Exhibit 10.8
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Agreement Concerning
Supply of Utilities,
Use of Welfare Facilities and
Management Services for Real Estate
Hyundai Electronics Industries Co., Ltd. ("HEI") and ChipPAC Korea, ("CPK")
hereby execute the Agreement concerning the supply of Utilities, use of welfare
facilities, and management services for real estate (hereinafter referred to as
"the Agreement") with the following conditions, pursuant to Article 9 of the
Business Transfer Agreement (hereinafter referred to as "the Business Transfer
Agreement") executed as of June 30, 1998 between the parties.
Article 1. Purpose
1. The purpose of the Agreement is to support CPK's success in the
semiconductor assembly business transferred from HEI under the Business
Transfer Agreement, by prescribing the rights and obligations between HEI
and CPK with respect to the supply of utilities, such as electric power,
water, heating and air conditioning, etc. ("Utilities") necessary for the
use of the real estate which CPK leased from HEI under the Lease Agreement
("Lease Agreement") executed on , 1998, the use of the welfare
facilities, such as cafeteria, etc. ("Welfare Facilities") and the
provision of management services accompanied with the use of the leased
real estate, such as the treatment of wastes, prevention of disasters, and
perimeter security, etc. ("the Management Services").
2. The details of the Utilities, Welfare Facilities, Management Services which
HEI supplies or provides CPK under the terms and conditions of the
Agreement shall be as set forth in Attachment 1 through Attachment 3.
Article 2. Standard for Calculating the Usage Fee
1. The usage fee ("the Usage Fee") which CPK shall pay HEI in consideration of
the provision of Utilities, Welfare Facilities and Management Services from
HEI under Article 1 above shall be decided in accordance with the
calculation standard, such as the unit price, etc. (hereinafter referred to
as "the Standard for Calculating the Usage Fee") as set forth in Attachment
1 through Attachment 3.
2. The Standard for Calculating the Usage Fee in Paragraph 1 above shall be
effective for one (1) year on a yearly basis and both parties shall consult
and adjust the Standard for Calculating the Usage Fee to be applied for the
following one (1) year, two (2) months prior to the expiration of the
effective period. In the event of a failure to adjust the Standard for
Calculating the Usage Fee between the parties, it shall be settled in
accordance with the methods as set forth in proviso of Article 13,
Paragraph 1. However, by the time the award of arbitration is made, the
Usage Fee shall be paid in
accordance with the Standard for Calculating the Usage Fee which applied
for the immediate preceding one (1) year. Upon the award of the
arbitration, it shall be settled according to the results thereof.
Article 3. Determination and Payment of the Monthly Usage Fee
1. Unless otherwise agreed by both parties, CPK shall submit the details of
the Utilities, Welfare Facilities and Management Services used for the
immediate preceding month by the 5th day (if it falls on a holiday, the
following day) of each month. HEI shall calculate CPK's Usage Fee for the
immediate preceding month in accordance with the Standard for Calculating
the Usage Fee based on the details above and then invoice CPK in writing by
the 8th day of the current month (if it is a holiday, the following day).
If CPK fails to submit the details of the use above by the 7th day of each
month, HEI may invoice after calculating the Usage Fee of CPK for the
immediate preceding month based on HEI's own data. However, if HEI raises
any objection over the contents of the details submitted by CPK or if CPK
raises any objection in the future with respect to the invoice for the
Usage fee calculated by HEI without the submission of the above details
from CPK, it shall be resolved through mutual consultation between the
parties. In the event of any change of the usage fee thereafter, it shall
be settled upon the payment of the Usage Fee for the month in which such
objection was raised.
2. CPK shall make fall payment of the Usage Fee to HEI in cash, within 15
days from the date of invoice from HEI under the foregoing Paragraph.
3. If CPK delays the whole or a part of the payment of the Usage Fee, CPK
shall pay HEI the default interest at the average default interest rate of
a general loan of general commercial banks for the delayed Usage Fee plus
the principal of the Usage Fee.
Article 4. Maintenance and Repair
HEI shall maintain and repair the relevant facilities and procure the necessary
personnel and expenses under its own responsibilities and at its own cost, for
the purpose of CPK's smooth use of the Utilities, Welfare Facilities and
Management Services, unless otherwise specified in the Lease Agreement or the
Standard for Calculating the Usage Fee.
