Exhibit 10.8
JOINT VENTURE CONTRACT
FOR
LESHAN-PHOENIX SEMICONDUCTOR COMPANY LIMITED
(AMENDED ON JUNE 25, 2002)
TABLE OF CONTENTS
Page
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PRELIMINARY STATEMENT..................................................... 1
ARTICLE 1 - DEFINITIONS AND INTERPRETATION................................ 1
ARTICLE 2 - PARTIES TO THE CONTRACT....................................... 3
ARTICLE 3 - ESTABLISHMENT OF THE JOINT VENTURE COMPANY.................... 5
ARTICLE 4 - PURPOSE, SCOPE AND SCALE OF PRODUCTION........................ 6
ARTICLE 5 - TOTAL AMOUNT OF INVESTMENT AND REGISTERED CAPITAL............. 6
ARTICLE 6 - RESPONSIBILITIES OF THE PARTIES............................... 11
ARTICLE 7 - TECHNOLOGY AND TRADEMARKS..................................... 12
ARTICLE 8 - SALE OF JOINT VENTURE PRODUCTS................................ 13
ARTICLE 9 - BOARD OF DIRECTORS............................................ 15
ARTICLE 10 - OPERATION AND MANAGEMENT..................................... 17
ARTICLE 11 - SITE......................................................... 19
ARTICLE 12 - MATERIALS, EQUIPMENT AND SERVICES............................ 19
ARTICLE 13 - LABOR MANAGEMENT............................................. 20
ARTICLE 14 - FINANCIAL AFFAIRS AND ACCOUNTING............................. 21
ARTICLE 15 - TAXATION AND INSURANCE....................................... 24
ARTICLE 16 - CONFIDENTIALITY.............................................. 25
ARTICLE 17 - JOINT VENTURE TERM........................................... 26
ARTICLE 18 - TERMINATION AND LIQUIDATION.................................. 26
ARTICLE 19 - BREACH OF CONTRACT........................................... 31
ARTICLE 20 - FORCE MAJEURE................................................ 31
ARTICLE 21 - SETTLEMENT OF DISPUTES....................................... 32
ARTICLE 22 - APPLICABLE LAW............................................... 33
ARTICLE 23 - MISCELLANEOUS PROVISIONS..................................... 34
Appendices
A List of the Joint Venture Products
B Schedule of Capital Contributions
i
JOINT VENTURE CONTRACT
THIS Amended JOINT VENTURE CONTRACT (this "Contract") is made in
Phoenix, Arizona, U.S.A. on the 25th day of June, 2002 among LESHAN RADIO
COMPANY LTD., an enterprise legal person established and existing under the laws
of the People's Republic of China with its legal address at 27 West People's
Road, Leshan, Sichuan Province 614000, People's Republic of China ("Party A"),
MOTOROLA (CHINA) INVESTMENT LIMITED, a company established and existing under
the laws of People's Republic of China, with its legal address at No. 108 Jian
Guo Road, Chao Yang District, Beijing 100022, People's Republic of China ("Party
B"), and SCG (CHINA) HOLDING CORPORATION, a company established and existing
under the laws of the State of Delaware, U.S.A., with its legal address at 5005
East McDowell Road, Phoenix, Arizona 85008, U.S.A. ("Party C"). Each of Party A,
Party B and Party C shall hereinafter individually be referred to as a "Party"
and collectively as the "Parties".
PRELIMINARY STATEMENT
WHEREAS, Party A, Party B and Party C are parties to the restated
Joint Venture Contract dated September 6, 1999, for the establishment of
Leshan-Phoenix Semiconductor Company Limited (the "Company") and desire that,
when this Contract becomes effective in accordance with its terms and
conditions, such Joint Venture Contract shall be amended and restated in its
entirety by this Contract;
WHEREAS, Party A, Party B and Party C desire that the Company add IC
and Discrete Wafer Fab products to the scope of its business ("New Products");
NOW THEREFORE, after friendly consultations conducted in accordance
with the principle of equality and mutual benefit, the Parties have agreed to
amend the Amended and Restated Joint Venture Contract of 1999 as follows:
ARTICLE 1 - DEFINITIONS AND INTERPRETATION
1.01 Definitions
Unless the terms or context of this Contract otherwise provide, the
following terms shall have the meanings set out below:
(a) "Motorola" means Party B or any of its Affiliates.
(b) "Affiliate" means, in relation to Party A, any enterprise or other
entity which, directly or indirectly, is controlled by Party A; the
term "control" meaning ownership of fifty percent (50%) or more of
the registered capital or the power to appoint the general manager,
factory chief or other principal person in charge of an enterprise
or other entity.
"Affiliate" means, in relation to Party B or Party C, any company
which, through ownership of voting stock (shares) or otherwise,
directly or indirectly, is controlled by, under common control with,
or in control of, Party B or Party C, as the case may be; the term
"control" meaning ownership of fifty percent (50%) or more of the
voting stock (shares) of a company, or the power to appoint or elect
a majority of the directors of a company, or the power to direct the
management of a company.
1 JOINT VENTURE CONTRACT
For purposes of this Contract, the Company shall not be deemed as an
Affiliate of any Party hereto.
(c) "Articles of Association" means the Articles of Association of the
Company executed on March 1, 1995 and as amended and restated.
(d) "Board" and "Board of Directors" mean the board of directors of the
Company.
(e) "Business License" means the business license of the Company issued
by the SAIC dated March 28, 1995 and any amendment to or renewal,
replacement or extension of such license.
(f) "China" and "PRC" mean the People's Republic of China excluding Hong
Kong, Macau and Taiwan for purposes of this Contract.
(g) "Company" means Leshan-Phoenix Semiconductor Company Limited.
(h) "Effective Date" means the effective date of this Contract, which
shall be the date on which this Contract and the Articles of
Association have been approved by the Examination and Approval
Authority without varying their terms or imposing any additional
conditions, unless otherwise agreed by the Parties in writing.
(i) "Examination and Approval Authority" means the authority entrusted
by the Chinese government to approve this Contract, the Appendices
attached hereto and the Articles of Association.
(j) "Export-oriented Enterprise" means the status of the Company to be
granted by the Examination and Approval Authority under PRC law.
(k) "Feasibility Study" means the Feasibility Study Report dated
November 4, 1994 regarding the feasibility of the joint venture and
the establishment of the Company, together with the Capital Increase
and Expansion Plan for the Wafer Fab Products dated June 2002.
(l) "Joint Venture Products" means the products listed in Appendix A
attached hereto and any other similar, related or complementary
products that the Board approves for production by the Company.
(m) "Joint Venture Term" means the term of this Contract as set forth in
Article 17.01 hereof including any extensions of such term pursuant
to Article 17.02 hereof.
(n) "Land Use Rights Grant Contract" means the relevant contract or
contracts for the grant of the land use rights over the Site between
the Company and the Municipality of Leshan.
(o) "Management Personnel" means the Company's General Manager, Deputy
General Manager and other management personnel designated by the
Board.
(p) "ON" means Party C or any of its Affiliates.
2 JOINT VENTURE CONTRACT
(q) "Plant" means the Company's manufacturing facilities located at the
Site where the Joint Venture Products will be produced.
(r) "Renminbi" or "RMB" means the lawful currency of China.
(s) "SAFE" means the State Administration of Foreign Exchange of the
People's Republic of China and/or a local branch thereof, as
appropriate to the context.
(t) "SAIC" means the State Administration for Industry and Commerce of
the People's Republic of China and/or a local branch thereof, as
appropriate to the context.
(u) "Services Contract" means the contract for the provision of services
between the Company and Party A.
(v) "Site" means the parcels of land located in Leshan, Sichuan
Province, on which the facilities of the Company are situated.
(w) "Technologically Advanced Enterprise" means the status of the
Company to be granted by the Chinese government under PRC law
(x) "Technology" has the meaning as defined in the Technology License
Contract, as amended.
(y) "Technology License Contract" means the technology license contract
dated February 24, 1995 as amended so far under which the Company is
the licensee.
(z) "Third Party" means any entity or person other than the Parties or
their Affiliates.
(aa) "United States Dollars" or "US$" means the lawful currency of the
United States of America.
(bb) "Working Personnel" means all employees and staff of the Company,
other than the Management Personnel.
(cc) "Wafer Fab Products" means the wafer fab products as listed in
Appendix A.
1.02 Interpretation
Article headings are inserted for the purposes of convenience and
reference only and shall not affect the interpretation or construction of
this Contract. Words denoting the singular shall, where applicable,
include the plural and vice versa. Reference to the masculine gender
shall, where applicable, include the feminine gender and the neuter gender
and vice versa.
ARTICLE 2 - PARTIES TO THE CONTRACT
2.01 The Parties
The Parties to this Contract are:
3 JOINT VENTURE CONTRACT
(a) Party A, Leshan Radio Company, Ltd., a Chinese limited liability
company registered in Leshan, Sichuan Province, China, with its
legal address at 27 West People's Road, Leshan, Sichuan Province,
China.
Legal Representative of Party A:
Name: Mr. Pan Min-Zhi
Position: Chairman of the Board
Nationality: Chinese
(b) Party B, Motorola (China) Investment Limited, a company established
and existing under the laws of the PRC, with its legal address at
No. 108 Jian Guo Road, Chao Yang District, Beijing 100022, People's
Republic of China.
Legal Representative of Party B:
Name: Mr. Pin Yong Lai
Position: Chairman of the Board
Nationality: Malaysia
(c) Party C, SCG (China) Holding Corporation, a company established and
existing under the laws of the State of Delaware, U.S.A., with its
legal address at 5005 McDowell Road, Phoenix, Arizona 85008, U.S.A.
