjustments to the historical amounts in the
pro forma financial statements, nothing came to their attention which
caused them to believe that the pro forma financial statements do not
comply as to form in all material respects with the applicable accounting
requirements of Rule 11-02 of Regulation S-X or that the pro forma
adjustments have not been properly applied to the historical amounts in
the compilation of such statements.
(xii) The Company shall have requested and caused Diwan, Ernst & Young
to have furnished to the Representatives letters, dated respectively as of the
Execution Time, as of the Closing Date, and as of any settlement date, in form
and substance satisfactory to the Representatives, confirming that they are
independent accountants within the meaning of the Act and the applicable rules
and regulations adopted by the Commission thereunder and containing other
statements and information of the type ordinarily included in accountants'
"comfort letters" to underwriters with respect to the financial statements of
Unipac Optoelectronics Corporation and certain financial information contained
in the Registration Statement and the Prospectuses, provided that the letter
delivered on the Closing Date shall use a "cut-off" date not earlier than the
date hereof and the letter delivered on any settlement date shall use a "cut
off" date not earlier than the date of the third Business Day prior to such
settlement date.
(xiii) Subsequent to the Execution Time or, if earlier, the dates as
of which information is given in the Registration Statement (exclusive of any
amendment thereof), and the Prospectuses (exclusive of any supplement thereto),
there shall not have been (a) any change or decrease specified in the letter or
letters referred to in paragraph (x) of this Section 6 or (b) any change, or
any development involving a prospective change, in or affecting the condition
(financial or otherwise), earnings, business or properties of the Company and
the Subsidiaries, taken as a whole, whether or not arising from transactions in
41
the ordinary course of business, except as set forth in or contemplated in the
Prospectuses (exclusive of any supplement thereto) the effect of which, in any
case referred to in clause (a) or (b) above, is, in the sole judgment of the
International Representatives, so material and adverse as to make it
impractical or inadvisable to proceed with the offering or delivery of the
International Securities as contemplated by the Registration Statement
(exclusive of any amendment thereof), the ADR Registration Statement and the
Prospectuses (exclusive of any supplement thereto).
(xiv) The Company and the Depositary shall have executed and delivered
the Deposit Agreement, and the Selling Shareholders shall have executed and
delivered the Power of Attorney, in each case in form and substance
satisfactory to the Representatives, and each of the Deposit Agreement and the
Powers of Attorney shall be in full force and effect.
(xv) The Selling Shareholders shall have delivered to the Depositary,
no later than on the Deposit Date, a New Taiwan dollar Bank of Taiwan cheque
payable to the ROC taxing authority, dated as of such date of delivery, in the
amount of the securities transfer tax payable on the transfer on the Closing
Date or the settlement date, as the case may be, of the Option Shares
represented by the ADSs to be sold by the Selling Shareholders pursuant to the
Underwriting Agreements to the appropriate taxing authorities in the Republic
of China.
(xvi) The Depositary shall have furnished or caused to be furnished to
the Representatives certificates satisfactory to the Representatives evidencing
(i) the deposit with the Depositary of the Certificates of Payment or Option
Shares in respect of which ADSs to be purchased by the Underwriters on the
Closing Date or any settlement date, as the case may be, are to be issued, (ii)
the execution, issuance, countersignature (if applicable) and delivery of the
ADRs evidencing such ADSs pursuant to the Deposit Agreement, (iii) if
applicable, the receipt by the Depositary of the New Taiwan dollar Bank of
Taiwan cheque referred to in Section 6(xv) hereof, and (iv) such other matters
related thereto as the Representatives reasonably request.
(xvii) Prior to each of the Closing Date and any settlement date, the
Company and the Selling Shareholders shall have furnished to the
Representatives such further information, certificates and documents as the
Representatives may reasonably request.
(xviii) The ADSs shall have been listed and admitted and authorized
for trading on the New York Stock Exchange, subject only to official notice of
issuance, and satisfactory evidence of such actions shall have been provided to
the Representatives.
(xix) At the Execution Time, the Company shall have furnished to the
Representatives a letter substantially in the form of Exhibit A hereto from
each executive officer of the Company listed in the Prospectuses, and the legal
entity represented by each director and supervisor of the Company, in each case
addressed to the Representatives.
(xx) No order or notice, oral or written, from any governmental or
regulatory authority of the ROC, including the ROC SFC, has been received by
the Company to the effect that the offering contemplated by this Agreement, if
consummated, will contravene applicable laws or regulations of the ROC.