Article 5. CPK's Obligations
With respect to the use of the Utilities, Welfare Facilities and Management
Services, CPK shall perform its obligations as a prudent custodian and comply
with the relevant laws and regulations, rules established by HEI in connection
with such Utilities, Welfare Facilities or Management Services and other
instructions of HEI.
Article 6. Transfer or Increase of Communication Related Facilities
1. In cases where HEI transfers or increases communication related
facilities upon the request of CPK, the expense needed therefor shall be
borne by CPK in accordance with (Attachment 3).
2. The transferred or increased communication related facilities in accordance
with the foregoing Paragraph shall be deemed to be changed by CPK under
Article 6 of the Lease Agreement.
Article 7. Suspension of the Performance of Obligations
1. In the case that CPK delays payment of the monthly Usage Fee under Article
3 two or more times, and a written notice from HEI granting a period of 15
days or more to make payment has been sent, if CPK fails to make full
payment within such period, HEI may suspend the whole or a part of the
supply of all services under the Agreement.
2. After HEI suspends the whole or a part of the supply of the services under
the Agreement, CPK shall not use the suspended Utilities, Welfare
Facilities and Management Services till the full payment of any and all
delayed Usage Fees.
The suspension of the supply of the services made by HEI in accordance with
Paragraph 1 above shall not constitute the non-performance of HEI's
obligations under the Lease Agreement and HEI shall not take responsibility
for any damages incurred on CPK due to the suspension of the supply of the
relevant services.
Article 8. Government Approval, etc.
In connection with the performance of the Agreement, if any approval, permit or
report to the government and other relevant authority is necessary, the relevant
party shall take the necessary measures under its own responsibility and at its
own expense.
Article 9. Duration and Termination of the Agreement, etc.
1. The Agreement shall be effective from the effective date of the Lease
Agreement to the expiration date of the Lease Agreement.
2. In cases where the other party commits a breach of any of its obligations
under this Agreement, in connection with the provision or use of Welfare
Facilities or Management Services, that is not remedied within sixty (60)
days from the giving of a written notice requiring said breach to be
remedied, the Agreement, to the extent of the relevant part,
shall be terminable forthwith by either party hereto. In cases where CPK
breaches its obligation to pay the Usage Fee as set forth in Article 7,
Paragraph 1, HEI may exercise both the rights of suspension of the supply
of services under Article 7, Paragraph 1 and the termination of the
Agreement under this Paragraph.
3. Notwithstanding Paragraph 2 above, unless otherwise agreed by both parties,
the termination of the Utilities parts in the Agreement shall not be
permitted, prior to the expiration of the Lease Agreement.
4. In cases where the period for the payment of the Usage Fee is less than one
(1) month to be settled at the time of the termination of the Agreement and
the Standard for Calculating Usage Fee is determined on a monthly basis,
the Usage Fee shall be calculated and paid on the number of days used.
5. With respect to the procedures for settlement prescribed in Paragraph 4
above, Article 3 shall apply mutatis mutandis.
Article 10. Compensation for Damage
In cases where a party causes damage to the other party by breaching its
obligations under the Agreement, by its intention or negligence, the breaching
party shall compensate the direct damages incurred on the other party.
However, with respect to the damages incurred on CPK in connection with the
power supply of HEI to CPK, HEI shall be exempted from any and all liabilities
unless it was caused by HEI's intention or gross negligence.
Article 11. Confidentiality
Each party shall not divulge to a third party any and all technical information,
trade secret and other business confidential matters of the other party obtained
in connection with the Agreement and the performance thereof for the duration of
the Agreement and three (3) years thereafter, without the prior written consent
of the other party.
Article 12. Force Majeure
In cases where a party is unable to perform its obligations under the Agreement
due to the amendment or abolishment of the relevant laws and regulations, acts
of God, fire, war, actions of the government, strike or other force majeure
events after the execution of the Agreement, it shall immediately report thereof
to the other party. While such force majeure event exists, a party shall not
take any responsibility for any non-performance of the Agreement against the
other party.