Legal Representative of Party C:
Name: Henry Leung
Position: Chairman of the Board
Nationality: American
2.02 Representations, Warranties and Undertakings
(a) Each of Party A, Party B and Party C hereby represents, warrants and
undertakes to the other Parties that, as of the date of execution
hereof and as of the Effective Date:
(i) it is duly organized, validly existing and in good
standing under the laws of the place of its
establishment or incorporation;
(ii) it has all requisite power, authority and approval
required to enter into this Contract and upon the
Effective Date will have all requisite power, authority
and approval to perform fully each and every one of its
obligations hereunder;
(iii) it has taken all action necessary to authorize it to
enter into this Contract and such Party's representative
whose signature is affixed hereto is fully authorized in
writing to sign this Contract and to bind such Party
thereby;
(iv) upon the Effective Date, this Contract shall constitute
its legal, valid and binding obligation;
4 JOINT VENTURE CONTRACT
(v) neither the execution of this Contract, nor the
performance of such Party's obligations hereunder, will
conflict with, or result in a breach of, or constitute a
default under, any provision of its business license or
articles of association, or any law, rule, regulation,
authorization or approval of any government agency or
body, or of any contract or agreement to which it is a
party or is subject; and
(vi) all material documents, statements and information of or
provided by any governmental body in its possession
relating to the transactions contemplated in this
Contract have been disclosed to the other Parties, and
no document previously provided by it to the other
Parties contains any untrue statement of material fact.
(b) If any Party does not perform the above undertakings and
representations, it shall be considered a breach of this Contract.
(c) At the time of the execution of this Contract, each Party shall
provide the other Parties with a certified copy of its business
license.
2.03 Change of Legal Representative
Each Party shall have the right to change its legal representative and
shall promptly notify the other Parties of such change and the name,
position and nationality of its new legal representative.
ARTICLE 3 - ESTABLISHMENT OF THE JOINT VENTURE COMPANY
3.01 Name and Address of the Company; Branches
(a) The name of the Company shall be "?????????????????" in Chinese, and
"Leshan-Phoenix Semiconductor Company Limited" in English.
(b) The legal address of the Company shall be 27A West People's Road,
Leshan, Sichuan Province, China.
(c) In accordance with its business needs, the Company may establish
branch offices within or outside China upon the decision of the
Board and approval by the relevant governmental authorities.
3.02 Limited Liability Company
The form of organization of the Company shall be a limited liability
company. Except as otherwise provided herein, once a Party has paid in
full its contribution to the registered capital of the Company, it shall
not be required to provide any further funds to or on behalf of the
Company by way of capital contribution, loan, advance, guarantee or
otherwise unless the Parties mutually agree otherwise. Creditors of the
Company shall have recourse only to the assets of the Company and shall
not seek repayment from any of the Parties. The Company shall indemnify
the Parties against any and all losses, damages, or liabilities suffered
by the Parties in respect of any Third Party claims arising out of the
operation of the Company. Subject to the above, the profits, risks and
losses of the Company shall be shared by the Parties in proportion to
their respective contributions to the Company's registered capital.
5 JOINT VENTURE CONTRACT
3.03 Laws and Decrees
The Company shall be a legal person under the laws of China. The
activities of the Company shall be governed and protected by the laws,
decrees and relevant rules and regulations of China.
3.04 Code of Conduct
The Company and its employees shall comply with a Code of Conduct adopted
by the Board of Directors. The Code of Conduct shall be substantially
similar to the Code of Conduct of Party A, Party B or Party C, whichever
is more strict, and shall be fully consistent with relevant Chinese laws.
ARTICLE 4 - PURPOSE, SCOPE AND SCALE OF PRODUCTION
4.01 Purpose
The Parties have agreed that the purposes of the Company will be
manufacturing low cost and high efficiency semi-conductor components and
products that meet world-wide quality standards by using advanced and
suitable technology and scientific management methods, to satisfy the
increasing global market demand and achieve a satisfactory return on
investment.
4.02 Scope of Business
The Company will engage in the development, design, manufacture, assembly
and testing of Integrated Circuit ("IC") and Discrete semiconductor
products and related products, the sale of products produced by the
Company and the provision of after-sales service with respect to such
products.
4.03 Scale of Production
It is anticipated by the Parties that the annual production capacity of
the Company at the completion of all investment phases will reach 28.5
billion units of miniature surface mount IC packages and 728,000 6-inch IC
and Discrete wafers. The Board of Directors of the Company shall have
complete autonomy in the formulation and execution of the Company's
production policies in order to achieve these goals, and may expand or
reduce the Company's scale of production in accordance with market demands
and the Company's business situation.
ARTICLE 5 - TOTAL AMOUNT OF INVESTMENT AND REGISTERED CAPITAL
5.01 Total Investment
The total amount of investment will be Five Hundred Nine Million Three
Hundred Thousand United States Dollars (US$$509.3 million). This
investment shall be made in phases, subject to market conditions and the
business operations of the Company, as the Board shall decide from time to
time. If the Company is successful, the Parties hope to increase further
their investment, but any such increase will need to be finalized and
approved in the future by the Board and the Examination and Approval
Authority .
6 JOINT VENTURE CONTRACT
5.02 Registered Capital
The total amount of registered capital will be One Hundred One Million
Eight Hundred and Sixty Thousand United States Dollars (US$101.86
Million).
5.03 Contributions to Capital
(a) Party A's contribution to the registered capital of the Company
shall be Thirty-Nine Million Seven Hundred Twenty-Five Thousand and
Four Hundred United States Dollars (US$39,725,400), representing a
thirty-nine percent (39%) share of the registered capital of the
Company. Party A's contribution to the registered capital shall
include Thirty-Eight Million Three Hundred Sixty Thousand and Four
Hundred Seventy-Seven United States Dollars (US$38,360,477) in cash,
equipment valued at Four Hundred Eighty-Three Thousand Nine Hundred
and Twenty-Three United States Dollars (US$483,923), the land use
rights of a parcel of land located at No. 27, West People's Road,
the total area of which is 26,853.80 square meters and is valued at
Seven Hundred Twenty-One Thousand United States Dollars
(US$721,000), and additional land use rights and the building
thereon located at No. 27, West People's Road and currently used for
Expatriate Apartments valued at One Hundred Sixty Thousand United
States Dollars (US$160,000).
(b) Party B's contribution to the registered capital of the Company
shall be Ten Million One Hundred Eighty-Six Thousand United States
Dollars (US$10,186,000), representing a ten percent (10%) share of
the registered capital of the Company.
(c) Party C's contribution to the registered capital of the Company
shall be Fifty-One Million Nine Hundred Forty-Eight Thousand and Six
Hundred United States Dollars (US$51,948,600), representing a
fifty-one percent (51%) share of the registered capital of the
Company.
(d) The unpaid registered capital amount as of the date hereof will be
paid by installment contribution in accordance with Appendix B.
5.04 Payment of Registered Capital and Conditions Precedent thereto
(a) Subject to Article 5.04(c) below, each Party shall make its
contribution to the registered capital of the Company in accordance
with the schedule set forth in Appendix B.
(b) In the event that a Party fails to make its capital contribution, in
whole or in part, in accordance with the provisions of Article
5.04(a) and Appendix B, such Party shall be liable to pay liquidated
damages to the Company in the form of simple interest on the unpaid
amount from the time due until the time paid at the rate of two
percent (2%) above the six-month London Interbank Offered Rate
(LIBOR) for United States Dollars up to a maximum of US$200,000.00.
Notwithstanding the above provisions of this Article 5.04 (a), if
the failure of a Party to make its capital contribution, in whole or
in part, is not remedied within thirty (30) days of notice from any
other Party, said other
7 JOINT VENTURE CONTRACT
Party shall have the right to terminate this Contract pursuant to
Article 18.01(c)(ix) hereof.
(c) The Parties shall have no obligation to make capital contributions
in accordance with Appendix B until the occurrence of the Effective
Date. The capital contributions to be made by the Parties under this
Contract shall be reduced by the amount of any distributable profits
that are not distributed to the Parties as dividends, and such
profits may be reinvested in the business of the Company as
determined by the Board.
5.05 Investment Certificate
After each Party's installment contribution to the registered capital has
been made, a Chinese registered accountant shall verify the contribution
and issue a contribution verification report. Thereupon, the Company shall
issue an investment certificate to each Party signed by the Chairman and
the Vice Chairman of the Board.
5.06 Assignment of Registered Capital
(a) Each Party hereto undertakes to the other Parties and to the Company
that it shall not assign, sell, transfer or otherwise dispose of all
or any part of its interest in the registered capital of the Company
or its rights, obligations and benefits under this Contract unless
(i) each of the other Parties hereto shall have consented in writing
to such assignment, sale, transfer or disposition or (ii) such
assignment, sale, transfer or disposition complies with the terms of
this Article 5.06.
(b) When one Party (the "Disposing Party") wishes to sell, assign or
otherwise dispose of all or part of its share of the registered
capital (the "Offered Share"), it shall notify each of the other
Parties (the "Non-Disposing Parties") in writing (the "Transfer
Notice") of the identity of the proposed purchaser and provide each
Non-Disposing Party a copy of the offer including all of the
proposed terms and conditions of such sale, assignment or disposal.
The Transfer Notice shall include a statement confirming that there
is no supplementary consideration not stated in the offer. The
Non-Disposing Parties shall have a preemptive right to purchase all
but not part of such Offered Share in proportion to their respective
equity interests in the Company on terms and conditions no less
favorable to the Disposing Party than those specified in the
Transfer Notice.
(c) The Non-Disposing Parties may exercise their preemptive right by
giving notice to the Disposing Party of their intention to purchase
the Offered Share within 30 days after receipt of the Transfer
Notice ("Option Exercise Period"). Upon issuance of such notice, the
Parties shall execute such documents as are required to effect the
transfer. The purchase shall be made within 30 days after receipt of
any required government approvals of the transfer.