42
(xxi) Prior to the Closing Date, the Company shall have received from
each of its employees entitled to subscribe to the Underwritten Shares a
written waiver of such employee's right to subscribe to such Underwritten
Shares.
(xxii) The closing of the purchase of the U.S. Underwritten Securities
to be issued and sold by the Company and the Selling Shareholders pursuant to
the U.S. Underwriting Agreement shall occur concurrently with the closing of
the purchase of the International Underwritten Securities described herein.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Representatives and counsel for the Underwriters, this
Agreement and all obligations of the International Underwriters under this
Agreement may be canceled at, or at any time prior to, the Closing Date or the
settlement date by the Representatives. Notice of such cancellation shall be
given to the Company and each Selling Shareholder in writing or by telephone or
facsimile confirmed in writing.
The documents required to be delivered by this Section 6 shall be
delivered at the office of Davis Polk & Wardwell, counsel for the Underwriters,
at 18/F, The Hong Kong Club Building, 3A Chater Road, Hong Kong, on the Closing
Date.
7. Reimbursement of Underwriters' Expenses. If the sale of the
International Securities provided for in this Agreement is not consummated:
(a) Because any condition to the obligations of the Underwriters
set forth in Section 6 hereof is not satisfied because of any refusal,
inability or failure of the Company to comply with such condition, or
because of any refusal, inability or failure on the part of the Company to
perform any agreement in this Agreement or comply with any provision
hereof other than by reason of a default by any of the Underwriters, the
Underwriters shall not be required to make any payments, or reimburse the
Company or the Selling Shareholders for any payments, described in Section
5(i)(o) hereof, and the Company will reimburse the Underwriters severally
through Salomon Smith Barney Inc. on demand for (i) all out-of-pocket
expenses (including reasonable fees and disbursements of counsel) that
shall have been incurred by them in connection with the proposed purchase
and sale of the Securities and (ii) all payments by the Underwriters under
Section 5(i)(o) hereof.
(b) Because of any termination pursuant to Section 10 hereof, the
Underwriters shall not be required to make any payments, or reimburse the
Company or the Selling Shareholders for any payments, described in Section
5(i)(o) hereof and the Company will reimburse the Underwriters severally
through Salomon Smith Barney Inc. on demand for all payments made by the
Underwriters pursuant to Section 5(i)(o) hereof; provided that if the
Company or any of its subsidiaries consummates an international securities
offering with any lead manager other than Salomon Smith Barney Inc. or any
of the affiliates of Salomon Smith Barney Inc. in the period ending 365
days following such termination, then immediately upon the consummation of
such offering, the Company will, in addition, reimburse the
43
Underwriters severally through Salomon Smith Barney Inc. on demand for all
out-of-pocket expenses (including reasonable fees and disbursements of
counsel) that shall have been incurred by them in connection with the
proposed purchase and sale of the Securities.
(c) For any reason other than those set forth in paragraphs (a)
or (b) above, the Underwriters will not be required to make any payments,
or reimburse the Company or the Selling Shareholders for any payments,
described in Section 5(i)(o) hereof, and the Company will reimburse the
Underwriters severally through Salomon Smith Barney Inc. on demand for all
payments by the Underwriters under Section 5(i)(o) hereof.
If the Company is required to make any payments to the Underwriters
under this Section 7 because of any Selling Shareholder's refusal, inability or
failure to satisfy any condition to the obligations of the Underwriters set
forth in Section 6, the Selling Shareholders shall reimburse the Company pro
rata in proportion to the percentage of Securities to be sold by each on demand
for all amounts so paid.
8. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each International Underwriter, the directors,
officers, employees and agents of each International Underwriter and each
person who controls any International Underwriter within the meaning of either
the Act or the Exchange Act against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may become subject
under the Act, the Exchange Act or other Federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact contained
in the registration statement for the registration of the Securities as
originally filed or in any amendment thereof, or in the ADR Registration
Statement as originally filed or in any amendment thereof, or in any U.S. or
International Preliminary Prospectus or in either of the Prospectuses, or in
any amendment thereof 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 agrees to reimburse each such indemnified party, as incurred, for any legal
or other expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability or action; provided,
however, that the Company will 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
any such untrue statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any International
Underwriter through the International Representatives specifically for
inclusion therein. This indemnity agreement will be in addition to any
liability which the Company may otherwise have.
