UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of
1934
(Amendment No. ____)*
Information to be Included in Statements
Filed Pursuant to Rule 13d-1(a) and Amendments Thereto Filed Pursuant to Rule 13d-2(a)
Vimicro
International Corporation
(Name of Issuer)
Ordinary
Shares, par value US$0.0001 per share **
(Title of Class of Securities)
G9366M103
(CUSIP Number)
Xiaodong Yang
Vimicro Tianjin Corporation
15/F Shining Tower
No. 35 Xueyuan Road
Haidian District, Beijing 100083
People’s Republic of China
With copies to:
Kevin K. Tung, Esq.
KEVIN KERVENG TUNG, P.C.
136-20 38TH AVENUE, SUITE
3D
FLUSHING, NY 11354
Facsimile: (718) 939-4468
(Name,
Address and Telephone Number of Person Authorized to Receive Notices and Communications)
September 11, 2015
(Date of Event which Requires Filing of
this Statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e),
240.13d-1(f) or 240.13d-1(g), check the following box. ¨
Note: Schedules filed in paper format shall include a
signed original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties to whom copies are
to be sent.
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* |
The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. |
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** |
Not for trading, but only in connection with the listing on NASDAQ Global Market of American depositary shares, each representing four ordinary shares. |
The information required on the remainder of this cover page
shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”)
or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however,
see the Notes).
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| 1. |
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NAMES OF REPORTING PERSONS
Xiaodong Yang |
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| 2. |
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) ¨
(b) ¨ |
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| 3. |
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SEC USE ONLY
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| 4. |
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SOURCE OF FUNDS
PF, OO
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| 5. |
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CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e): ¨
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CITIZENSHIP OR PLACE OF ORGANIZATION
People’s Republic of China |
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| NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH |
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7. |
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SOLE VOTING POWER
10,847,261 ordinary shares(1) |
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8. |
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SHARED VOTING POWER
0 |
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9. |
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SOLE DISPOSITIVE POWER
10,847,261 ordinary shares(1) |
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10. |
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SHARED DISPOSITIVE POWER
0 |
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
10,847,261 ordinary shares(1) |
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CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(see instructions) ¨ |
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.63 % |
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TYPE OF REPORTING PERSON
IN
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(1) This amount includes (a) 9,053,961 ordinary shares, (b)
108,325 American Depositary Shares (ADSs), representing 433,300 ordinary shares and (c) options to purchase 1,360,000 ordinary
shares within 60 days of September 14, 2015.
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| 1. |
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NAMES OF REPORTING PERSONS
Vimicro Tianjin Corporation |
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) ¨
(b) ¨ |
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SEC USE ONLY
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SOURCE OF FUNDS
PF, OO
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CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e): ¨
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CITIZENSHIP OR PLACE OF ORGANIZATION
British Virgin Islands |
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| NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH |
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7. |
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SOLE VOTING POWER
9,053,961 ordinary shares |
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8. |
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SHARED VOTING POWER
0 |
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9. |
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SOLE DISPOSITIVE POWER
9,053,961 ordinary shares |
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10. |
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SHARED DISPOSITIVE POWER
0 |
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| 11. |
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
9,053,961 ordinary shares |
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| 12. |
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CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(see instructions) ¨ |
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.29% |
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TYPE OF REPORTING PERSON (see instructions)
CO |
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INTRODUCTORY NOTE
This Schedule 13D (this “Schedule 13D”) is filed
by Dr. Xiaodong (Dave) Yang (“Dr. Yang”) and Vimicro Tianjin Corporation (collectively, the “Reporting Persons”,
and each a “Reporting Person”), with respect to Vimicro International Corporation (the “Company” or “Issuer”).
This Schedule 13D represents the initial statement on Schedule
13D filed by the Reporting Persons with the United States Securities and Exchange Commission (the “SEC”). The ordinary
shares of the Issuer described herein held by Dr. Yang were previously reported on his Schedule 13G filed on February 10, 2014
(as amended). The ordinary shares of the Issuer described herein held by Dr. Yang were previously reported on his Schedule 13G
filed on February 10, 2014 (as amended).
| ITEM 1. |
SECURITIES AND ISSUER |
This Schedule 13D relates to the ordinary shares, par value
US$0.0001 per share (“Ordinary Shares”) and American depositary shares (the “ADSs”), each representing
four Ordinary Shares of the Issuer are listed on the NASDAQ Global Market under the symbol “VIMC.” The address of the
principal executive office of the Company is 15/F Shining Tower, No. 35 Xueyuan Road, Haidian District, Beijing 100191, People’s
Republic of China (the “PRC”).
| ITEM 2. |
IDENTITY AND BACKGROUND |
(a) – (c), (f) This Schedule 13D is being filed jointly
by the Reporting Persons pursuant to Rule 13d-1(k) promulgated by the SEC under Section 13 of the Act. The Reporting Persons are
making this single, joint filing because they may be deemed to constitute a “group” within the meaning of Section 13(d)(3)
of the Act with respect to the transaction described in Item 4 of this Schedule 13D.
The agreement between the Reporting Persons relating to the
joint filing is attached hereto as Exhibit 7.01. Information with respect to each of the Reporting Persons is given solely by such
Reporting Person, and no Reporting Person assumes responsibility for the accuracy or completeness of the information concerning
the other Reporting Persons, except as otherwise provided in Rule 13d-1(k).
Dr. Yang is a director of the Company. The business address
of Dr. Yang is 15/F Shining Tower, No. 35 Xueyuan Road, Haidian District, Beijing 100083, PRC. Dr. Yang is a citizen of the PRC.
Vimicro Tianjin Corporation is principally an investment holding
vehicle. Vimicro Tianjin Corporation is a British Virgin Islands company wholly-owned by Dr. Yang. The business address of Vimicro
Tianjin Corporation is 15/F, Shining Tower, No. 35, Xueyuan Road, Haidian District, Beijing 100191, PRC.
(d) – (e) During the last five years, none of the Reporting
Persons has been (1) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (2) a party to
a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is
subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violation with respect to such laws.
| ITEM 3. |
SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION |
It is anticipated that the funding for the Proposed Transaction
will be provided by a combination of debt and equity financing. Equity financing will be provided by the Reporting Persons in the
form of cash and rollover equity in the Company.
| ITEM 4. |
PURPOSE OF TRANSACTION |
On June 21, 2015, Mr. Zhonghan (John) Deng, chairman of the
board of directors (the "Board") and chief executive officer and Mr. Zhaowei (Kevin) Jin, co-chief executive officer
and a member of the Board of the Company (the "Buyer Group") submitted a non-binding proposal (the “Proposal”)
to the Company’s board of directors. In the Proposal, the Buyer Group proposed to acquire all outstanding Ordinary Shares
of the Company (including Ordinary Shares represented by ADSs) not already owned by the Buyer Group at US$3.375 per Ordinary Share,
or US$13.50 per ADS, in cash (the “Proposed Transaction”). The Buyer Group intends to finance the transactions contemplated
under the Proposal through a combination of debt and equity capital.
On August 5, 2015, a consortium agreement (the “Consortium
Agreement”) was entered by and among Mr. Zhonghan (John) Deng (“Mr. Deng”), Mr. Zhaowei (Kevin) Jin (“Mr.
Jin” and together with Mr. Deng, the “Founders”), Vimicro Beijing Corporatio, a British Virgin Islands company
controlled by Mr. Deng, Vimicro Shenzhen Corporation, a British Virgin Islands company controlled by Mr. Jin (the foregoing two
parties, the “Founder Shareholders” and, collectively with the Founders, the “Founder Parties”), and Mr.
Shengda Zan, together with one or more affiliates and/or entities beneficially majority owned by Mr. Shengda Zan (“Mr. Zan”)
(collectively, the “Sponsor”). Each of Sponsor and the Founder Parties is referred to herein as a “Consortium
Member”, and collectively, the “Consortium”.
In said Consortium Agreement, the Consortium Members proposed
to undertake an acquisition transaction with respect to the Issuer. If such transaction is completed, the Issuer’s ADSs would
become eligible for termination of registration pursuant to Section 12(g)(4) of the Securities Act and would be delisted from the
NASDAQ Global Market.
Under the Consortium Agreement, the Consortium shall, with Mr.
Deng’s and Mr. Jin’s assistance and cooperation, (a) undertake due diligence with respect to the Issuer and its business;
(b) engage in discussions with the Issuer regarding the Proposal; and (c) negotiate in good faith the terms of definitive documentation
in respect of the Proposed Transaction, including but not limited to, the Merger Agreement (as defined in the Consortium Agreement).
The Consortium Members further agreed to incorporate a new company under the laws of the Cayman Islands (“Holdco”)
and to cause Holdco to form a direct, wholly-owned subsidiary under the laws of the Cayman Islands (“Acquisition Company”)
to undertake the Proposed Transaction and to negotiate in good faith to reach agreement on the ownership percentage in the Holdco,
the terms of the memorandum and articles of association of the acquisition vehicles and the terms of a shareholder agreement that
would, among other things, govern the relationship of the shareholders in the Holdco following the closing. The Consortium Agreement
also contains provisions with respect to the obligation on Consortium Members to notify other Consortium Members in the event of
a competing proposal, limits on additional intra-consortium agreements that prejudices a Consortium Mmeber, sharing of fees and
expenses and Consortium Members, appointment of advisors and confidentiality obligations.
On September 11, 2015, Dr. Yang and Vimicro Tianjin Corporation,
together with Mr. Deng, Vimicro Beijing Corporation, Mr. Jin, Vimicro Shenzhen Corporation and Mr. Zan entered into an amended
and restated consortium agreement (the “Restated Consortium Agreement”) pursuant to which the Consortium Agreement
was amended and restated in its entirety on substantially the same terms as the Consortium Agreement to provide for, among other
things, the inclusion of Dr. Yang and Vimicro Tianjin Corporation, as new members of the Consortium in connection with the Proposal
to pursue the Proposed Transaction.
