Merger Agreement, dated January 1, 2010
Exhibit
No. 5
Merger
Agreement, dated January 1, 2010
THE
SPIN-OFF, CAPITAL REDUCTION AND MERGER REFERRED TO HEREIN INVOLVE THE SECURITIES
OF FOREIGN COMPANIES. THE SPIN-OFF, CAPITAL REDUCTION AND MERGER REFERRED TO
HEREIN ARE SUBJECT TO DISCLOSURE REQUIREMENTS OF A FOREIGN COUNTRY THAT ARE
DIFFERENT FROM THOSE OF THE UNITED STATES. FINANCIAL STATEMENTS AND OTHER
FINANCIAL OR ACCOUNTING DATA REFERRED TO IN, OR ENCLOSED WITH, THIS NOTICE, IF
ANY, HAVE BEEN PREPARED IN ACCORDANCE WITH FOREIGN ACCOUNTING STANDARDS THAT MAY
NOT BE COMPARABLE TO THOSE ACCEPTED IN THE UNITED STATES.
IT
MAY BE DIFFICULT FOR YOU TO ENFORCE YOUR RIGHTS AND ANY CLAIM YOU MAY HAVE
ARISING UNDER THE FEDERAL SECURITIES LAWS, SINCE EACH OF THE COMPANY, PEGATRON
CORPORATION AND PEGATRON INTERNATIONAL INVESTMENT COMPANY, LTD. IS LOCATED IN A
FOREIGN COUNTRY, AND SOME OR ALL OF THEIR OFFICERS AND DIRECTORS MAY BE
RESIDENTS OF A FOREIGN COUNTRY. YOU MAY NOT BE ABLE TO XXX A FOREIGN COMPANY OR
ITS OFFICERS OR DIRECTORS IN A FOREIGN COURT FOR VIOLATIONS OF THE U.S.
SECURITIES LAWS. IT MAY BE DIFFICULT TO COMPEL A FOREIGN COMPANY AND ITS
AFFILIATES TO SUBJECT THEMSELVES TO A U.S. COURT'S JUDGMENT.
(Translation
– In case of any discrepancy between the Chinese and English versions, the
Chinese version shall prevail.)
This
Agreement is entered into by and between Pegatron Corporation ("Party A"), and
Pegatron International Investment Co., Ltd. ("Party B") on January 1, 2010 (the
"Agreement").
Whereas,
to maximize the efficiency of the own-brand business and dedicated ODM business,
ASUSTeK Computer Inc. ("ASUS") is actively undertaking corporate restructuring
in hopes of efficiently dividing the businesses and increasing their
competitiveness. ASUS plans to spin off and transfer the businesses of the ODM
business (refers to ASUS' 100% owned long-term equity investment in Party A) to
Party B (the whole arrangement and the associated matters collectively named as
the "Spin-off") in accordance with the Enterprise Merger and Acquisition Act,
Company Act, and other relevant laws and regulations. The record date of the
Spin-off is temporarily set on June 1, 2010 (however, the actual record date of
the Spin-off shall be determined by the board of directors of ASUS, and the
actual record date of the Spin-off is referred to as the "record date of the
Spin-off"). As such, the board of directors of ASUS has on December 11, 2009
resolved the Spin-off Plan and intends to resolve on January 1, 2010 the
Spin-off Plan as shown in Appendix
1;
Whereas,
both Party A and Party B plan to merge after the Spin-off;
Now,
therefore, in consideration of the mutual promises and covenants herein, the
parties hereto agree as follows:
Article
1
The
parties agree to conduct an absorption type merger between Party A and Party B
after the completion of the Spin-off by ASUS in accordance with the relevant
laws and the Agreement, whereby Party A will be the surviving company after the
merger, and Party B will be the extinguished company after the merger and will
dissolve as a result of the merger (the "Merger"). The name of the surviving
company after the merger will still be Pegatron Corporation, and the head office
will be situated at 0X, Xx. 00, Xxxxxx Xxxxxx, Xxxxxx Xxxx with the main
business area within the Republic of China ("R.O.C."), and branches or offices
may be established in suitable locations in and out of this
country.