(b) Each Selling Shareholder severally and not jointly agrees to
indemnify and hold harmless the Company, each of its directors, each of
its officers who signs the Registration Statement or the ADR Registration
Statement, each International Underwriter, the directors, officers,
employees and agents of each International Underwriter and each person who
controls the Company or any International Underwriter within the meaning
of either the Act or the Exchange Act and each other
44
Selling Shareholder, if any, to the same extent as the foregoing indemnity
from the Company to each International Underwriter, but only with
reference to written information furnished to the Company by or on behalf
of such Selling Shareholder specifically for inclusion in the documents
referred to in the indemnity in Section 8(a). This indemnity agreement
will be in addition to any liability which any Selling Shareholder may
otherwise have.
(c) Each International Underwriter severally and not jointly
agrees to indemnify and hold harmless the Company, each of its directors,
each of its officers who signs the Registration Statement or the ADR
Registration Statement, and each person who controls the Company within
the meaning of either the Act or the Exchange Act and each Selling
Shareholder, to the same extent as the indemnity in Section 8(a) from the
Company to each International Underwriter, but only with reference to
written information relating to such International Underwriter furnished
to the Company by or on behalf of such International Underwriter through
the Representatives specifically for inclusion in the documents referred
to in the indemnity in Section 8(a). This indemnity agreement will be in
addition to any liability which any International Underwriter may
otherwise have. The Company and each Selling Shareholder acknowledge that
the statements set forth in the last paragraph of the cover page regarding
delivery of the Securities, and, under the heading "Underwriting," (i) the
list of Underwriters and their respective participation in the sale of the
Securities, (ii) the sentences related to concessions and reallowances,
and (iii) the paragraph related to stabilization, syndicate covering
transactions and penalty bids in any U.S. or International Preliminary
Prospectus and the Prospectuses, constitute the only information furnished
in writing by or on behalf of the several Underwriters for inclusion in
any U.S. or International Preliminary Prospectus or the Prospectuses.
(d) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party in
writing of the commencement thereof; but the failure so to notify the
indemnifying party (i) will not relieve it from liability under paragraph
(a), (b) or (c) above unless and to the extent it did not otherwise learn
of such action and such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses and (ii) will not,
in any event, relieve the indemnifying party from any obligations to any
indemnified party other than the indemnification obligation provided in
paragraph (a), (b) or (c) above. The indemnifying party shall be entitled
to appoint counsel of the indemnifying party's choice at the indemnifying
party's expense to represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate
counsel retained by the indemnified party or parties except as set forth
below); provided, however, that such counsel shall be satisfactory to the
indemnified party. Notwithstanding the indemnifying party's election to
appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel
(including local counsel), and the indemnifying party shall bear the
reasonable fees, costs and expenses of such separate counsel if (i) the
use of counsel chosen by the indemnifying
45
party to represent the indemnified party would present such counsel with a
conflict of interest, (ii) the actual or potential defendants in, or
targets of, any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those
available to the indemnifying party, (iii) the indemnifying party shall
not have employed counsel satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of
the institution of such action or (iv) the indemnifying party shall
authorize the indemnified party to employ separate counsel at the expense
of the indemnifying party. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same
jurisdiction, be liable for (i) the fees and expenses of more than one
separate firm (in addition to any local counsel) for all Underwriters and
the directors, officers, employees and agents of each Underwriter and each
person who controls any Underwriter within the meaning of either the Act
or the Exchange Act, (ii) the fees and expenses of more than one separate
firm (in addition to any local counsel) for the Company, its directors,
its officers who sign the Registration Statement and each person, if any,
who controls the Company within the meaning of either the Act or the
Exchange Act and (iii) the fees and expenses of more than one separate
firm (in addition to any local counsel) for all Selling Shareholders and
all persons, if any, who control any Selling Shareholder within the
meaning of either the Act or the Exchange Act, and that all such fees and
expenses shall be reimbursed as they are incurred. In the case of any such
separate firm for the Underwriters and directors, officers, employees and
agents, and control persons, of any Underwriters, such firm shall be
designated in writing by Salomon Smith Barney Inc. In the case of any such
separate firm for the Company, and such directors, officers and control
persons of the Company, such firm shall be designated in writing by the
Company. In the case of any such separate firm for the Selling
Shareholders and such control persons of any Selling Shareholders, such
firm shall be designated in writing by the persons named as
attorneys-in-fact for the Selling Shareholders under the Powers of
Attorney. An indemnifying party will not, without the prior written
consent of the indemnified parties, settle or compromise or consent to the
entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or
contribution may be sought under this Agreement (whether or not the
indemnified parties are actual or potential parties to such claim or
action) unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability arising
out of such claim, action, suit or proceeding.