References to the Proposal, the Consortium Agreement and the
Restated Consortium Agreement in this Schedule 13D are qualified in their entirety by reference to the Proposal, the Consortium
Agreement and the Restated Consortium Agreement, a copy of which is attached hereto as Exhibit 7.02, Exhibit 7.03 and Exhibit 7.04,
and incorporated herein by reference in their entirety.
| Item 5. |
INTEREST IN SECURITIES OF THE ISSUER |
(a) – (b) The following disclosure assumes that there
are 124,263,310 Ordinary Shares outstanding as of September 14, 2015, as provided by the Issuer.
Ordinary Shares are not listed for trading. Each Ordinary Shares
is entitled to one vote on all matters subject to shareholder vote.
With respect to each of the Reporting Persons, the cover pages
of this Schedule 13D are incorporated herein by reference, as if set forth in their entirety.
Number of shares as to which such person
has:
| Reporting Person | |
Amount beneficially owned: | | |
Percent of class(1): | | |
Sole power to vote or direct
the vote: | | |
Shared power to vote or to direct the vote: | | |
Sole power to dispose or to direct the disposition of: | | |
Shared power to dispose or to direct the disposition of: | |
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| Xiaodong Yang(2) | |
| 10,847,261 | | |
| 8.63 | % | |
| 10,847,261 | | |
| 0 | | |
| 10,847,261 | | |
| 0 | |
| Vimicro Tianjin Corporation(2) | |
| 9,053,961 | | |
| 7.29 | % | |
| 9,053,961 | | |
| 0 | | |
| 9,053,961 | | |
| 0 | |
(1) Percentage based on 124,263,310 Ordinary Shares
outstanding as of September 14, 2015, as provided by the Issuer.
(2) Vimicro Tianjin Corporation is the record owner
of 9,053,961 ordinary shares of the Issuer. Xiaodong Yang is the sole director and shareholder of the Vimicro Tianjin Corporation
and may be deemed to be the beneficial owner of the ordinary shares held by the Vimicro Tianjin Corporation.
(c) Except as set forth in Item 3 above and incorporated herein
by reference, none of the Reporting Persons has effected any transactions in the Ordinary Shares or ADSs during the 60 days preceding
the filing of this Schedule 13D.
(d) Not applicable.
(e) Not applicable.
| ITEM 6. |
CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. |
The descriptions of the principal terms of the Proposal, the
Consortium Agreement and the Restated Consortium Agreement under Item 4 are incorporated herein by reference in their entirety.
To the best knowledge of the Reporting Persons, except as provided
herein and in the Schedule 13D, there are no contracts, arrangements, understandings or relationships (legal or otherwise) between
the Reporting Persons nor between any of the Reporting Persons and any other person with respect to any securities of the Issuer,
joint ventures, loan or option arrangements, puts or calls, guarantees of profits, divisions of profits or loss, or the giving
or withholding of proxies, or a pledge or contingency, the occurrence of which would give another person voting power over the
securities of the Issuer.
| ITEM 7. |
MATERIAL TO BE FILED AS EXHIBITS. |
| Exhibit 7.01 |
Joint Filing Agreement between the Reporting Persons dated September 14, 2015. |
| Exhibit 7.02 |
Proposal Letter from the Buyer Group to the Company’s board of directors, dated as of June 21, 2015. |
| Exhibit 7.03 |
Consortium Agreement dated August 5, 2015. |
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| Exhibit 7.04 |
Restated Consortium Agreement dated September 11, 2015. |
SIGNATURE
After reasonable inquiry and to the best
of its knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct.
| Dated: September 21, 2015 |
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| Xiaodong Yang |
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/Xiaodong Yang/ |
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Xiaodong Yang |
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| Vimicro Tianjin Corporation |
By: |
/Xiaodong Yang/ |
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Name: |
Xiaodong Yang |
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Title: |
Director |
Exhibit 7.01
JOINT FILING AGREEMENT
In accordance with Rule 13d-1(k) under the
Securities Exchange Act of 1934, as amended, the undersigned hereby agree to (i) the joint filing on behalf of each of them of
a statement on Schedule 13D (including amendments thereto) with respect to the Ordinary Shares (including Ordinary Shares represented
by ADSs) of Vimicro International Corporation and (ii) that this Joint Filing Agreement be included as an exhibit to such joint
filing, provided that, as contemplated by Section 13d-1(k)(ii), no person shall be responsible for the completeness and accuracy
of the information concerning the other persons making the filing unless such person knows or has reason to believe such information
is inaccurate.
This Joint Filing Agreement may be executed
in any number of counterparts all of which together shall constitute one and the same instrument.
[Signatures Pages Follow]
IN WITNESS WHEREOF, the undersigned hereby execute this Agreement
as of September 14, 2015.
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XIAODONG (DAVE) YANG |
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By: |
/s/ Xiaodong (Dave) Yang |
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Vimicro Tianjin Corporation |
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By: |
/s/ Xiaodong (Dave) Yang |
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Name: |
Xiaodong (Dave) Yang |
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Title: |
Director |
Exhibit 7.02
June 21, 2015
2015年6月21日
The Board of Directors
Vimicro International Corporation
16/F Shining Tower
No. 35 Xueyuan Road, Haidian District
Beijing 100191, People’s Republic
of China
董事会
中星微电子集团
北京市海淀区学院路35号
世宁大厦16层，100191
Dear Members of Board of Directors:
尊敬的董事会成员：
We, Zhonghan (John) Deng, chairman of the
board of directors (the "Board") and chief executive officer and Zhaowei (Kevin) Jin,co-chief executive officer and a
member of the Board of Vimicro International Corporation (the "Company") (the "Buyer Group"),are pleased to
submit this preliminary non-binding proposal to acquire all of the outstanding ordinary shares (the "Shares") of the
Company not already owned by Buyer Group or their respective affiliates in a transaction (the "Acquisition") described
below.
我们，中星微电子集团（“公司”）的董事会主席及首席执行官邓中翰及联合首席执行官及董事会成员金兆玮（“买方集团”），在此高兴地向董事会提交该初步的不具有法律约束力的收购尚未由买方集团或其关联方持有的公司所有发行在外的普通股（“股份”）的提案（“收购”），具体条款如下。
We believe that our proposed price provides
an attractive opportunity to the Company's shareholders. This price represents a premium of 22.7% above the average closing price
of the Company's ADSs over the last 90 trading days.
我们相信我们提议的价格为公司股东提供了一个有吸引力的机会。该价格代表了过去90个交易日公司ADS平均收盘价格的溢价22.7%.
The terms and conditions upon which we are
prepared to pursue the Acquisition are set forth below. We are confident in our ability to consummate an Acquisition as outlined
in this letter.
我们准备进行收购的条款及条件如下。我们有信心可以按照本信函所列条款完成收购。
| 1. | Consortium. We will form an acquisition vehicle for the purpose of implementing the Acquisition.
Please also note that the Buyer Group is currently interested only in pursuing the Acquisition and is not interested in selling
their shares in any other transaction involving the Company. |
财团。我们将组建一个收购实体以执行该收购。请注意买方集团目前只对完成收购感兴趣而不对在公司的其它交易中出售其股份感兴趣。
| 2. | Purchase Price. Our proposed consideration payable for the Shares acquired in the Acquisition
is US$13.5 per American Depositary Share of the Company ("ADS", each representing four Shares), or US$3.375 per Share,
in cash. |
购买价格。我们提议的收购股份的对价为每美国存托股票（“ADS”，每份ADS代表四股股份）13.5美元或每股3.375美元，以现金形式支付。
| 3. | Financing. We intend to finance the Acquisition with a combination of debt and equity capital.
Equity financing will be provided by the Buyer Group in the form of cash and rollover equity in the Company. Debt financing is
expected to be provided by loans from third party financial institutions. We are confident that we can timely secure adequate financing
to consummate the Acquisition. |
融资。我们计划以债权融资和股权融资相结合的方式进行收购的融资。股权融资将由买方集团以现金及置换公司股权的方式进行。债权融资将由第三方金融机构提供贷款。我们有信心可以按时取得适当的融资以完成收购。
| 4. | Due Diligence. Parties providing financing will require a timely opportunity to conduct customary
due diligence on the Company. We would like to ask the board of directors of the Company to accommodate such due diligence request
and approve the provision of confidential information relating to the Company and its business to possible sources of equity and
debt financing subject to a customary form of confidentiality agreement. |
尽职调查。提供融资的各方将要求有一个及时的机会来对公司进行惯常的尽职调查。我们请求公司董事会提供该等尽职调查的条件并批准向债权融资或股权融资的提供方提供公司及其业务相关的保密信息（受制于惯常的保密协议）。
| 5. | Definitive Agreements. We are prepared to negotiate and finalize definitive agreements (the
"Definitive Agreements") expeditiously. This proposal is subject to execution of the Definitive Agreements. These documents
will include provisions typical for transactions of this type. |
最终协议。我们已经准备好尽快进行谈判并达成最终协议（“最终协议”）。该提案受制于最终协议的签署。这些文件将包括该类型交易的典型条款。
| 6. | Confidentiality. The Buyer Group will, as required by law, promptly file a Schedule 13D. We
are sure you will agree with us that it is in all of our interests to ensure that our discussions relating to the Acquisition proceed
in a confidential manner, unless otherwise required by law, until we have executed the Definitive Agreements or terminated our
discussions. |
保密。买方集团将根据法律的要求即刻提交Schedule
13D备案。我们相信，在我们签署最终协议或终止就收购的讨论之前，各方以保密的方式开展对收购的讨论（法律另有要求的除外）是符合各方利益的。
| 7. | Process. We believe that the Acquisition will provide value to the Company's shareholders.
We recognize of course that the Board will evaluate the proposed Acquisition independently before it can make its determination
whether to endorse it. In considering the proposed Acquisition, you should be aware that we are interested only in acquiring the
outstanding Shares that the Buyer Group does not already own, and that the Buyer Group does not intend to sell their stake in the
Company to a third party. |
程序。我们相信收购将给公司的股东带来价值。我们当然承认董事会将在决定是否赞同该收购前对该收购进行独立的评估。就该提议的收购，您应该知道我们只对收购买方集团尚未拥有的公司已发行股份感兴趣，买方集团并不计划出售其公司股份给第三方。
| 8. | No Binding Commitment. This letter constitutes only a preliminary indication of our interest,
and does not constitute any binding offer, agreement or commitment with respect to an Acquisition. Such a commitment will result
only from the execution of Definitive Agreements, and then will be on the terms provided in such documentation. |
没有约束力的承诺。本信函仅表明我们的初步意向，不构成有关收购的有约束力的要约、协议或承诺。该等承诺只在签署最终协议后产生，并且承诺的具体条款将在最终协议中约定。
In closing, each of us would like to express our commitment
to working together to bring this Acquisition to a successful and timely conclusion. Should you have any questions regarding this
proposal, please do not hesitate to contact any of us. We look forward to speaking with you.