Article 13. Miscellaneous
1. The execution, performance and interpretation of the Agreement shall be
governed by the laws of the Republic of Korea. Any dispute arising from or
in relation to the Agreement shall be settled in the competent court of
Seoul District Court. However, in the case of a failure to adjust the
Standard for Calculating Usage Fee under Article 2, Paragraph 2 or in cases
where the parties fail to reach an agreement to determine the Usage Fee
under Article 3, Paragraph 1, it shall be resolved by the commercial
arbitration of the Korean Chamber of Commerce.
2. Any matters not specified in the Agreement shall be decided through mutual
agreement in accordance with the relevant laws and regulations and general
business practices.
3. Each party shall not transfer the whole or a part of its rights and
obligations under this Agreement nor cause a third party to act for its
rights and obligations, without the prior written consent of the other
party.
4. The terms and conditions of the Agreement may be revised by the written
agreement with affixed seals and names (or signatures) of both parties.
In Witness Whereof, the parties shall prepare the Agreement in duplicate, set
their names and seals thereof and keep each copy hereof respectively.
June 30, 1998
HEI: Hyundai Electronics Industries Co., Ltd.
Address: San 136-1, Ami-ri, Bubal-eub, Ichon-ku, Kyongki-do, 467-860,
Korea
Representative Director: Young Hwan Kim (seal)
CPK: ChipPAC Korea
San 136-1, Ami-ri, Bubal-eub, Ichon-ku, Kyongki-do, 467-860, Korea
Representative Director: ________________ (seal)
Officer's Certification
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I, Tony Lin, hereby represent that this English translation is a fair and
accurate translation.
By: /s/ Tony Lin
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Title: Chief Financial Officer
ChipPAC, Inc.
Utility Supply, Use of Welfare Facilities and Management Services for Real
Estate 1) Utility Supply
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(1) Scope: Electricity, Water Supply, Sewage & Waste Water, Steam etc
(2) Usage Fee
(Unit: Won)
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Item Unit Contract Price Calculation of Usage Fee
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Unit Price
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Electricity KWH monthly usage x 54 .U/price = KEPCO supply cost in of the month x 1.13
unit price (overhead, interest on facility value, etc)
/54 = /47.68 (KEPCO supply cost in Apr 98) x 1.13
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Water Water m* monthly usage x 183 1. Based on average actual cost
-house use m* unit price 2. Unit Price = water cost + purification cost
-industrial . purification cost = labor + depreciation + expenses
use + direct cost
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Sewage m* 773 1. Based on average actual cost
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Waste Water m* 741 2. Unit Price = labor + depreciation + expenses
+ direct cost
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Steam TON monthly usage x 24445 . Unit Price = gas price per liter x 80 + 7,551Won
unit price
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(3) Maintenance:
1) HEI to be responsible for maintenance/repair of utilities outside
A&T building
2) CPK to be responsible for maintenance/repair of utilities inside A&T
building
3) HEI shall not be responsible for damages or losses caused to CPK
unless intentional or by negligence.
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2) Use of Welfare Facilities
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(1) Scope: Canteen, Guest house, Company Newspaper, educational facility,
others
(2) Usage Fee
(Unit: Won)
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Item Contract Price Details of Contract Price
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Unit Price
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1) Welfare Canteen number of meal 2,000/cupon same price as for visitors
facilities coupon x u/price
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Vision21, Ami Art Hall, Fixed Cost 5,000,000/mon 1. Allocation of HEI's total cost as
Gym., swimming pool, per number of total CPK employees
shuttle bus 2. HEI total cost: labor,
depreciation, expenses
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Legal service Fixed Cost 100,000/mon Allocation of HEI's total cost as per
number of total CPK employees
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Civil affair service actual cost per service CPK employees personally pay for the
service.
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Wedding Hall 100,000/wedding same rate as for Hyundai subsidiaries
(personally pay 40,000KRW, CPK
supports 60,000KRW)
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Guest house as charged per use same rate as for Hyundai Elevator
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2) Parking Car Parking Fixed Cost 4,500,000/mon Allocation of HEI's total cost as per
number of CPK office workers
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3) commuter Bus for Ichon and Fixed Cost 18,400,000/mon Allocation of HEI's total cost as per
bus other cities number of CPK office workers
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4) Company HEI Newspapers Fixed Cost 1,000,000/mon @ 180/copy x 5,400 copies
publications
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5) Education Educational cost as charged per class direct cost per class x 1.4 ('96, '97
actual overhead, indirect, expenses,
etc)
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(3) Others
1) HEI employees Rental APT
: CPK employees can reside for the remaining term of contract
which was personally executed with HEI.