(d) If one Non-Disposing Party does not exercise the option within the
Option Exercise Period or fails to make payment for its share of the
Offered Share within the time provided in subsection (c), the other
Non-Disposing Party shall have the option to purchase such share by
giving notice to the Disposing Party
8 JOINT VENTURE CONTRACT
within 30 days thereafter. If such other Non-Disposing Party does
not wish to purchase such share or if both of the Non-Disposing
Parties should fail to exercise their preemptive right, the
Disposing Party may sell all but not part of the Offered Share to
the proposed purchaser at a price not less than that provided in the
Transfer Notice. The Disposing Party shall provide each of the
Non-Disposing Parties with a copy of any executed written equity
transfer agreement with the purchaser.
(e) It shall be a condition precedent to the right of any Party to
transfer any of its registered capital that (i) the transfer shall
be done in accordance with Chinese law, (ii) the transferee agrees
to be bound by and entitled to the obligations and benefits of this
Contract as if an original party hereto; and (iii) neither the
business of the Company nor the performance of its contracts shall
be interrupted, nor shall its organizational structure be affected
by any such sale, assignment or other disposal of such registered
capital. Notwithstanding the foregoing, unless the written consent
of the Disposing Party is obtained, upon any assignment, sale or
other disposal of the Disposing Party's entire interest in the
registered capital of the Company, the Company shall remove from its
name all references to the name of the Disposing Party and shall
cease using all packaging, letterhead, stationery, promotional and
advertising materials and other items which contain any reference to
the name of the Disposing Party.
(f) Subject to the satisfaction of the terms and conditions set forth in
this Article 5.06, the Parties shall cause their directors appointed
to the Board to approve any sale, assignment or other disposal of
registered capital hereunder. Any such sale, assignment or other
disposal shall, to the extent required by law, be submitted to the
Examination and Approval Authority for examination and approval.
Upon receipt of the approval of the Examination and Approval
Authority, the Company shall register the change in ownership with
the SAIC.
(g) The provisions on assignment set forth in this Article 5.06 shall
not apply to any sale or assignment of registered capital by any
Party to any of its Affiliates, and the other Parties shall be
deemed to have consented to, and the Parties shall cause their
directors appointed to the Board to approve, any such sale or
assignment. Any such sale or assignment shall, to the extent
required by law, be submitted to the Examination and Approval
Authority for examination and approval. Upon receipt of such
approval, the Company shall register the change in ownership with
the SAIC.
(h) The share of the registered capital owned by Party B and Party C
shall not, in the aggregate, be lower than 25% of the registered
capital of the Company.
5.07 Encumbrance of Investment
No Party shall mortgage, pledge, charge or otherwise encumber all or any
part of its contribution to the Company's registered capital without the
prior written consent of the other Parties.
5.08 Increase of Registered Capital and Additional Financing
9 JOINT VENTURE CONTRACT
(a) Any increase in the registered capital of the Company must be
approved by a unanimous vote of the members of the Board present in
person or by proxy at a duly constituted meeting thereof and
submitted to the Examination and Approval Authority for examination
and approval. Upon receipt of the approval of the Examination and
Approval Authority, the Company shall register the increase in
registered capital with the local branch of the SAIC. Unless
otherwise agreed by the Parties, any increase in the registered
capital shall be made by the Parties in the same proportion as their
respective then-existing interests in the registered capital of the
Company. The agreement on any capital increase may specify the time
limits for payment of such capital increase. If any Party fails to
contribute its share of the capital increase within the time limits
set out therein, such Party shall pay interest to the Company on the
amount of the overdue contribution at the rate of two percent (2%)
above the six-month LIBOR for United States Dollars as in effect on
the date such contribution is due. Such interest shall be payable
monthly in arrears from and including the date on which such
contribution is due and to but excluding the date on which such
contribution (together with all interest accrued thereon) is paid in
full.
(b) In the event that any Party fails to make its registered capital
contribution (or any portion thereof) as provided herein or fails to
provide its share of any increase in the Company's registered
capital as described in (a) above, then in addition to any other
rights the Company may have against the defaulting Party, the
Company may offer such portion to the non-defaulting Parties in
proportion to the ratio of their respective interests in the
registered capital of the Company. Such offer to provide a portion
of any increase in the registered capital as described in this
paragraph requires approval by the Examination and Approval
Authority.
(c) The Company shall fund the difference between the total amount of
investment and registered capital through long-term loans obtained
from financial institutions. If the Company cannot obtain all or a
portion of the required loans on the strength of its own credit,
then each of the Parties, either directly or through an Affiliate,
shall raise loans for the Company in the same proportion as their
respective contributions to the registered capital. If any Party is
unable to raise loans in the proportion applicable to such Party,
the other Parties shall consider helping arrange for such loans. The
Board shall decide the specific timing and amounts of the Company's
loans. Loans shall bear interest at the actual loan interest rate,
following confirmation by the Board. Such loans shall be repaid by
the Company on a pari passu basis in accordance with the decision of
the Board based upon the Company's ability to repay without
endangering the financial stability of the Company. The Company may
fund the difference between the total amount of investment and
registered capital through overseas loans obtained from financial
institutions.
(d) In the future, the Company may obtain additional financing by
utilizing its own internal funds, through loans from sources in
China or outside China, or through increased investment by the
Parties.
10 JOINT VENTURE CONTRACT
ARTICLE 6 - RESPONSIBILITIES OF THE PARTIES
6.01 Responsibilities of Party A
In addition to its other obligations under this Contract, Party A shall
have the following responsibilities:
(a) assist the Company in obtaining all necessary approvals, permits and
licenses for the operation of the Company;
(b) assist the Company in liaising with the relevant authorities to
effectively procure the external water supply, fuel supply, power
supply, transportation, communications, and other services required
for the Plant at the most preferential prices available;
(c) assist the Company in obtaining raw materials from sources in China;
(d) assist the Company in opening Renminbi and foreign currency bank
accounts and in obtaining Renminbi loans when necessary;
(e) assist the Company in arranging for the transportation of imported
equipment and materials between ports in China and the Plant;
(f) assist with the procedures for applying for and procuring licenses,
and on carrying out all customs procedures, for the import of
machinery, equipment, materials, supplies and office equipment;
(g) assist the expatriate employees of the Company to obtain all
necessary entry visas and work permits;
(h) assist the Company in recruiting various types of qualified Chinese
personnel;
(i) assist the Company in obtaining the Certificate of Authentication of
its status as an "Integrated Circuit (IC) Manufacturing Enterprise"
permitting the Company to be entitled to all the Value-Added Tax
("VAT") and other investment incentives as provided for by the
governments including in State Council Document No. (2000) 18 on
Policies to Encourage the Development of the Software and Integrated
Circuit (IC) Industries dated on June 24, 2000 and in policies
promulgated by the Sichuan Provincial Government;
(j) assist the Company in obtaining approval of its status as a
Technologically Advanced Enterprise and/or Export-oriented
Enterprise and securing the appropriate confirmation certificates;
thus permitting the Company to enjoy the preferential tax treatment
and other benefits available to such enterprises under the current
and future government sponsored programs including programs
promulgated under the western region modernization policies;
(k) assist the Company to obtain access to sources of foreign exchange;
(l) assist the Company to apply for and obtain approval from the Customs
that the Company's factory and all other facilities will be treated
as a bonded factory or warehouse in accordance with Chinese legal
regulations;
11 JOINT VENTURE CONTRACT
(m) assist the Company in applying for and obtaining any other most
preferential tax treatment and other investment incentives available
under applicable laws and regulations, in addition to those listed
in this Article 6.01;
(n) assist the Company in getting duty and VAT exemption that may be
available on all self-used materials and equipment; and
(o) handle other matters entrusted by the Company from time to time.
6.02 Responsibilities of Party B and Party C
In addition to its other obligations under this Contract, each of Party B
and Party C shall have the following responsibilities, which shall be
carried out directly or through its Affiliates:
(a) when requested by the Company, assist the Company in the purchase of
equipment, supplies and materials manufactured inside or outside
China;
(b) assist the Company in obtaining loans when necessary;
(c) assist the Company in recruiting expatriate and local personnel;
(d) assist the Company in arranging training of Company personnel in
China or abroad as contemplated in the Technology License Contract;
(e) assist the Company in generating export opportunities; and
(f) handle other matters entrusted by the Company from time to time.
6.03 If, at the time or times of Party B or Party C's performance hereunder, a
validated U.S. export license is required for Party B, Party C or their
Affiliates to lawfully export goods or associated technical data, then the
issuance of such license shall constitute a condition precedent to Party B
and Party C's obligations hereunder.
6.04 No Compensation
When the Parties assist the Company with the purchase of equipment,
supplies and materials, they shall serve the Company without compensation
and no Party may impose additional charges.
ARTICLE 7 - TECHNOLOGY AND TRADEMARKS
7.01 Technology
The Parties contemplate that from time to time during the term of this
Contract, Semiconductor Components Industries, LLC may provide the Company
and/or Party A with additional Technical Information and Know-How to
produce other products. In such event, the Parties shall cause the Company
and Party A to execute one or more additional technology license contracts
with Semiconductor Components
12 JOINT VENTURE CONTRACT
Industries, LLC in substantially the form of the Technology License
Contract. Any additional technology license contracts will become
effective on the date of approval by or registration with the Examination
and Approval Authority and will be valid for ten (10) years.
7.02 Trademarks
(a) The Company is not authorized to use the name or trademark of any
Party in its name or otherwise, except as specifically authorized in
writing by such Party.
(b) The Company shall develop and register its own trademark. The use of
such trademark shall be decided upon by the Board.
ARTICLE 8 - SALE OF JOINT VENTURE PRODUCTS
8.01 Distribution and Sales- Non Wafer Fab Products
(a) Unless unanimously decided otherwise by the Board, each Party,
directly or through designated Affiliates, shall purchase the
Company's products in proportion to its contribution to the
registered capital, and the pricing of such purchases shall follow
the principles provided in the Board resolutions dated June 12, 1997
and any subsequent unanimous Board resolutions.
(b) Each Party or its Affiliates may act as agent for the sale of such
Party's portion of the Company's production. In such case, such
Party or its Affiliates shall receive a sales commission.
(c) The majority of the Company's products will be exported directly or
indirectly.
