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EXHIBIT 1.1
S&C Draft of September 20, 2000
ADVANCED SEMICONDUCTOR ENGINEERING, INC.
20,000,000 AMERICAN DEPOSITARY SHARES
REPRESENTING
100,000,000 COMMON SHARES
(PAR VALUE NT$10 PER SHARE)
UNDERWRITING AGREEMENT
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September , 2000
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Goldman Sachs (Asia) L.L.C.,
Morgan Stanley & Co. Incorporated,
As representatives of the several Underwriters
named in Schedule I hereto,
c/o Goldman Sachs (Asia) L.L.C.,
68th Floor, Cheung Kong Center,
2 Queen's Road Central,
Hong Kong
Ladies and Gentlemen:
Advanced Semiconductor Engineering, Inc., a company limited by shares (the
"Company") formed under the laws of the Republic of China (the "ROC"), proposes,
subject to the terms and conditions stated herein, to issue and sell to the
Underwriters named in Schedule I hereto (the "Underwriters") an aggregate of
20,000,000 American Depositary Shares representing 100,000,000 common shares,
par value NT$10 per share (the "Common Shares"), of the Company (the "Firm
ADSs"). ASE Investment Inc., a company limited by shares formed under the laws
of the ROC (the "Subsidiary"), proposes, subject to the terms and conditions
stated herein, to sell to the Underwriters, at the election of the Underwriters,
up to 2,774,778 additional American Depositary Shares representing 13,873,890
Common Shares of the Company (the "Optional ADSs".) The Firm ADSs and the
Optional ADSs that the Underwriters elect to purchase pursuant to Section 2
hereof are herein collectively called the "ADSs". The Common Shares represented
by the Firm ADSs are hereinafter called the "Firm Shares" and the Common Shares
represented by the Optional ADSs are hereinafter called the "Optional Shares"
and the Firm Shares and the Optional Shares are herein collectively called the
"Shares".
The ADSs are to be issued pursuant to a deposit agreement (the "Deposit
Agreement"), dated as of September , 2000, among the Company, Citibank, N.A.,
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as depositary (the "Depositary"), and holders from time to time of the American
Depositary Receipts (the "ADRs") issued by the Depositary and evidencing the
ADSs. Each ADS will initially represent the right to receive five Common Shares
deposited pursuant to the Deposit Agreement.
It is understood by the parties that the Underwriters are offering ADSs in
the United States and internationally outside of the ROC.
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1. (I) The Company represents and warrants to, and agrees with, each of
the Underwriters that:
(a) A registration statement on Form F-1 (File No. 333-44622) (the
"Initial Registration Statement") in respect of the Shares and
the ADSs has been filed with the Securities and Exchange
Commission (the "Commission"); the Initial Registration Statement
and any post-effective amendment thereto, each in the form
heretofore delivered to you, and, excluding exhibits thereto, to
you for each of the other Underwriters, have been declared
effective by the Commission in such form; no other document with
respect to the Initial Registration Statement has heretofore been
filed with the Commission; and no stop order suspending the
effectiveness of the Initial Registration Statement, any
post-effective amendment thereto if any, has been issued and, to
the knowledge of the Company, no proceeding for that purpose has
been initiated or threatened by the Commission (any preliminary
prospectus included in the Initial Registration Statement or
filed with the Commission pursuant to Rule 424(a) of the rules
and regulations of the Commission under the Securities Act of
1933, as amended (the "Act") is hereinafter called a "Preliminary
Prospectus"); Initial Registration Statement, if any, including
all exhibits thereto and including the information contained in
the form of final prospectus filed with the Commission pursuant
to Rule 424(b) under the Act in accordance with Section 5(a)
hereof and deemed by virtue of Rule 430A under the Act to be part
of the Initial Registration Statement at the time it was declared
effective, each as amended at the time such part of the Initial
Registration Statement became effective, if any, became or
hereafter becomes effective, are hereinafter collectively called
the "Registration Statement"; and such final prospectus, in the
form first filed pursuant to Rule 424(b) under the Act, is
hereinafter called the "Prospectus";
(b) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each
Preliminary Prospectus, at the time of filing thereof, conformed
in all material respects to the requirements of the Act and the
rules and regulations of the Commission thereunder, and did not
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however, that
this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity
with information furnished in writing to the Company by an
Underwriter through Goldman Sachs (Asia) L.L.C. expressly for use
therein;
(c) The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement
or the Prospectus will conform, in all material respects to the
requirements of the Act and the rules and regulations of the
Commission thereunder, and the Registration Statement and the
Prospectus will not, as of the applicable effective date as to
the Registration Statement and any amendment thereto and as of
the applicable filing date as to the Prospectus and any amendment
or supplement thereto, contain an untrue statement of a material
fact or omit to state a material fact required to be stated
therein or
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necessary to make the statements therein not misleading;
provided, however, that this representation and warranty shall
not apply to any statements or omissions made in reliance upon
and in conformity with information furnished in writing to the
Company by an Underwriter through Goldman Sachs (Asia) L.L.C.
expressly for use therein;
(d) A registration statement on Form F-6 (File No. 333- ) in
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respect of the ADSs has been filed with the Commission; such
registration statement in the form heretofore delivered to you
and, excluding exhibits, to you for each of the other
Underwriters, has been declared effective by the Commission in
such form; no other document with respect to such registration
statement has heretofore been filed with the Commission; no stop
order suspending the effectiveness of such registration statement
has been issued and to the knowledge of the Company no proceeding
for that purpose has been initiated or threatened by the
Commission (such registration statement, including all exhibits
thereto, each as amended at the time such registration statement
became effective, being hereinafter called the "ADS Registration
Statement"); and the ADS Registration Statement when it became
effective conformed, and any further amendments thereto will
conform, in all material respects to the requirements of the Act
and the rules and regulations of the Commission thereunder, and
did not, as of the applicable effective date, contain an untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading;
(e) A registration statement on Form F-4 (File No. 333- ) in
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respect of the exchange offer described in the Prospectus under
the caption "Exchange Offer" (the "Exchange Offer") has been
filed with the Commission; such registration statement in the
form heretofore delivered to you and, excluding exhibits, to you
for each of the other Underwriters, has been declared effective
by the Commission in such form; no other document with respect to
such registration statement has heretofore been filed with the
Commission; no stop order suspending the effectiveness of such
registration statement has been issued and to the knowledge of
the Company no proceeding for that purpose has been initiated or
threatened by the Commission;
(f) Neither the Company nor any of its subsidiaries named in Schedule
II hereto (the "Significant Subsidiaries") has sustained since
the date of the latest audited financial statements included in
the Prospectus any loss or interference with its business from
fire, explosion, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth or
contemplated in the Prospectus that would, individually or in the
aggregate, reasonably be expected to have a material adverse
effect on the [general affairs,] management or current or future
consolidated financial position, shareholders' equity or results
of operations of the Company and its subsidiaries, taken as a
whole ("Material Adverse Effect"); and, since the respective
dates as of which information is given in the Registration
Statement and the Prospectus, there has not been any decrease in
the capital stock, increase in short-term debt or long-term debt
of the Company
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or any of its Significant Subsidiaries or any material adverse
change, or any development involving a prospective material
adverse change, in or affecting the general affairs, management,
financial position, shareholders' equity or results of operations
of the Company and its subsidiaries, taken as a whole, otherwise
than as set forth or contemplated in the Prospectus; and other
than the Significant Subsidiaries, no other subsidiary of the
Company is a "Significant Subsidiary" as defined in Regulation
S-X under the Act;
(g) The Company and the Significant Subsidiaries have good and
marketable title to all real property and good and marketable
title to all personal property owned by them, in each case free
and clear of all liens, encumbrances and defects or such as do
not materially affect the value of such property and do not
interfere with the use made and proposed to be made of such
property by the Company and the Significant Subsidiaries; and any
real property and buildings held under lease by the Company and
the Significant Subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to
be made of such property and buildings by the Company and the
Significant Subsidiaries in each case except as described in or
contemplated by the Prospectus;
(h) The Company has been duly incorporated and is validly existing as
a company limited by shares formed under the laws of the ROC,
with corporate power and authority to own its properties and
conduct its business as described in the Prospectus, and has been
duly qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties or conducts
any business so as to require such qualification, except where
the failure to be so qualified would not, individually or in the
aggregate, have a Material Adverse Effect; and each of the
Significant Subsidiaries has been duly incorporated and is
validly existing as a corporation under the laws of its
jurisdiction of incorporation;
(i) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued, are
fully paid and non-assessable and conform in all material
respects to the description of the Common Shares contained in the
Prospectus; and all of the issued shares of capital stock of each
of the Significant Subsidiaries have been duly and validly
authorized and issued, are fully paid and non-assessable and,
other than as set forth in the Prospectus, are owned directly or
indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims of which the Company is aware;
all of the issued and outstanding Common Shares have been duly
listed and admitted for trading on the Taiwan Stock Exchange (the
"Taiwan Stock Exchange"); the holders of outstanding shares of
capital stock of the Company are not entitled to preemptive or
other rights to acquire the Shares or the ADSs; other than the
US$200,000,000 Zero Coupon Convertible Bonds due November 2002
outstanding on the date hereof, 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
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issue, the Common Shares or any other class of capital stock of
the Company; other than the US$160,000,000 1% Guaranteed
Convertible Notes due July 1, 2004 issued by ASE Test Finance
Limited, there are no outstanding securities convertible into or
exchangeable for, or warrants, rights or options to purchase from
the Company's subsidiaries, or obligations of the Company's
subsidiaries to issue, any class of capital stock; the Shares may
be freely deposited by the Company with the Depositary against
issuance of ADRs evidencing Firm ADSs; the Firm ADSs are freely
transferable by the Company to or for the account of the several
Underwriters and (to the extent described in the Prospectus) the
initial purchasers thereof; and there are no restrictions on
subsequent transfers of the Shares and Firm ADSs under the laws
of the ROC and of the United States, except as described in the
Prospectus under the captions "Description of Common Shares",
"Description of American Depositary Receipts" or "Foreign
Investment and Exchange Controls in the ROC";
(j) The Shares have been duly and validly authorized; the Optional
shares are, and, when issued and delivered against payment
therefor as provided herein, the Firm Shares will be, duly and
validly issued and fully paid and non-assessable, and will be
duly listed and admitted for trading on the Taiwan Stock Exchange
upon the exchange of the certificates of payment that represent
the irrevocable right to receive such Shares (the "Certificates
of Payment");
(k) The Deposit Agreement has been duly authorized by the Company,
and when executed and delivered by the Company and duly
authorized, executed and delivered by the Depositary, will
constitute a valid and legally binding agreement of the Company,
enforceable in accordance with its terms, subject, as to
enforceability, to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and
general equity principles; upon issuance by the Depositary of
ADRs evidencing ADSs against the deposit of Shares in respect
thereof in accordance with the provisions of the Deposit
Agreement, such ADRs will be duly and validly issued, the persons
in whose names the ADRs are registered will be entitled to the
rights specified therein and in the Deposit Agreement; and the
Deposit Agreement and the ADRs conform in all material respects
to the descriptions thereof contained in the Prospectus;
(l) Other than as set forth or contemplated in the Prospectus, no
consents, approvals, authorizations, orders of, registrations,
clearances by or qualifications of or with any court or
governmental agency or body or any stock exchange authorities
(hereinafter referred to as a "Governmental Agency") having
jurisdiction over the Company or any of the Significant
Subsidiaries or any of their properties (hereinafter referred to
as "Governmental Authorizations") are required for the issuance
and sale of the Shares or the ADSs, for the deposit of Shares
with the Depositary and for the execution and delivery by the
Company of this Agreement and the Deposit Agreement to be duly
and validly authorized except for (A) registration of the Shares,
the ADSs and the Exchange Offer under the Act, (B) the approval
of the Central Bank of the ROC (the "CBC") of foreign
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exchange settlements and payments contemplated by the Deposit
Agreement, (C) the filings and approvals, if any, required under
(1) the Key Points for Handling Issuance and Offer of Overseas
Securities by Issuers of the ROC (the "Overseas Offering Rules"),
(2) the rules and regulations of the Taiwan Stock Exchange, the
Securities and Futures Commission of the ROC (the "SFC") and the
CBC and (3) the Export Processing Zone Administration of the
Ministry of Economic Affairs of the ROC (the "MOEA"), (D) the
registration of the issue of the Firm Shares with the MOEA which
shall be filed by the Company within 15 days of the First Time of
Delivery (as defined in Section 4 hereof) and (E) any
governmental authorizations as may be required under state
securities or Blue Sky laws of the United States or the laws of
other jurisdictions outside the ROC in connection with the
purchase and distribution of the ADSs by or for the account of
the Underwriters. Such Governmental Authorizations which have
been obtained are in full force and effect;
(m) Other than as set forth in the Prospectus, no governmental
approvals are currently required in the ROC in order for the
Company to pay dividends or other distributions declared by the
Company to holders of Common Shares, including the Depositary, or
for the conversion by the Depositary of any dividends paid in New
Taiwan dollars ("NT dollars") to U.S. dollars or the transfer
thereof out of the ROC 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;
(n) The issue and sale of the Shares and ADSs to be sold (initially
in the form of Certificates of Payment) by the Company and the
Subsidiary hereunder, the deposit of the Shares (initially in the
form of Certificates of Payment) being deposited with the
Depositary against issuance of the ADRs evidencing the ADSs and
the compliance by the Company with all of the provisions of this
Agreement and the Deposit Agreement, and the consummation of the
transactions herein and therein contemplated and the consummation
of the transactions contemplated under the Exchange Offer, will
not conflict with or result in a breach or violation of any of
the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other
material agreement or instrument to which the Company or any of
the Significant Subsidiaries is a party or by which the Company
or any of the Significant Subsidiaries is bound or to which any
of the property or assets of the Company or any of the
Significant Subsidiaries is subject other than any such
conflicts, breaches, violations or defaults which, individually
or in aggregate, would not have a Material Adverse Effect, nor
will such action result in any violation of the provisions of the
constituent documents of the Company or any of the Significant
Subsidiaries or any statute or any order, rule or regulation of
any Governmental Agency having jurisdiction over the Company or
any of the Significant Subsidiaries or any of their properties,
including the ROC Company Law and the ROC Securities and Exchange
Law and the regulations promulgated thereunder;
(o) Neither the Company nor any of the Significant Subsidiaries is in
violation of its constituent documents or in default in the
performance or observance
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of any material obligation, agreement, covenant or condition
contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is
a party or by which it or any of its properties may be bound
except such violations or defaults which individually or in
aggregate would not have a Material Adverse Effect;
(p) Other than as set forth in the Prospectus, so long as this
Agreement, the Certificates of Payment and the cross receipt
referred to in the Deposit Agreement, if any, or any other
documents which are deemed "receipts" under the ROC Stamp Tax Law
are executed outside the ROC, no stamp or other issuance or
transfer taxes or duties and no capital gains, income,
withholding or other taxes (except such income taxes as may be
imposed by the government of the ROC or any political subdivision
or taxing authority thereof or therein on payments hereunder to
any Underwriter whose net income is subject to tax by the ROC or
withholding, if any, with respect to any such income tax) are
payable by or on behalf of the Underwriters to the government of
the ROC or any political subdivision or taxing authority thereof
or therein in connection with (A) the deposit with the Depositary
of Shares by the Company against the issuance of ADRs evidencing
ADSs, (B) the sale and delivery by the Company and the Subsidiary
of the Shares and ADSs to or for the respective accounts of the
Underwriters, (C) the sale and delivery outside the ROC by the
Underwriters of the ADSs to the initial purchasers thereof, (D)
the execution and delivery of this Agreement and the Deposit
Agreement or (E) the consummation of the transactions
contemplated under the Exchange Offer;
(q) Neither the Company nor any of its subsidiaries has taken,
directly or indirectly, any action which was designed to or which
has constituted or which might reasonably be expected to cause or
result in stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the
Shares and ADSs;
(r) The statements set forth in the Prospectus under the captions
"Description of Common Shares", "Description of American
Depositary Receipts" and "Exchange Offer", insofar as they
purport to constitute a summary of the terms of the Common
Shares, the ADSs and the Exchange Offer, respectively, and under
the captions "Taxation", "Underwriting", "The Securities Market
of the ROC" and "Foreign Investment and Exchange Controls in the
ROC", insofar as they purport to summarize the provisions of the
laws and documents referred to therein, are accurate, complete
and fair in all material respects;
(s) Other than as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of
the Significant Subsidiaries is a party or of which any property
of the Company or any of the Significant Subsidiaries is the
subject which, if determined adversely to the Company or any of
the Significant Subsidiaries, would individually or in the
aggregate have a Material Adverse Effect; and, to the best of the
Company's knowledge, no such proceedings are threatened or
contemplated by any Governmental Agency or threatened by others;
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(t) The Company is not and, after giving effect to the offering and
sale of the ADSs, will not be required to register as an
"investment company", under the Investment Company Act of 1940,
as amended (the "Investment Company Act");
(u) Each of the Company and the Significant Subsidiaries has all
licenses, franchises, consents, authorizations, approvals,
orders, certificates and permits of and from, and has made all
declarations and filings with, all Governmental Agencies
necessary to own, lease, license and use its properties and
assets and to conduct its business in the manner described in the
Prospectus, other than any such licenses, franchises, consents,
authorizations, approvals, orders, certificates or permits the
failure to possess any of which would not individually or in the
aggregate have a Material Adverse Effect;
(v) The Company believes that it was not a Passive Foreign Investment
Company ("PFIC") within the meaning of Section 1297(a) of the
United States Internal Revenue Code of 1986, as amended, for its
most recent taxable year, and the Company has no plans or
intention to take any action that would result in the Company
becoming a PFIC in the future;
(w) T. N. Soong & Co., a Member Firm of Andersen Worldwide, S.C., who
have certified certain financial statements of the Company and
its subsidiaries, and KPMG Certified Public Accountants, who have
certified certain financial statements of ASE (Chung Li), Inc.