Article
2
The
record date of the Merger (the "record date of the Merger") shall be determined
by the board of directors of both Party A and Party B; provided that the record
date of the Merger shall be after the completion of the Spin-off (i.e. the
record date of the Spin-off) and after obtaining the approval of the securities
competent authority as to the issuance of new shares from the capital increase
due to the merger. From the record date of the Merger, all assets, liabilities
listed in the account books of Party B and all of its rights and obligations
shall be generally assumed by Party A.
Article
3
On the execution date of
the Agreement, the registered capital of Party A is NTD 25,000,000,000, divided
into 2,500,000,000 common shares at a par value of NTD 10 per share, and the
paid-in capital is NTD 22,860,539,350 divided into 2,286,053,935 common
shares at a par value of
NTD 10 per share.
1
On the
execution date of the Agreement, the registered capital of Party B is NTD
100,000, divided into 10,000 common shares at a par value of NTD 10 per share,
and the paid-in capital is NTD 100,000 divided into 10,000 common shares at a
par value of NTD 10 per share.
After the
completion of the Spin-off (i.e. the record date of the Spin-off), Party B
intends to issue 2,286,063,935 common shares; provided that the total actual
amount of shares issued shall still be handled in accordance with the Spin-Off
Plan. As such, upon the completion of the Spin-off (i.e. the record date of the
Spin-off), the registered capital of Party B will be NTD 22,860,639,350, divided
into 2,286,063,935 common shares at a par value of NTD 10 which are all common
shares, and the paid-in capital is expected to be NTD 22,860,639,350, divided
into 2,286,063,935 common shares at a par value of NTD 10.
Article
4
Both
Party A and Party B agree that from the execution date of the Agreement and
until the record date of the Merger, except for the issuance of new shares for
the Spin-off or the Merger, or unless otherwise stipulated in the Agreement or
otherwise agreed in writing by the other party, neither party may issue new
shares or provide or distribute dividends or employee bonuses; however, the cash
dividends or cash employee bonuses may be provided or distributed upon
resolution of the shareholders meeting.
Both
Party A and Party B agree that the share exchange ratio for the Merger is
determined based on the book value of the business value and amount of assets to
be spun off stated in ASUS’ financial statements as of September 30, 2009 as
reviewed by the CPA, and the financial statements of Party A as of September 30,
2009 as reviewed by the CPA, with reference to relevant operating performance,
prospective business developments, goodwill and other relevant factors. Except
for the shares in Party A held by Party B before the record date of the Merger
shall be cancelled automatically and with no effect or otherwise stipulated in
the Agreement, the shareholders of Party B shall obtain the shares issued by
Party A from the capital increase for the merger, at a ratio of one share in
exchange for one share of Party A.
Article
5
Party A
intends to issue 2,286,063,935 new common shares at a par value of NTD 10 which
are all common shares for the share exchange due to the Merger. The paid-in
capital of Party A after the Merger shall be NTD 22,860,639,350, divided into
2,286,063,935 common shares, unless amended or adjusted as agreed under the
Agreement.
The
rights and obligations of the new shares issued by Party A as a result of the
capital increase for the Merger shall remain the same as the original shares of
Party A. When the shareholders of Party B exchanges for the new shares of Party
A, for fractional shares which are less than one share, Party A will round off
to a dollar and make a one-time cash payment within 30 days from the record date
of the Merger based on its net worth per share as of the record date of the
Merger. All fractional shares which are less than one share shall be
consolidated into complete shares, and the Chairman of Party A is authorized to
seek specific persons to subscribe for these shares at net worth per
share.
2
Article
6
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1.
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Capital
increase in cash, issuance of convertible corporate bonds, issuance of
bonus shares, issuance of corporate bonds with warrants, preferred shares
with warrants, stock warrants, and other equity-type
securities.
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2.
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Taking
actions that affects the company's financial conditions or operations,
such as a disposition of material
assets.
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3.
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Occurrence
of an event that affects the shareholders' equity, such as a major
disaster or a major change in
technology.
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4.
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Buyback
of the treasury stocks by a party participating in the Merger in
accordance with the laws.
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5.
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An
increase or decrease in the number of entities or companies participating
in the Merger.
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6.