(d) Party A may request the Company to perform the assembly and test of
devices by the Company which are not produced by Motorola or ON.
Such production would use wafers provided by Party A on a
consignment basis and take place within Party A's pro rata share of
the Company's manufacturing capacity. However, the quantity and
specifications of each device requested must meet the Company's
manufacturability requirements as defined by the General Manager of
the Company.
(e) Party A, Party B and Party C may request the Company to perform the
assembly and test of devices by the Company using wafers provided by
Party C or its Affiliates, on a consignment basis and taking place
within each Party's pro rata share of the Company's manufacturing
capacity. However, the quantity and specifications of each device
requested must meet the Company's manufacturability requirements as
defined by the General Manager of the Company.
(f) The New Products for non wafer fab listed in Appendix A will be sold
exclusively to the Parties or their affiliates. However, the Company
may sell such New Products to third parties if the Board agrees such
sales are in the best interests of the Company.
13 JOINT VENTURE CONTRACT
8.02 Distribution and Sales - Wafer Fab Products
(a) The Wafer Fab Products listed in Appendix A will be sold exclusively
to the parties or their affiliates. However, the Company may sell
such New Products on the open market if the Board agrees such sales
are in the best interests of the Company.
(b) For the first three years of operation of the Wafer Fab, the pricing
for wafer fab products will be set at the lower of (1) prices that
are calculated to generate a return on invested equity equal to the
weighed average annual interest rate of borrowing of the Company as
determined by the Board at the end of each fiscal year plus 6% or
(2) the cost at which such products could be purchased from an
unrelated third party in an arm's-length transaction. Thereafter,
pricing will be set at a level that generates a return on invested
equity equal to the weighed average annual interest rate of
borrowing of the Company as determined by the Board at the end of
each fiscal year plus 6%.
(c) Each party will have the right to purchase Wafer Fab Products from
the Company in proportion to their respective equity interests
therein. In order to exercise such right, each party will commit at
least one year in advance to purchase specified amounts of Wafer Fab
Products. If a party fails to purchase any of its committed amount,
then it shall pay the Company an underutilization charge as defined
in the Board Resolution dated May 16, 2002. In addition, once a
party makes a commitment to purchase a given amount of Wafter Fab
Products, it may not reduce such amount in any subsequent year,
except if (a) such reduction is caused by the exercise by either of
the other parties of its right to regain its share of the total
production capacity as set out in Section 8.02d, or (b) either of
the other parties agrees to take over the reduced amount.
(d) If in any year a party does not commit to purchase all the Wafer Fab
Products it is entitled to purchase (such party a "Declining
Party"), each of the other parties will have the right to commit to
purchase a pro rata portion (based on such party's registered
capital in the Company, calculated for such purpose not taking into
account the equity owned by the Declining Party) of such New
Products. A Declining Party may upon one year's advance notice
regain its share of production.
(e) the Company shall increase its production capacity to satisfy the
demands of the parties for the Wafer Fab Products. If total demand
exceeds the production capacity of the Company, the parties agree
that the Company will raise funds, through additional pro rata
capital contributions or loans, to expand its production capacity.
(f) No party or any of its affiliates may resell to any third party
wafers produced by the Company utilizing the design of any other
party. However, a party and any of its affiliates may sell finished
products utilizing wafers produced by the Company.
14 JOINT VENTURE CONTRACT
ARTICLE 9 - BOARD OF DIRECTORS
9.01 Formation of the Board
(a) The Board shall consist of nine (9) directors, three (3) of whom
shall be appointed by Party A, one (1) of whom shall be appointed by
Party B and five (5) of whom shall be appointed by Party C. At the
time this Contract is executed and each time a director is
appointed, each Party shall notify in writing to the other Parties
the names of its appointee(s).
(b) In the event of any change in the ratio of ownership of the Parties
of the registered capital of the Company (including as a result of
an increase in the registered capital), the total number of
directors and the number of directors appointed by each Party shall
be changed as necessary to reflect such change. The Board may by its
decision increase or decrease the number of directors from time to
time, subject to the requirements of PRC law.
(c) Each director shall be appointed for a term of four (4) years and
may serve consecutive terms if reappointed by the Party originally
appointing him. A director shall serve and may be removed at the
pleasure of the Party which appointed him. If a seat on the Board is
vacated by the retirement, resignation, illness, disability or death
of a director or by the removal of such director by the Party which
originally appointed him, the Party which originally appointed such
director shall appoint a successor to serve out such director's
term.
(d) A director selected by Party C shall serve as the Chairman of the
Board and a director selected by Party A shall serve as Vice
Chairman of the Board. The Chairman of the Board shall be the legal
representative of the Company. Whenever the Chairman of the Board is
unable to perform his responsibilities for any reason, another
director as designated by the Chairman may temporarily represent
him. The Chairman of the Board shall exercise his authority within
the limits prescribed by the Board and may not under any
circumstances contractually bind the Company or otherwise take any
action on behalf of the Company without prior approval of the Board.
(e) Subject to a decision by the Board, the Company shall indemnify the
director against all claims and liabilities incurred by reason of
acting as a director of the Company, except if incurred as a result
of willful misconduct, gross negligence or violations of criminal
laws.
9.02 Powers of the Board
(a) The Board shall be the highest authority of the Company.
(b) Resolutions involving the following matters may be adopted at a duly
constituted and convened meeting of the Board only upon the
unanimous affirmative vote of each and every director of the Board
voting in person, by telephone, video conference or by proxy at such
meeting:
(i) amendment of the Articles of Association;
(ii) merger of the Company with another economic
organization;
15 JOINT VENTURE CONTRACT
(iii) suspension or dissolution of the Company; and
(iv) increase, decrease or assignment of the registered
capital of the Company.
(c) All other issues that require a resolution by the Board may be
adopted at a duly convened meeting of the Board, and such resolution
may be adopted only by the affirmative vote of only a simple
majority of the directors present at such meeting in person or by
telephone, video conference or proxy.
(d) Meetings of the Board shall be attended by at least one director
from each Party or his proxy, and will be scheduled to ensure to the
maximum extent possible, the convenient participation of the
directors. If a Party is not represented at a meeting it will be
rescheduled as soon as possible to ensure the participation of
directors from all the Parties, within a maximum of sixty (60) days.
After sixty (60) days, the rescheduled meeting may take place if any
six (6) directors participate. If a Board Meeting is held in
accordance with this section, the Parties in attendance shall orally
notify the non-attending Party about the contents and decisions of
the meeting on the day of the meeting, then fax a copy of the
minutes of the meeting to the non-attending Party within seven (7)
days. The non-attending Party may offer opinions and suggestions.
9.03 Meetings
(a) Meetings of the Board shall be held at least once each year.
Meetings shall be held at the registered address of the Company or
such other address in China or abroad as is designated by the Board.
Meetings may be attended by directors in person or by telephone,
video conference or proxy.
(b) The Chairman of the Board shall set the agenda and be responsible
for convening and presiding over Board meetings.
(c) Upon the written request of three (3) or more of the directors of
the Company specifying the matters to be discussed, the Chairman of
the Board shall within twenty-one (21) days convene an interim
meeting of the Board. The Chairman, or in his absence another
director as designated by the Chairman or Party C, shall decide on
the timing and location of such interim meetings.
(d) In order to convene a meeting of the Board, the Chairman shall send
written notice to each director at least thirty (30) days prior to
the meeting. Such notice shall include a detailed agenda of matters
to be discussed at the meeting and all reports, documents and other
materials relevant or necessary for adequate and informed
consideration of each matter on such agenda. All such notices of
meetings, detailed agendas and relevant or necessary reports,
documents and other materials shall be written in English and
Chinese. Notice of any meeting of the Board may be waived by consent
of all directors attending the meeting in person or by proxy.
(e) Subject to Article 9.02(d) above, six (6) of the directors present
in person or by proxy shall constitute a quorum which shall be
necessary for the conduct of
16 JOINT VENTURE CONTRACT
business at any meeting of the Board. Except as provided in Article
9.02(d), if at any properly convened meeting, no quorum is
constituted because less than two-thirds of the directors are
present in person or by proxy, the Chairman may call another meeting
with seven (7) days' notice. Any director absent from a meeting
without giving a reason therefor and without having appointed a
proxy shall be considered to have abstained from voting and shall be
considered as present for purposes of determining a quorum.
Excluding those directors who shall be considered to have abstained
from voting, resolutions other than those listed in Article 9.02(b)
hereof shall be valid if passed by more than half of the directors
present.
(f) If a Board member is unable to participate in a Board meeting, he
may issue a proxy and entrust a representative to participate in the
meeting on his behalf. Unless otherwise provided in the proxy, the
representative so entrusted shall have the same rights and powers as
the Board member. One person may represent more than one director by
proxy. Each Party shall cause its appointed directors to attend
Board meetings either in person or by proxy.
(g) The Board will cause complete and accurate minutes to be kept of all
meetings of the Board, together with copies of notices of the
meetings, in English and Chinese. Minutes of all meetings of the
Board shall be distributed to all the directors as soon as
practicable after each meeting but not later than thirty (30) days
from the date of such meeting. Any director who wishes to propose
any amendment or addition thereto shall submit the same in writing
to the Chairman and the Vice Chairman within two (2) weeks after
receipt of the proposed minutes. The minutes shall be finalized by
the Chairman and Vice Chairman.
(h) Any action requiring the unanimous vote of the directors of the
Board may be taken without a meeting if all members of the Board
consent in writing to such action. Any action requiring a majority
vote of the directors may be taken without a meeting if a majority
of the members of the Board consent in writing to such action. Such
written consents shall be filed with the minutes of the Board
proceedings and shall have the same force and effect as a vote taken
by members physically present.
(i) Members of the Board shall serve in such capacity without any
remuneration, but all reasonable costs incurred by a director in the
performance of his duties as a member of the Board shall be borne by
the Party which appointed the director.