and ASE (Korea) Inc., are each independent public accountants as
required by the Act and the rules and regulations of the
Commission thereunder;
(x) Since the date of the latest audited financial statements
included in the Prospectus, neither Company nor any of its
subsidiaries has (A) entered into or assumed any contract, (B)
incurred or agreed to incur any liability (including any
contingent liability) or other obligation, (C) acquired or
disposed of or agreed to acquire or dispose of any business or
any other asset or (D) assumed or acquired or agreed to assume or
acquire any liabilities (including contingent liabilities) that
would be material to the Company and its subsidiaries, taken as a
whole, and that are not otherwise described in the Prospectus;
(y) Each of this Agreement and the Deposit Agreement is in proper
form to be enforceable against the Company in the ROC in
accordance with its terms; to ensure the legality, validity,
enforceability or admissibility into evidence in the ROC of this
Agreement, it is not necessary that this Agreement or the Deposit
Agreement be filed or recorded with any court or other authority
in the ROC or that any stamp or similar tax in the ROC be paid on
or in respect of this Agreement, the Deposit Agreement or any
other documents to be furnished hereunder, it being understood
that in court proceedings in the ROC, a translation into the
Chinese language may be required;
(z) Other than as set forth in the Prospectus, each of the Company
and the Significant Subsidiaries owns or has valid licenses in
full force and effect or otherwise has the legal right to use, or
can acquire on reasonable terms,
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all patents, patent licenses, inventions, trademarks, service
marks, trade names, domain names, copyrights, know-how (including
trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
information, proprietary rights and processes ("Intellectual
Property") necessary to conduct its business as presently
conducted and as proposed to be conducted; neither the Company
nor any of the Significant Subsidiaries has received any written
notice or claim or infringement of or conflict with asserted
rights of others with respect to any Intellectual Property, which
notice or claim remains in dispute and which is reasonably likely
to result in a Material Adverse Effect;
(aa) There are no contracts, agreements or understandings between the
Company and any person granting 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 include any
securities of the Company with the ADSs registered pursuant to
the Registration Statement, except as described in the Prospectus
or as have been validly waived in writing in connection with the
offering of the ADSs contemplated hereby;
(bb) The audited consolidated financial statements (and the notes
thereto) of the Company and its consolidated subsidiaries
included in the Prospectus present fairly the financial position
of the Company and its consolidated subsidiaries as of the dates
indicated and the results of operations and changes in financial
position of the Company and its consolidated subsidiaries for the
periods specified, and such financial statements have been
prepared in conformity with generally accepted accounting
principles in the ROC applied on a consistent basis throughout
the periods presented (other than as described therein); the
summary and selected financial data, including the selected
unaudited quarterly financial information, included in the
Prospectus present fairly the information shown therein and have
been compiled on a basis consistent with that of the audited
financial statements included therein; and the pro forma
financial statements included in the Prospectus 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
reflect the proper application of those adjustments to the
historical financial statement amounts in the pro forma financial
statements included in the Prospectus, and the pro forma
adjustments have been properly applied to the historical amounts
in the compilation of those statements; and
(cc) This Agreement has been duly authorized, executed and delivered
by the Company.
(II) The Company and the Subsidiary hereby jointly and severally
represent and warrant to, and agree with, each of the Underwriters that:
(a) The Subsidiary has been duly incorporated and is validly existing
as a company limited by shares formed under the laws of the ROC;
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(b) Other than as set forth or contemplated in the Prospectus, no
consents, approvals, authorizations, orders of, registrations,
clearances by or qualifications of or with any Governmental
Agency having jurisdiction over the Subsidiary are required for
the deposit of the Optional Shares with the Depositary, for the
sale and delivery of the Optional ADSs representing the Optional
Shares to be sold by the Subsidiary hereunder, and for the
execution and delivery by the Subsidiary of this Agreement to be
duly and validly authorized, except for (A) registration of the
Optional Shares and Optional ADSs under the Act and (B) any
governmental authorizations as may be required under state
securities or Blue Sky laws of the United States or the laws of
other jurisdictions outside the ROC in connection with the
purchase and distribution of the Optional ADSs by or for the
account of the Underwriters; such Governmental Authorizations
which have been obtained are in full force and effect; the
Optional Shares may be freely deposited by the Subsidiary with
the Depositary against issuance of ADRs evidencing Optional ADSs;
and the Subsidiary has the corporate right, power and authority
to enter into this Agreement and to sell, assign, transfer and
deliver the Optional ADSs representing the Optional Shares to be
sold by the Subsidiary hereunder; and this Agreement has been
duly authorized, executed and delivered by the Subsidiary;
(c) The sale of the Optional ADSs representing the Optional Shares to
be sold by the Subsidiary hereunder, the deposit of the Optional
Shares with the Depositary against issuance of the ADRs
evidencing the Optional ADSs to be delivered at each Time of
Delivery, the compliance by the Subsidiary with all of the
provisions of this Agreement and the Deposit Agreement and the
consummation of the transactions herein and therein contemplated
will not (1) conflict with or result in a breach or violation of
any of the terms or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Subsidiary is a party or by
which the Subsidiary is subject, other than any such conflict,
breach, violation or default that would not, individually or in
the aggregate, have a material adverse effect on the ability of
the Subsidiary to perform its obligations under this Agreement
(2) result in any violation of the provisions of any statute or
any order, rule or regulation of any Governmental Agency having
jurisdiction over the Subsidiary or property of the Subsidiary
other than any such violation that would not, individually or in
the aggregate, have a material adverse effect on the ability of
the Subsidiary to perform its obligation under this Agreement or
the Deposit Agreement, and (3) violate any provision of the
Articles of Incorporation of the Subsidiary;
(d) The Subsidiary has, and immediately prior to each Time of
Delivery the Subsidiary will have, good and valid title to the
Shares and ADSs to be sold by the Subsidiary hereunder, free and
clear of all liens, encumbrances, equities or claims; and
assuming that (A) DTC is a "protected purchaser" (as defined in
Section 8-303 of the Uniform Commercial Code as adopted in the
State of New York (the "Code")) of the Optional ADSs and a
"securities intermediary" (as defined in Section 8-102 of the
Code) and (B)
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the Underwriters have acquired, pursuant to Section 8-501 of the
Code and the terms and provisions of the Underwriting Agreement,
their "security entitlement" (as defined in Section 8-102 of the
Code) in the Optional ADSs for "value" (as defined in Section
1-201 of the Code) and without notice of an "adverse claim" (as
defined in Section 8-102 of the Code), no action based on an
adverse claim to such Optional ADSs, whether framed in
conversion, replevin, constructive trust, equitable lien, or
other theory, may be asserted against any such Underwriter.
(e) The Subsidiary has not taken, directly or indirectly, any action
which is designed to or which has constituted or which might
reasonably be expected to cause or result in the stabilization or
manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares or ADSs;
(f) The Optional ADSs delivered at the applicable Time of Delivery
will be freely transferable by the Subsidiary to or for the
account of the several Underwriters and (to the extent described
in the Prospectus) to the initial purchasers thereof; and there
are no restrictions on subsequent transfers of the Optional
Shares or Optional ADSs under the laws of the ROC and of the
United States except as described in the Prospectus under the
captions "Description of Common Shares", "Description of American
Depositary Receipts" or "Foreign Investment and Exchange Controls
in the ROC";
(g) Other than as set forth in the Prospectus and so long as this
Agreement, the certificates of payment, and the cross receipt
referred to in the Deposit Agreement if any, or any other
documents which are deemed "receipts" under the ROC Stamp Tax
Law, are executed outside the ROC, no stamp or other issuance or
transfer taxes or duties and no capital gains, income,
withholding or other taxes (except such income taxes as may be
imposed by the government of the ROC or any political subdivision
or taxing authority thereof or therein on payments hereunder to
any Underwriter whose net income is subject to tax by the ROC or
withholding, if any, with respect to any such income tax) are
payable by or on behalf of the Underwriters to the government of
the ROC or any political subdivision or taxing authority thereof
or therein in connection with (A) the deposit with the Depositary
of Optional Shares by the Subsidiary against the issuance of ADRs
evidencing Optional ADSs, (B) the sale and delivery by the
Subsidiary of the Optional ADSs representing the Optional Shares
to or for the respective accounts of the Underwriters, (C) the
sale and delivery outside the ROC by the Underwriters of the
Optional ADSs representing the Optional Shares to the initial
purchasers thereof pursuant to the terms of this Agreement or (D)
the execution and delivery of this Agreement.
(h) This Agreement is in proper form to be enforceable against the
Subsidiary in the ROC in accordance with its terms; to ensure the
legality, validity, enforceability or admissibility into evidence
in the ROC of this Agreement, it is not necessary that this
Agreement be filed or recorded with any court or other authority
in the ROC or that any stamp or similar tax in the ROC
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<PAGE> 12
be paid on or in respect of this Agreement or any other documents
to be furnished hereunder, it being understood that in court
proceedings in the ROC, a translation into the Chinese language
may be required.
(i) To the extent that any statements or omissions made in the
Registration Statement, any Preliminary Prospectus, the
Prospectus or any amendment or supplement thereto are made in
reliance upon and in conformity with written information
furnished to the Company by the Subsidiary expressly for use
therein, (A) such Preliminary Prospectus, at the time of filing
thereof, conformed in all material respects to the requirements
of the Act and the rules and regulations of the Commission
thereunder, and did not contain an untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading;
and (B) such Registration Statement conforms, and such Prospectus
and any further amendments or supplements to such Registration
Statement or such Prospectus will conform, in all material
respects to the requirements of the Act and the rules and
regulations of the Commission thereunder, and such Registration
Statement and such Prospectus will not, as of the applicable
effective date as to such Registration Statement and any
amendment thereto and as of the applicable filing date as to such
Prospectus and any amendment or supplement thereto, contain an
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; and
(j) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 with respect to the transactions
herein contemplated, the Subsidiary will deliver to you prior to
or at the applicable Time of Delivery (as hereinafter defined) a
properly completed and executed United States Treasury Department
Form W-8 or W-9 (or other applicable form or statement specified
by Treasury Department regulations in lieu thereof).