(e) In the event that the indemnity provided in paragraph (a),
(b) or (c) of this Section 8 is unavailable to or insufficient to hold
harmless an indemnified party for any reason, the Company, the Selling
Shareholders and the International Underwriters agree to contribute to the
aggregate losses, claims, damages and liabilities (including legal or
other expenses reasonably incurred in connection with investigating or
defending same) (collectively "Losses") to which the Company, one or more
of the Selling Shareholders and one or more of the International
Underwriters may be subject in such proportion as is appropriate to
reflect the relative benefits received by the Company, by the Selling
Shareholders and by the International
46
Underwriters from the offering of the International Securities; provided,
however, that in no case shall any International Underwriter (except as
may be provided in any agreement among underwriters relating to the
offering of the Securities) be responsible for any amount in excess of the
underwriting discount or commission applicable to the International
Securities purchased by such International Underwriter under this
Agreement. If the allocation provided by the immediately preceding
sentence is unavailable for any reason, the Company, the Selling
Shareholders and the International Underwriters shall contribute in such
proportion as is appropriate to reflect not only such relative benefits
but also the relative fault of the Company, of the Selling Shareholders
and of the International Underwriters in connection with the statements or
omissions which resulted in such Losses as well as any other relevant
equitable considerations. Benefits received by the Company and by the
Selling Shareholders shall be deemed to be equal to the total net proceeds
from the offering (before deducting expenses) received by each of them,
and benefits received by the International Underwriters shall be deemed to
be equal to the total underwriting discounts and commissions, in each case
as set forth on the cover page of the International Prospectus. Relative
fault shall be determined by reference to, among other things, whether any
untrue or any alleged untrue statement of a material fact or the omission
or alleged omission to state a material fact relates to information
provided by the Company and the Selling Shareholders on the one hand or
the International Underwriters on the other, the intent of the parties and
their relative knowledge, access to information and opportunity to correct
or prevent such untrue statement or omission. The Company, the Selling
Shareholders and the International Underwriters agree that it would not be
just and equitable if contribution were determined by pro rata allocation
or any other method of allocation which does not take account of the
equitable considerations referred to above. Notwithstanding the provisions
of this paragraph (e), 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. For purposes of this Section 8, each person who
controls an International Underwriter within the meaning of either the Act
or the Exchange Act and each director, officer, employee and agent of an
International Underwriter shall have the same rights to contribution as
such International Underwriter, and each person who controls the Company
within the meaning of either the Act or the Exchange Act, each officer of
the Company who shall have signed the Registration Statement or the ADR
Registration Statement and each director of the Company shall have the
same rights to contribution as the Company, subject in each case to the
applicable terms and conditions of this paragraph (e).
9. Default by an Underwriter. If any one or more International
Underwriters shall fail to purchase and pay for any of the International
Securities agreed to be purchased by such International Underwriter or
International Underwriters under this Agreement and such failure to purchase
shall constitute a default in the performance of its or their obligations under
this Agreement, the remaining International Underwriters shall be obligated
severally to take up and pay for (in the respective proportions which the
amount of International Securities set forth opposite their names in Schedule I
hereto bears to the aggregate amount of International Securities set forth
opposite the names of all the remaining International Underwriters) the
International Securities which the defaulting International Underwriter or
International
47
Underwriters agreed but failed to purchase; provided, however,
that in the event that the aggregate amount of International Securities which
the defaulting International Underwriter or International Underwriters agreed
but failed to purchase shall exceed 10% of the aggregate amount of
International Securities set forth in Schedule I hereto, the remaining
International Underwriters shall have the right to purchase all, but shall not
be under any obligation to purchase any, of the International Securities, and
if such nondefaulting International Underwriters do not purchase all the
International Securities, this Agreement will terminate without liability to
any nondefaulting International Underwriter, the Selling Shareholders or the
Company. In the event of a default by any International Underwriter as set
forth in this Section 9, the Closing Date shall be postponed for such period,
not exceeding five Business Days, as the International Representatives shall
determine in order that the required changes in the Registration Statement, the
ADR Registration Statement and the Prospectuses or in any other documents or
arrangements may be effected. Nothing contained in this Agreement shall relieve
any defaulting International Underwriter of its liability, if any, to the
Company, the Selling Shareholders and any nondefaulting International
Underwriter for damages occasioned by its default under this Agreement.