最后，我们想表明我们同各方一起合作从而实现并尽快完成收购的承诺。如您对该提案有任何问题，请随时与我们联系。我们期待着与您沟通。
Sincerely,
此致，
Zhonghan (John) Deng
邓中翰
Zhaowei (Kevin) Jin
金兆玮
Exhibit 7.03
Strictly Confidential
CONSORTIUM AGREEMENT
CONSORTIUM AGREEMENT, dated August 5, 2015
(this “Agreement”), among Mr. Zhonghan (John) Deng (“Mr. Deng”), Mr. Zhaowei (Kevin)
Jin (“Mr. Jin” and together with Mr. Deng, the “Founders”), Vimicro Beijing Corporation,
a British Virgin Islands company controlled by Mr. Deng, Vimicro Shenzhen Corporation, a British Virgin Islands company controlled
by Mr. Jin (the foregoing two parties, the “Founder Shareholders” and, collectively with the Founders, the “Founder
Parties”), and Mr. Shengda Zan, together with one or more Affiliates and/or entities beneficially majority owned by Mr.
Shengda Zan (“Sponsor”). Each of Sponsor and the Founder Parties is referred to herein as a “Consortium
Member” and, collectively, the “Consortium.” Unless otherwise defined herein, capitalized terms are
defined in Section 10.1 hereof.
WHEREAS, the Consortium Members propose
to undertake an acquisition transaction (the “Transaction”) with respect to Vimicro International Corporation,
a company incorporated under the laws of the Cayman Islands with ADSs listed on the NASDAQ Global Market under the symbol “VIMC”
(the “Target”), pursuant to which the Target would be delisted from NASDAQ Global Market and deregistered under
the United States Securities Exchange Act of 1934, as amended (the “Exchange Act”);
WHEREAS, (a) in connection with the
Transaction, the Consortium Members propose to form a new company (“Holdco”) under the laws of the Cayman Islands,
and to cause Holdco to form a direct, wholly-owned subsidiary (“Acquisition Company”) under the laws of the
Cayman Islands, and (b) at the closing of the Transaction (the “Closing”), the Consortium Members intend
that Acquisition Company will be merged with and into the Target, with the Target being the surviving company and becoming a direct,
wholly-owned subsidiary of Holdco (the “Surviving Company”);
WHEREAS, on June 21, 2015, the Founders
submitted a non-binding proposal to the board of directors of the Target (the “Target Board”) in connection
with the Transaction; and
WHEREAS, in accordance with the terms of
this Agreement, the Consortium will conduct (a) an evaluation of the Target, including conducting due diligence of the Target
and its business, (b) discussions regarding the Proposal with the Target, and (c) negotiation of the terms of definitive
documentation in connection with the Transaction (in which negotiations the Target will be represented by a special committee of
independent and disinterested directors of the Target Board (the “Special Committee”)), including, without limitation,
an agreement and plan of merger among Holdco, Acquisition Company and the Target in form and substance to be agreed by the Consortium
and the Target (the “Merger Agreement”), which shall be subject to the approval of the shareholders of the Target.
NOW, THEREFORE, in consideration of the
foregoing recitals and of the mutual agreements and covenants set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Consortium Members, intending to be legally bound, hereby agree
as follows:
1. Proposal; Holdco Ownership; Other Agreements
1.1 Participation in Transaction. The Consortium Members
agree to participate in the Transaction on the terms set forth in this Agreement.
1.2 Proposal. The Consortium shall, with the Founder
Parties’ assistance and cooperation, (a) undertake due diligence with respect to the Target and its business; (b) engage
in discussions with the Target regarding the Proposal; and (c) negotiate in good faith the terms of definitive documentation
in respect of the Transaction, including, without limitation, the Merger Agreement. The Consortium Members further agree to negotiate
in good faith to reach agreement on a shareholders agreement that would, among other things, govern the relationship of the shareholders
in Holdco following the Closing, and contain provisions customary for transactions of this type, as well as the terms of any other
agreements among the Consortium Members required to support the Proposal or to regulate the relationship among the Consortium Members.
Strictly Confidential
1.3 Holdco Ownership.
(a) Prior to the execution of the Merger Agreement, the Consortium
Members shall (i) incorporate Holdco and shall cause Holdco to incorporate Acquisition Company, and (ii) negotiate in
good faith the terms of the memorandum and articles of association of Holdco and Acquisition Company. The memorandum and articles
of association of Acquisition Company shall become the memorandum and articles of association of the Surviving Company at the Closing.
(b) Each Consortium Member’s ownership percentage in Holdco
shall be based on the amount of cash paid, and the agreed-upon value of any other consideration contributed, by it to Holdco relative
to the aggregate amount of cash paid, and the aggregate agreed-upon value of any other consideration contributed, by all of the
Consortium Members to Holdco in connection with the Transaction. For the avoidance of doubt, the Consortium Members agree that
the obligation of the Consortium Members to purchase and pay for any Holdco shares shall be subject to the satisfaction or waiver
of the various conditions to the obligations of Holdco and Acquisition Company to consummate the Transaction to be set forth in
the Merger Agreement.
2. Participation in Transaction; Advisors; Approvals
2.1 Information Sharing and Roles. Each Consortium Member
shall cooperate in good faith in connection with the Proposal and the Transaction, including, without limitation, by (a) complying
with any information delivery or other requirements entered into by Holdco, a Consortium Member or an Affiliate of a Consortium
Member, and shall not, and shall direct its Representatives not to, whether by their action or omission, breach such arrangements
or obligations, (b) participating in meetings and negotiations with the Special Committee and its advisors, (c) executing
and complying with any confidentiality agreements reasonably required by the Target, (d) sharing all information reasonably necessary
to evaluate the Target, including, without limitation, technical, operational, legal, accounting and financial materials and relevant
consulting reports and studies, (e) providing each other or Holdco with all information reasonably required concerning such
Consortium Member or any other matter relating to such Consortium Member in connection with the Transaction and any other information
a Consortium Member may reasonably require in respect of any other Consortium Member and its Affiliates for inclusion in any definitive
documentation related to the Transaction, (f) providing timely responses to reasonable requests by any other Consortium Member
for information, and (g) applying the level of resources and expertise that such Consortium Member reasonably considers to
be necessary and appropriate to meet its obligations under this Agreement. Notwithstanding the foregoing, no Consortium Member
is required to make available to the other Consortium Members any of its internal investment committee materials or analyses or
any information which it considers commercially sensitive or which is otherwise held subject to an obligation of confidentiality.
Notwithstanding anything herein to the contrary, nothing herein shall obligate the Founders to provide any information in breach
of any of their obligations or fiduciary duties to the Target.
2.2 Appointment of Advisors.
(a) The Consortium Members shall agree to the scope and engagement
terms of all joint Advisors to Holdco or the Consortium in connection with the Transaction. The Consortium Members agree and acknowledge
that Gunderson Dettmer Stough Villeneuve Franklin & Hachigian LLP has been selected by the Consortium Members to serve as international
counsel to the Founder Parties and the Consortium for the Transaction. The Consortium will engage PRC counsel and Cayman Islands
counsel to the Consortium when required.
(b) If a Consortium Member requires separate representation
in connection with specific issues arising out of the Proposal or the Transaction, such Consortium Member may retain other Advisors
to advise it; provided, that such Consortium Member shall (i) provide prior notice to the other Consortium Members of such
retention, and (ii) be solely responsible for the fees and expenses of such separate Advisors unless otherwise agreed by the
Consortium.
2.3 Approvals. Each Consortium Member shall use reasonable
best efforts and provide all cooperation as may be reasonably requested by each other Consortium Member to obtain all applicable
governmental, statutory, regulatory or other approvals, licenses, waivers or exemptions required or, in the reasonable opinion
of such other Consortium Member, desirable for the consummation of the Transaction.
Strictly Confidential
3. Transaction Costs
3.1 Expenses and Fee Sharing.
(a) Each of the Consortium Member may incur out-of-pocket fees
and expenses on its own behalf in connection with the Transaction (such fees and expenses incurred by each Consortium Member in
connection with any inter-Consortium Member agreements or arrangements, “Individual Expenses”). Furthermore,
the Consortium Members may incur other fees and expenses on behalf of the Consortium in connection with the Transaction (all such
fees and expenses other than Individual Expenses, “Consortium Expenses”), including, without limitation, the
fees and expenses (i) of the joint Advisors retained by the Consortium pursuant to Section 2.2(a), (ii) of any proxy
solicitors, and (iii) in connection with any actions taken on behalf of Holdco or the Consortium in accordance with the terms
of the definitive agreements, including regulatory filings made or to be made pursuant to the Merger Agreement; provided,
however, that each Consortium Member shall obtain the other Consortium Member’s consent prior to incurring any Consortium
Expenses over US$50,000 in any single engagement or transaction.
(b) If the Transaction is consummated, then, at or immediately
following the Closing, Holdco or the Surviving Company shall pay (if applicable, through reimbursement of a Consortium Member)
all Consortium Expenses.
(c) If the Transaction is not consummated and such failure to
consummate is not due to any breach of this Agreement by any Consortium Member, each Consortium Member shall be responsible for
its proportionate share of the Consortium Expenses based on such Consortium Member’s proposed shareholding percentage in
Holdco as of Closing (exclusive of the any share capital reserved in connection with any equity incentive plan).
(d) If the Transaction is not consummated due to a breach of
this Agreement by any Consortium Member, the Consortium Member in breach shall be responsible for (i) its own and the other
Consortium Members’ Individual Expenses, (ii) its own and the other Consortium Members’ share of any amounts payable
by them pursuant to Section 3.1(f), and (iii) all Consortium Expenses, in addition to any liability for its breach of
this Agreement.