2. Subject to the terms and conditions herein set forth, (a) the Company
agrees to sell to each of the Underwriters, and each of the Underwriters agrees,
severally and not jointly, to purchase from the Company at a purchase price per
ADS of US$ , the number of Firm ADSs set forth opposite the name of such
-----
Underwriters in Schedule I hereto, and (b) in the event and to the extent that
the Underwriters shall exercise the election to purchase Optional ADSs as
provided below, the Subsidiary agrees to sell to each of the Underwriters, and
the Company agrees to cause the Subsidiary to sell to each of the Underwriters,
and each of the Underwriters agrees, severally and not jointly, to purchase from
the Subsidiary at the purchase price per ADS set forth in clause (a) of this
Section 2, that portion of the number of Optional ADSs as to which such election
shall have been exercised (to be adjusted by you so as to eliminate fractional
shares) determined by multiplying such number of Optional ADSs by a fraction the
numerator of which is the maximum number of Optional ADSs which such Underwriter
is entitled to purchase as set forth opposite the name of such Underwriter in
Schedule I hereto and the denominator of which is the maximum number of Optional
ADSs that all of the Underwriters are entitled to purchase hereunder.
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<PAGE> 13
The Subsidiary hereby grants to the Underwriters the right to purchase at
their election up to 2,774,778 Optional ADSs, at the purchase price per ADS set
forth in the paragraph above, for the sole purpose of covering overallotment of
ADSs made in connection with the offering of the Firm ADSs. Any such election to
purchase Optional ADSs shall be made in proportion to the maximum number of
Optional ADSs to be sold by the Subsidiary as set forth in Schedule I hereto.
Any such election to purchase Optional ADSs may be exercised only by written
notice from you to the Company and the Subsidiary, given within a period of 30
calendar days after the date of this Agreement and setting forth the aggregate
number of Optional ADSs to be purchased and the date on which such Optional ADSs
are to be delivered, as determined by you but in no event earlier than the First
Time of Delivery (as defined in Section 4 hereof) or, unless you and the Company
otherwise agree in writing, earlier than two or later than ten business days
after the date of such notice.
3. Upon the authorization by you of the release of the Firm ADSs, the
several Underwriters propose to offer the Firm ADSs for sale upon the terms and
conditions set forth in the Prospectus.
4. (a) The ADSs to be purchased by each Underwriter hereunder, in
definitive form, and in such authorized denominations and registered in
such names as Goldman Sachs (Asia) L.L.C. may request upon at least
forty-eight hours notice to the Company and/or the Subsidiary, as
applicable, prior to a Time of Delivery (as defined below) (the
"Notification Time"), shall be delivered by or on behalf of the Company
and/or the Subsidiary, as applicable, to Goldman Sachs (Asia) L.L.C.,
through the facilities of The Depository Trust Company ("DTC"), for the
account of such Underwriter, against payment by or on behalf of such
Underwriter of the purchase price therefor by wire transfer of Federal
(same-day) funds to the account specified by the Company and/or the
Subsidiary, as applicable, to Goldman Sachs (Asia) L.L.C. at least
forty-eight hours in advance. The Company will cause the certificates
representing the ADSs to be made available for checking at least
twenty-four hours prior to the Time of Delivery (as defined below) with
respect thereto at the office of DTC or its designated custodian (the
"Designated Office").
The time and date of such delivery and payment shall be, with respect
to the Firm ADSs, 9:30 a.m., New York City time, on September , 2000 or
----
such other time and date as Goldman Sachs (Asia) L.L.C. and the Company may
agree upon in writing, and, with respect to the Optional ADSs, 9:30 a.m.,
New York City time, on the date specified by Goldman Sachs (Asia) L.L.C. in
the written notice given by Goldman Sachs (Asia) L.L.C. of the
Underwriters' election to purchase such Optional ADSs, or such other time
and date as Goldman Sachs (Asia) L.L.C. and the Subsidiary may agree upon
in writing. Such time and date for delivery of the Firm ADSs is herein
called the "First Time of Delivery", such time and date for delivery of the
Optional ADSs, if not the First Time of Delivery, is herein called the
"Second Time of Delivery", and each such time and date for delivery is
herein called a "Time of Delivery".
(b) The documents to be delivered each Time of Delivery by or on
behalf of the parties hereto pursuant to Section 7 hereof, including the
cross-receipt for the ADSs and any additional documents requested by the
Underwriters pursuant to Section 7(t) hereof, will be delivered at the
offices of Sullivan & Cromwell, 28th Floor, Nine Queen's Road Central, Hong
Kong (the "Closing Location"), and the ADSs will be delivered as specified
in Section (a) above, all at such Time of Delivery. A meeting will be held
at the Closing Location at 9:00 p.m., Hong Kong time, on the New York
Business Day next preceding such
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<PAGE> 14
Time of Delivery, at which meeting the final drafts of the documents to be
delivered pursuant to the preceding sentence will be available for review
by the parties hereto. For the purposes of this Section 4, "New York
Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in New York are
generally authorized or obligated by law or executive order to close.
5. The Company agrees with each of the Underwriters:
(a) To prepare the Prospectus in a form approved by you and to file
such Prospectus pursuant to Rule 424(b) under the Act not later than the
Commission's close of business on the second New York Business Day
following the execution and delivery of this Agreement, or, if applicable,
such earlier time as may be required by Rule 430A(a)(3) under the Act; to
make no further amendment or any supplement to the Registration Statement
or Prospectus which shall be disapproved by you promptly after reasonable
notice thereof; to advise you, promptly after it receives notice thereof,
of the time when any amendment to the Registration Statement has been filed
or becomes effective or any supplement to the Prospectus or any amended
Prospectus has been filed and to furnish you copies thereof; to file
promptly all reports required to be filed by the Company with the
Commission pursuant to Section 13(a), 13(c) or 15(d) of the Exchange Act
subsequent to the date of the Prospectus and for so long as the delivery of
a prospectus is required in connection with the offering or sale of the
ADSs; to advise you, promptly after it receives notice thereof, of the
issuance by the Commission of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or prospectus, of the
suspension of the qualification of the ADSs for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for any
such purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statement or Prospectus or for additional
information; and, in the event of the issuance of any stop order or of any
order preventing or suspending the use of any Preliminary Prospectus or
prospectus or suspending any such qualification, promptly to use its best
efforts to obtain the withdrawal of such order;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the ADSs for offering and sale under the
securities laws of such jurisdictions as you may request and to comply with
such laws so as to permit the continuance of sales and dealings therein in
such jurisdictions for as long as may be necessary to complete the
distribution of the ADSs, provided that in connection therewith the Company
shall not be required to qualify as a foreign corporation or to file a
general consent to service of process in any jurisdiction;
(c) Prior to 12:00 noon, New York City time, on the New York Business
Day next succeeding the date of this Agreement and from time to time, to
furnish the Underwriters with copies of the Prospectus in New York City in
such quantities as you may reasonably request, and, if the delivery of a
prospectus is required at any time prior to the expiration of nine months
after the time of issue of the Prospectus in connection with the offering
or sale of the ADSs and if at such time any events shall have occurred as a
result of which the Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made when such Prospectus
is delivered, not misleading, or, if for any other reason it shall be
necessary during such period to amend or supplement the Prospectus in order
to comply with the Act, to notify you and upon your request to prepare and
furnish without charge to
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<PAGE> 15
each Underwriter and to any dealer in securities as many copies as you may
from time to time reasonably request of an amended Prospectus or a
supplement to the Prospectus which will correct such statement or omission
or effect such compliance, and in case any Underwriter is required to
deliver a prospectus in connection with sales of any of the ADSs at any
time nine months or more after the time of issue of the Prospectus, upon
your request but at the expense of such Underwriter, to prepare and deliver
to such Underwriter as many copies as you may request of an amended or
supplemented Prospectus complying with Section 10(a)(3) of the Act;
(d) To make generally available to its securityholders as soon as
practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as defined in Rule 158(c)
under the Act), an earnings statement of the Company and its subsidiaries
(which need not be audited) complying with Section 11(a) of the Act and the
rules and regulations of the Commission thereunder (including, at the
option of the Company, Rule 158);
(e) During the period beginning from the date hereof and continuing
to and including the date 90 days after the date of the Prospectus, not to
offer, sell, contract to sell, pledge, grant any option to purchase, make
any short sale or otherwise dispose of, except as provided hereunder and
under this Agreement: (i) any Common Shares or ADSs or any securities of
the Company that are substantially similar to the Common Shares or ADSs,
including but not limited to any securities that are convertible into or
exchangeable for, or that represent the right to receive, Common Shares or
ADSs or any such substantially similar securities; and (ii) any common
shares of its subsidiaries or controlled affiliates or depositary shares or
depositary receipts representing such common shares, including but not
limited to any securities that are convertible into or exchangeable for or
that represent the right to receive such common shares or such depositary
shares or receipts or any such substantially similar securities (in each
case other than pursuant to employee stock option plans existing on, or
upon the conversion or exchange of convertible or exchangeable securities
outstanding as of, the date of this Agreement and which are described in
the Prospectus), without your prior written consent, except for ADSs and
Common Shares represented thereby being sold hereunder, Common Shares to be
issued by the Company pursuant to any stock dividend payable to all holders
of Common Shares (including Common Shares represented by the ADSs) as of a
record date subsequent to the date of the Prospectus and employee bonus
shares relating to the Company's fiscal year ended December 31, 1999
approved at its annual general meeting of shareholders held on July 11,
2000;
(f) During the period beginning from the date hereof and continuing
to and including the date 90 days after the date of the Prospectus, to
cause each of its subsidiaries and controlled affiliates not to offer,
sell, contract to sell, pledge, grant any option to purchase, make any
short sale or otherwise dispose of, except as provided hereunder and under
this Agreement: (i) any Common Shares or ADSs or any securities of the
Company that are substantially similar to the Common Shares or ADSs,
including but not limited to any securities that are convertible into or
exchangeable for, or that represent the right to receive, Common Shares or
ADSs or any such substantially similar securities; and (ii) any common
shares of such subsidiaries or controlled affiliates or depositary shares
or depositary receipts representing such common shares, including but not
limited to any securities that are convertible into or exchangeable for or
that represent the right to receive such common shares or such depositary
shares or receipts or any such substantially similar
-15-
<PAGE> 16
securities (in each case other than pursuant to employee stock option plans
existing on, or upon the conversion or exchange of convertible or
exchangeable securities outstanding as of, the date of this Agreement and
which are described in the Prospectus), without your prior written consent,
except for equity securities whose issuance and sale by any subsidiary or
controlled affiliate will not result in a decrease of the Company's
beneficial ownership interest in that subsidiary or controlled affiliate
and common shares of Universal Scientific Industrial Co., Ltd. not in
excess of 18% of its outstanding ordinary shares as of the date of the
Prospectus (or depositary receipts representing up to the number of its
ordinary shares, or debt or other securities initially convertible into not
more than the number of shares or depositary receipts);
(g) To furnish to the Depositary for mailing to holders of record of
ADSs (i) as soon as practicable after the end of each fiscal year an annual
report (including a balance sheet and statements of income, shareholders'
equity and cash flows of the Company and its consolidated subsidiaries
certified by independent public accountants and prepared in conformity with
generally accepted accounting principles in the ROC ("ROC GAAP") together
with a reconciliation of net income and total stockholders' equity to
generally accepted accounting principles in the U.S. ("U.S. GAAP")) and
(ii) as soon as practicable after the end of the relevant period, such
semi-annual reports that are made available or are required to be made
available to shareholders and consolidated summary financial information of
the Company and its subsidiaries for the relevant period in reasonable
detail;
(h) During a period of [three] years from the effective date of the
Registration Statement, to furnish to you [copies of all reports or other
communications (financial or other) furnished to shareholders, and to
deliver to you (i)] as soon as they are available, copies of any reports
and financial statements furnished to or filed with the Commission or any
securities exchange on which any class of securities of the Company is
listed; [and (ii) such additional information concerning the business and
financial condition of the Company as you may from time to time reasonably
request (such financial statements to be on a consolidated basis to the
extent the accounts of the Company and its subsidiaries are consolidated in
reports furnished to its shareholders generally or to the Commission);]
(i) To use the net proceeds received by it from the sale of the ADSs
pursuant to this Agreement in the manner specified in the Prospectus under
the caption "Use of Proceeds";
(j) Prior to each Time of Delivery to deposit the Firm Shares
(initially in the form of Certificates of Payment), and to cause the
Subsidiary to deposit the Optional Shares, with the Depositary in
accordance with the provisions of the Deposit Agreement and otherwise to
comply with the Deposit Agreement so that ADRs evidencing ADSs will be
executed (and, if applicable, countersigned) and issued by the Depositary
against receipt of such Shares and delivered to the purchasers at such Time
of Delivery;
(k) Until the distribution of the ADSs has been completed, not to
(and to cause its subsidiaries not to) take, directly or indirectly, any
action which is designed to or which constitutes or which might reasonably
be expected to cause or result in stabilization or manipulation of the
price of any security of the Company or facilitate the sale or resale of
the Shares and the ADSs;
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<PAGE> 17
(l) To use its best efforts to list, subject to notice of issuance,
the Shares and ADSs on the NYSE;
(m) To file with the Commission such information on Form 20-F as may
be required by Rule 463 under the Act;
(n) To use its best efforts to consummate the Exchange Offer in the
manner described in the F-4 Registration Statement and the Prospectus; and
(o) To file with the MOEA the registration of the issue of the Firm
Shares within 15 days after the First Time of Delivery.