10. Termination. This Agreement shall be subject to termination in the
absolute discretion of the International Representatives, by notice given to
the Company prior to delivery of and payment for the International Securities,
if at any time prior to such time (i) trading in the Company's Common Shares
shall have been suspended by the Commission or the Taiwan Stock Exchange or
trading in securities generally on the New York Stock Exchange shall have been
suspended or limited or minimum prices shall have been established on either of
such Exchanges, (ii) a banking moratorium shall have been declared by U.S.
Federal, New York State or the ROC authorities or (iii) there shall have
occurred any outbreak or escalation of hostilities, declaration by the United
States or the ROC of a national emergency or war, or other calamity or crisis
the effect of which on financial markets is such as to make it, in the sole
judgment of the International Representatives, impractical or inadvisable to
proceed with the offering or delivery of the International Securities as
contemplated by the International Prospectus (exclusive of any supplement
thereto).
11. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of
the Company or its officers, of each Selling Shareholder and of the
International Underwriters set forth in or made pursuant to this Agreement will
remain in full force and effect, regardless of any investigation made by or on
behalf of any International Underwriter, any Selling Shareholder or the Company
or any of the officers, directors or controlling persons referred to in Section
8 hereof, and will survive delivery of and payment for the International
Securities. The provisions of Sections 7 and 8 hereof shall survive the
termination or cancellation of this Agreement.
12. Notices. All communications under this Agreement will be in
writing and effective only on receipt, and, if sent to the International
Representatives, will be mailed, delivered or telefaxed to Salomon Smith Barney
Inc., Attention: General Counsel (fax no.: (212) 816-7912) and confirmed to
such General Counsel at Salomon Smith Barney Inc., 388 Greenwich Street, New
York, New York, 10013, Attention: General Counsel; or, if sent to the Company,
will be mailed, delivered or telefaxed to (fax no.: (886-3) 564-3370) and
confirmed to it at 1 Li-Hsin Rd., 2 Science-Based Industrial Park, Hsin-Chu
300, Taiwan,
48
ROC, attention of Jerry Liu, Senior Manager of Finance Department; or if sent
to any Selling Shareholder, will be mailed, delivered or telefaxed and
confirmed to it at the address set forth in Schedule II hereto.
13. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
officers and directors and controlling persons referred to in Section 8 hereof,
and no other person will have any right or obligation under this Agreement.
14. Applicable Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed within the State of New York.
15. Jurisdiction. Each of the Company and the Selling Shareholders
agrees that any suit, action or proceeding against the Company brought by any
International Underwriter, the directors, officers, employees and agents of any
International Underwriter, or by any person who controls any International
Underwriter, arising out of or based upon this Agreement or the transactions
contemplated hereby may be instituted in any New York Court, and waives any
objection which it may now or hereafter have to the laying of venue of any such
proceeding, and irrevocably submits to the non-exclusive jurisdiction of such
courts in any suit, action or proceeding. Each of the Company and each Selling
Shareholder other than UMC has appointed CT Corporation System, Inc., 111
Eighth Avenue, New York, New York 10011 as its authorized agent and UMC has
appointed Law+, P.C., 993 Highland Circle, Los Altos, CA 94024 as its
authorized agent (the "Authorized Agent") upon whom process may be served in
any suit, action or proceeding arising out of or based upon this Agreement or
the transactions contemplated herein which may be instituted in any New York
Court, by any International Underwriter, the directors, officers, employees and
agents of any International Underwriter, or by any person who controls any
International Underwriter, and expressly accepts the non-exclusive jurisdiction
of any such court in respect of any such suit, action or proceeding. Each of
the Company and the Selling Shareholders hereby represents and warrants that
the Authorized Agent has accepted such appointment and has agreed to act as
said agent for service of process, and the Company agrees to take any and all
action, including the filing of any and all documents that may be necessary to
continue such appointment in full force and effect as aforesaid. Service of
process upon the Authorized Agent shall be deemed, in every respect, effective
service of process upon the Company and the Selling Shareholders.
Notwithstanding the foregoing, any action arising out of or based upon this
Agreement may be instituted by any International Underwriter, the directors,
officers, employees and agents of any International Underwriter, or by any
person who controls any International Underwriter, in any court of competent
jurisdiction in the ROC.
The provisions of this Section 15 shall survive any termination of this
Agreement, in whole or in part.