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Violation
of the representations, warranties, undertakings or agreements stipulated
in the Agreement, or the provision of fraudulent or insufficient
information resulting in an obvious difference in the value or other
matters in calculation of the share exchange
ratio.
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7.
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When
there is a need to adjust the aforementioned share exchange ratio as
ordered by the relevant competent authorities or in order to obtain the
approval of the relevant competent authorities (including the approval for
the listing of the surviving company after the Merger and the issuance of
new shares for the capital increase due to the
Merger).
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Article
7
Unless
otherwise provided by laws or regulations or in the Agreement, both Party A and
Party B agree that the shareholders' equity of either party, regardless of
whether there are any changes before the record date of the Merger, will not
affect the share exchange ratio stipulated in the aforementioned
article.
Article
8
Both
Party A and Party B agree that, where a shareholder of either Party A or Party B
objects to the matters of the Merger or the Agreement in accordance with the
laws and regulations, the shares held by such shareholder shall be bought back
in accordance with the laws. The shares bought back by the party shall be
handled in the following methods:
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1.
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The
shares bought back by Party B shall be cancelled on the record date of the
Merger.
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2.
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For
the shares bought back by Party A, in addition that the shares shall be
cancelled on the record date of the Merger and appropriate and necessary
adjustments shall be made to the number of new shares issued by Party A
for the capital increase as a result of the Merger and the paid-in capital
after the merger, Party A has the right to (1) transfer all or part of the
shares bought back to the shareholders of extinguished company (i.e. Party
B) within the scope allowed by laws and regulations to replace the same
number of new
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3
Article
9
If any
provision under the Agreement is held invalid as a result of a conflict with the
relevant laws and regulations, only such part of the provision in conflict is
invalid and the remaining provisions of the Agreement shall remain in full force
and effect. The provision held invalid as a result of conflict with the laws and
regulations shall be stipulated in accordance with the relevant laws and
regulations or the board of directors shall be authorized to separately
negotiate such provision within the legitimate scope.
Where
there is a need to amend any provisions under the Agreement as a result of an
order by the competent authorities, amendments to the laws and regulations or
actual needs, the board of directors is authorized to separately make such
amendments in accordance with the order of the competent authorities, the
amended laws and regulations or the actual needs.
Article
10
After the
resolution of the Merger by the shareholders meeting of both Party A and Party B
(if Party A or Party B is a company with a single shareholder, the board of
directors shall exercise the duties of the shareholders meeting instead), both
parties shall, in accordance with the laws and regulations, make a public
announcement and notify each creditor, and shall set forth a period of at least
30 days during which creditors may raise an objection, and appropriate warranty
or settlement shall be provided to the objecting creditor based on different
circumstances of the debt. After the record date of the Merger, the relevant
debts shall be handled in accordance with the Company Act, the Enterprise Merger
and Acquisition Act and the relevant laws and regulations.
Article
11
Both
Party A and Party B agree that their various financial, business, employee
maintenance and management shall remain in good order before the record date of
the Merger and may not have any abnormal behavior.
Article
12 Representations and Warranties
The party
to the Agreement hereby represents and warrants the following to the other
party:
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1.
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Party
A is a company limited by shares duly incorporated and validly existing
under the Company Act of the R.O.C., and has obtained the licenses,
approvals and other certificates necessary for operating the current
business.
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2.
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Party
B is a company limited by shares duly incorporated and validly existing
under the Company Act of the R.O.C., and has obtained the licenses,
approvals and other certificates necessary for operating the current
business.
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4
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3.
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Both
Party A and Party B have completely preserved and accurately recorded
based on normal business practice the account books and records required
to be preserved under the Company Act and relevant laws and regulations. A
copy of the Articles of Incorporation, corporate registration card,
business license, relevant licenses, list of directors and supervisors,
minutes of the shareholders meeting and board meeting has also been
prepared as requested for review by the other party, and such information
are true and correct.
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4.
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The
financial statements provided by both Party A and Party B to the other
party is prepared in accordance with the generally accepted accounting
principles of R.O.C. and properly conveys the financial status of such
party as of the date stated on the financial
statements.
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5.