[6. The Company covenants and agrees and with the several Underwriters
that will pay or cause to be paid the following: (i) the fees, disbursements and
expenses of the Company's counsel and accountants in connection with the
registration of the Shares and ADSs under the Act and all other expenses in
connection with the preparation, printing and filing of the Registration
Statement, the ADR Registration Statement and the F-4 Registration Statement,
any Preliminary Prospectus and the Prospectus and amendments and supplements
thereto and the mailing and delivering of copies thereof to the Underwriters and
dealers; (ii) the cost of printing or producing any Agreement among
Underwriters, this Agreement, the Selling Agreements, the Deposit Agreement, the
Blue Sky Memorandum, closing documents (including compilations thereof) and any
other documents in connection with the offering, purchase, sale and delivery of
the ADSs; (iii) all expenses in connection with the qualification of the ADSs
for offering and sale under state securities laws as provided in Section 5(b)
hereof, including the fees and disbursements of counsel for the Underwriters in
connection with such qualification and in connection with the Blue Sky surveys;
(iv) all fees and expenses in connection with the listing of the ADSs on the
NYSE; and the filing fees incident to, and the fees and disbursements of counsel
for the Underwriters in connection with, securing any required review by the
National Association of Securities Dealers, Inc. of the terms of the sale of the
ADSs; (v) to Goldman, Sachs & Co., for the account of the several Underwriters,
up to U.S.$ in respect of reasonable out-of-pocket expenses (including
-------
fees, disbursements and expenses of counsel to the Underwriters) incurred by the
Underwriters in connection with the transactions contemplated in the
Underwriting Agreement, other than the fees, disbursement and expenses included
in clause (iii) above; (vi) all expenses and taxes arising as a result of the
deposit by the Company of the Shares with the Depositary and the issuance and
delivery of the ADRs evidencing ADSs in exchange therefor by the Depositary to
the Company, of the sale and delivery of the ADS and the Shares by the Company
to or for the account of the Underwriters, of the sale and delivery outside of
the ROC of the ADSs by the Underwriters to the initial purchasers thereof in the
manner contemplated under this Agreement, including, in any such case, any
income, capital gains, withholding, transfer or other tax asserted against an
Underwriter by reason of the purchase and sale of an ADS pursuant to this
Agreement; (vii) the fees and expenses (including fees and disbursements of
counsel), if any, of the Depositary and any custodian appointed under the
Deposit Agreement, other than the fees and expenses to be paid by holders of
ADRs (other than the Underwriters, in connection with the initial purchase of
ADSs; (viii) the fees and expenses of the Authorized Agent (as defined in
Section 15 hereof); (ix) the cost of preparing ADRs; (x) the cost and charges of
any transfer agent or registrar; and (xi) all other costs and expenses incident
to the performance of its obligations hereunder which are not otherwise
specifically provided for in this Section. It is understood, however, that,
except as provided in this Section, and Sections 8 and 11 hereof, the
Underwriters will pay all of their own costs and expenses, including the fees of
their counsel, stock transfer taxes (other than any imposed by the ROC or any
political subdivision or
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<PAGE> 18
taxing authority thereof or therein) on resale of any of the ADSs by them, and
any advertising expenses connected with any offers they may make.] [TO BE
CONFIRMED BY GS AND THE COMPANY.]
7. The obligations of the Underwriters hereunder, as to the ADSs to be
delivered at each Time of Delivery, shall be subject, in their discretion, to
the condition that all representations and warranties and other statements of
the Company herein are, at and as of such Time of Delivery, true and correct,
the condition that the Company shall have performed all of its and their
obligations hereunder theretofore to be performed, and the following additional
conditions:
(a) The Prospectus shall have been filed with the Commission pursuant
to Rule 424(b) within the applicable time period prescribed for such filing
by the rules and regulations under the Act and in accordance with Section
5(a) hereof; if the Company has elected to rely upon Rule 462(b), the Rule
462(b) Registration Statement shall have become effective by 10:00 P.M.,
Washington, D.C. time, on the date of this Agreement; no stop order
suspending the effectiveness of the Registration Statement or any part
thereof shall have been issued and no proceeding for that purpose shall
have been initiated or threatened by the Commission; and all requests for
additional information on the part of the Commission shall have been
complied with to your reasonable satisfaction;
(b) Sullivan & Cromwell, U.S. counsel for the Underwriters, shall
have furnished to you such written opinion or opinions, dated such Time of
Delivery, with respect to the matters as you may reasonably request, and
such counsel shall have received such papers and information as they may
reasonably request to enable them to pass upon such matters;
(c) Davis Polk & Wardwell, U.S. counsel for the Company, shall have
furnished to you their written opinion, dated [such] Time of Delivery, in
form and substance satisfactory to you, to the effect that:
(i) To the extent, if any, that the laws of the State of New York may
govern its execution and delivery, this Agreement has been duly
executed and delivered by the Company;
(ii) Assuming that the Deposit Agreement has been duly
authorized, executed and delivered by the Depositary under New York
law and has been duly authorized, executed and delivered by the
Company under ROC law, and assuming that each of the Depositary and
the Company has full power, authority and legal right to enter into
and perform its obligations thereunder, the Deposit Agreement
constitutes a valid and binding agreement of the Company, enforceable
in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of
creditors' rights and to general principles of equity and except as
rights to indemnity and contribution thereunder may be limited by
applicable law;
(iii) Upon issuance by the Depositary of the ADSs against the
deposit of the Shares in accordance with the Deposit Agreement, the
ADSs will be duly and validly issued and will entitle the holders
thereof to the rights specified in the Deposit Agreement assuming that
(A) the Deposit Agreement constitutes a valid and binding agreement of
the Depositary, (B) the Shares have been duly authorized and validly
issued and are fully paid and nonassessable and that any
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<PAGE> 19
preemptive rights with respect to the Shares have been validly waived
or exercised, (C) the Shares have been duly deposited with the
Depositary in accordance with the provisions of the Deposit Agreement
and (D) the actions specified in clauses (B) and (C) of this paragraph
(iii) have been taken by the Depositary in accordance with all
applicable New York laws and regulations and have been taken by the
Company in accordance with all applicable ROC laws and regulations;
(iv) Assuming that the actions referred to in clause (A) of
this paragraph (iv) have been duly authorized by the Company under the
laws of the ROC, (A) the Company has, under the laws of the State of
New York relating to personal jurisdiction, pursuant to Section 14 of
this Agreement: (1) validly and irrevocably submitted to the personal
jurisdiction of any state or federal court located in the Borough of
Manhattan, The City of New York, New York (each a "New York Court") in
any action arising out of or based on this Agreement or the
transactions contemplated hereby, (2) to the extent permitted by
applicable law, has validly and irrevocably waived any objection to
the venue of a proceeding in any such court, and (3) validly and
irrevocably appointed the Authorized Agent (as defined herein) as its
authorized agent for the purpose described in Section 14 hereof; and
(B) service of process effected on such agent in the manner set forth
in Section 14 hereof will be effective to confer valid personal
jurisdiction over the Company;
(v) Except as disclosed in the Registration Statement and the
Prospectus and except for the performance by the Company of its
indemnification and contribution obligations under this Agreement, as
to which such counsel is not being asked to express an opinion, (A)
the issuance and the deposit of the Shares with the Depositary in
accordance with the Deposit Agreement, (B) the sale of the ADSs to the
Underwriters in accordance with this Agreement, (C) the performance by
the Company of its obligations under this Agreement and the Deposit
Agreement and (D) the consummation of the transactions contemplated
under the Exchange Offer will not contravene (x) any provision of
United States Federal or New York State law that in such counsel's
experience is normally applicable to general business corporations in
relation to transactions of the type contemplated in this Agreement,
the Deposit Agreement and the Exchange Offer, except for the
securities or Blue Sky laws of the State of New York, as to which such
counsel has not been asked to express an opinion, or (y) any agreement
or other instrument governed by New York law and binding upon the
Company or any of its Significant Subsidiaries listed on a schedule
attached to such opinion;
(vi) Except as disclosed in the Registration Statement and the
Prospectus and except for the performance by the Company of its
indemnification and contribution obligations under this Agreement, as
to which such counsel is not being asked to express an opinion, no
consents, approval, authorization or order of, or qualification with,
any governmental body or agency is required under United States
Federal or New York State law that in such counsel's experience is
normally applicable to general business corporations in relation to
transactions of the type contemplated in this Agreement and the
Deposit Agreement for the (A) issuance and the deposit of the Shares
with the Depositary in accordance with the Deposit Agreement, (B) sale
of the ADSs to the Underwriters in accordance with this Agreement, (C)
performance by the Company of its obligations under this
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<PAGE> 20
Agreement and (D) the consummation of the transactions contemplated
under the Exchange Offer, except such as may be required by the
securities or Blue Sky laws of the State of New York;
(vii) Such counsel has considered the statements relating to
United States Federal and New York State legal matters and documents
governed by New York State law included in the Prospectus under the
captions "Exchange Offer", "Description of American Depositary
Receipts", "Taxation -- United States Federal Income Taxation" and
"Underwriting"; and in such counsel's opinion, such statements, fairly
summarize in all material respects such matters and documents;
(viii) The Company is not, and after giving effect to the
offering and sale of the ADSs and the application of the proceeds
thereof as described in the Prospectus will not, be required to
register as an "investment company" as such term is defined in the
Investment Company Act;
(ix) Nothing has come to such counsel's attention that causes
such counsel to believe that (A) the Registration Statement and
Prospectus (except for the financial statements and financial
schedules and other financial data included therein, as to which such
counsel need not express a belief) do not comply as to form in all
material respects with the requirements of the Act and the applicable
rules and regulations of the Commission thereunder or (B) (x) the
Registration Statement and the Prospectus included therein (except for
the financial statements and financial schedules and other financial
data included therein, as to which such counsel need not express a
belief) at the time the Registration Statement became effective
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading or (y) the Prospectus (except for
the financial statements and financial schedules and other financial
data included therein, as to which such counsel need not express a
belief) as of its date and as of such Time of Delivery contains an
untrue statement of a material fact or omitted or omits 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; and
(x) Such counsel does not know of any documents that are
required to be filed as exhibits to the Registration Statement that
are not filed.
In rendering such opinion, such counsel may state that they express no
opinion as to the laws of any jurisdiction other than the laws of the State of
New York and the Federal law of the United States;
(d) Lee and Li, ROC counsel for the Company, shall have furnished to
you their written opinion dated such Time of Delivery, in form and
substance satisfactory to you, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation limited by shares formed under the laws of
the ROC, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus;
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(ii) The Company has an authorized capitalization as set
forth in the Prospectus, and all of the issued shares of capital stock
of the Company (including the Shares being delivered at such Time of
Delivery) have been duly and validly authorized and issued and are
fully paid and non_assessable; all of the issued and outstanding
Common Shares have been duly listed and admitted for trading on the
Taiwan Stock Exchange; the holders of outstanding shares of capital
stock of the Company are not entitled to preemptive or other rights to
acquire the Shares or the ADSs in connection with the transactions
contemplated hereby or otherwise; the Shares to be deposited by the
Company may be freely deposited by the Company with the Depositary
against issuance of ADRs evidencing ADSs and, after obtaining the
approval of the Taiwan Stock Exchange, will be duly listed and
admitted for trading on the Taiwan Stock Exchange upon the exchange of
the Certificates of Payment with the Shares; the ADSs and the Shares
are freely transferable by the Company to or for the account of the
several Underwriters in the manner contemplated herein and to the
initial purchasers thereof; and there are no restrictions on
subsequent transfers of the ADSs or the Shares except as described in
the Prospectus under "Description of Common Shares", "Common Shares
Eligible for Future Sale", "Description of American Depositary
Receipts" and "Annex B -- Foreign Investment and Exchange Controls in
the ROC"; and the Shares and ADSs conform to the description of the
Common Shares and the ADSs contained in the Prospectus;
(iii) The Deposit Agreement has been duly authorized, executed
and delivered by the Company and constitutes a valid and legally
binding agreement of the Company, enforceable in accordance with its
terms, subject, as to enforcement, to bankruptcy, fraudulent transfer,
insolvency, reorganization and similar laws of general applicability
relating to or affecting creditors' rights;
(iv) To the best of such counsel's knowledge after reasonable
inquiry and based on a certificate of the Company, the Company has
been duly qualified as a foreign corporation for the transaction of
business under the laws of each other jurisdiction in which it owns or
leases properties or conducts any business so as to require such
qualification, or is subject to no material liability or disability by
reason of failure to be so qualified in any such jurisdiction (such
counsel being entitled to rely in respect of the opinion in this
clause upon opinions of local counsel and in respect of matters of
fact upon certificates of officers of the Company, provided that such
counsel shall state that they believe that both you and they are
justified in relying upon such opinions and certificates);
(v) To the best of such counsel's knowledge after reasonable
inquiry and based on a certificate of the Company, the Company has
good and marketable title to all real property owned by it, in each
case free and clear of all liens, encumbrances and defects except such
as are described in the Prospectus or such as do not materially affect
the value of such property and do not interfere with the use made and
proposed to be made of such property by the Company; and any real
property and buildings held under lease by the Company are held by it
under valid, subsisting and enforceable leases with such exceptions as
are not material and do not interfere with the use made and proposed
to be made of such property and buildings by the Company;
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<PAGE> 22
(vi) To the best of such counsel's knowledge after reasonable
inquiry and based on a certificate of the Company, other than as set
forth in the Prospectus, there are no legal or governmental
proceedings pending to which the Company or any of its Significant
Subsidiaries is a party or of which any property of the Company or any
of its Significant Subsidiaries is the subject which, if determined
adversely to the Company or any of its Significant Subsidiaries, would
individually or in the aggregate have a material adverse effect on the
current or future consolidated financial position, shareholders'
equity or results of operations of the Company and its Significant
Subsidiaries; and, to the best of such counsel's knowledge, no such
proceedings are threatened or contemplated by any Governmental Agency
or threatened by others;
(vii) This Agreement has been duly authorized, executed and
delivered by the Company;
(viii) The issue and sale of the Shares and ADSs being
delivered at such Time of Delivery to be sold by the Company, the
deposit of the Shares being deposited by the Company with the
Depositary against issuance of the ADSs evidencing the ADRs to be
delivered at such Time of Delivery by the Company, the compliance by
the Company with all of the provisions of this Agreement and the
Deposit Agreement, the consummation of the transactions herein and
therein contemplated and the consummation of the transactions
contemplated under the Exchange Offer will not conflict with or result
in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument listed as an exhibit
to the Registration Statement, nor will such action result in any
violation of the provisions of the Articles of Incorporation of the
Company or any statute or any order, rule or regulation of any
Governmental Agency of the ROC;
(ix) No Governmental Authorization of or with any
Governmental Agency is required in the ROC for the issue and sale of
the Shares and ADSs by the Company, the deposit of the Shares being
deposited by the Company with the Depositary against issuance of the
ADSs evidencing the ADRs to be delivered at such Time of Delivery by
the Company or the consummation by the Company of the transactions
contemplated by this Agreement, the Deposit Agreement and the Exchange
Offer, except for (A) the approval of the CBC of foreign exchange
settlements and payments contemplated by the Deposit Agreement, (B)
the filings and approvals, if any, required under (1) the Overseas
Offering Rules, (2) the rules and regulations of the Taiwan Stock
Exchange, the SFC or the CBC and (3) the Export Processing Zone
Administration of the MOEA; and (C) the registration of the issue of
the Firm Shares with the MOEA, which shall be filed by the Company
within 15 days of the First Time of Delivery. Such Governmental
Authorizations which have been obtained are in full force and effect;
(x) The statements in the Prospectus under "Risk Factors",