ARTICLE 10 - OPERATION AND MANAGEMENT
10.01 Management Organization
The Company shall adopt a management system under which the General
Manager shall be responsible to and under the leadership of the Board.
10.02 General Manager
17 JOINT VENTURE CONTRACT
(a) The General Manager shall be an individual of high professional
qualifications and experience. The General Manager shall be
nominated by Party C and appointed by the Board of Directors. The
General Manager shall be employed pursuant to such terms as shall be
set out in an offering letter issued by the Board of Directors and
an employment contract with the Company. If the General Manager is
removed or cannot serve in such capacity due to retirement,
resignation, illness, disability or death, a successor shall be
nominated and appointed in the same manner as the original
appointee.
(b) The General Manager shall be in charge of the day-to-day operation
and management of the Company, shall be responsible to the Board and
shall carry out all matters entrusted by the Board. In particular,
but without limiting the generality of the foregoing, the General
Manager shall have the following responsibilities:
(i) perform all pertinent obligations set forth in this
Contract and the Articles of Association, as well as
resolutions adopted by the Board;
(ii) formulate a comprehensive organizational structure and
management system for consideration and approval by the
Board;
(iii) appoint and dismiss managerial staff (both Chinese and
expatriate) in charge of various departments, and their
subordinates;
(iv) formulate, and submit to the Board for adoption, Company
policies, rules and regulations, define and designate
departmental job responsibilities, and direct and
supervise departmental activities;
(v) submit to the Board for review and approval business
plans, annual and quarterly budgets, forecast plans and
reports;
(vi) formulate and implement personnel training programs,
including apprenticeships and graduate training schemes;
(vii) manage external relations and sign economic contracts
and other corporate documents as authorized by the
Board; and
(viii) handle all other major issues as authorized and directed
by the Board.
(c) The General Manager shall perform his or her duties on a full-time
basis and shall not hold any operation or management related posts
concurrently with other enterprises.
(d) The General Manager shall not be required to indemnify the Company
for any acts performed in his or her official capacity (but the
Company shall indemnify Third Parties for losses suffered as a
result therefrom if liability exists by the Company), except for
such acts which constitute willful misconduct, gross negligence or
violations of criminal laws.
10.03 Deputy General Manager
18 JOINT VENTURE CONTRACT
(a) The Deputy General Manager shall be nominated by Party A and
appointed by the Board of Directors. The Deputy General Manager
shall assist the General Manager in the day-to-day operation and
management of the Company.
(b) The Deputy General Manager shall perform his or her duties on a
full-time basis and shall not hold any operation or management
related posts concurrently with other enterprises.
(c) The Deputy General Manager shall not be required to indemnify the
Company for any acts performed in his or her official capacity (but
the Company shall indemnify Third Parties for losses suffered as a
result therefrom if liability exists by the Company), except for
such acts which constitute willful misconduct, gross negligence or
violations of criminal laws.
ARTICLE 11 - SITE
11.01 Land Use Rights
(a) The Company has acquired the land use rights for the Site pursuant
to the Land Use Rights Grant Contract and other relevant legal
documents. The Company's land use rights of the Site and its
ownership of the buildings and structures on the Site are evidenced
by several Land Use Rights Certificates and Real Estate Certificates
or equivalent documents issued by the relevant Chinese government
authorities in the name of the Company.
11.02 Environmental Matters
(a) The Company shall strictly comply with all applicable environmental
laws and regulations of the PRC in its operation activities.
(b) Each of the Parties and the Company shall have the right to have the
Site tested in accordance with ON's "Due Diligence Environmental
Policy" and the Site must pass such test.
(c) The Company will participate in and cooperate with ON's audit
program, in which facilities are inspected on a periodic basis for
compliance with environmental, safety, and health laws and
regulations. Any such audit is subject to prior notice from Party C
and shall be coordinated and scheduled by the Company and Party C.
The Company must provide responses to any audit recommendations and
complete corrective action.
ARTICLE 12 - MATERIALS, EQUIPMENT AND SERVICES
12.01 Sources of Supply
(a) The Company shall have the right to import materials and equipment
not available in China in the qualities and quantities deemed
necessary by the General Manager, except that items requiring import
licenses shall be handled in accordance with the relevant import
licensing regulations of China.
(b) Unless otherwise required by Chinese legal regulations, the Company
shall have the right to appoint foreign architects, consultants,
engineers and
19 JOINT VENTURE CONTRACT
contractors to undertake relevant work when, in the opinion of the
General Manager, there are no Chinese units or individuals qualified
or available to undertake such work.
12.02 Party A Services
Party A shall provide to the Company certain services and facilities
required for the Company's operation, pursuant to the terms and conditions
of the Services Contract.
12.03 Machinery and Equipment
The Company may purchase from Party C or its Affiliates machinery and
equipment. The purchase price will be agreed upon by the Board.
ARTICLE 13 - LABOR MANAGEMENT
13.01 Governing Principle
Matters relating to the recruitment, employment, dismissal, resignation,
wages and welfare of the staff and workers of the Company shall be handled
in accordance with the Labor Law of the People's Republic of China (the
"Labor Law") and related legislation. The Company shall have autonomy in
determining its employment policies and related matters in accordance with
Chinese legal regulations applicable to foreign invested enterprises. The
Company shall seek to deal directly with its employees, without any
external intermediary parties, and will cause the adoption of such
personnel policies and practices as appropriate in order to reasonably
achieve such results. The Company shall establish personnel practices that
fairly reward employees for services rendered in a manner consistent with
common business practices in their location of employment.
13.02 Working Personnel
Working Personnel shall be employed by the Company in accordance with the
terms of individual employment contracts entered into between the Company
and individual Working Personnel or relevant agreements entered into
between the Company and Party A. The standard individual employment
contract shall be filed with the local labor department.
13.03 Management Personnel
Management Personnel shall be employed by the Company in accordance with
the terms of individual employment contracts or the terms of relevant
agreements between the Company and Party A. Expatriate personnel
(including those from the regions of Hong Kong, Macau and Taiwan) shall
receive a salary and benefits commensurate with those provided to
expatriate personnel employed by other foreign investment enterprises of a
similar nature in China.
13.04 Conformity with Labor Protection
20 JOINT VENTURE CONTRACT
The Company shall conform to rules and regulations of the Chinese
government concerning labor protection and ensure safe and civilized
production. Labor insurance for the Working Personnel of the Company shall
be handled in accordance with individual employment contracts and the
relevant regulations of the Chinese government.
13.05 Number of Employees
The qualifications and number of employees shall be determined in
accordance with the operating needs of the Company. The Company shall
refer to the guidelines provided by Party C as to staffing experience in
similar types of facilities in other countries.
13.06 Employee Examination and Recruitment
(a) The Company shall observe the Labor Law, labor regulations and other
relevant regulations and the Company shall have autonomy in
determining its employment policies and relevant matters.
(b) Employees will be selected from candidates for employment according
to their professional qualifications and work experience. Each
Working Personnel may be examined and interviewed by the General
Manager or his designated representative prior to commencement of
employment by the Company. The General Manager shall have the
absolute right to decide, on behalf of the Company, whether to
employ any such person. All candidates hired by the Company must
complete satisfactorily a probationary period of employment before
they will be officially considered permanent employees of the
Company.
ARTICLE 14 - FINANCIAL AFFAIRS AND ACCOUNTING
14.01 Accounting System
(a) The Financial Controller of the Company, under the leadership of the
General Manager, shall be responsible for the financial management
of the Company.
(b) The General Manager and the Financial Controller shall prepare the
accounting system and procedures in accordance with the relevant
regulations. The accounting system and procedures to be adopted by
the Company shall be submitted to the Board for approval. Once
approved by the Board, the accounting system and procedures shall be
filed with the department in charge of the Company and with the
relevant local department of finance and the tax authorities for the
record. The accounting system and procedures approved by the Board
shall to the maximum extent possible comport with the accounting
requirements of Party C.
(c) The Company shall adopt Renminbi as its bookkeeping base currency,
but may also adopt the United States Dollar as a supplementary
bookkeeping currency.
21 JOINT VENTURE CONTRACT
(d) All accounting records, vouchers, books and statements of the
Company shall be made and kept in Chinese. All accounting statements
of the Company shall also be made and kept in English.
(e) For the purposes of preparing the Company's accounts and statements,
calculating declared dividends to be distributed to the Parties, and
for any other purposes where it may be necessary to effect a
currency conversion, such conversion shall be in accordance with the
median rate for buying and selling announced by the People's Bank of
China, or other rate recognized by the Chinese government, on the
date of actual receipt or payment.
14.02 Financial Reports
(a) The Company shall furnish to the Parties financial reports (in
Chinese and English) on at least a monthly basis so that they may
continuously be informed about the Company's performance.
(b) The Company shall submit to the Parties an annual financial report
(which shall include an audited profit and loss statement and
balance sheet for the fiscal year) within one (1) month after the
end of the fiscal year, together with an audit report from the
Company's auditor.
14.03 Audits
(a) An independent accountant registered in China shall be engaged as
the Company's auditor to examine and verify the annual financial
report, investment certificates to be issued to the Parties,
financial reports on the liquidation of the Company and other
financial documents as required by the Board.
(b) Each of the parties shall have the right to inspect, audit, and
copy, from time to time, the books and other financial records and
documents of the Company at its own expense. The Party wishing to
exercise its right to audit shall be free to use its own internal
auditors to perform said audit, if it so chooses. Said internal
auditors shall also have the right to audit the Company's system of
internal control and the Company's compliance with the Code of
Conduct approved by the Company. The audit of these systems may
result in recommendations to management. Management shall be
required to provide responses to the recommendations and complete
corrective action. Audit reports, consisting of an introduction,
conclusion, recommendations, and responses will be issued to the
Company and the Parties.
(c) Each Party may, at its own expense, appoint an accountant (which may
be either an accountant registered abroad or registered in China) to
audit the accounts of the Company on behalf of such Party.
Reasonable access to the Company's financial records shall be given
to such auditor and such auditor shall keep confidential all
documents examined while conducting audits.