(e) If applicable, each Consortium Member shall be entitled
to receive such Consortium Member’s proportionate share of any termination or other fees or amounts payable to Holdco by
the Target pursuant to the Merger Agreement, net of the expenses required to be borne by it pursuant to the provisions herein.
(f) Subject to Section 3.1(d) and Section 9.11, each
Consortium Member shall pay its proportionate share (based on such Consortium Member’s proposed shareholding in Holdco as
of Closing) of any termination, topping, break-up or other fees or amounts (including amounts paid in settlement of any dispute
or litigation relating to the foregoing) payable by Holdco or Acquisition Company under the Merger Agreement, net of the expenses
required to be borne by it pursuant to this Section 3.1.
(g) Except otherwise provided herein, all Individual Expenses
of each Consortium Member shall be borne by such Consortium Member.
(h) Notwithstanding anything herein to the contrary, all fees,
costs and expenses incurred by or on behalf of Sponsor or the Consortium in connection with the business, legal, financial and
other due diligence investigations of the Target shall be (i) “Individual Expenses” insofar as such due diligence
investigations of the Target are for the sole benefit of the Sponsor, and (ii) “Consortium Expenses” insofar as
such due diligence investigations of the Target are for the benefit of the Consortium.
4. Cooperation
4.1 Notice of Competing Proposal. Each Consortium Member
shall promptly notify the other Consortium Members if it or any of its Representatives receives any approach or communication with
respect to any Competing Proposal, including, without limitation, in such notice the identity of the other persons involved and
the nature and content of the approach or communication, and provide the other Consortium Members with copies of any written communication.
4.2 Adverse Agreement. Unless otherwise agreed in writing
by each Consortium Member, no Consortium Member may enter into any agreement with another Consortium Member or group of Consortium
Members that has the effect of discriminating against any Consortium Member in a manner that is materially adverse to such Consortium
Member without such Consortium Member’s consent. Each Consortium Member shall provide to all other Consortium Members a copy
of each agreement to be entered into with less than all of the Consortium Members prior to the execution of such agreement.
Strictly Confidential
5. Termination
5.1 Termination Events. Subject to Section 5.2(a),
this Agreement shall terminate with respect to all Consortium Members upon the earliest to occur of (a) the Closing, (b) a
written agreement among the Consortium Members to terminate this Agreement, (c) if the Merger Agreement has been entered into,
written notice of termination of this Agreement delivered by any Consortium Member that did not contribute to any breach of the
Merger Agreement resulting in the termination thereof, and (d) the first anniversary of the date hereof if the Merger Agreement
has not been entered into as of such time.
5.2 Effect of Termination. Upon termination of this Agreement
pursuant to Section 5.1, Article 3 (Transaction Costs), Article 5 (Termination), Section 6.2 (Confidentiality), Article
7 (Notices) and Article 9 (Miscellaneous) shall continue to bind the Consortium Members.
6. Announcements and Confidentiality
6.1 Announcements. The Consortium shall be responsible
for any announcements regarding the subject matter of this Agreement and the Transaction (subject to each other Consortium Member
having a reasonable opportunity to review and comment upon such announcements), and no Consortium Member shall make any such announcements,
except to the extent that any announcement is required by law, a court of competent jurisdiction, a regulatory body or international
stock exchange, and then only after the form and terms of the announcement have been notified to the other Consortium Members and
the other Consortium Members have had a reasonable opportunity to comment thereon, in each case to the extent reasonably practicable.
6.2 Confidentiality.
(a) Except as permitted under Section 6.3, each Consortium
Member shall not, and shall procure its Affiliates and Representatives not to, without the prior written consent of the other Consortium
Members, disclose any Confidential Information received by it (the “Recipient”) from any other Consortium Member
(the “Discloser”) in any manner whatsoever. Each Consortium Member shall not, and shall procure its Affiliates
and Representatives not to, use any Confidential Information for any purpose other than for the purposes of giving effect to and
performing its obligations under this Agreement or evaluating, negotiating and implementing the Transaction.
(b) Subject to Section 6.2(c), the Recipient shall return
or destroy (in the Recipient’s sole discretion), upon written request of the Discloser, any Confidential Information which
falls within clause (a) of the definition of Confidential Information; provided, that with respect to any electronic data
that constitutes Confidential Information, the foregoing obligation shall not apply to any electronic data stored on the back-up
tapes of the Recipient’s hardware.
(c) Each Consortium Member may retain copies of the Confidential
Information referred to in Section 6.2(b) in order to comply with legal, regulatory or bona fide record keeping requirements.
(d) Each Consortium Member acknowledges that, in relation to
Confidential Information received by it from the other Consortium Members, the obligations contained in this Section 6.2 shall
continue to apply for a period of twelve (12) months following termination of this Agreement pursuant to Section 5.1,
unless otherwise agreed in writing.
6.3 Permitted Disclosures. A Consortium Member may disclose
Confidential Information (a) to those of its Affiliates and Representatives as such Consortium Member reasonably deems necessary
to give effect to, perform its obligations under or enforce this Agreement or evaluate, negotiate and implement the Transaction
(including, without limitation, potential financing sources), but only on a confidential basis, or (b) if required by law
or a court of competent jurisdiction, the United States Securities and Exchange Commission or any other regulatory body or international
stock exchange having jurisdiction over a Consortium Member or pursuant to whose rules and regulations such disclosure is required
to be made, but only after the form and terms of such disclosure have been notified to the other Consortium Members and the other
Consortium Members have had a reasonable opportunity to comment thereon, in each case to the extent legally permissible and reasonably
practicable.
Strictly Confidential
7. Notices
7.1 Any notice, request, instruction or other document to be
provided hereunder by any Consortium Member to another Consortium Member shall be in writing and delivered personally or sent by
facsimile, overnight courier or electronic mail, to the address, facsimile number or electronic mail address provided under the
other Consortium Member’s signature page hereto, or to any other address, facsimile number or electronic mail address as
a Consortium Member may hereafter specify for the purpose by notice to the other Consortium Members. All such notices, requests
and other communications shall be deemed received on the date of receipt by the recipient thereof if received prior to 5:00 p.m.
(local time) on a Business Day in the place of receipt. Otherwise, any such notice, request or communication shall be deemed to
have been received on the next succeeding Business Day in the place of receipt.
8. Representations and Warranties
8.1 Representations and Warranties. Each Consortium Member
hereby represents and warrants, on behalf of such Consortium Member only, to the other Consortium Members that (a) it has
the requisite power and authority to execute, deliver and perform this Agreement; (b) the execution, delivery and performance
of this Agreement by it have been duly authorized by all necessary action on the part of such Consortium Member and no additional
proceedings are necessary to approve this Agreement; (c) this Agreement has been duly executed and delivered by it and constitutes
a valid and binding agreement of such Consortium Member enforceable against it in accordance with the terms hereof; (d) its
execution, delivery and performance (including, without limitation, the provision and exchange of information) of this Agreement
will not (i) conflict with, require a consent, waiver or approval under, or result in a breach of or default under, any of
the terms of any material contract or agreement to which such Consortium Member is a party or by which such Consortium Member is
bound, or any office such Consortium Member holds, (ii) violate any order, writ, injunction, decree or statute, or any rule
or regulation, applicable to such Consortium Member or any of its properties and assets, or (iii) result in the creation of,
or impose any obligation on such Consortium Member to create, any lien, charge or other encumbrance of any nature whatsoever upon
such Consortium Member’s properties or assets; and (e) no broker, finder or investment banker is entitled to any brokerage,
finder’s or other fee or commission in connection with the Transaction based upon arrangements made by or on behalf of such
Consortium Member.
8.2 Target Securities. As of the date of this Agreement,
(a) the Consortium Members hold of record (i) the number of Target Ordinary Shares set forth under the heading “Target
Ordinary Shares” next to their names on Schedule A hereto, (ii) the number of ADSs set forth under the heading “ADSs”
next to their names on Schedule A hereto, and (iii) the number of outstanding Target Securities (other than Target Ordinary
Shares and ADSs) set forth under the heading “Other Target Securities” next to their names on Schedule A hereto, in
each case free and clear of any encumbrances or restrictions (other than restrictions on transfer pursuant to applicable laws);
(b) each Consortium Member has the sole right to control the voting and disposition of the Target Ordinary Shares, ADSs and
any other Target Securities held by (i) in the case of the Founders, the Founder Shareholder of such Founder and (ii) in the case
of Mr. Shengda Zan, one or more Affiliates of Mr. Shengda Zan; and (c) none of the Consortium Members or their respective
Affiliates owns, directly or indirectly, any Target Ordinary Shares, ADSs or other Target Securities, other than as set forth on
Schedule A hereto. For purposes of Section 8.2(c), “owns” means a Consortium Member (x) is the record holder
of such security or (y) is the “beneficial owner” (within the meaning of Rule 13d-3 under the Exchange Act) of
such security.
8.3 Reliance. Each Consortium Member acknowledges that
the other Consortium Members have entered into this Agreement on the basis of and reliance upon (among other things) the representations
and warranties in Sections 8.1 and 8.2 and have been induced by them to enter into this Agreement.
9. Miscellaneous
9.1 Entire Agreement. This Agreement constitutes the
entire agreement among the Consortium Members and supersedes any previous oral or written agreements or arrangements among them
or between any of them relating to its subject matter.
Strictly Confidential
9.2 Further Assurances. Each Consortium Member shall
use all reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate
with the other Consortium Members in doing, all things necessary, proper or advisable to carry out the intent and purposes of this
Agreement.
9.3 Severability. If any provision of this Agreement
is held to be invalid or unenforceable for any reason, it shall be adjusted rather than voided, if possible, in order to achieve
the intent of the Consortium Members to the maximum extent possible. In any event, the invalidity or unenforceability of any provision
of this Agreement in any jurisdiction shall not affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of this Agreement, including that provision, in any other jurisdiction.
9.4 Amendments; Waivers. Neither this Agreement nor any
term hereof may be amended or otherwise modified other than by an instrument in writing signed by each of the Consortium Members.