"Dividends and Dividend Policy", "Management's Discussion and Analysis
of Financial Condition and Results of Operations", "Business",
"Management", "Description of Common Shares", "Description of American
Depositary Receipts", "Underwriting", "Common Shares Eligible for
Future Sale", "Taxation -- ROC Taxation", "Enforceability of Civil
Liabilities", "Annex A -- The Securities Market of the ROC"
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<PAGE> 23
and "Annex B -- Foreign Investment and Exchange Controls in the ROC",
to the extent such statements relate to matters of law or regulation
or to the provisions of documents therein described, are true and
accurate in all material respects, and nothing has been omitted from
such statements which would make the same misleading in any material
respect;
(xi) To the best of such counsel's knowledge after reasonable
inquiry and based on the certificates of the Company and the
Subsidiary, the Company and the Significant Subsidiaries own and
possess the Intellectual Property necessary to conduct their
businesses as presently conducted and as proposed to be conducted; and
neither the Company nor its Significant Subsidiaries has received any
notice or claim of infringement of or conflict with asserted rights of
others with respect to any Intellectual Property, which notice or
claim remains in dispute and which is reasonably likely to have a
material adverse effect on the current or future consolidated
financial position, shareholders' equity or results of operations of
the Company and its Significant Subsidiaries, taken as a whole;
(xii) Other than as set forth in the Prospectus, so long as
this Agreement, the Certificates of Payment and the cross receipt
referred to in the Deposit Agreement, if any, 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 government of the ROC or any political
subdivision or taxing authority thereof or therein on payments
hereunder to any Underwriter whose net income is subject to tax by the
ROC or withholding, if any, with respect to any such income tax) are
payable by or on behalf of the Underwriters to the ROC or to any
political subdivision or taxing authority thereof or therein in
connection with (A) the deposit with the Depositary of Shares
(initially in the form of the Certificates of Payment) by the Company
against the issuance of ADRs evidencing the ADSs, (B) the sale and
delivery by the Company of the Shares and ADSs to or for the
respective accounts of the Underwriters pursuant to the terms of this
Agreement, (C) the sale and delivery outside the ROC by the
Underwriters of the ADSs to the initial purchasers thereof in the
manner contemplated herein, (D) the execution and delivery of this
Agreement or (E) the consummation of the transactions contemplated
under the Exchange Offer;
(xiii) Insofar as matters of law of the ROC are concerned, the
Registration Statement and the F-4 Registration Statement and the
filing of the Registration Statement and the F-4 Registration
Statement with the Commission have been duly authorized by and on
behalf of the Company; and the Registration Statement and the F-4
Registration Statement have been duly executed pursuant to such
authorization by and on behalf of the Company;
(xiv) The Company's agreement to the choice of law provisions
set forth in Section 17 hereof will be recognized by the courts of the
ROC; the Company can sue and be sued in its own name under the laws of
the ROC; the irrevocable submission of the Company to the exclusive
jurisdiction of a New York Court, the waiver by the Company of any
objection to the venue of a proceeding of a New York Court and the
agreement of the Company that this Agreement shall be governed by and
construed in accordance with the laws of the State of New York
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<PAGE> 24
are legal, valid and binding; service of process effected in the
manner set forth in Section 14 hereof will be effective, insofar as
the law of the ROC is concerned, to confer valid personal jurisdiction
over the Company; and judgment obtained in a New York Court arising
out of or in relation to the obligations of the Company under this
Agreement would be enforceable against the Company in the courts of
the ROC;
(xv) The indemnification and contribution provisions set
forth in Section 8 hereof do not contravene the laws of the ROC;
(xvi) Except as described in the Prospectus all dividends and
other distributions declared and payable on the shares of capital
stock of the Company may under the current laws and regulations of the
ROC to be paid in New Taiwan Dollars (including any such dividends or
distributions to be paid to the Depositary) may be converted into
foreign currency that may be freely transferred out of the ROC, and
all such dividends and other distributions will not be subject to
withholding or other taxes under the laws and regulations of the ROC
and are otherwise free and clear of any other tax, withholding or
deduction in the ROC and without the necessity of obtaining any
Governmental Authorization in the ROC;
(xvii) To the best of our knowledge after reasonable inquiry
and based on a certificate of the Company, the Company is not in
violation of its Articles of Incorporation or other constituent
documents and is not 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;
(xviii) The statements set forth in the Prospectus under the
caption "Description of Common Shares", "Description of American
Depositary Receipts" and "Exchange Offer", insofar as they purport to
constitute a summary of the terms of the Common Shares, ADSs and the
Exchange Offer, respectively, under the caption "Taxation", and under
the caption "Underwriting", insofar as they purport to describe the
provisions of the laws and documents referred to therein, are accurate
and fair in all material respects;
(xix) Based upon such counsel's participation in the
preparation of the Registration Statement, the F-4 Registration
Statement and the Prospectus and review and discussion of the contents
thereof, and participation in conferences with officers and other
representatives and counsel of the Company and representatives and
counsel of the Underwriters in connection with the preparation
thereof, but without independent check or verification except with
respect to the matters to which such counsel's opinion relates, such
counsel have no reason to believe that, as of its effective date, the
Registration Statement, the F-4 Registration Statement or any further
amendment thereto made by the Company prior to such Time of Delivery
(other than the financial statements and related schedules and other
financial data included therein, as to which such counsel need express
no opinion) contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or that, as of
its date, the Prospectus or any further amendment or
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<PAGE> 25
supplement thereto made by the Company prior to such Time of Delivery
(other than the financial statements and related schedules and other
financial data included therein, as to which such counsel need express
no opinion) contained an untrue statement of a material fact or
omitted to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading or that, as of such Time of Delivery, either the
Registration Statement, the F-4 Registration Statement or the
Prospectus or any further amendment or supplement thereto made by the
Company prior to such Time of Delivery (other than the financial
statements and related schedules and other financial data included
therein, as to which such counsel need express no opinion) contains an
untrue statement of a material fact or omits to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and
(xx) Each of this Agreement and the Deposit Agreement is in
proper form to be enforceable in the ROC in accordance with its terms;
to ensure the legality, validity, enforceability or admissibility into
evidence in the ROC of this Agreement, it is not necessary that this
Agreement, the Deposit Agreement be filed or recorded with any court
or other authority in the ROC or that any stamp or similar tax in the
ROC be paid on or in respect of this Agreement, the Deposit Agreement,
the ADRs or any other documents to be furnished hereunder, it being
understood that in court proceedings in the ROC, a translation into
the Chinese language may be required.
In giving such opinion, such counsel may state that with respect
to all matters of United States federal and New York law they have
relied upon the opinions of United States counsel for the Company
delivered pursuant to paragraph (c) of this Section 7;
(e) Davis Polk & Wardwell, U.S. counsel for the Subsidiary, shall
have furnished to you their written opinion, dated the applicable Time of
Delivery, in form and substance satisfactory to you, to the effect that:
(i) To the extent, if any, that the laws of the State of New
York may govern its execution and delivery, this Agreement has been
duly executed and delivered by or on behalf of the Subsidiary;
(ii) Except as disclosed in the Registration Statement and the
Prospectus and except for the performance by the Subsidiary of its
indemnification and contribution obligations under this Agreement, as
to which such counsel is not being asked to express an opinion, (A)
the sale by the Subsidiary of the Optional ADSs to the Underwriters in
accordance with this Agreement and (B) performance by the Subsidiary
of its obligations under this Agreement will not contravene (X) any
provision of United States Federal or New York State law that in such
counsel's experience is normally applicable to general business
corporations in relation to transactions of the type contemplated in
this Agreement, except for the securities of Blue Sky laws of the
State of New York, as to which such counsel is not being asked to
express an opinion, or (Y) any agreement or other agreement governed
by New York law and binding upon the Subsidiary listed on a schedule
attached to such opinion;
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<PAGE> 26
(iii) Except as disclosed in the Registration Statement and the
Prospectus and except for the performance by the Subsidiary of its
indemnification and contribution obligations under this Agreement, as
to which such counsel is not being asked to express an opinion, no
consent, approval, authorization or order of, or qualification with
any governmental body or agency is required under United States
Federal or New York State law that in such counsel's experience is
normally applicable to general business corporations in relation to
transactions of the type contemplated in this Agreement and the
Deposit Agreement for the (A) sale by the Subsidiary of the Optional
ADSs to the Underwriters in accordance with this Agreement and (B)
performance by the Subsidiary of its obligations under this Agreement,
except such as may be required by the securities or Blue Sky laws of
the State of New York;
(iv) Assuming that (A) DTC is a "protected purchaser" (as
defined in Section 8-303 of the Code) of the Optional ADSs and a
"securities intermediary" (as defined in Section 8-102 of the Code)
and (B) the Underwriters have acquired pursuant to Section 8-501 of
the Code and the terms and provisions of this Agreement their
"security entitlement" (as defined in Section 8-102 of the Code) in
the Optional ADSs for "value" (as defined in Section 1-201 of the
Code) and without notice of an "adverse claim" (as defined in Section
8-102 of the Code), no action based on an adverse claim to such
Optional ADSs, whether framed in conversion, replevin, constructive
trust, equitable lien, or other theory, may be asserted against such
underwriter;
(v) Upon issuance by the Depositary of the Optional ADSs
against the deposit of the Optional Shares in accordance with the
Deposit Agreement, the Optional ADSs will be duly and validly issued
and will entitle the holders thereof to the rights specified in the
Deposit Agreement assuming that (A) the Deposit Agreement constitutes
a valid and binding agreement of the parties thereto, (B) the Optional
Shares have been duly authorized and validly issued and are fully paid
and nonassessable and that any preemptive rights with respect to the
Optional Shares have been validly waived or exercised, (C) the
Optional Shares have been duly deposited with the Depositary in
accordance with the provisions of the Deposit Agreement and (D) the
actions specified in clauses (B) and (C) of this paragraph (v) have
been taken by the Depositary in accordance with all applicable New
York laws and regulations and have been taken by the Company in
accordance with all applicable ROC laws and regulations; and
(vi) Assuming that the actions referred to in clause (A) of this
paragraph (vi) have been duly and validly authorized by the Subsidiary
under the laws of the ROC, (A) the Subsidiary has, under the laws of
the State of New York relating to personal jurisdiction, pursuant to
Section 14 of this Agreement: (1) validly and irrevocably submitted to
the personal jurisdiction of any New York Court in any action arising
out of or based on this Agreement or the transactions contemplated
hereby, (2) to the extent permitted by applicable law, validly and
irrevocably waived any objection to the venue of a proceeding in any
such court, and (3) validly and irrevocably appointed the Authorized
Agent as its authorized agent for the purpose described in Section 14
hereof; and (B) service of process effected on such agent in the
manner set forth in Section 14 hereof will be effective to confer
valid personal jurisdiction over the Subsidiary;
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<PAGE> 27
In rendering such opinion, such counsel may state that they express no
opinion as to the laws of any jurisdiction other than the laws of the State
of New York and the Federal laws of the United States;
(f) Lee and Li, ROC counsel for the Subsidiary, shall have furnished
to you their written opinion, dated such Time of Delivery, in form and
substance satisfactory to you, to the effect that:
(i) The Subsidiary has been duly incorporated and is validly
existing as a company limited by shares under the laws of the ROC;
(ii) This Agreement has been duly executed and delivered by or
on behalf of the Subsidiary; and the sale of the Optional ADSs
representing the Optional Shares to be sold by the Subsidiary
hereunder and the compliance by the Subsidiary with all of the
provisions of this Agreement and the consummation of the transactions
herein and therein contemplated will not, to the best of such
counsel's knowledge and after due enquiry and based on a certificate
of the subsidiary, conflict with or result in a breach or violation of
any terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument known to such counsel to which the Subsidiary is a party
or by which the Subsidiary is bound, or to which any of the property
or assets of the Subsidiary is subject, nor will such action result in
any violation of the provisions of the Articles of Incorporation of
the Company or any statute or any order, rule or regulation known to
such counsel of any Governmental Agency in the ROC;
(iii) No Governmental Authorizations of or with any
Governmental Agency is required in the ROC for the sale of the
Optional ADSs representing the Optional Shares by the Subsidiary, the
deposit of the Shares being deposited by the Subsidiary with the
Depositary against issuance of the ADSs evidencing the ADRs to be
delivered at such time of delivery of the Subsidiary or the
consummation by the Subsidiary of the transactions contemplated by
this Agreement and the Deposit Agreement, except such as have been
duly obtained and are in full force and effect;
(iv) The Optional ADSs representing the Optional Shares
delivered at each Time of Delivery will be freely transferable by the
Subsidiary to or for the account of the several Underwriters and (to
the extent described in the Prospectus) to the initial purchasers
thereof; and there are no restrictions on subsequent transfers of the
Optional Shares or Optional ADSs under the laws of the ROC except as
described in the Prospectus under the captions "Description of Common
Shares", "Description of American Depositary Receipts" or "Foreign
Investment and Exchange Controls in the ROC";
(v) Immediately prior to such Time of Delivery, the
Subsidiary had good and valid title to the Optional Shares and the
Optional ADSs representing such Optional Shares to be sold at such
Time of Delivery by the Subsidiary under this Agreement and the
Deposit Agreement, free and clear of all liens, encumbrances, equities
or claims, and full right, power and authority to sell, assign,
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<PAGE> 28
transfer and deliver the Optional Shares and the Optional ADSs
representing such Optional Shares to be sold by the Subsidiary
hereunder and thereunder;
(vi) Good and valid title to the Optional Shares and the
Optional ADSs representing such Optional Shares, free and clear of all
liens, encumbrances, equities or claims, has been transferred to each
of the several Underwriters who have purchased the Optional ADSs
representing such Optional Shares in good faith and without notice of
any such lien, encumbrance, equity or claim or any other adverse
claim;
(vii) This Agreement is in proper form to be enforceable
against the Company in the ROC in accordance with its terms; to ensure
the legality, validity, enforceability or admissibility into evidence
in the ROC of this Agreement, it is not necessary that this Agreement
or any other documents be filed or recorded with any court or other
authority in the ROC or that any stamp or similar tax in the ROC be
paid on or in respect of this Agreement or any other documents to be
furnished hereunder, it being understood that in a court proceeding in
the ROC, a translation into the Chinese language may be required;
(viii) The Subsidiary's agreement to the choice of law
provisions set forth in Section 17 hereof will be recognized by the
courts of the ROC; the Subsidiary can sue and be sued in its own name
under the laws of the ROC; the irrevocable submission of the
Subsidiary to the exclusive jurisdiction of a New York Court, the
waiver by the Subsidiary of any objection to the venue of a proceeding
of a New York Court and the agreement of the Subsidiary that this
Agreement shall be governed by and construed in accordance with the
laws of the State of New York are legal, valid and binding; service of
process effected in the manner set forth in Section 14 hereof will be
effective, insofar as the law of the ROC is concerned, to confer valid
personal jurisdiction over the Subsidiary; and judgment obtained in a
New York Court arising out of or in relation to the obligations of the
Subsidiary under this Agreement would be enforceable against the
Subsidiary in the courts of the ROC; and
(ix) Other than as set forth in the Prospectus, so long as
this Agreement, the Certificates of Payment and the cross receipt
referred to in the Deposit Agreement, if any, 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 government of the ROC or any political
subdivision or taxing authority thereof or therein on payments
hereunder to any Underwriter whose net income is subject to tax by the
ROC or withholding, if any, with respect to any such income tax) are
payable by or on behalf of the Underwriters to the government of the
ROC or any political subdivision or taxing authority thereof or
therein in connection with (A) the deposit with the Depositary of
Shares by the Subsidiary against the issuance of ADRs evidencing ADSs,
(B) the sale and delivery by the Subsidiary of the Shares and ADSs to
or for the respective accounts of the Underwriters, (C) the sale and
delivery outside the ROC by the Underwriters of the ADSs to the
initial purchasers thereof, or (D) the execution and delivery of this
Agreement and the Deposit Agreement.