14.04 Bank Accounts and Foreign Exchange Control
22 JOINT VENTURE CONTRACT
(a) The Company shall open foreign exchange and Renminbi bank accounts
at authorized banks in China and may also open foreign exchange
account(s) outside China with the approval of SAFE for the
furtherance of its business purposes.
(b) The Company's foreign exchange transactions shall be handled in
accordance with relevant Chinese regulations relating to foreign
exchange control.
14.05 Foreign Exchange Balance
(a) The Company shall be responsible to maintain a balance in its
foreign exchange receipts and expenditures through the sale of its
products and services and through other methods permitted under the
laws of China.
(b) If there is a foreign exchange deficiency, the Board will consider
various plans and alternatives to balance foreign exchange receipts
and expenditures, which, subject to obtaining the relevant
government approvals, may include all means permitted under the
relevant regulations, including but not limited to export of
domestically produced products and, when permitted by law, borrowing
from foreign exchange banks.
(c) All costs incurred in converting Renminbi to foreign exchange
required for the Company's operations shall be treated as operating
expenses of the Company.
(d) Liquid funds in the Company's foreign exchange account shall be used
in the following order of priority:
(i) payments of principal and interest on foreign exchange
loans taken out by the Company from Third Parties;
(ii) payment for imported materials and equipment;
(iii) payment for imported services;
(iv) payments due under the Technology License Contract;
(v) payment of the Company's expatriate staff salaries;
(vi) payment of principal and interest on foreign exchange
loans and advances provided by the Parties or
Affiliates;
(vii) maintenance of foreign currency reserves determined by
the Board of Directors;
(viii) remittance of profits to Party B and Party C; and
(ix) payment of profits to Party A.
(e) Upon government approval, the Company may source components and
equipment from local suppliers for the Parties' Affiliates inside
and outside China.
23 JOINT VENTURE CONTRACT
14.06 Fiscal Year
The Company shall adopt the calendar year as its fiscal year, which shall
begin on January 1 and end on December 31 of the same year, except that
the first fiscal year of the Company shall commence on the date that the
Company is granted its Business License and shall end on the immediately
succeeding December 31.
14.07 Profits Distribution
(a) After the payment of income tax by the Company, the Board will
determine the annual allocations from after-tax net profits to the
reserve fund and expansion fund of the Company and the bonus and
welfare fund for the workers and staff members. The sum of the
annual allocations to the three funds shall be determined by the
Board.
(b) The Board shall once every year by a formally adopted resolution
decide the amount of after-tax net profit of the Company (after the
deduction of the allocations to the three funds mentioned in
paragraph (a) above) to be retained in the Company for expanding the
production and operation of the Company and the amount to be
distributed to the Parties in proportion to their respective shares
in the registered capital.
(c) If the Company carries losses from previous years, the after-tax net
profits of the current year shall first be used to cover the losses
after deductions for the three funds mentioned in 14.07(a). No
profit shall be distributed unless the deficit from the previous
years is made up. Profits retained by the Company and carried over
from the previous years may be distributed together with the
distributable profits of the current year, or after the deficit of
the current year is made up therefrom.
(d) When the Company has foreign currency available for profit
distribution, Party B and Party C will have a priority right to
receive their respective shares of the distributable profit in
foreign exchange.
ARTICLE 15 - TAXATION AND INSURANCE
15.01 Income Tax, Customs Duties and Other Taxes
(a) The Company shall pay tax under the relevant tax laws of China,
subject to any further tax holidays, waivers, exemptions, or
exclusions granted to the Company from time to time by any local,
regional or national tax authorities.
(b) No later than six (6) months before the expiration of the
preferential income tax treatment currently enjoyed by the Company,
the Company may submit an application for confirmation of the
Company's status as a Technologically Advanced Enterprise and
Export-oriented Enterprise in accordance with the Implementing
Measures of the Ministry of Foreign Trade and Economic Cooperation
on the Confirmation and Examination of Export-Oriented and
Technologically Advanced Enterprises with Foreign Investment and
other relevant regulations. Upon receiving such confirmation, the
Company shall be
24 JOINT VENTURE CONTRACT
entitled to all preferential tax treatment granted to such
enterprise under PRC law.
(c) The Chinese and expatriate employees of the Company shall pay tax on
their individual incomes in accordance with the relevant provisions
of the tax laws of China.
15.02 Insurance
(a) The Company shall, at its own cost and expense, at all times take
out and maintain full and adequate insurance for the Company against
loss or damage by fire and such other risks as are customarily
insured against.
(b) The property, transportation and other items of insurance of the
Company will be denominated in Chinese and foreign currencies, as
appropriate. The types and amounts of insurance coverage shall be
determined by the General Manager.
(c) The Company shall take out the required insurance from the People's
Insurance Company of China or any other insurance company authorized
to do business in China.
ARTICLE 16 - CONFIDENTIALITY
16.01 Confidentiality
(a) Prior to and during the term of this Contract, each Party has
disclosed or may disclose confidential and proprietary information
to the other Parties. In addition, the Parties may, during the term
of this Contract, obtain confidential and proprietary information of
the Company in connection with the operation of the Company. Each of
the Parties receiving such information shall, during the term of
this Contract and for three (3) years thereafter:
(i) maintain the confidentiality of such information; and
(ii) not disclose it to any person or entity, except to their
employees who need to know such information to perform
their responsibilities.
(b) The provisions of paragraph (a) above shall not apply to information
that:
(i) can be shown to be known by the receiving Party by
written records made prior to disclosure by the
disclosing Party;
(ii) is or becomes public knowledge otherwise than through
the receiving Party's breach of this Contract; or
(iii) was obtained by the receiving Party from a Third Party
having no obligation of confidentiality with respect to
such information.
(c) If required by Party B or Party C, the Company shall execute a
separate confidentiality agreement with provisions similar to those
in paragraphs (a), (b) and (c) above with respect to confidential
and proprietary information
25 JOINT VENTURE CONTRACT
obtained by the Company from Party B or Party C, as the case may be,
or their respective Affiliates.
(d) Each of the Parties and the Company shall formulate rules and
regulations to cause its directors, senior staff, and other
employees, and those of their Affiliates also to comply with the
confidentiality obligation set forth in this Article 16.
(e) The technology and any other technical information licensed or
provided in any way by Party B, Party C or their Affiliates to the
Company or otherwise acquired or developed by the Company shall be
used by the Company only in the Plant for the production of Joint
Venture Products.
(f) The Company shall be liable for damages accrued to any Party as a
result of a breach of any provision of this Article 16 by the
Company, which damages shall be determined in accordance with the
relevant provisions of the contract law of China. The payment of
damages by the Company to any Party shall be without prejudice to
any right or rights of action or other remedies accrued to such
Party at the date of such breach.
(g) This Article 16 and the obligations and benefits hereunder shall
survive for three (3) years after the expiration or termination of
this Contract, notwithstanding the termination, dissolution or
liquidation of the Company.
(h) Notwithstanding the foregoing provisions of this Article 16, each of
the Parties shall be permitted to make any disclosure required by
applicable law.
ARTICLE 17 - JOINT VENTURE TERM
17.01 Joint Venture Term
The Joint Venture Term established under this Contract shall be fifty (50)
years, commencing on March 28, 1995.
17.02 Extension of the Joint Venture Term
If the Board unanimously approves the extension of the Joint Venture Term,
the Company shall apply to the Examination and Approval Authority for
approval no less than six (6) months prior to the expiration of the Joint
Venture Term. The Joint Venture Term may be extended only upon approval by
the Examination and Approval Authority.
ARTICLE 18 - TERMINATION AND LIQUIDATION
18.01 Termination
(a) This Contract shall terminate upon the expiration of the Joint
Venture Term set forth in Article 17.01 hereof unless extended
pursuant to Article 17.02 hereof.
26 JOINT VENTURE CONTRACT
(b) This Contract may be terminated at any time by the written agreement
of the Parties and after obtaining approval from the relevant
Chinese government authorities.
(c) This Contract may be terminated by the written notice of a Party to
the other Parties of an intention to terminate this Contract,
followed by a vote of the Board to terminate this Contract pursuant
to the procedure set forth in paragraph (d) below and after
obtaining approval from the relevant Chinese government authorities,
if:
(i) any other Party materially breaches this Contract
(except for a breach involving capital contributions per
5.04(b)) or violates the Articles of Association causing
the Company's inability to continue operating or
otherwise undermining the desired objectives of the
Parties, and such breach or violation is not cured
within three (3) months of written notice to the
breaching Party;
(ii) the Technology License Contract or any other technology
contract or the Land Use Rights Contract is materially
breached by the Company;
(iii) the Services Contract is materially breached by Party A
causing the Company's inability to continue operating or
otherwise undermining the desired objectives of the
Parties, (in these cases only Party B and Party C may
terminate this Contract) or the Services Contract is
materially breached by the Company causing the Company's
inability to continue operating or otherwise undermining
the desired objectives of the Parties, (in these cases
only Party A may terminate this Contract);
(iv) the Technology License Contract is materially breached
by the licensor thereunder (in this case only the
Parties which are not the licensor or Affiliates of such
licensor may terminate this Contract);
(v) the Company or any Party becomes bankrupt, is the
subject of proceedings for liquidation or dissolution,
ceases to carry on business or becomes unable to pay its
debts as they become due;
(vi) the Company qualifies but is unable to secure or retain
the appropriate certificate from the Examination and
Approval Authorities granting the Company status as a
Technologically Advanced Enterprise in an economic
development area or as a Technologically Intensive or
Knowledge Intensive Manufacturing Foreign Investment
Enterprise and qualifying the Company for the 15%
regular tax rate;
(vii) the Company is not allowed to import raw materials and
equipment which it deems necessary to carry out its
operations.