2) HEI employees Clinic
: CPK employees can use HEI clinic. Price is as per the guideline
set by Gov't.
3) Commuter Bus (not included in this Agreement)
: CPK and HEI agrees how to allocate the cost. CPK will
directly pay its portion to bus companies.
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3) Management Services for Real Estate
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(1) Scope: waste disposal, dangerous article warehouse, fire brigade,
guard, telecommunication facilities, road
(2) Usage Fee
1) Number of CPK employee in Ichon premise as of month end x 11,500
Won -- Number of A&T employees in May 98 x 11,500 Won = 24,679
thousand Won
2) Reference: Calculation Details per Item (per month)
(Unit : Won)
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Item Allocated by Estimates Remark
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1. Waste disposal Total 4,204,000
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general waste quantity of 2,163,000 Fixed cost based on wastes happened
designated waste wastes in the past
extinguishable waste
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street dust nbr of employees 900,000 Allocation of HEI's total cost as per
number of total CPK employees
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use of road quantity of water, 388,000 Allocation of HEI's total cost as per
waste water usage of water, waste water
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legal management quantity of wastes 753,000 labor + expenses
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2. Dangerous article chemicals, etc. quantity 141,000 depreciation cost of warehouse X CPK
warehouse area rate
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3. Fire Brigade rent area 684,000 (labor + expenses) x ratio of CPK
employees
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4. Guard and Reception nbr of employees 14,563,000 (direct cost + depreciation of
security system) x ratio of number
of CPK employees
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5. Telecommunication Total 4,883,000
facilities -----------------------------------------------------------------------------------------------------
tie line nbr of lines
Ichon - Seoul 149,000 HEI's total cost X ratio of nbr of
Ichon - overseas (excluding Sanghai) 1,998,000 CPK line
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Maintenance nbr of lines 2,500,000 HEI's total cost X ratio of nbr of
CPK line
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switch board/operator nbr of lines 236,000 HEI's total cost X ratio of nbr of
CPK line
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Grand Total 24,475,000
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* The following won't be included in the agreement.
- telephone (other than mobile/tie line): CPK to have a direct contract
with KT. HEI to allow CPK to use HEI's switching facilities.
- Mobile: CPK to change the name of subscriber from HEI to CPK, directly
pay to telephone company.
- Ichon-HECS, Ichon-Chung Joo tie line: HEI to change the name of
subscriber from HEI to CPK, directly pay to KT.
* Additional Cost: CPK to pay 8000KRW/line to HEI for expansion of tel
facilities, line move, increase of nbr of line, etc.
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II. Amendment Agreement
1. Additional items which are not included in the Original Agreement
. Contact parties: CPK (ChipPAC Korea)
HEI (Hyundai Electronics Industries)
. Scope of supply: HEI's supply of Cool water, CDA, Nitrogen to CPK
. Calculation method of the Usage Fee
Item Unit Contract Price Unit Price
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Cool water m/3/ Monthly usage x unit price 34 Won
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CDA m/3/ Monthly usage x unit price 4 Won
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Nitrogen m/3/ Monthly usage x unit price 42 Won
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* The same unit price was applied as in the Utility Supply Agreement.
2. Modification on the "Use of Welfare" part in the Original Agreement:
HEI's Intramural hospital
. Contract parties: CPK (ChipPAC Korea)
HEI (Hyundai Electronics Industries)
. Related Article in the Original Agreement
- HEI shall request a lump-sum payment to CPK for the medical
treatment fee on CPK's employees
- The medical treatment fee will be decided in accordance with the
Standard Fee set by the Government.
. The above article shall be modified and replaced as below.
- CPK's employees shall receive free medical treatment service from
HEI's intramural hospital for the items on which HEI's employees
receive free medical treatment service. As a compensation for this,
CPK will pay 3.5 million Korean won to HEI every month. However, for
the regular health check-up service, CPK shall pay monthly lump-sum
charges separately at HEI's request.