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<PAGE> 29
In rendering such opinion, such counsel may state that they express no
opinion as to the laws of any jurisdiction outside the ROC and in rendering
the opinion in subparagraph (ii), (iv), (v) and (vi) such counsel may rely
upon a certificate of the Subsidiary in respect of the matters of fact as
to ownership of and liens, encumbrances, equities or claims on, the Shares
and ADSs to be sold by the Subsidiary, provided that such counsel shall
state that they believe both you and they are justified in relying upon
such certificate;
(g) Lee and Li, ROC counsel for ASE Test, Inc. ("ASE Kaohsiung"), and
ASE (Chung Li) Inc. ("ASE Chung Li"), shall have furnished to you their
written opinion dated such Time of Delivery, in form and substance
satisfactory to you, to the effect that:
(i) To the best of such counsel's knowledge after reasonable
inquiry and based on the certificates of each of ASE Kaohsiung and ASE
Chung Li, each of ASE Kaohsiung and ASE Chung Li has been duly
incorporated and is validly existing as a corporation formed under the
laws of the ROC; and except as disclosed in the Prospectus, all of the
issued shares of capital stock of each of ASE Kaohsiung and ASE Chung
Li have been duly and validly authorized and issued, are fully paid
and non-assessable, and are owned directly or indirectly by the
Company, free and clear of all liens, encumbrances, equities and
claims;
(ii) To the best of such counsel's knowledge after reasonable
inquiry and based on the certificates of each of ASE Kaohsiung and ASE
Chung Li, each of ASE Kaohsiung and ASE Chung Li has good and
marketable title to all real property owned by each of them, in each
case free and clear of all liens, encumbrances and defects except such
as are described in the Prospectus or such as do not materially affect
the value of such property and do not interfere with the use made and
proposed to be made of such property by each of them; and any real
property and buildings held under lease by each of ASE Kaohsiung and
ASE Chung Li are held by each of them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not
interfere with the use made and proposed to be made of such property
and buildings by each of them;
(iii) To the best of such counsel's knowledge after reasonable
inquiry and based on the certificates of each of ASE Kaohsiung and ASE
Chung Li, the issue and sale of the Shares and ADSs being delivered at
such Time of Delivery to be sold by the Company, the deposit of the
Shares being deposited by the Company with the Depositary against
issuance of the ADSs evidencing the ADRs to be delivered at such Time
of Delivery by the Company, the compliance by the Company with all of
the provisions of this Agreement and the Deposit Agreement, the
consummation of the transactions herein and therein contemplated and
the consummation of the transactions contemplated under the Exchange
Offer will not conflict with or result in a breach or violation of any
of the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument known to such counsel to which any of ASE Kaohsiung and
ASE Chung Li is a party or by which any of them is bound or to which
any of the property or assets of any of them is subject, nor will such
action result in any violation of the provisions of the Articles of
Incorporation of any of them or any statute or any order, rule or
regulation known to such counsel of any Governmental Agency having
jurisdiction over any of them or any of their properties; and
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<PAGE> 30
(iv) To the best of such counsel's knowledge after reasonable
inquiry and based on the certificates of each of ASE Kaohsiung and ASE
Chung Li, none of ASE Kaohsiung or ASE Chung Li is in violation of its
Articles of Incorporation or in default in the performance or
observance of any material obligation, agreement, covenant or
condition contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a
party or by which it or any of its properties may be bound;
(h) Allen & Gledhill, Republic of Singapore ("Singapore") counsel for
ASE Test Limited ("ASE Test"), shall have furnished to you their written
opinion dated such Time of Delivery, in form and substance satisfactory to
you, substantially to the effect that:
(i) ASE Test has been duly incorporated, is validly existing
under the laws of Singapore, has the corporate power and authority to
own its property and to conduct its business as described in the
Prospectus;
(ii) as at 31st August 2000, the 38,902,740 ordinary shares of
US$0.25 each in the capital of ASE Test registered in the name of J&R
Holding have been duly authorized and validly issued, are fully paid
and non-assessable, and are not issued in violation of any preemptive
or similar rights under (A) the laws of Singapore, (B) the Memorandum
and Articles of Association of ASE Test or other constitutive document
of ASE Test or any amendment thereto or (C) as far as we are aware,
after due enquiry, any agreement or instrument binding upon ASE Test
and governed by Singapore law; for the purposes of such opinion such
counsel may assume that the term "non-assessable" in relation to the
shares means under Singapore law that holders of such shares, having
fully paid up all amounts due on such shares as to nominal amount and
premium thereon, are under no further personal liability to contribute
to the assets or liabilities of ASE Test in their capacities purely as
holders of such shares;
(iii) as at 31st August 2000, the 3,600,000 ordinary shares of
US$0.25 each in the capital of ASE Test registered in the name of ASE
Holding Limited have been duly authorized and validly issued, are
fully paid and non-assessable, and are not issued in violation of any
preemptive or similar rights under (A) the laws of Singapore, (b) the
Memorandum and Articles of Association of ASE Test or any other
constitutive document of ASE Test or any other constitutive document
of ASE Test or any amendment thereto or (c) as far as such counsel is
aware, after due enquiry, any agreement or instrument binding upon ASE
Test and governed by Singapore law; for the purposes of such opinion
such counsel may assume that the term "non-assessable" in relation to
the shares means under Singapore law that holders of such shares,
having fully paid up all amounts due on such shares as to nominal
amount and premium thereon, are under no further personal liability to
contribute to the assets or liabilities of ASE Test in their
capacities purely as holders of such shares;
(iv) As of such Time of Delivery, (a) such counsel is not
representing ASE Test or any of its subsidiaries in any legal or
governmental proceedings, pending or threatened, to which ASE Test or
any subsidiary is a party or to which any of the properties of ASE
Test or any subsidiary is subject and (b) such counsel
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is not aware of the existence of any such legal or governmental
proceedings in the Republic of Singapore;
(v) The issue and sale of the Shares and ADSs being delivered
at such Time of Delivery to be sold by the Company, the deposit of the
Shares being deposited by the Company with the Depositary against
issuance of the ADSs evidencing the ADRs to be delivered at such Time
of Delivery by the Company, the performance by the Company of its
obligations under this Agreement and the Deposit Agreement, and the
consummation of the Exchange Offer will not contravene (a) any
provision of applicable Singapore law or the Memorandum and Articles
of Association of ASE Test, or (b) as far as such counsel is aware,
any judgment, order or decree of any governmental body, agency or
court of Singapore having jurisdiction over ASE Test or any of its
assets; and
(vi) No consents, authorizations, approvals, orders,
certificates or permits of and from, and no declarations and filings
with, any local and other governmental authorities in the Republic of
Singapore or any courts and other tribunals in the Republic of
Singapore are required for ASE Test to own, lease and use its
properties and assets and to conduct its business in the manner
described in, and contemplated by, the Prospectus;
(i) Appleby Spurling & Kempe, Bermuda counsel for J&R Holding Limited
("J&R Holding"), shall have furnished to you their written opinion dated
such Time of Delivery, in form and substance satisfactory to you, to the
effect that:
(i) J&R Holding has been duly incorporated and is validly
existing as a corporation formed under the laws of Bermuda; and all of
the issued shares of capital stock of J&R Holding have been duly and
validly authorized and issued, are fully paid and non-assessable, and
are owned directly or indirectly by the Company, free and clear of all
liens, encumbrances, equities and claims;
(ii) To the best of such counsel's knowledge after reasonable
inquiry, other than as set forth in the Prospectus, there are no legal
or governmental proceedings in Bermuda pending to which J&R Holding or
any of its Bermuda subsidiaries is a party or of which any property of
J&R Holding or any of its Bermuda subsidiaries is the subject which,
if determined adversely to J&R Holding or any of its Bermuda
subsidiaries, would individually or in the aggregate have a material
adverse effect on the current or future consolidated financial
position, shareholders' equity or results of operations of J&R Holding
and its Bermuda subsidiaries; and, to the best of such counsel's
knowledge, no such proceedings are threatened or contemplated by any
Bermuda Governmental Agency or threatened by others;
(iii) The issue and sale of the Shares and ADSs being delivered
at such Time of Delivery to be sold by the Company, the deposit of the
Shares being deposited by the Company with the Depositary against
issuance of the ADSs evidencing the ADRs to be delivered at such Time
of Delivery by the Company, the compliance by the Company with all of
the provisions of this Agreement and the Deposit Agreement, the
consummation of the transactions herein and therein contemplated and
the consummation of the transactions contemplated under the
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Exchange Offer does not and will not cause J&R Holding to contravene
or result in a breach of: (a) any applicable law, rule or regulation
of Bermuda, (b) any order, judgment, injunction, decree, determination
or award of any Bermuda court or any Bermuda judicial, administrative
or governmental authority or organization presently in effect and
applicable to J&R Holding, (c) any provision of the Memorandum of
Association or the Bye Laws of J&R Holding or (d) to the best of such
counsel's knowledge after reasonable inquiry, any agreement or
instrument binding on J&R Holding and governed by Bermuda law; and
(iv) Other than such consents and approvals as have already
been granted by governmental authorities in Bermuda, no consents,
authorizations, approvals, orders, certificates or permits of and
from, and no declarations and filings with, any local and governmental
authorities in the Bermuda or any courts and other tribunals in the
Bermuda are required for J&R Holding to own, lease and use its
properties and assets and to conduct its business in the manner
described in, and contemplated by, the Prospectus;
(j) Counsel for the Depositary shall have furnished to you their
written opinion, dated such Time of Delivery, in form and substance
satisfactory to you, to the effect that:
(i) The Deposit Agreement has been duly authorized, executed
and delivered by the Depositary and constitutes a valid and legally
binding obligation of the Depositary, enforceable in accordance with
its terms, subject as to enforcement to bankruptcy, insolvency,
reorganization and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles;
(ii) The ADRs issued under and in accordance with the
provisions of the Deposit Agreement to evidence ADSs will entitle the
holders thereof to the rights specified therein and in the Deposit
Agreement, assuming that (A) the Shares represented by the ADSs which
are in turn evidenced by ADRs have been duly authorized and validly
issued and are fully paid and nonassessable and that any preemptive
rights with respect to the Shares have been validly waived or
exercised and (B) such Shares have been duly deposited with Citibank,
N.A., as Custodian, in each case under and in accordance with all
applicable laws and regulations;
(iii) Upon issuance by the Depositary of ADRs evidencing ADSs
against the deposit of Shares in respect thereof in accordance with
the provisions of the Deposit Agreement, such ADRs will be duly and
validly issued and the person in whose name the ADRs are registered
will be entitled to the rights specified therein and in the Deposit
Agreement; and
(iv) The ADS Registration Statement and any amendments thereof
or supplements thereto, as of their respective effective dates,
compiled as to form in all material respects with the requirements of
the Act and the rules and regulations of the Commission thereunder;
In rendering such opinion, such counsel may state that they express no
opinion as to the laws of any jurisdiction outside the United States;
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(k) On the date of the printing of the Preliminary Prospectus at a
time prior to the actual printing of such Preliminary Prospectus, on the
date of the Prospectus of a time prior to the execution of this Agreement,
at 9:30 a.m., New York City time, on the effective date of any
post-effective amendment to the Registration Statement filed subsequent to
the date of this Agreement and also at each Time of Delivery, T. N. Soong &
Co., a Member Firm of Andersen Worldwide, S.C., shall have furnished to you
a letter or letters, dated the respective dates of delivery thereof, in
form and substance satisfactory to you, to the effect set forth in Annex I
hereto (the executed copies of the letters delivered prior to the printing
of the Preliminary Prospectus and prior to the execution of this Agreement
are attached as Annex I(a) hereto and a draft of the form of letter to be
delivered on the effective date of any post-effective amendment to the
Registration Statement and as of each Time of Delivery is attached as Annex
I(b) hereto);
(l) (i) Neither the Company, the Subsidiary nor any of the
Significant Subsidiaries shall have sustained since the date of the latest
audited financial statements included in the Prospectus any loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, otherwise than as set forth
or contemplated in the Prospectus that would have or would reasonably be
expected to have a Material Adverse Effect, and (ii) since the respective
dates as of which information is given in the Prospectus there shall not
have been any decrease in the capital stock or increase in short-term debt
or long-term debt of the Company, the Subsidiary or any of the Significant
Subsidiaries or any change, or any development involving a prospective
change, in or affecting the general affairs, management, financial
position, shareholders' equity or results of operations of the Company, the
Subsidiary or the Significant Subsidiaries, otherwise than as set forth or
contemplated in the Prospectus, the effect of which, in any such case
described in clause (i) or (ii), is in the judgment of the Representatives
so material and adverse as to make it impracticable or inadvisable to
proceed with the public offering or the delivery of the ADSs being
delivered at such Time of Delivery on the terms and in the manner
contemplated in the Prospectus;
(m) On or after the date hereof there shall not have occurred any of
the following: (i) a suspension or material limitation in trading in
securities generally on the NYSE or the Taiwan Stock Exchange; (ii) a
suspension or material limitation in trading in the Company's securities or
the ADSs on the NYSE or the Taiwan Stock Exchange; (iii) a general
moratorium on commercial banking activities in New York, London or the ROC,
declared by the relevant authorities; (iv) a change or development
involving a prospective change (except as set forth in the Prospectus) in
the ROC taxation affecting the Company, the Shares or the ADSs or the
transfer thereof or the imposition of exchange controls by the United
States or the ROC; or (v) the outbreak or escalation of hostilities
involving the United States, the United Kingdom or the ROC or the
declaration by the United States, the United Kingdom or the ROC of a
national emergency or war, if the effect of any such event specified in
this clause (v) in the judgment of the Representatives makes it
impracticable or inadvisable to proceed with the public offering or the