No provision of this Agreement may be waived, discharged or terminated other than by an instrument in writing signed by the Consortium
Member against whom the enforcement of such waiver, discharge or termination is sought. No failure or delay by any Consortium Member
in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.
9.5 Assignment; No Third Party Beneficiaries. Other than
as provided herein, the rights and obligations of each Consortium Member shall not be assigned without the prior consent of the
other Consortium Members; provided, however, that Sponsor may assign its rights and obligations under this Agreement, in whole
or in part, to any affiliated investment funds of Sponsor, any investment vehicle of Sponsor or such funds (as the case may be)
so long as Sponsor shall remain subject to its obligations under this Agreement. This Agreement shall be binding upon the respective
heirs, successors, legal representatives and permitted assigns of the Consortium Members. Nothing in this Agreement shall be construed
as giving any person, other than the Consortium Members and their heirs, successors, legal representatives and permitted assigns
any right, remedy or claim under or in respect of this Agreement or any provision hereof.
9.6 No Partnership or Agency. The Consortium Members
are independent and nothing in this Agreement constitutes a Consortium Member as the trustee, fiduciary, agent, employee, partner
or joint venturer of any other Consortium Members.
9.7 Counterparts. This Agreement may be executed in counterparts
and all counterparts taken together shall constitute one document.
9.8 Governing Law. This Agreement and all matters arising
out of or relating to this Agreement shall be governed in all respects by the laws of Hong Kong, without reference to any conflicts
of law provisions.
9.9 Dispute Resolution.
(a) Any disputes, actions and proceedings (“Disputes”)
against any Consortium Member or arising out of or in any way relating to this Agreement shall be resolved through consultation
between the parties to the Dispute. Consultation shall begin immediately after one party to the Dispute has delivered to the other
party to the Dispute a request for consultation (the “Request for Consultation”).
(b) Any Dispute not resolved by the parties within thirty (30) days
after delivery of a Request for Consultation will be subject to the exclusive jurisdiction of any court of competent jurisdiction
in Hong Kong. The Consortium Members irrevocably and unconditionally submit to the jurisdiction of any such court and waive any
defenses based on lack of personal jurisdiction, venue or inconvenient forum.
(c) Any Consortium Member may, to the extent permitted under
the laws of the jurisdiction where application is made, seek an interim injunction from a court or other authority with competent
jurisdiction and, notwithstanding that this Agreement is governed by the laws of Hong Kong, a court or authority hearing an application
for injunctive relief may apply the procedural law of the jurisdiction where the court or other authority is located in determining
whether to grant the interim injunction.
Strictly Confidential
9.10 Specific Performance. Each Consortium Member acknowledges
and agrees that the other Consortium Members would be irreparably injured by a breach of this Agreement by it and that money damages
alone are an inadequate remedy for actual or threatened breach of this Agreement. Accordingly, each Consortium Member shall be
entitled to seek specific performance or injunctive or other equitable relief (without posting a bond or other security) to enforce
or prevent any violations of any provision of this Agreement, in addition to all other rights and remedies available at law or
in equity to such Consortium Member, including, without limitation, the right to claim money damages for breach of any provision
of this Agreement.
9.11 Limitation on Liability. The obligation of each
Consortium Member under this Agreement is several (and not joint or joint and several), provided that the obligations of the Founder
Parties under this Agreement shall be joint and several as among the Founder Parties.
10. Definitions and Interpretations
10.1 Definitions. In this Agreement, unless the context
requires otherwise:
“ADSs” means the Target’s American
Depositary Shares, each representing four Target Ordinary Shares.
“Advisors” means any advisors or consultants
of Holdco, Acquisition Company, and the Consortium Members, in each case appointed in connection with the Transaction.
“Affiliate” means, with respect to any person,
any other person that, directly or indirectly, Controls, is Controlled by or is under common Control with such specified person
and “Affiliates” shall be construed accordingly.
“Business Day” means any day (other than
a Saturday or a Sunday) on which banks generally are open in the Cayman Islands, the People’s Republic of China, Hong Kong,
and in New York, New York, for the transaction of normal banking business.
“Competing Proposal” means a proposal, offer
or invitation to the Target, Sponsor, any of the Founder Parties or any of their respective Affiliates (other than the Proposal),
that involves the direct or indirect acquisition of ten percent (10%) or more of any class of the Target Ordinary Shares or
voting power in the Target, a sale of all or any significant amount of the assets of the Target, a merger, business combination,
consolidation, restructuring, reorganization, or recapitalization involving the Target, a change of control of the Target or any
other transaction that could adversely affect, prevent or materially reduce the likelihood of the consummation of the Transaction
with the Consortium.
“Confidential Information” includes (a) all
written, oral or other information obtained in confidence by one Consortium Member from any other Consortium Member in connection
with this Agreement or the Transaction, unless such information (i) is already known to such Consortium Member or to others
not known by such Consortium Member to be bound by a duty of confidentiality, (ii) is or becomes publicly available other
than through a breach of this Agreement by such Consortium Member or its Representatives, or (iii) is independently developed
by such Consortium Member or its Representatives without use of Confidential Information and (b) the existence or terms of,
and any negotiations or discussions (including the status thereof) relating to, this Agreement, the Proposal and any definitive
documentation, including, without limitation, the Merger Agreement.
“Control” means the possession, directly
or indirectly, of the power to direct the management and policies of a person, whether through the ownership of voting securities,
by contract or otherwise.
“Representative” of a Consortium Member means
that Consortium Member’s employees, directors, officers, partners, members, advisors (including, without limitation, legal
counsel, accountants, consultants and financial advisors), potential sources of debt financing, and any representatives of the
foregoing. The Representatives shall include the Advisors.
“Target Ordinary Shares” means the issued
and outstanding ordinary shares, par value US$0.0001 per share, of the Target.
“Target Securities” means shares, warrants,
options and any other securities or instruments which are convertible into or exercisable for shares or other equity of the Target,
including, without limitation, the Target Ordinary Shares and the ADSs.
10.2 Headings. Section and paragraph headings are inserted
for ease of reference only and shall not affect construction.
[Signature Pages Follow]
Strictly Confidential
IN WITNESS WHEREOF, the Consortium Members have caused this
Agreement to be duly executed and delivered as of the date first written above.
| FOUNDER PARTIES: |
| |
| Mr. Zhonghan (John) Deng |
| |
|
/s/ Zhonghan (John) Deng |
| |
| Vimicro Beijing Corporation |
| |
|
| By: |
|
/s/ Zhonghan (John) Deng |
| Name: |
|
Zhonghan (John) Deng |
| Title: |
|
Director |
| |
| Mr. Zhaowei (Kevin) Jin |
| |
|
/s/ Zhaowei (Kevin) Jin |
| |
| Vimicro Shenzhen Corporation |
| |
|
| By: |
|
/s/ Zhaowei (Kevin) Jin |
| Name: |
|
Zhaowei (Kevin) Jin |
| Title: |
|
Director |
| Address for the Founder Parties: |
| 15/F Shining Tower |
| No. 35 Xueyuan Road |
| Haidian District, Beijing 100083 |
| People’s Republic of China |
| with a required copy to: |
| Gunderson Dettmer Stough Villeneuve Franklin & Hachigian LLP |
| Suite 2101, Building C, Yintai Center |
| #2 Jianguomenwai Ave. |
| Chaoyang District, Beijing 100022 |
| People’s Republic of China |
| Attention: |
|
Jerome J. Ku, Esq. |
Strictly Confidential
IN WITNESS WHEREOF, the Consortium Members have caused this
Agreement to be duly executed and delivered as of the date first written above.
| SPONSOR: |
| |
| Shengda Zan |
| |
|
|
/s/
Shengda Zan |
| |
|
|
| Address for Sponsor: |
| Room 906, Bank of Shanghai Tower |
| 168 Middle Yincheng Road, Shanghai |
| People’s Republic of China |
| Attention: Suyue Li |
|
|
Strictly Confidential
SCHEDULE A
TARGET SECURITIES
| Consortium Member |
Target Ordinary Shares |
ADSs |
Other Target Securities |
| Mr. Zhonghan (John) Deng |
0 |
0 |
8,856,368 |
| Mr. Zhaowei (Kevin) Jin |
0 |
0 |
4,093,620 |
| Vimicro Beijing Corporation |
4,453,192 |
15,000 |
0 |
| Vimicro Shenzhen Corporation |
1,391,851 |
100,000 |
0 |
| Mr. Shenga Zan |
31,250,0001 |
1,070,0002 |
0 |
______________________
1
Held of record by Alpha Spring Limited as of the date of this Agreement.
2
Held of record by Alpha Spring Limited as of the date of this Agreement.
Exhibit 7.04
Strictly Confidential
RESTATED CONSORTIUM AGREEMENT
THIS RESTATED CONSORTIUM AGREEMENT, dated
September 11, 2015 (this “Agreement”), among Mr. Zhonghan (John) Deng (“Mr. Deng”),
Mr. Zhaowei (Kevin) Jin (“Mr. Jin” and together with Mr. Deng, the “Founders”), Vimicro Beijing
Corporation, a British Virgin Islands company controlled by Mr. Deng, Vimicro Shenzhen Corporation, a British Virgin Islands company
controlled by Mr. Jin (the foregoing two parties, the “Founder Shareholders” and, collectively with the Founders,
the “Founder Parties”), Mr. Xiaodong (Dave) Yang (“Mr. Yang”), Vimicro Tianjin Corporation,
a British Virgin Islands company controlled by Mr. Yang, and Mr. Shengda Zan (together with one or more Affiliates and/or entities
beneficially majority owned by Mr. Shengda Zan, “Sponsor”). Each of Sponsor, Mr. Yang, Vimicro Tianjin Corporation
and the Founder Parties is referred to herein as a “Consortium Member” and, collectively, the “Consortium.”
Unless otherwise defined herein, capitalized terms are defined in Section 10.1 hereof.