16. Currency. Each reference in this Agreement to U.S. Dollars (the
"relevant currency") is of the essence. To the fullest extent permitted by law,
the obligations of each 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
49
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 or the Selling Shareholder making such payment will
pay such additional amounts, in the relevant currency, as may be necessary to
compensate for the shortfall. Any obligation of any of the Company or 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.
17. Waiver of Immunity. To the extent that any of the Company or the
Selling Shareholders has or hereafter may acquire any immunity (sovereign or
otherwise) from any legal action, suit or proceeding, from jurisdiction of any
court or from set-off or any legal process (whether service or notice,
attachment in aid or otherwise) with respect to itself or any of its property,
each of the Company and the Selling Shareholders hereby irrevocably waives and
agrees not to plead or claim such immunity in respect of its obligations under
this Agreement.
18. Counterparts. This Agreement may be signed in one or more
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same agreement.
19. Headings. The section headings used in this Agreement are for
convenience only and shall not affect the construction hereof.
20. Definitions. The terms which follow, when used in this Agreement,
shall have the meanings indicated.
"Act" shall mean the United States Securities Act of 1933, as amended,
and the rules and regulations of the Commission promulgated thereunder.
"ADR Registration Statement" shall mean the registration statement
referred to in paragraph 1(i)(c) above, including all exhibits thereto, each as
amended at the time such part of the registration statement became effective.
"ADRs" shall mean the certificates issued by the Depositary to
evidence the American depositary shares issued under the terms of the Deposit
Agreement.
"ADSs" shall mean the American depositary shares, each of which
represents ten (10) common shares of the Company, par value NT$10 per share,
issued under the terms of the Deposit Agreement.
"Affiliate" shall mean, with respect to any Selling Shareholder other
than Kuang-Hwa, any affiliate of such Selling Shareholder, and, solely with
respect to Kuang-Hwa, any person or entity directly, or indirectly through one
or more intermediaries, controlled by Kuang-Hwa.
50
"Business Day" shall mean any day other than a Saturday, a Sunday or a
legal holiday or a day on which banking institutions or trust companies are
authorized or obligated by law to close in New York City or the ROC.
"Commission" shall mean the Securities and Exchange Commission.
"Effective Date" shall mean each date and time that the Registration
Statement and the ADR Registration Statement, any post-effective amendment or
amendments thereto and any Rule 462(b) Registration Statement became or become
effective.
"Exchange Act" shall mean the United States Securities Exchange Act of
1934, as amended, and the rules and regulations of the Commission promulgated
thereunder.
"Execution Time" shall mean the date and time that this U.S.
Underwriting Agreement is executed and delivered by the parties hereto.
"International Preliminary Prospectus" shall have the meaning set
forth under "U.S. Preliminary Prospectus."
"International Prospectus" shall mean such form of prospectus relating
to the International Securities as first filed pursuant to Rule 424(b) after
the Execution Time or, if no filing pursuant to Rule 424(b) is made, such form
of prospectus included in the Registration Statement at the Effective Date.
"International Representatives" shall mean the addressees of the
International Underwriting Agreement.
"International Securities" shall mean the International Underwritten
Securities and the International Option Securities.
"International Underwriters" shall mean the several underwriters named
in Schedule I to the International Underwriting Agreement.
"International Underwriting Agreement" shall mean the International
Underwriting Agreement dated the date hereof related to the sale of the
International Securities by the Company and the Selling Shareholders to the
International Underwriters.
"New York Courts" shall mean the U.S. Federal or State courts located
in the State of New York, County of New York.
"Option Securities" shall mean the U.S. Option Securities and the
International Option Securities.
"Option Shares" shall mean the U.S. Option Shares and the International
Option Shares.
"Preliminary Prospectus" shall have the meaning set forth under "U.S.
Preliminary Prospectus."
51
"Prospectuses" and "each Prospectus" shall mean the U.S. Prospectus and
the International Prospectus.
"Registration Statement" shall mean the registration statement
referred to in paragraph 1(i)(a) above, including exhibits and financial
statements, as amended at the Execution Time (or, if not effective at the
Execution Time, in the form in which it shall become effective) and, in the
event any post-effective amendment thereto or any Rule 462(b) Registration
Statement becomes effective prior to the Closing Date, shall also mean such
registration statement as so amended or such Rule 462(b) Registration
Statement, as the case may be. Such term shall include any Rule 430A
Information deemed to be included therein at the Effective Date as provided by
Rule 430A.
"Representatives" shall mean the U.S. Representatives and the
International Representatives.
"Rule 424", "Rule 430A" and "Rule 462" refer to such rules under the
Act.