(viii) under the requirements specified in the relevant Chinese
legal regulations, the Company is qualified but unable
to obtain or retain duty and tax exemption on imported
production equipment, spare parts, production tools,
construction and production materials, and other
27 JOINT VENTURE CONTRACT
necessary goods and "bonded" treatment on the imported
raw materials for the Company's normal production use or
is unable to obtain or retain approval of bonded
factory, bonded manufacturing area, or bonded warehouse
status when the import/export volume of the Company
meets the requirements specified in the relevant Chinese
regulations.
(ix) any other Party has failed to provide its contribution
to the registered capital of the Company on or before
the expiration of the time period stipulated in Article
5.04(b) or 5.08 hereof;
(x) any other Party transfers its share of the registered
capital in the Company in violation of the provisions of
this Contract;
(xi) the conditions or consequences of Force Majeure (as
hereinafter defined in Article 20) significantly
interfere with the normal functioning of the Company for
a period in excess of six (6) months causing the
Company's inability to continue operating or otherwise
undermines the desired objectives of the Parties, and
the Parties have been unable to find an equitable
solution pursuant to Article 21 hereof;
(xii) if the Board determines that the Company is unable
obtain its desired objectives such as quantity, quality,
cost, rate of production, supply of regional market
preferences or requirements, delivery needs or any other
objective;
(xiii) if market conditions change such that the Board
determines that the Company may no longer sell Joint
Venture Products on a competitive basis;
(xiv) the Parties cannot implement the economic adjustment set
forth in Article 22.02.
(d) In the event that any Party gives notice pursuant to Article
18.01(c) hereof of a desire to terminate this Contract, the Parties
shall within a two (2)-month period after such notice is given
conduct negotiations and endeavor to resolve the situation which
resulted in the giving of such notice. In the event matters are not
resolved to the satisfaction of all the Parties within two (2)
months of such notice or any non-notifying Party definitely refuses
to commence negotiations within the period stated above, each Party
shall cause its appointed directors to vote to terminate this
Contract, and the Board shall submit a termination application to
the Examination and Approval Authority for approval.
(e) For purposes of this Article 18, the "date of termination" shall be
(i) the date of expiration of the Joint Venture Term, if the
termination is effected pursuant to paragraph (a) above; (ii) the
date of the written agreement of the Parties, if the termination is
effected pursuant to paragraph (b) above; or (iii) the date that the
Board votes to terminate this Contract, if the termination is
effected pursuant to paragraph (c) above.
28 JOINT VENTURE CONTRACT
18.02 Buy-out Options
(a) In the event that any Party gives notice pursuant to Article
18.01(c) hereof of a desire to terminate this Contract, the other
Parties (except for the Party in breach or is bankrupt or insolvent)
shall have the right to purchase the equity interest of such Party
in proportion to their respective interests in the registered
capital. A Party that wishes to exercise such buy-out option shall
notify the other Parties in writing of its decision no later than
thirty (30) days after the end of the two-month negotiation period
referred to in Article 18.01(d).
(b) In the event that this Contract is terminated pursuant to Article
18.01(a) or 18.01(b) hereof, any Party shall have the option to
purchase the equity interest of the other Parties. A Party that
wishes to exercise such buy-out option shall notify the other
Parties in writing of its decision no later than thirty (30) days
after the date of termination.
(c) Absent any buy-out notice, the Parties shall liquidate the Company
in accordance with applicable law and Article 18.03 hereof.
(d) In the event a buy-out option is exercised, the Parties shall within
two (2) weeks of receipt of the buy-out notice jointly appoint one
Sino-foreign joint venture accounting or appraisal firm qualified in
China to value the Company. All costs and expenses of such
accounting or appraisal firm shall be borne equally by Party A,
Party B and Party C.
(e) The valuation of the Company as provided in paragraph (d) above
shall be completed within four (4) weeks and shall be based on the
assumption that (i) the Company shall continue as a going concern
and (ii) subject to the terms and conditions of and to the extent
permitted by the relevant agreements, the Company shall enjoy the
right to use the Site and the Plant and the right to use the
technology and know-how provided to the Company by each of the
Parties.
(f) The purchase price shall be equal to an amount determined by
multiplying the value of the Company by the percentage of registered
capital then held by the selling Party.
(g) The purchase price shall be paid to the selling Party within sixty
(60) days after the later to occur of (i) the determination of such
purchase price and (ii) the receipt of any governmental approvals in
respect of the relevant purchase then required under applicable law.
If Party B or Party C is the selling Party, the purchase price shall
be paid in United States Dollars.
(h) Upon a buy-out pursuant to this Article 18.02, each Party agrees to
take (and to cause the Company and the Board to take) whatever
action may be necessary to consummate such buy-out, including but
not limited to (i) obtaining the approval of the Examination and
Approval Authority and all other necessary approvals, (ii) in the
case of a buy-out of Party A, taking all actions required to convert
the Company into a wholly foreign-owned enterprise, and (iii)
causing the Business License and registration records of the Company
to be changed or canceled with SAIC.
29 JOINT VENTURE CONTRACT
18.03 Liquidation
(a) If the Parties are required to liquidate the Company pursuant to
Article 18.02(c) hereof, or if the Parties otherwise agree that the
Company shall no longer operate as a going concern, then the Board
shall, within a period of thirty (30) days, appoint a liquidation
committee which shall have the power to represent the Company in all
legal matters. The liquidation committee shall value and liquidate
the Company's assets in accordance with the Foreign Investment
Enterprises Liquidation Procedures and other applicable Chinese law
and regulations and the principles set out herein.
(b) The liquidation committee shall consist of seven (7) members, of
which two (2) members shall be nominated by Party A, one (1) member
shall be nominated by Party B, and four (4) members including the
chairman of the liquidation committee shall be nominated by Party C.
Members of the liquidation committee may, but need not be, Board
directors or senior employees of the Company. When permitted by
Chinese law or regulations, each Party may also appoint professional
advisors to be members of or to assist the liquidation committee.
The Board shall report the formation of the liquidation committee to
the department in charge of the Company. In principle, the
liquidation committee shall resolve all issues by consensus. In the
event that consensus cannot be reached, matters shall be decided by
a majority vote of all members of the liquidation committee.
(c) The liquidation committee shall conduct a thorough examination of
the Company's assets and liabilities, on the basis of which it
shall, in accordance with the relevant provisions of this Contract,
develop a liquidation plan which, if approved by the Board, shall be
executed under the liquidation committee's supervision. The
liquidation plan shall provide that the Parties will have the right
to purchase any of the machinery and equipment and other facilities
on a priority basis. In the event that two or more Parties offer the
same terms and conditions for such purchases, competitive bidding
shall take place. If the Company is liquidated, ON shall have the
right to terminate the Technology License Contract and Party A shall
have the right to terminate the Services Contract so that these
contracts shall not be deemed to be assets of the Company.
(d) In developing and executing the liquidation plan, the liquidation
committee shall use every effort to obtain the highest possible
price in United States Dollars for the Company's assets.
(e) The liquidation expenses, including remuneration to members and
advisors to the liquidation committee, shall be paid out of the
Company's assets in priority to the claims of other creditors.
(f) After the liquidation of the Company's assets and the settlement of
all of its outstanding debts, the balance shall be divided and paid
over to Party A, Party B and Party C in proportion to their
respective shares of the registered capital of the Company.
30 JOINT VENTURE CONTRACT
(g) On completion of all liquidation procedures, the liquidation
committee shall submit a final report approved by an independent
accountant registered abroad or in China to the Examination and
Approval Authority, hand in the Business License to the original
registration authority and complete all other formalities for
canceling the Company's registration. Each of Party B and Party C
shall have the right to obtain copies of all of the Company's
accounting books and other documents at its own expense, but the
originals thereof shall be left in the care of Party A.
(h) Party A hereby agrees Party B and Party C shall have priority in
obtaining the foreign currency portion of the balance to be
distributed under paragraph (f) above.
18.04 Continuing Obligations
The obligations and benefits stipulated in the confidentiality provisions
of Article 16, in the provisions on settlement of disputes of Article 21
and in the provisions on termination and liquidation of this Article 18
shall survive the termination of this Contract with approval from the
relevant authorities of the PRC government and the termination,
dissolution or liquidation of the Company.
ARTICLE 19 - BREACH OF CONTRACT
19.01 Liability for Breach of Contract
In the event that a breach of contract committed by a Party to this
Contract results in the non-performance of or inability to fully perform
this Contract or its Appendices, the liabilities arising from the breach
of contract shall be borne by the Party in breach as provided in this
Contract and its Appendices. In the event that a breach of contract is
committed by more than one Party, each such Party shall bear its
individual share of the liabilities arising from the breach of contract.
19.02 Limitations on Liability
Notwithstanding the foregoing, and except for any liability arising under
Article 11 hereof, the aggregate liability of each Party under this
Contract shall not exceed such Party's investment in the registered
capital of the Company.
ARTICLE 20 - FORCE MAJEURE
20.01 Definition of Force Majeure
"Force Majeure" shall mean any event which is beyond the control of the
affected Party, and which is unforeseen, unavoidable or insurmountable,
and which arises after the Effective Date and which prevent total or
partial performance by such Party. Such events shall include earthquakes,
typhoons, flood, fire, war, failures of international or domestic
transportation, acts of government or public agencies, epidemics, civil
disturbances, strikes or any other events which cannot be foreseen,
prevented or controlled, including events which are accepted as Force
Majeure in general international commercial practice.
20.02 Consequences of Force Majeure
31 JOINT VENTURE CONTRACT
(a) If an event of Force Majeure occurs, a Party's contractual
obligations affected by such an event under this Contract shall be
suspended during the period of delay caused by the Force Majeure.
(b) The Party claiming Force Majeure shall promptly inform the other
Parties in writing and shall furnish the other Parties within
fifteen (15) days thereafter sufficient proof of the occurrence and
duration of such Force Majeure. The Party claiming Force Majeure
shall also use all reasonable endeavors to eliminate or mitigate the
effects of such Force Majeure.