WHEREAS, the Consortium Members propose
to undertake an acquisition transaction (the “Transaction”) with respect to Vimicro International Corporation,
a company incorporated under the laws of the Cayman Islands with ADSs listed on the NASDAQ Global Market under the symbol “VIMC”
(the “Target”), pursuant to which the Target would be delisted from NASDAQ Global Market and deregistered under
the United States Securities Exchange Act of 1934, as amended (the “Exchange Act”);
WHEREAS, (a) in connection with the
Transaction, the Consortium Members propose to form a new company (“Holdco”) under the laws of the Cayman Islands,
and to cause Holdco to form a direct, wholly-owned subsidiary (“Acquisition Company”) under the laws of the
Cayman Islands, and (b) at the closing of the Transaction (the “Closing”), the Consortium Members intend
that Acquisition Company will be merged with and into the Target, with the Target being the surviving company and becoming a direct,
wholly-owned subsidiary of Holdco (the “Surviving Company”);
WHEREAS, on June 21, 2015, the Founders
submitted a non-binding proposal to the board of directors of the Target (the “Target Board”) in connection
with the Transaction;
WHEREAS, on August 5, 2015, the Founder
Parties and the Sponsor entered into a Consortium Agreement (the “Prior Agreement”);
WHEREAS, the parties to the Prior Agreement
wish to restate the Prior Agreement to, among other things, admit Mr. Yang and Vimicro Tianjin Corporation into the Consortium
as Consortium Members; and
WHEREAS, in accordance with the terms of
this Agreement, the Consortium will conduct (a) an evaluation of the Target, including conducting due diligence of the Target
and its business, (b) discussions regarding the Proposal with the Target, and (c) negotiation of the terms of definitive
documentation in connection with the Transaction (in which negotiations the Target will be represented by a special committee of
independent and disinterested directors of the Target Board (the “Special Committee”)), including, without limitation,
an agreement and plan of merger among Holdco, Acquisition Company and the Target in form and substance to be agreed by the Consortium
and the Target (the “Merger Agreement”), which shall be subject to the approval of the shareholders of the Target.
NOW, THEREFORE, in consideration of the
foregoing recitals and of the mutual agreements and covenants set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Consortium Members, intending to be legally bound, hereby agree
as follows:
1. Proposal;
Holdco Ownership; Other Agreements
1.1 Participation in Transaction. The Consortium Members
agree to participate in the Transaction on the terms set forth in this Agreement.
Strictly Confidential
1.2 Proposal. The Consortium shall, with the Founder
Parties’ assistance and cooperation, (a) undertake due diligence with respect to the Target and its business; (b) engage
in discussions with the Target regarding the Proposal; and (c) negotiate in good faith the terms of definitive documentation
in respect of the Transaction, including, without limitation, the Merger Agreement. The Consortium Members further agree to negotiate
in good faith to reach agreement on a shareholders agreement that would, among other things, govern the relationship of the shareholders
in Holdco following the Closing, and contain provisions customary for transactions of this type, as well as the terms of any other
agreements among the Consortium Members required to support the Proposal or to regulate the relationship among the Consortium Members.
1.3 Holdco Ownership.
(a) Prior to the execution of the Merger Agreement, the Consortium
Members shall (i) incorporate Holdco and shall cause Holdco to incorporate Acquisition Company, and (ii) negotiate in
good faith the terms of the memorandum and articles of association of Holdco and Acquisition Company. The memorandum and articles
of association of Acquisition Company shall become the memorandum and articles of association of the Surviving Company at the Closing.
(b) Each Consortium Member’s ownership percentage in Holdco
shall be based on the amount of cash paid, and the agreed-upon value of any other consideration contributed, by it to Holdco relative
to the aggregate amount of cash paid, and the aggregate agreed-upon value of any other consideration contributed, by all of the
Consortium Members to Holdco in connection with the Transaction. For the avoidance of doubt, the Consortium Members agree that
the obligation of the Consortium Members to purchase and pay for any Holdco shares shall be subject to the satisfaction or waiver
of the various conditions to the obligations of Holdco and Acquisition Company to consummate the Transaction to be set forth in
the Merger Agreement.
2. Participation
in Transaction; Advisors; Approvals
2.1 Information Sharing and Roles. Each Consortium Member
shall cooperate in good faith in connection with the Proposal and the Transaction, including, without limitation, by (a) complying
with any information delivery or other requirements entered into by Holdco, a Consortium Member or an Affiliate of a Consortium
Member, and shall not, and shall direct its Representatives not to, whether by their action or omission, breach such arrangements
or obligations, (b) participating in meetings and negotiations with the Special Committee and its advisors, (c) executing
and complying with any confidentiality agreements reasonably required by the Target, (d) sharing all information reasonably necessary
to evaluate the Target, including, without limitation, technical, operational, legal, accounting and financial materials and relevant
consulting reports and studies, (e) providing each other or Holdco with all information reasonably required concerning such
Consortium Member or any other matter relating to such Consortium Member in connection with the Transaction and any other information
a Consortium Member may reasonably require in respect of any other Consortium Member and its Affiliates for inclusion in any definitive
documentation related to the Transaction, (f) providing timely responses to reasonable requests by any other Consortium Member
for information, and (g) applying the level of resources and expertise that such Consortium Member reasonably considers to
be necessary and appropriate to meet its obligations under this Agreement. Notwithstanding the foregoing, no Consortium Member
is required to make available to the other Consortium Members any of its internal investment committee materials or analyses or
any information which it considers commercially sensitive or which is otherwise held subject to an obligation of confidentiality.
Notwithstanding anything herein to the contrary, nothing herein shall obligate the Founders to provide any information in breach
of any of their obligations or fiduciary duties to the Target.
2.2 Appointment of Advisors.
(a) The Consortium Members shall agree to the scope and engagement
terms of all joint Advisors to Holdco or the Consortium in connection with the Transaction. The Consortium Members agree and acknowledge
that Gunderson Dettmer Stough Villeneuve Franklin & Hachigian LLP has been selected by the Consortium Members to serve as international
counsel to the Founder Parties and the Consortium for the Transaction. The Consortium will engage PRC counsel and Cayman Islands
counsel to the Consortium when required.
(b) If a Consortium Member requires separate representation
in connection with specific issues arising out of the Proposal or the Transaction, such Consortium Member may retain other Advisors
to advise it; provided, that such Consortium Member shall (i) provide prior notice to the other Consortium Members of such
retention, and (ii) be solely responsible for the fees and expenses of such separate Advisors unless otherwise agreed by the
Consortium.
Strictly Confidential
2.3 Approvals. Each Consortium Member shall use reasonable
best efforts and provide all cooperation as may be reasonably requested by each other Consortium Member to obtain all applicable
governmental, statutory, regulatory or other approvals, licenses, waivers or exemptions required or, in the reasonable opinion
of such other Consortium Member, desirable for the consummation of the Transaction.
3. Transaction
Costs
3.1 Expenses and Fee Sharing.
(a) Each of the Consortium Member may incur out-of-pocket fees
and expenses on its own behalf in connection with the Transaction (such fees and expenses incurred by each Consortium Member in
connection with any inter-Consortium Member agreements or arrangements, “Individual Expenses”). Furthermore,
the Consortium Members may incur other fees and expenses on behalf of the Consortium in connection with the Transaction (all such
fees and expenses other than Individual Expenses, “Consortium Expenses”), including, without limitation, the
fees and expenses (i) of the joint Advisors retained by the Consortium pursuant to Section 2.2(a), (ii) of any proxy
solicitors, and (iii) in connection with any actions taken on behalf of Holdco or the Consortium in accordance with the terms
of the definitive agreements, including regulatory filings made or to be made pursuant to the Merger Agreement; provided,
however, that each Consortium Member shall obtain the other Consortium Member’s consent prior to incurring any Consortium
Expenses over US$50,000 in any single engagement or transaction.
(b) If the Transaction is consummated, then, at or immediately
following the Closing, Holdco or the Surviving Company shall pay (if applicable, through reimbursement of a Consortium Member)
all Consortium Expenses.
(c) If the Transaction is not consummated and such failure to
consummate is not due to any breach by any Consortium Member of this Agreement or any other agreements entered into by any Consortium
Member in connection with the Transaction, each Consortium Member shall be responsible for its proportionate share of the Consortium
Expenses based on such Consortium Member’s proposed shareholding percentage in Holdco as of Closing (exclusive of the any
share capital reserved in connection with any equity incentive plan).
(d) If the Transaction is not consummated due to a breach by
any Consortium Member (a “Breaching Consortium Member”) of this Agreement or any other agreements entered into
by such Consortium Member in connection with the Transaction (a “Consortium Member Breach”), such Breaching
Consortium Member shall be responsible for (i) its own and the other non-breaching Consortium Members’ Individual Expenses,
(ii) its own and the other non-breaching Consortium Members’ share of any amounts payable by them pursuant to Section 3.1(f),
and (iii) all Consortium Expenses, in addition to any liability for its breach of this Agreement and any other agreements
entered into by any Consortium Member in connection with the Transaction. In the event of a Consortium Member Breach, the Breaching
Consortium Members shall, jointly and severally, cause Breaching Consortium Members to cure such Consortium Member Breach (to the
extent that such Consortium Member Breach is curable) to the satisfaction of the non-breaching Consortium Members (it being understood
that any cure shall be without recourse to cash or assets of the Consortium). Without limiting the obligations of the Breaching
Consortium Members or the rights of the non-breaching Consortium Members set forth in this Section 3.1(d), the Breaching Consortium
Members shall, jointly and severally, indemnify the non-breaching Consortium Members and their respective Affiliates, limited partners,
members, shareholders, employees, agents and representatives (each, an “Indemnitee”) for any and all losses,
liabilities, damages, liens, claims, obligations, penalties, settlements, deficiencies, costs and expenses, including without limitation
reasonable advisor’s fees and other reasonable expenses of investigation, defense and resolution of any Consortium Member
Breach by the Breaching Consortium Members paid, suffered, sustained or incurred by the Indemnitees, resulting from, or arising
out of, or due to, any Consortium Member Breach by the Breaching Consortium Members.
(e) If applicable, each Consortium Member shall be entitled
to receive such Consortium Member’s proportionate share of any termination or other fees or amounts payable to Holdco by
the Target pursuant to the Merger Agreement, net of the expenses required to be borne by it pursuant to the provisions herein.