"Rule 430A Information" shall mean information with respect to the
Securities and the offering thereof permitted to be omitted from the
Registration Statement when it becomes effective pursuant to Rule 430A.
"Rule 462(b) Registration Statement" shall mean a registration
statement and any amendments thereto filed pursuant to Rule 462(b) relating to
the offering covered by the registration statement referred to in Section
1(a)(i) hereof.
"Securities" shall mean the U.S. Securities and the International
Securities.
"Selling Shareholders" shall mean the persons named on Schedule II to
the U.S. Underwriting Agreement and the International Underwriting Agreement.
"Shares" shall mean the U.S. Shares and the International Shares.
"Subsidiaries" shall mean the subsidiaries of the Company listed on
Annex A attached hereto.
"UMC Letter" shall mean the letter agreement dated April 30, 2002
between the Company and Salomon Smith Barney Inc. relating to the offering by
United Microelectronics Corporation of bonds that will be exchangeable into the
Common Shares or ADSs of the Company.
"Underlying Shares" shall mean the Shares that will be represented by
the ADSs.
"Underwriter" and "Underwriters" shall mean the U.S. Underwriters and
the International Underwriters.
"Underwritten Securities" shall mean the U.S. Underwritten Securities
and the International Underwritten Securities.
52
"Underwritten Shares" shall mean the U.S. Underwritten Shares and the
International Underwritten Shares.
"United States or Canadian Person" shall mean any person who is a
national or resident of the United States or Canada, any corporation,
partnership, or other entity created or organized in or under the laws of the
United States or Canada or of any political subdivision thereof, or any estate
or trust the income of which is subject to United States or Canadian Federal
income taxation, regardless of its source (other than any non-United States or
non-Canadian branch of any United States or Canadian Person), and shall include
any United States or Canadian branch of a person other than a United States or
Canadian Person. "U.S." or "United States" shall mean the United States of
America (including the states thereof and the District of Columbia), its
territories, its possessions and other areas subject to its jurisdiction.
"U.S. Preliminary Prospectus" and "International Preliminary
Prospectus", respectively, shall mean any preliminary prospectus with respect
to the offering of the U.S. Securities and the International Securities, as the
case may be, referred to in paragraph 1(i)(a) above and any preliminary
prospectus with respect to the offering of the U.S. Securities and the
International Securities, as the case may be, included in the Registration
Statement at the Effective Date that omits Rule 430A Information; and the U.S.
Preliminary Prospectus and the International Preliminary Prospectus are
hereinafter collectively called the "Preliminary Prospectuses".
"U.S. Prospectus" shall mean the prospectus relating to the Securities
that is first filed pursuant to Rule 424(b) after the Execution Time or, if no
filing pursuant to Rule 424(b) is required, shall mean the form of final
prospectus relating to the Securities included in the Registration Statement at
the Effective Date.
"U.S. Representatives" shall mean the addressees of the U.S.
Underwriting Agreement.
"U.S. Securities" shall mean the U.S. Underwritten Securities and the
U.S. Option Securities.
"U.S. Underwriting Agreement" shall mean this agreement relating to
the sale of the U.S. Securities by the Company and the Selling Shareholders to
the U.S. Underwriters.
"U.S. Underwriters" shall mean the several underwriters named in
Schedule I to the U.S. Underwriting Agreement.
53
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this letter and your acceptance shall represent a binding agreement
among the Company and the several International Underwriters.
Very truly yours,
AU Optronics Corp.
By: /s/ Kuen-Yao (K.Y.) Lee
--------------------------------------
Chief Executive Officer
Benq Corporation
By: /s/ Kuen-Yao (K.Y.) Lee
--------------------------------------
President
United Microelectronics Corporation
By: /s/ Max Weishun Cheng
--------------------------------------
Attorney-in-fact
Acer Inc.
By: /s/ Max Weishun Cheng
--------------------------------------
Attorney-in-fact
Kuang-Hwa Investment Holding Co., Ltd.
By: /s/ Max Weishun Cheng
--------------------------------------
Attorney-in-fact
54
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
Salomon Smith Barney Inc.
UBS AG, acting through its business group UBS Warburg
ING Bank N.V.
CLSA Limited
Daiwa Securities SMBC Hong Kong Limited
Lehman Brothers Inc.
By: Salomon Smith Barney Inc.
By: /s/ Willy Liu
----------------------
Managing Director
For themselves and the other
several International Underwriters
named in Schedule I to the foregoing
Agreement.