delivery of the ADSs being delivered at such Time of Delivery on the terms
and in the manner contemplated in the Prospectus or (vi) the occurrence of
any material adverse change in the existing financial, political or
economic conditions in the United States, the United Kingdom and the ROC or
elsewhere which, in the judgment of the Representatives would materially
and adversely affect the financial markets or the market for the ADSs and
other equity securities;
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<PAGE> 34
(n) The ADSs to be sold by the Company at such Time of Delivery shall
have been duly listed, subject to notice of issuance, on the NYSE;
(o) The Exchange Offer shall have commenced in the manner as
described in the F-4 Registration Statement and the Prospectus;
(p) The Depositary shall have furnished or caused to be furnished to
you as such Time of Delivery certificates satisfactory to you evidencing
the deposit with it of the Shares being so deposited against issuance of
ADRs evidencing the ADSs to be delivered by the Company at such Time of
Delivery, and the execution, countersignature (if applicable), issuance and
delivery of ADRs evidencing such ADSs pursuant to the Deposit Agreement;
(q) Each party set forth in Annex III attached hereto shall have
entered into an agreement (each the "Lock-Up Agreement") whereby during the
period beginning from the date hereof and continuing to and including the
date 90 days after the date of the Prospectus, such party shall not offer,
sell, contract to sell, pledge, grant any option to purchase, make any
short sale or otherwise dispose of, except as provided hereunder, any (i)
Shares or ADSs or any securities of the Company that are substantially
similar to Shares or ADSs, including but not limited to any securities that
are convertible into or exchangeable for, or that represent the right to
receive, Shares or ADSs or any such substantially similar securities; (ii)
common shares of such party or depositary shares or depositary receipts
representing such common shares or any securities that are substantially
similar to such common shares or such depositary shares or depositary
receipts, including but not limited to any securities that are convertible
into or exchangeable for, or that represent the right to receive, such
common shares or such depositary shares or depositary receipts or any such
substantially similar securities; and (iii) common shares of such party's
subsidiaries or controlled affiliates or depositary shares or depositary
receipts representing such common shares or any securities that are
substantially similar to such common shares or such depositary shares or
depositary receipts, including but not limited to any securities that are
convertible into or exchangeable for, or that represent the right to
receive, such common shares or such depositary shares or depositary
receipts or any such substantially similar securities, in each case whether
now owned or hereinafter acquired, owned directly by the undersigned
(including holding as a custodian) or with respect to which the undersigned
has beneficial ownership within the rules and regulations of the
Commission, without your prior written consent (a draft of such Lock-Up
Agreement is attached as Annex II hereto);
(r) The Company shall have complied with the provisions of Section
5(c) hereof with respect to the furnishing of prospectuses on the New York
Business Day next succeeding the date of this Agreement;
(s) (i) The Company shall have obtained all Governmental
Authorizations required for the issuance and sale of the Firm Shares or the
Firm ADSs, for the deposit of Firm Shares with the Depositary and for the
execution and delivery by the Company of this Agreement and the Deposit
Agreement to be duly and validly authorized; and (ii) the Subsidiary shall
have obtained all Governmental Authorizations required for the deposit of
the Optional Shares with the Depositary, for the sale and delivery of the
Optional ADSs representing the Optional Shares to be sold by the Subsidiary
and for the execution and delivery by the Subsidiary of this Agreement to
be duly and validly authorized; and
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(t) The Company shall have furnished or caused to be furnished to you
at such Time of Delivery certificates of officers of the Company and
officers of the Subsidiary satisfactory to you as to the accuracy of the
representations and warranties of the Company and the Subsidiary herein, as
the case may be, at and as of such Time of Delivery, as to the performance
by the Company and the Subsidiary of all of their respective obligations
hereunder to be performed at or prior to such Time of Delivery, and as to
such other matters as you may reasonably request, and the Company shall
have furnished or caused to be furnished certificates as to the matters set
forth in subsections (a), (l) and (s) of this Section, and as to such other
matters as you may reasonably request.
8. (a) The Company will indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement, the ADR Registration Statement or the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse each
Underwriter for any legal or other expenses reasonably incurred by such
Underwriter in connection with investigating or defending any such action or
claim as such expenses are incurred; provided, however, that the Company shall
not be liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in any Preliminary
Prospectus, the Registration Statement, the ADR Registration Statement or the
Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by any Underwriter
through Goldman Sachs (Asia) L.L.C. expressly for use therein.
(b) The Subsidiary will indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement, the ADR Registration Statement or the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse each
Underwriter for any legal or other expenses reasonably incurred by such
Underwriter in connection with investigating or defending any such action or
claim as such expenses are incurred; provided, however, that the Subsidiary
shall not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in any Preliminary
Prospectus, the Registration Statement, the ADR Registration Statement or the
Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
any Underwriter through Goldman Sachs (Asia) L.L.C. expressly for use therein.
(c) Each Underwriter will indemnify and hold harmless the Company and the
Subsidiary against any losses, claims, damages or liabilities to which the
Company and the Subsidiary may become subject, under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement, the ADR Registration Statement or the Prospectus, or any
amendment or supplement thereto, or
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<PAGE> 36
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in any Preliminary Prospectus, the Registration
Statement, the ADR Registration Statement or the Prospectus or any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by such Underwriter through Goldman Sachs
(Asia) L.L.C. expressly for use therein; and will reimburse the Company or the
Subsidiary for any legal or other expenses reasonably incurred by the Company
and the Subsidiary in connection with investigating or defending any such action
or claim as such expenses are incurred.
(d) Promptly after receipt by an indemnified party under subsection (a),
(b) or (c) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against an indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (which shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and,
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the written consent
of the indemnified party, effect the settlement or compromise of, or consent to
the entry of any judgment with respect to, any pending or threatened action or
claim in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified party is an actual or potential party
to such action or claim) unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all liability
arising out of such action or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act, by or on behalf of
any indemnified party.
(e) If the indemnification provided for in this Section 8 is unavailable
to or insufficient to hold harmless an indemnified party under subsection (a),
(b) or (c) above in respect of any losses, claims, damages or liabilities (or
actions in respect thereof) referred to therein, then each indemnifying party
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect the relative benefits
received by the Company and the Subsidiary on the one hand and the Underwriters
on the other from the offering of the ADSs. If, however, the allocation provided
by the immediately preceding sentence is not permitted by applicable law or if
the indemnified party failed to give the notice required under subsection (d)
above, then each indemnifying party shall contribute to such amount paid or
payable by such indemnified party in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
Company and the Subsidiary on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions in respect thereof), as well as any
other relevant equitable considerations. The relative benefits received by the
Company and the Subsidiary on the one hand (it being understood that for
purposes of this subsection (e) any benefit received by the Subsidiary shall
also be deemed to have been
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<PAGE> 37
received by the Company) and the Underwriters on the other shall be deemed to be
in the same proportion as the total net proceeds from the offering of the ADSs
purchased under this Agreement (before deducting expenses) received by the
Company and the Subsidiary bear to the total underwriting discounts and
commissions received by the Underwriters with respect to the ADSs purchased
under this Agreement, in each case as set forth in the table on the cover page
of the Prospectus. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company and the Subsidiary on the one hand or the
Underwriters on the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, the Subsidiary and the Underwriters agree that it would not be just
and equitable if contributions pursuant to this subsection (d) were determined
by pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to above in this subsection (d). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to above
in this subsection (e) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
subsection (d), no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the ADSs underwritten by
it and distributed to the public were offered to the public exceeds the amount
of any damages which such Underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations in this subsection (e) to contribute are several in proportion to
their respective underwriting obligations and not joint.
(f) The obligations of the Company or the Subsidiary, respectively, under
this Section 8 shall be in addition to any liability which the Company or the
Subsidiary, respectively, may otherwise have and shall extend, upon the same
terms and conditions, to the respective affiliates [and agents] of each
Underwriter and to each person, if any, who controls any Underwriter within the
meaning of the Act; and the obligations of the Underwriters under this Section 8
shall be in addition to any liability which the respective Underwriters may
otherwise have and shall extend, upon the same terms and conditions, to each
officer and director of the Company or the Subsidiary, as the case may be, and
to each person, if any, who controls the Company or the Subsidiary, as the case
may be, within the meaning of the Act.
9. (a) If any Underwriter shall default in its obligation to purchase the
ADSs which it has agreed to purchase hereunder at a Time of Delivery, you may in
your discretion arrange for you or another party or other parties to purchase
such ADSs on the terms contained herein. If within thirty-six hours after such
default by any Underwriter you do not arrange for the purchase of such ADSs,
then the Company shall be entitled to a further period of thirty-six hours
within which to procure another party or other parties satisfactory to you to
purchase such ADSs on such terms. In the event that, within the respective
prescribed periods, you notify the Company that you have so arranged for the
purchase of such ADSs, or the Company notify you that they have so arranged for
the purchase of such ADSs, you or the Company shall have the right to postpone
such Time of Delivery for a period of not more than seven days, in order to
effect whatever changes may thereby be made necessary in the Registration
Statement or the Prospectus, or in any other documents or arrangements, and the
Company agrees to file promptly any amendments to the Registration Statement or
the Prospectus which in your opinion may thereby be made necessary. The term
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"Underwriter" as used in this Agreement shall include any person substituted
under this Section with like effect as if such person had originally been a
party to this Agreement with respect to such ADSs.
(b) If, after giving effect to any arrangements for the purchase of the
ADSs of a defaulting Underwriter or Underwriters by you and the Company as
provided in subsection (a) above, the aggregate number of such ADSs which
remains unpurchased does not exceed one-eleventh of the aggregate number of all
of the ADSs to be purchased at such Time of Delivery, then the Company shall
have the right to require each non-defaulting Underwriter to purchase the number
of ADSs which such Underwriter agreed to purchase hereunder at such Time of
Delivery and, in addition, to require each non-defaulting Underwriter to
purchase its pro rata share (based on the number of ADSs which such Underwriter
agreed to purchase hereunder) of the ADSs of such defaulting Underwriter or
Underwriters for which such arrangements have not been made; but nothing herein
shall relieve a defaulting Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the
ADSs of a defaulting Underwriter or Underwriters by you and the Company as
provided in subsection (a) above, the aggregate number of such ADSs which
remains unpurchased exceeds one-eleventh of the aggregate number of all of the
Shares to be purchased at such Time of Delivery, or if the Company shall not
exercise the right described in subsection (b) above to require non-defaulting
Underwriters to purchase ADSs of a defaulting Underwriter or Underwriters, then
this Agreement (or, with respect to the Second Time of Delivery, the obligations
of the Underwriters to purchase and of the Subsidiary to sell the Optional ADSs)
shall thereupon terminate, without liability on the part of any non-defaulting
Underwriter or the Company, except for the expenses to be borne by the Company
and the Underwriters as provided in Section 6 hereof and the indemnity and
contribution agreements in Section 8 hereof; but nothing herein shall relieve a
defaulting Underwriter from liability for its default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Company, the Subsidiary and the several
Underwriters, as set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall remain in full force and effect,
regardless of any investigation (or any statement as to the results thereof)
made by or on behalf of any Underwriter or any controlling person of any
Underwriter, or the Company, or any officer or director or controlling person of
the Company, the Subsidiary or any controlling person of the Subsidiary, and
shall survive delivery of and payment for the ADSs.
11. If this Agreement shall be terminated pursuant to Section 9 hereof,
neither the Company nor the Subsidiary shall be under any liability to any
Underwriter except as provided in Sections 6 and 8 hereof; but, if for any other
reason any Firm ADSs and/or, if applicable, Optional ADSs are not delivered by
or on behalf of the Company or the Subsidiary as provided herein, the Company
and the Subsidiary will reimburse the Underwriters through you for all
out-of-pocket expenses approved in writing by you, including fees and
disbursements of counsel, reasonably incurred by the Underwriters in making
preparations for the purchase, sale and delivery of the Firm ADSs and/or, if
applicable, Optional ADSs not so delivered, but the Company and the Subsidiary
shall then be under no further liability to any Underwriter in respect of the
Firm ADSs and/or, if applicable, Optional ADSs not so delivered, except as
provided in Sections 6 and 8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you jointly or by Goldman Sachs (Asia) L.L.C. on behalf of you as the
representatives.