(f) Subject to Section 3.1(d) and Section 9.11, each
Consortium Member shall pay its proportionate share (based on such Consortium Member’s proposed shareholding in Holdco as
of Closing) of any termination, topping, break-up or other fees or amounts (including amounts paid in settlement of any dispute
or litigation relating to the foregoing) payable by Holdco or Acquisition Company under the Merger Agreement, net of the expenses
required to be borne by it pursuant to this Section 3.1.
Strictly Confidential
(g) Except otherwise provided herein, all Individual Expenses
of each Consortium Member shall be borne by such Consortium Member.
(h) Notwithstanding anything herein to the contrary, all fees,
costs and expenses incurred by or on behalf of Sponsor or the Consortium in connection with the business, legal, financial and
other due diligence investigations of the Target shall be (i) “Individual Expenses” insofar as such due diligence
investigations of the Target are for the sole benefit of the Sponsor, and (ii) “Consortium Expenses” insofar as
such due diligence investigations of the Target are for the benefit of the Consortium.
4.
Cooperation
4.1 Notice of Competing Proposal. Each Consortium Member
shall promptly notify the other Consortium Members if it or any of its Representatives receives any approach or communication with
respect to any Competing Proposal, including, without limitation, in such notice the identity of the other persons involved and
the nature and content of the approach or communication, and provide the other Consortium Members with copies of any written communication.
4.2 Adverse Agreement. Unless otherwise agreed in writing
by each Consortium Member, no Consortium Member may enter into any agreement with another Consortium Member or group of Consortium
Members that has the effect of discriminating against any Consortium Member in a manner that is materially adverse to such Consortium
Member without such Consortium Member’s consent. Each Consortium Member shall provide to all other Consortium Members a copy
of each agreement to be entered into with less than all of the Consortium Members prior to the execution of such agreement.
5. Termination
5.1 Termination Events. Subject to Section 5.2(a),
this Agreement shall terminate with respect to all Consortium Members upon the earliest to occur of (a) the Closing, (b) a
written agreement among the Consortium Members to terminate this Agreement, (c) if the Merger Agreement has been entered into,
written notice of termination of this Agreement delivered by any Consortium Member that did not contribute to any breach of the
Merger Agreement resulting in the termination thereof, and (d) the first anniversary of the date hereof if the Merger Agreement
has not been entered into as of such time.
5.2 Effect of Termination. Upon termination of this Agreement
pursuant to Section 5.1, Article 3 (Transaction Costs), Article 5 (Termination), Section 6.2 (Confidentiality), Article
7 (Notices) and Article 9 (Miscellaneous) shall continue to bind the Consortium Members.
6. Announcements
and Confidentiality
6.1 Announcements. The Consortium shall be responsible
for any announcements regarding the subject matter of this Agreement and the Transaction (subject to each other Consortium Member
having a reasonable opportunity to review and comment upon such announcements), and no Consortium Member shall make any such announcements,
except to the extent that any announcement is required by law, a court of competent jurisdiction, a regulatory body or international
stock exchange, and then only after the form and terms of the announcement have been notified to the other Consortium Members and
the other Consortium Members have had a reasonable opportunity to comment thereon, in each case to the extent reasonably practicable.
6.2 Confidentiality.
(a) Except as permitted under Section 6.3, each Consortium
Member shall not, and shall procure its Affiliates and Representatives not to, without the prior written consent of the other Consortium
Members, disclose any Confidential Information received by it (the “Recipient”) from any other Consortium Member
(the “Discloser”) in any manner whatsoever. Each Consortium Member shall not, and shall procure its Affiliates
and Representatives not to, use any Confidential Information for any purpose other than for the purposes of giving effect to and
performing its obligations under this Agreement or evaluating, negotiating and implementing the Transaction.
Strictly Confidential
(b) Subject to Section 6.2(c), the Recipient shall return
or destroy (in the Recipient’s sole discretion), upon written request of the Discloser, any Confidential Information which
falls within clause (a) of the definition of Confidential Information; provided, that with respect to any electronic data
that constitutes Confidential Information, the foregoing obligation shall not apply to any electronic data stored on the back-up
tapes of the Recipient’s hardware.
(c) Each Consortium Member may retain copies of the Confidential
Information referred to in Section 6.2(b) in order to comply with legal, regulatory or bona fide record keeping requirements.
(d) Each Consortium Member acknowledges that, in relation to
Confidential Information received by it from the other Consortium Members, the obligations contained in this Section 6.2 shall
continue to apply for a period of twelve (12) months following termination of this Agreement pursuant to Section 5.1,
unless otherwise agreed in writing.
6.3 Permitted Disclosures. A Consortium Member may disclose
Confidential Information (a) to those of its Affiliates and Representatives as such Consortium Member reasonably deems necessary
to give effect to, perform its obligations under or enforce this Agreement or evaluate, negotiate and implement the Transaction
(including, without limitation, potential financing sources), but only on a confidential basis, or (b) if required by law
or a court of competent jurisdiction, the United States Securities and Exchange Commission or any other regulatory body or international
stock exchange having jurisdiction over a Consortium Member or pursuant to whose rules and regulations such disclosure is required
to be made, but only after the form and terms of such disclosure have been notified to the other Consortium Members and the other
Consortium Members have had a reasonable opportunity to comment thereon, in each case to the extent legally permissible and reasonably
practicable.
7. Notices
7.1 Any notice, request, instruction or other document to be
provided hereunder by any Consortium Member to another Consortium Member shall be in writing and delivered personally or sent by
facsimile, overnight courier or electronic mail, to the address, facsimile number or electronic mail address provided under the
other Consortium Member’s signature page hereto, or to any other address, facsimile number or electronic mail address as
a Consortium Member may hereafter specify for the purpose by notice to the other Consortium Members. All such notices, requests
and other communications shall be deemed received on the date of receipt by the recipient thereof if received prior to 5:00 p.m.
(local time) on a Business Day in the place of receipt. Otherwise, any such notice, request or communication shall be deemed to
have been received on the next succeeding Business Day in the place of receipt.
8. Representations
and Warranties
8.1 Representations and Warranties. Each Consortium Member
hereby represents and warrants, on behalf of such Consortium Member only, to the other Consortium Members that (a) it has
the requisite power and authority to execute, deliver and perform this Agreement; (b) the execution, delivery and performance
of this Agreement by it have been duly authorized by all necessary action on the part of such Consortium Member and no additional
proceedings are necessary to approve this Agreement; (c) this Agreement has been duly executed and delivered by it and constitutes
a valid and binding agreement of such Consortium Member enforceable against it in accordance with the terms hereof; (d) its
execution, delivery and performance (including, without limitation, the provision and exchange of information) of this Agreement
will not (i) conflict with, require a consent, waiver or approval under, or result in a breach of or default under, any of
the terms of any material contract or agreement to which such Consortium Member is a party or by which such Consortium Member is
bound, or any office such Consortium Member holds, (ii) violate any order, writ, injunction, decree or statute, or any rule
or regulation, applicable to such Consortium Member or any of its properties and assets, or (iii) result in the creation of,
or impose any obligation on such Consortium Member to create, any lien, charge or other encumbrance of any nature whatsoever upon
such Consortium Member’s properties or assets; and (e) no broker, finder or investment banker is entitled to any brokerage,
finder’s or other fee or commission in connection with the Transaction based upon arrangements made by or on behalf of such
Consortium Member.
Strictly Confidential
8.2 Target Securities. As of the date of this Agreement,
(a) the Consortium Members hold of record (i) the number of Target Ordinary Shares set forth under the heading “Target
Ordinary Shares” next to their names on Schedule A hereto, (ii) the number of ADSs set forth under the heading “ADSs”
next to their names on Schedule A hereto, and (iii) the number of outstanding Target Securities (other than Target Ordinary
Shares and ADSs) set forth under the heading “Other Target Securities” next to their names on Schedule A hereto, in
each case free and clear of any encumbrances or restrictions (other than restrictions on transfer pursuant to applicable laws);
(b) each Consortium Member has the sole right to control the voting and disposition of the Target Ordinary Shares, ADSs and
any other Target Securities held by (i) in the case of the Founders, the Founder Shareholder of such Founder, (ii) in the case
of Mr. Yang, Vimicro Tianjin Corporation, (iii) in the case of Mr. Shengda Zan, any Affiliates of Mr. Shengda Zan that hold any
Target Ordinary Shares, ADSs and any other Target Securities; and (c) none of the Consortium Members or their respective Affiliates
owns, directly or indirectly, any Target Ordinary Shares, ADSs or other Target Securities, other than as set forth on Schedule
A hereto. For purposes of Section 8.2(c), “owns” means a Consortium Member (x) is the record holder of such
security or (y) is the “beneficial owner” (within the meaning of Rule 13d-3 under the Exchange Act) of such security.
8.3 Reliance. Each Consortium Member acknowledges that
the other Consortium Members have entered into this Agreement on the basis of and reliance upon (among other things) the representations
and warranties in Sections 8.1 and 8.2 and have been induced by them to enter into this Agreement.
9. Miscellaneous
9.1 Entire Agreement. This Agreement constitutes the
entire agreement among the Consortium Members and supersedes any previous oral or written agreements or arrangements among them
or between any of them relating to its subject matter. Without limiting the generality of the foregoing, this Agreement restates,
supersedes and replaces the Prior Agreement in its entirety.
9.2 Further Assurances. Each Consortium Member shall
use all reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate
with the other Consortium Members in doing, all things necessary, proper or advisable to carry out the intent and purposes of this
Agreement.
9.3 Severability. If any provision of this Agreement
is held to be invalid or unenforceable for any reason, it shall be adjusted rather than voided, if possible, in order to achieve
the intent of the Consortium Members to the maximum extent possible. In any event, the invalidity or unenforceability of any provision
of this Agreement in any jurisdiction shall not affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of this Agreement, including that provision, in any other jurisdiction.
9.4 Amendments; Waivers. Neither this Agreement nor any
term hereof may be amended or otherwise modified other than by an instrument in writing signed by each of the Consortium Members.
No provision of this Agreement may be waived, discharged or terminated other than by an instrument in writing signed by the Consortium
Member against whom the enforcement of such waiver, discharge or termination is sought. No failure or delay by any Consortium Member
in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.