55
SCHEDULE I
Number of ADSs (representing
Underwritten Shares) to be
Underwriters Purchased
- ------------ -----------------------------
Salomon Smith Barney Inc........................... 15,000,000
UBS AG, acting through its business group
UBS Warburg.................................... 5,000,000
ING Bank N.V....................................... 2,500,000
CLSA Limited....................................... 1, 000,000
Daiwa Securities SMBC Hong Kong Limited............ 1, 000,000
Lehman Brothers Inc................................ 500,000
------------
Total.............. 25,000,000
SCHEDULE II
Maximum Number of ADSs
(representing Option Shares)
Selling Shareholders: to be Sold
- --------------------- ----------------------------
Benq Corporation
157, Shan-Ying Road,
Gueishan Taoyuan, 333
Taiwan, ROC
Fax No.: (886-3) 359-3235 1,250,000
United Microelectronics Corporation
No. 3 Lee-Hsing Road II,
Science-Based Industrial Park, Hsin-Chu City 300,
Taiwan, ROC
Fax No.: (886-3) 577-4767 1,250,000
Acer Inc.
21F, #88, Hsin Tai Wu Road, Sec. 1, Hsinchih, Taipei,
Tsien 221,
Taiwan, ROC
Fax No.: (886-2) 8691-1009 500,000
Kuang-Hwa Investment Holding Co., Ltd.
10F, 232, Pa Teh Road, Sec 2, Taipei,
Taiwan, ROC
Fax No.: (886-2) 2711-3699 500,000
---------
Total ................ 3,500,000
EXHIBIT A
[Form of Lock-Up Agreement]
[Letterhead of executive officer or shareholder of
AU Optronics Corp.]
, 2002
Salomon Smith Barney Inc.
UBS AG, acting through its business group UBS Warburg
CLSA Limited
Daiwa Securities SMBC Hong Kong Limited
Lehman Brothers Inc.
As Representatives of the several U.S. Underwriters
and International Underwriters
ING Financial Markets LLC
As Representative of the Several U.S. Underwriters
ING Bank N.V.
As Representative of the Several International Underwriters
c/o Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
Ladies and Gentlemen:
This letter is being delivered to you in connection with the
proposed U.S. Underwriting Agreement and International Underwriting Agreement
(collectively, the "Underwriting Agreements") to be entered into between AU
Optronics Corp. (the "Company"), a corporation organized under the laws of the
Republic of China, the selling shareholders to be named therein, and you as
representative of a group of U.S. Underwriters and International Underwriters
to be named therein, relating to an underwritten public offering of American
depositary shares ("ADSs"), each ADS representing ten common shares, par value
NT$10.00 per share, of the Company (the "Common Shares").
In order to induce you and the other U.S. Underwriters and
International Underwriters to enter into the Underwriting Agreements, the
undersigned will not, without the prior written consent of Salomon Smith Barney
Inc., offer, sell, contract to sell, pledge or otherwise dispose of (or enter
into any transaction which is designed to, or might reasonably be
A-1
expected to, result in the disposition (whether by actual disposition or
effective economic disposition due to cash settlement or otherwise) by the
undersigned or any affiliate of the undersigned or any person in privity with
the undersigned or any affiliate of the undersigned), directly or indirectly,
including the filing (or participation in the filing) of a registration
statement with the U.S. Securities and Exchange Commission in respect of, or
establish or increase a put equivalent position or liquidate or decrease a call
equivalent position, within the meaning of Section 16 of the U.S. Securities
Exchange Act of 1934, as amended, and the rules and regulations of the U.S.
Securities and Exchange Commission promulgated thereunder with respect to, any
Common Shares or ADSs (other than Common Shares or ADSs disposed of as bona
fide gifts approved by Salomon Smith Barney Inc.) or any securities convertible
into, or exercisable or exchangeable for, Common Shares or ADSs, or publicly
announce an intention to effect any such transaction, for a period that
commences on the date hereof and ends 90 days after the date of the
Underwriting Agreements.
If, for any reason, the Underwriting Agreements shall be
terminated prior to the Closing Date (as defined in the Underwriting
Agreements), the agreement set forth above shall likewise be terminated.
Yours very truly,
[Signature of executive
officer or shareholder]
[Name and address of executive
officer or shareholder]
A-2
Annex A
Subsidiaries
AU Optronics (L) Corp.
AU Optronics Corporation
America
AU Optronics (Suzhou) Corp.
AU Optronics Corporation
Japan