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<PAGE> 39
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to you as the representatives in care of Goldman Sachs
(Asia) L.L.C., 68th Floor, Cheung Kong Center, 2 Queen's Road Central, Hong
Kong, Attention: Legal Department; and if to the Company or the Subsidiary shall
be delivered or sent by mail, telex or facsimile transmission to the address of
the Company set forth in the Registration Statement, Attention: Chief Financial
Officer; provided, however, that any notice to an Underwriter pursuant to
Section 8 (d) hereof shall be delivered or sent by mail, telex or facsimile
transmission to such Underwriter at its address set forth in its Underwriters'
Questionnaire or telex constituting such Questionnaire, which address will be
supplied to the Company or the Subsidiary by you upon request. Any such
statements, requests, notices or agreements shall take effect upon receipt
thereof.
13. This Agreement shall be binding upon, and inure solely to the benefit
of, the Underwriters, the Company, the Subsidiary and, to the extent provided in
Sections 8 and 10 hereof, the officers and directors of the Company, the
Subsidiary and each person who controls the Company, the Subsidiary or any
Underwriter, and their respective heirs, executors, administrators, successors
and assigns, and no other person shall acquire or have any right under or by
virtue of this Agreement. No purchaser of any of the ADSs from any Underwriter
shall be deemed a successor or assign by reason merely of such purchase.
14. Each of the parties hereto irrevocably (i) agrees that any legal suit,
action or proceeding against the Company or the Subsidiary brought by any
Underwriter or by any person who controls any Underwriter arising out of or
based upon this Agreement or the transactions contemplated hereby may be
instituted in any New York court, (ii) waives, to the extent permitted by
applicable law, any objection which it may now or hereafter have to the laying
of venue of any such proceeding and (iii) submits to the [exclusive]
jurisdiction of such courts in any such suit, action or proceeding. Each of the
Company and the Subsidiary has appointed C.T. Corporation System, New York, New
York, as its authorized agent (the "Authorized Agent") upon whom process may be
served in any such action arising out of or based on this Agreement or the
transactions contemplated hereby which may be instituted in any New York Court
by any Underwriter or by any person who controls any Underwriter, expressly
consents to the jurisdiction of any such court in respect of any such action,
and waives any other requirements of or objections to personal jurisdiction with
respect thereto. Such appointment shall be irrevocable. Each of the Company and
the Subsidiary represents and warrants that the Authorized Agent has agreed to
act as such agent for service at process and agrees to take any and all action,
including the filing of any and all documents and instruments, that may be
necessary to continue such appointment in full force and effect as aforesaid.
Service of process upon the Authorized Agent and written notice of such service
to the Company and the Subsidiary, as the case may be, shall be deemed, in every
respect, effective service of process upon the Company and the Subsidiary, as
the case may be.
15. In respect of any judgment or order given or made for any amount due
hereunder that is expressed and paid in a currency (the "judgment currency")
other than United States dollars, the Company and the Subsidiary, as the case
may be, will, to the extent permitted by applicable law, indemnify each
Underwriter against any loss incurred by such Underwriter as a result of any
variation as between (i) the rate of exchange at which the United States dollar
amount is converted into the judgment currency for the purpose of such judgment
or order and (ii) the rate of exchange at which an Underwriter is able to
purchase United States dollars with the amount of the judgment currency actually
received by such Underwriter. The foregoing indemnity shall constitute a
separate and independent obligation of the Company and the Subsidiary and shall
continue in full force and effect notwithstanding any such judgment or order as
aforesaid. The term "rate of exchange" shall
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<PAGE> 40
include any premiums and costs of exchange payable in connection with the
purchase of or conversion into United States dollars.
16. Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
17. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
18. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
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<PAGE> 41
If the foregoing is in accordance with your understanding, please sign and
return to us counterparts hereof, and upon the acceptance hereof by you, on
behalf of each of the Underwriters, this letter and such acceptance hereof shall
constitute a binding agreement among each of the Underwriters, the Company and
the Subsidiary. It is understood that your acceptance of this letter on behalf
of each of the Underwriters is pursuant to the authority set forth in a form of
Agreement among Underwriters, the form of which shall be submitted to the
Company for examination upon request, but without warranty on your part as to
the authority of the signers thereof.
Very truly yours,
Advanced Semiconductor Engineering, Inc.
By:
-------------------------------------
Name:
Title:
ASE Investment Inc.
By:
-------------------------------------
Name:
Title:
Accepted as of the date hereof
Goldman Sachs (Asia) L.L.C.
Morgan Stanley & Co. Incorporated
By:
--------------------------------
Name:
Title:
on behalf of each of the Underwriters
<PAGE> 42
SCHEDULE I
<TABLE>
<CAPTION>
NUMBER OF OPTIONAL ADSS
TOTAL NUMBER OF FIRM ADSS TO BE PURCHASED IF
UNDERWRITER TO BE PURCHASED MAXIMUM OPTION EXERCISED
----------- ------------------------- ------------------------
<S> <C> <C>
Goldman Sachs (Asia) L.L.C.
Morgan Stanley & Co. Incorporated
Deutsche Bank Securities Inc
UBS AG, acting through its business
group UBS Warburg
Wit SoundView Corporation
Barits Securities Corporation
FB Gemni Capital Limited
------------------------- ------------------------
Total
========================= ========================
</TABLE>
<PAGE> 43
SCHEDULE II
SIGNIFICANT SUBSIDIARIES
ASE (Chung Li) Inc.
ASE Test, Inc.
ASE Test Limited
J&R Holding Limited
<PAGE> 44
ANNEX I
FORM OF ANNEX I DESCRIPTION OF COMFORT LETTER
FOR REGISTRATION STATEMENT ON FORM F-1
Pursuant to Section 7(k) of the Underwriting Agreement, the accountants
shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with respect
to the Company and its subsidiaries within the meaning of the Act and the
applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules (and, if applicable,
financial forecasts and/or pro forma financial information) examined by
them and included in the Prospectus or the Registration Statement comply as
to form in all material respects with the applicable accounting
requirements of the Act and the related published rules and regulations
thereunder; and, if applicable, they have made a review in accordance with
standards established by the American Institute of Certified Public
Accountants of the unaudited consolidated interim financial statements,
selected financial data, pro forma financial information, financial
forecasts and/or condensed financial statements derived from audited
financial statements of the Company for the periods specified in such
letter, as indicated in their reports thereon, copies of which have been
furnished to the representatives of the Underwriters (the
"Representatives")[and are attached hereto];
(iii) They have made a review in accordance with standards
established by the American Institute of Certified Public Accountants of
the unaudited condensed consolidated statements of income, consolidated
balance sheets and consolidated statements of cash flows included in the
Prospectus as indicated in their reports thereon copies of which [have been
separately furnished to the Representatives][are attached hereto]; and on
the basis of specified procedures including inquiries of officials of the
Company who have responsibility for financial and accounting matters
regarding whether the unaudited condensed consolidated financial statements
referred to in paragraph (vi)(A)(i) below comply as to form in all material
respects with the applicable accounting requirements of the Act and the
related published rules and regulations, nothing came to their attention
that caused them to believe that the unaudited condensed consolidated
financial statements do not comply as to form in all material respects with
the applicable accounting requirements of the Act and the related published
rules and regulations;
(iv) The unaudited selected financial information with respect to
the consolidated results of operations and financial position of the
Company for the five most recent fiscal years included in the Prospectus
agrees with the corresponding amounts (after restatements where applicable)
in the audited consolidated financial statements for such five fiscal years
which were included or incorporated by reference in the Company's Annual
Reports on Form 20-F for such fiscal years;
(v) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K and on
the basis of limited procedures specified in such letter nothing came to
their attention as a result of the
I-1
<PAGE> 45
foregoing procedures that caused them to believe that this information does
not conform in all material respects with the disclosure requirements of
Items 8 and 11 of Form 20-F and of Regulation S-K;
(vi) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available interim
financial statements of the Company and its subsidiaries, inspection of the
minute books of the Company and its subsidiaries since the date of the
latest audited financial statements included in the Prospectus, inquiries
of officials of the Company and its subsidiaries responsible for financial
and accounting matters and such other inquiries and procedures as may be
specified in such letter, nothing came to their attention that caused them
to believe that:
(A) (a) the unaudited consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Prospectus do not comply as to form in all material
respects with the applicable accounting requirements of the Act and
the related published rules and regulations, or (ii) any material
modifications should be made to the unaudited condensed consolidated
statements of income, consolidated balance sheets and consolidated
statements of cash flows included in the Prospectus for them to be in
conformity with generally accepted accounting principles;
(B) any other unaudited income statement data and balance sheet
items included in the Prospectus do not agree with the corresponding
items in the unaudited consolidated financial statements from which
such data and items were derived, and any such unaudited data and
items were not determined on a basis substantially consistent with the
basis for the corresponding amounts in the audited consolidated
financial statements included in the Prospectus;
(C) the unaudited financial statements which were not included
in the Prospectus but from which were derived any unaudited condensed
financial statements referred to in clause (A) and any unaudited
income statement data and balance sheet items included in the
Prospectus and referred to in clause (B) were not determined on a
basis substantially consistent with the basis for the audited
consolidated financial statements included in the Prospectus;
(D) any unaudited pro forma consolidated condensed financial
statements included in the Prospectus do not comply as to form in all
material respects with the applicable accounting requirements of the
Act and the published rules and regulations thereunder or the pro
forma adjustments have not been properly applied to the historical
amounts in the compilation of those statements;
(E) as of a specified date not more than five days prior to the
date of such letter, there have been any changes in the consolidated
capital stock (other than issuances of capital stock upon exercise of
options and stock appreciation rights, upon earn-outs of performance
shares and upon conversions of convertible securities, in each case
which were outstanding on the date of the latest financial statements
included in the Prospectus) or any increase in the consolidated
long-term debt of the Company and its subsidiaries, or any decreases
in
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<PAGE> 46
consolidated net current assets or stockholders' equity or other items
specified by the Representatives, or any increases in any items
specified by the Representatives, in each case as compared with
amounts shown in the latest balance sheet included in the Prospectus,
except in each case for changes, increases or decreases which the
Prospectus discloses have occurred or may occur or which are described
in such letter; and
(F) for the period from the date of the latest financial
statements included in the Prospectus to the specified date referred
to in clause (E) there were any decreases in consolidated net revenues
or operating profit or the total or per share amounts of consolidated
net income or other items specified by the Representatives, or any
increases in any items specified by the Representatives, in each case
as compared with the comparable period of the preceding year and with
any other period of corresponding length specified by the
Representatives, except in each case for decreases or increases which
the Prospectus discloses have occurred or may occur or which are
described in such letter; and
(g) In addition to the examination referred to in their report(s)
included in the Prospectus and the limited procedures, inspection of minute
books, inquiries and other procedures referred to in paragraphs (iii) and
(vi) above, they have carried out certain specified procedures, not
constituting an examination in accordance with generally accepted auditing
standards, with respect to certain amounts, percentages and financial
information specified by the Representatives, which are derived from the
general accounting records of the Company and its subsidiaries, which
appear in the Prospectus, or in Part II of, or in exhibits and schedules
to, the Registration Statement specified by the Representatives, and have
compared certain of such amounts, percentages and financial information
with the accounting records of the Company and its subsidiaries and have
found them to be in agreement.
I-3
<PAGE> 47
ANNEX II
FORM OF LOCK-UP AGREEMENT
ADVANCED SEMICONDUCTOR ENGINEERING, INC.
LOCK-UP AGREEMENT
September , 2000
-----
Goldman Sachs (Asia) L.L.C.,
Morgan Stanley & Co. Incorporated,
As representatives of the several Underwriters
named in Schedule I hereto,
c/o Goldman Sachs (Asia) L.L.C.,
68th Floor, Cheung Kong Center,
2 Queen's Road Central,
Hong Kong.
Re: Advanced Semiconductor Engineering, Inc. -- Lock-Up Agreement
Ladies and Gentlemen:
The undersigned understands that you, as representatives (the
"Representatives"), propose to enter into an underwriting agreement on behalf of
the several Underwriters named in Schedule I to such agreement (collectively,
the "Underwriters"), with Advanced Semiconductor Engineering, Inc., a company
limited by shares formed under the laws of the Republic of China (the "Company")
and ASE Investment Inc., a company limited by shares formed under the laws of
the Republic of China (the "Subsidiary"), providing for a public offering of
American depositary shares ("ADSs") representing common shares of the Company,
par value NT$10 per share (the "Common Shares"), pursuant to a Registration
Statement on Form F-1 and a Registration Statement on Form F-6 to be filed with
the Securities and Exchange Commission (the "SEC").
In consideration of the agreement by the Underwriters to offer and sell the
ADSs, and of other good and valuable consideration the receipt and sufficiency
of which is hereby acknowledged, the undersigned agrees that, during the period
beginning from the date of the final Prospectus covering the public offering of
the ADSs and continuing to and including the date 90 days after the date of such
final Prospectus, the undersigned will not offer, sell, contract to sell,
pledge, grant any option to purchase, make any short sale or otherwise dispose
of any Common Shares or ADSs or any securities of the Company that are
substantially similar to Common Shares or ADSs, including but not limited to any
securities that are convertible into or exchangeable for, or that represent the
right to receive, Common Shares or ADSs or any such substantially similar
securities.
II-1
<PAGE> 48
The undersigned understands that the Company and the Underwriters are
relying upon this Lock-Up Agreement in proceeding toward consummation of the
offering. The undersigned further understands that this Lock-Up Agreement is
irrevocable and shall be binding upon the undersigned's heirs, legal
representatives, successors, and assigns.
Very truly yours,
------------------------------------
Exact Name of Shareholder
------------------------------------
Authorized Signature
------------------------------------
Title
II-2
<PAGE> 49
ANNEX III
SCHEDULE OF SHAREHOLDERS
ASE Enterprises
Jason C.S. Chang
Richard H.P. Chang
Feng Mei-Jean
Chang Yao Hung-ying
III-1