(c) In the event of Force Majeure, the Parties shall immediately consult
with each other in order to find an equitable solution and shall use
all reasonable endeavours to minimize the consequences of such Force
Majeure.
ARTICLE 21 - SETTLEMENT OF DISPUTES
21.01 Friendly Consultations
In the event any dispute arises between the Parties out of or in relation
to this Contract, including any dispute regarding its breach, termination
or validity, the Parties shall attempt in the first instance to resolve
such dispute through friendly consultations.
21.02 Joint Conciliation
If the dispute has not been resolved by friendly consultations within
sixty (60) days after one Party has served written notice on the other
Party or Parties requesting the commencement of such consultations, then
the Parties shall attempt to reach a settlement through conciliation
conducted in Beijing in accordance with the Conciliation Rules of the
Beijing Conciliation Center of the China International Economic and Trade
Arbitration Commission. If the dispute is resolved through conciliation,
the Parties agree to enter into a written settlement contract.
21.03 Arbitration
If the dispute is not resolved pursuant to Article 21.02 within sixty (60)
days after conciliation proceedings have commenced, or if a Party fails to
comply with any settlement reached by conciliation conducted pursuant to
Article 21.02 within sixty (60) days after a settlement is reached, then
(a) any Party involved may submit the dispute for arbitration in
Stockholm at the Arbitration Institute of the Stockholm Chamber of
Commerce in accordance with the Arbitration Rules of that Institute
with instructions that the arbitration be conducted in English and
that the arbitrators may refer to both the English and Chinese texts
of this Joint Venture Contract;
(b) there shall be three (3) arbitrators all of whom shall be fluent in
English and Mandarin. Party A shall select one (1) arbitrator, and
Party B and Party C shall select one (1) arbitrator. The third
arbitrator shall be appointed by agreement between the arbitrators
selected by Party A, Party B and Party C, and such third arbitrator
shall serve as chairman of the panel;
32 JOINT VENTURE CONTRACT
(c) the arbitration award shall be final and binding on the Parties and
shall be enforced in accordance with its terms;
(d) the arbitration fee shall be borne by the losing party.
(e) each Party may require the other Parties to enter into a written
contract which sets forth the terms of the arbitration award.
21.04 Continuous Performance of Joint Venture Contract
In the course of the arbitration, this Contract shall be continuously
performed in accordance with its terms and the Articles of Association
except for the part which is under, or which is directly and substantially
affected by, the arbitration.
21.05 Enforceability of Award
Any award of the arbitrators shall be enforceable by any court having
jurisdiction over the Party against which the award has been rendered, or
wherever assets of the Party against which the award has been rendered can
be located, and such award shall be enforceable in accordance with the
"United Nations Convention on the Recognition and Enforcement of Foreign
Arbitral Awards (1958)" (except where reservations are made by the
People's Republic of China).
21.06 Jurisdiction of Chinese Courts
Any dispute arising under this Contract shall be settled in accordance
with this Article 21, except that either party may apply to the courts of
China to enforce an arbitration award rendered or contract executed in
accordance with this Article.
ARTICLE 22 - APPLICABLE LAW
22.01 Applicable Law
The formation, validity, interpretation and implementation of this
Contract shall be governed by the laws of the People's Republic of China
which are published and publicly available, but in the event that there is
no published and publicly available law in China governing a particular
matter relating to this Contract, reference shall be made to general
international commercial practices.
22.02 Economic Adjustment
If any Party's or the Company's economic benefits are adversely and
materially affected by the promulgation of any new laws, rules or
regulations of China or the amendment or interpretation of any existing
laws, rules or regulations of China after the signature date of this
Contract, or if the Company subsequently fails to continue to qualify for
preferential treatment, the Parties shall promptly consult with each other
and use their best endeavors to implement any adjustments necessary to
maintain each Party's and the Company's economic benefits derived from
this Contract on a basis no less favorable than the economic benefits it
would have derived if such laws, rules or regulations had not been
promulgated, amended or so interpreted. If the economic benefits approved
by the Parties following consultations cannot be obtained after such
adjustments are implemented, a Party may terminate this Contract under
Article 18.
33 JOINT VENTURE CONTRACT
22.03 Preferential Treatment
The Company and the Parties shall be entitled according to the law to any
tax, investment or other benefits or preferences that become available or
publicly known after the signing of this Contract and which are more
favorable than those set forth in this Contract.
22.04 Continuity of Contract
The Parties agree that in the event of the promulgation of any new laws,
rules or regulations of China, this Contract shall continue to be
performed in accordance with its terms to the largest extent permitted
under PRC law.
ARTICLE 23 - MISCELLANEOUS PROVISIONS
23.01 Non-Competition
Because the Company will be manufacturing components with commodity
characteristics, the Parties agree that Party A or Party C shall not,
directly or indirectly, through any other joint venture, manufacture in
China the Joint Venture Products including the New Products listed in
Appendix A that are being manufactured and to be manufactured by the
Company, unless the Company cannot meet demand for such products (whether
due to demands of quantity, quality, cost, rate of production, regional
market preferences or requirements, delivery needs or any other reason).
In order to strengthen their relationship with Party A, Party C and their
Affiliates have no present intention of producing the products in Appendix
A in China other than through the Company unless the Company cannot meet
demand for such products.
In order to strengthen its relationship with Party C, Party A is willing
to give Party C first right of refusal for Party A's future semi-conductor
projects. Party A shall give written notice to Party C describing such
project. Party C shall have sixty (60) days to either agree to participate
therein or to decline to participate and Party C shall be deemed to have
declined if it fails to respond in such time. If Party C declines to
participate, Party A may conduct such activities on its own or with other
parties on the terms described to Party C.
23.02 Waiver
To the extent permitted by Chinese law or regulations, failure or delay on
the part of any Party hereto to exercise a right, power or privilege under
this Contract and the Appendices hereto shall not operate as a waiver
thereof; nor shall any single or partial exercise of a right, power or
privilege preclude any other future exercise thereof.
23.03 Assignability
This Contract may not be assigned in whole or in part by any Party without
the prior written consent of each of the other Parties hereto and the
approval of the Examination and Approval Authority.
23.04 Binding Effect
34 JOINT VENTURE CONTRACT
This Contract is made for the benefit of each of the Parties and their
respective lawful successors and assignees and is legally binding on them.
This Contract may not be changed orally, but only by a written instrument
signed by each of the Parties and approved by the Examination and Approval
Authority.
23.05 Severability
Subject to the provisions of Article 22.02 hereof, the invalidity of any
provision of this Contract shall not affect the validity of any other
provision of this Contract.
23.06 Language
This Contract is executed in the Chinese language in five (5) originals
and in the English language in five (5) originals. Both language versions
shall be equally authentic.
23.07 Entire Agreement
This Contract and the Appendices hereto constitute the entire agreement
among Party A, Party B and Party C with respect to the subject matter of
this Contract and supersede all prior discussions, negotiations and
agreements among them. In the event of any conflict between the terms and
provisions of this Contract, the Articles of Association and the
Feasibility Study, the terms and provisions of this Contract shall
prevail.
23.08 Notices
Any notice or written communication provided for in this Contract by one
Party to the other Parties, including but not limited to any and all
offers, writings, or notices to be given hereunder, shall be made in
English or Chinese by facsimile, or by courier service delivered letter,
promptly transmitted or addressed to the appropriate Party. The date of
receipt of a notice or communication hereunder shall be deemed to be
fifteen (15) days after the letter is given to the courier service in the
case of a courier service delivered letter and one (1) working day after
dispatch of a facsimile if evidenced by a transmission report. All notices
and communications shall be sent to the appropriate address set forth
below, until the same is changed by notice given in writing to the other
Parties.
PARTY A:
Leshan Radio Company, Ltd.
27 West People's Road
Leshan, Sichuan Province 614000
People's Republic of China
Attention: Chairman
Facsimile No: 86-833-213-2060
PARTY B:
Motorola (China) Investment Limited
No. 108 Jian Guo Road
Chao Yang District
35 JOINT VENTURE CONTRACT
Beijing 100022
People's Republic of China
Attention: Corporate Law Department
Facsimile No: 86-10-6566-8449
PARTY C:
SCG (China) Holding Corporation
5005 East McDowell Road
Phoenix, Arizona 85008
U.S.A.
Attention: General Counsel
Facsimile No: 1-602-244-5500
The sending Party shall send confirmation to the other Parties by
telephone or facsimile at an appropriate time.
23.09 Appendices
The Appendices hereto listed below are made an integral part of this
Contract and are equally binding with these Articles 1 through 23.
List of Joint Venture Products (Appendix A)
Schedule of Capital Contributions (Appendix B)
23.10 Effectiveness
This Contract shall become effective on the Effective Date.
36 JOINT VENTURE CONTRACT
IN WITNESS WHEREOF, each of the Parties hereto have caused this Contract to be
executed by their duly authorized representatives on the date first set forth
above.
LESHAN RADIO COMPANY, LTD.
By: /s/ Pan Min-zhi
--------------------------
Name: Pan Min-Zhi
Title: Chairman of the Board
MOTOROLA (CHINA) INVESTMENT LIMITED
By: /s/ Larry Cheng
--------------------------
Name: Larry Cheng
Title: Authorized Representative
SCG (CHINA) HOLDING CORPORATION
By: /s/ Steve Hanson
--------------------------
Name: Steve Hanson
Title: President
37 JOINT VENTURE CONTRACT
APPENDIX A
LIST OF JOINT VENTURE PRODUCTS
Assembly Test Products
SOT23, SC59, SC88, SC75, SC89, SC70, SOD323, SOIC, SOD523, SOD723 and other
miniature surface mount semiconductor packages.
Wafer Fab Products
IC and Discrete wafers
A
APPENDIX B
SCHEDULE OF CAPITAL CONTRIBUTIONS
The total amount of the registered capital of the Company is US$101.86 million.
As of the date hereof, the Parties have paid in US$52,039,207. The specific
timing and amounts for each future installment payment by each Party shall be
determined by the decision of the Board of the Company.
B