9.5 Assignment; No Third Party Beneficiaries. Other than
as provided herein, the rights and obligations of each Consortium Member shall not be assigned without the prior consent of the
other Consortium Members; provided, however, that Sponsor may assign its rights and obligations under this Agreement, in whole
or in part, to any affiliated investment funds of Sponsor, any investment vehicle of Sponsor or such funds (as the case may be)
so long as Sponsor shall remain subject to its obligations under this Agreement. This Agreement shall be binding upon the respective
heirs, successors, legal representatives and permitted assigns of the Consortium Members. Nothing in this Agreement shall be construed
as giving any person, other than the Consortium Members and their heirs, successors, legal representatives and permitted assigns
any right, remedy or claim under or in respect of this Agreement or any provision hereof.
9.6 No Partnership or Agency. The Consortium Members
are independent and nothing in this Agreement constitutes a Consortium Member as the trustee, fiduciary, agent, employee, partner
or joint venturer of any other Consortium Members.
Strictly Confidential
9.7 Counterparts. This Agreement may be executed in counterparts
and all counterparts taken together shall constitute one document.
9.8 Governing Law. This Agreement and all matters arising
out of or relating to this Agreement shall be governed in all respects by the laws of Hong Kong, without reference to any conflicts
of law provisions.
9.9 Dispute Resolution.
(a) Any disputes, actions and proceedings (“Disputes”)
against any Consortium Member or arising out of or in any way relating to this Agreement shall be resolved through consultation
between the parties to the Dispute. Consultation shall begin immediately after one party to the Dispute has delivered to the other
party to the Dispute a request for consultation (the “Request for Consultation”).
(b) Any Dispute not resolved by the parties within thirty (30) days
after delivery of a Request for Consultation will be subject to the exclusive jurisdiction of any court of competent jurisdiction
in Hong Kong. The Consortium Members irrevocably and unconditionally submit to the jurisdiction of any such court and waive any
defenses based on lack of personal jurisdiction, venue or inconvenient forum.
(c) Any Consortium Member may, to the extent permitted under
the laws of the jurisdiction where application is made, seek an interim injunction from a court or other authority with competent
jurisdiction and, notwithstanding that this Agreement is governed by the laws of Hong Kong, a court or authority hearing an application
for injunctive relief may apply the procedural law of the jurisdiction where the court or other authority is located in determining
whether to grant the interim injunction.
9.10 Specific Performance. Each Consortium Member acknowledges
and agrees that the other Consortium Members would be irreparably injured by a breach of this Agreement by it and that money damages
alone are an inadequate remedy for actual or threatened breach of this Agreement. Accordingly, each Consortium Member shall be
entitled to seek specific performance or injunctive or other equitable relief (without posting a bond or other security) to enforce
or prevent any violations of any provision of this Agreement, in addition to all other rights and remedies available at law or
in equity to such Consortium Member, including, without limitation, the right to claim money damages for breach of any provision
of this Agreement.
9.11 Limitation on Liability. The obligation of each
Consortium Member under this Agreement is several (and not joint or joint and several), provided that (i) the obligations of the
Founder Parties under this Agreement shall be joint and several as among the Founder Parties and (ii) the obligations of Mr. Yang
and Vimicro Tianjin Corporation shall be joint and several as among Mr. Yang and Vimicro Tianjin Corporation.
10. Definitions
and Interpretations
10.1 Definitions. In this Agreement, unless the context
requires otherwise:
“ADSs” means the Target’s American
Depositary Shares, each representing four Target Ordinary Shares.
“Advisors” means any advisors or consultants
of Holdco, Acquisition Company, and the Consortium Members, in each case appointed in connection with the Transaction.
“Affiliate” means, with respect to any person,
any other person that, directly or indirectly, Controls, is Controlled by or is under common Control with such specified person
and “Affiliates” shall be construed accordingly.
“Business Day” means any day (other than
a Saturday or a Sunday) on which banks generally are open in the Cayman Islands, the People’s Republic of China, Hong Kong,
and in New York, New York, for the transaction of normal banking business.
“Competing Proposal” means a proposal, offer
or invitation to the Target, Sponsor, Mr. Yang, Vimicro Tianjin Corporation, any of the Founder Parties or any of their respective
Affiliates (other than the Proposal), that involves the direct or indirect acquisition of ten percent (10%) or more of any
class of the Target Ordinary Shares or voting power in the Target, a sale of all or any significant amount of the assets of the
Target, a merger, business combination, consolidation, restructuring, reorganization, or recapitalization involving the Target,
a change of control of the Target or any other transaction that could adversely affect, prevent or materially reduce the likelihood
of the consummation of the Transaction with the Consortium.
Strictly Confidential
“Confidential Information” includes (a) all
written, oral or other information obtained in confidence by one Consortium Member from any other Consortium Member in connection
with this Agreement or the Transaction, unless such information (i) is already known to such Consortium Member or to others
not known by such Consortium Member to be bound by a duty of confidentiality, (ii) is or becomes publicly available other
than through a breach of this Agreement by such Consortium Member or its Representatives, or (iii) is independently developed
by such Consortium Member or its Representatives without use of Confidential Information and (b) the existence or terms of,
and any negotiations or discussions (including the status thereof) relating to, this Agreement, the Proposal and any definitive
documentation, including, without limitation, the Merger Agreement.
“Control” means the possession, directly
or indirectly, of the power to direct the management and policies of a person, whether through the ownership of voting securities,
by contract or otherwise.
“Representative” of a Consortium Member means
that Consortium Member’s employees, directors, officers, partners, members, advisors (including, without limitation, legal
counsel, accountants, consultants and financial advisors), potential sources of debt financing, and any representatives of the
foregoing. The Representatives shall include the Advisors.
“Target Ordinary Shares” means the issued
and outstanding ordinary shares, par value US$0.0001 per share, of the Target.
“Target Securities” means shares, warrants,
options and any other securities or instruments which are convertible into or exercisable for shares or other equity of the Target,
including, without limitation, the Target Ordinary Shares and the ADSs.
10.2 Headings. Section and paragraph headings are inserted
for ease of reference only and shall not affect construction.
[Signature Pages Follow]
Strictly Confidential
IN WITNESS WHEREOF, the Consortium Members have caused this
Agreement to be duly executed and delivered as of the date first written above.
| |
FOUNDER PARTIES: |
| |
|
| |
Mr. Zhonghan (John) Deng |
| |
|
| |
/s/ Zhonghan (John) Deng |
| |
|
| |
|
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Vimicro Beijing Corporation |
| |
|
|
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By: |
/s/ Zhonghan (John) Deng |
| |
|
|
| |
Name: |
Zhonghan (John) Deng |
| |
|
|
| |
Title: |
Director |
| |
|
| |
|
| |
Mr. Zhaowei (Kevin) Jin |
| |
|
| |
/s/ Zhaowei (Kevin) Jin |
| |
|
| |
|
| |
Vimicro Shenzhen Corporation |
| |
|
|
| |
By: |
/s/ Zhaowei (Kevin) Jin |
| |
|
|
| |
Name: |
Zhaowei (Kevin) Jin |
| |
|
|
| |
Title: |
Director |
| |
Address for the Founder Parties: |
| |
|
| |
16/F Shining Tower |
| |
|
| |
No. 35 Xueyuan Road |
| |
|
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Haidian District, Beijing 100083 |
| |
|
| |
People’s Republic of China |
Strictly Confidential
| |
with a required copy to: |
| |
|
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Gunderson Dettmer Stough Villeneuve
Franklin & Hachigian LLP |
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|
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Suite 2101, Building C, Yintai Center |
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|
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#2 Jianguomenwai Ave. |
| |
|
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Chaoyang District, Beijing 100022 |
| |
|
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People’s Republic of China |
| |
|
| |
Attention: |
Jerome J. Ku, Esq. |
Strictly Confidential
IN WITNESS WHEREOF, the Consortium Members have caused this
Agreement to be duly executed and delivered as of the date first written above.
| |
SPONSOR: |
| |
|
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Shengda Zan |
| |
|
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/s/ Shengda Zan |
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Address for Sponsor: |
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|
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Room 906, Bank of Shanghai Tower |
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|
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168 Middle Yincheng Road, Shanghai |
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|
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People’s Republic of China |
| |
|
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Attention: |
Suyue Li |
Strictly Confidential
IN WITNESS WHEREOF, the Consortium Members have caused this
Agreement to be duly executed and delivered as of the date first written above.
| |
Mr. Xiaodong (Dave) Yang |
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|
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/s/ Xiaodong (Dave) Yang |
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|
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|
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Vimicro Tianjin Corporation |
| |
|
|
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By: |
/s/ Xiaodong (Dave) Yang |
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|
|
| |
Name: |
Xiaodong (Dave) Yang |
| |
|
|
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Title: |
Director |
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Address: |
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|
| |
16/F Shining Tower |
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|
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No. 35 Xueyuan Road |
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|
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Haidian District, Beijing 100083 |
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|
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People’s Republic of China |
Strictly Confidential
SCHEDULE A
TARGET SECURITIES
| Consortium Member | |
Target Ordinary
Shares | | |
ADSs | | |
Other Target
Securities | |
| Mr. Zhonghan (John) Deng | |
| 0 | | |
| 0 | | |
| 8,856,368 | |
| Vimicro Beijing Corporation | |
| 4,453,192 | | |
| 15,000 | | |
| 0 | |
| Mr. Zhaowei (Kevin) Jin | |
| 0 | | |
| 0 | | |
| 4,093,620 | |
| Vimicro Shenzhen Corporation | |
| 1,391,851 | | |
| 100,000 | | |
| 0 | |
| Mr. Shenga Zan | |
| 31,250,000 | 1 | |
| 1,070,000 | 2 | |
| 0 | |
| Mr. Xiaodong (Dave) Yang | |
| 0 | | |
| 108,325 | | |
| 1,400,000 | |
| Vimicro Tianjin Corporation | |
| 9,053,961 | | |
| 0 | | |
| 0 | |
1
Held of record by Alpha Spring Limited as of the date of this Agreement.
2
Held of record by Alpha Spring Limited as of the date of this Agreement.
(MM) (NASDAQ:VIMC)
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(MM) (NASDAQ:VIMC)
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