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The
execution and performance of the Agreement is not in violation of the
current laws and regulations, the judgments, orders or dispositions made
by the court or relevant competent authorities, the Articles of
Incorporation, or existing agreements, undertakings or other obligations
in effect and executed by both Party A and Party
B.
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6.
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The
Agreement has been executed by a duly authorized representative of both
Party A and Party B and has a binding
effect.
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7.
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In
addition to the taxes sufficiently disclosed in the financial statements
before the record date of the Merger, the taxes to be reported and paid by
both Party A and Party B under the laws has been reported in accordance
with the laws, and there is no material delinquent in reporting, omission
of the reporting or underreporting of the taxes, non-collection,
under-collection or evasion of taxes, or other violation of the relevant
taxation laws, orders or explanation
rulings.
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8.
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Apart
from the events disclosed by the party, both Party A and Party B has none
of the following circumstances:
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(a)
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Except
for those necessary for the daily business operations which have no
material effect to the company, any obligations or debts directly or
indirectly owed to any party, or any loans from any party, or execution of
a monetary loan agreement for a term of more than one year or a loan
agreement with any party, or execution of any agreement where the party is
to bear guarantee liabilities.
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(b)
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The
party is not involved in any pending litigation, arbitration or other
legal proceedings, where the results may have a material detrimental
effect to the financial status, business and property of such
party.
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(c)
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Engaging
in any transaction outside of normal business which may have a material
detrimental effect to the financial status, business and property of such
party.
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(d)
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Other
events which may have a detrimental effect to the business and property of
such party and is sufficient to affect the assessment of the
Merger.
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Article
13
Both Party A and Party B
agree that the rights and interests of the employees employed before the record
date of the Merger shall be safeguarded in accordance with the Enterprise Merger
and Acquisition Act and the relevant laws and regulations based on their
relevant status of retention, reallocation,
dismissal, or retirement.
5
Article
14
After the
merger, the Articles of Incorporation of Party A shall serve as the Articles of
Incorporation of the surviving company (as set forth in Appendix 2). If it is necessary to
amend the Articles of Incorporation of Party A due to the Merger or the
requirement of Party A itself, it shall be amended by resolution of the
shareholders meeting of Party A in accordance with the laws (if Party A is a
company with a single shareholder, the board of directors shall exercise the
duties of the shareholders meeting).
Article
15
Party B
agrees to assist in the application for approval of the Merger and other
relevant matters in line with the requested schedule and events of Party A
according to the relevant laws and regulations.
Article
16
Unless
otherwise provided in the Agreement, the fees for the attorneys, CPAs and
financial consultants for the Merger and other taxes or expenses incurred from
the Merger (including the fees incurred from the special review conducted or the
opinion rendered by professionals) shall be borne by both Party A and Party B
themselves regardless of whether the Merger takes effect, unless the tax relief
or tax exemption provisions apply.
Article
17
The
Agreement may be terminated upon written consent of the parties to the
Agreement. The termination of the Agreement shall be resolved by the board of
directors of both Party A and Party B and shall not require the resolution of
the shareholders meeting of both Party A and Party B, provided that the board of
directors shall report to the shareholders meeting afterwards.
Article
18
Both
Party A and Party B agree that the Agreement may be executed after the
resolution of the board meeting, provided that it shall take effect after
resolution by the shareholders meeting (if a party is a company with a single
shareholder, the board of directors shall exercise the duties of the
shareholders meeting instead). The Merger (and the record date of the Merger)
may only become effective after the completion of the Spin-off (i.e. the record
date of the Spin-off) and after obtaining the approvals of the securities
competent authorities in relation to the issuance of new shares by Party A for
the capital increase due to the Merger.
Article
19
In the
event of a breach of the Agreement by either party, Party A or Party B in
default shall be liable for all losses and damages incurred by the other party
(including without limitation fees of the attorneys, CPAs and financial
consultants).
Article
20
The
Agreement shall be governed by the laws of R.O.C. Both Party A and Party B agree
that in the
event of a dispute arising from the Agreement, it shall be resolved through
arbitration by the Arbitration Association of R.O.C. situated in
Taipei in accordance with the Arbitration Act.
6
Article
21
Both
Party A and Party B agree that matters not governed under the Agreement shall be
handled in accordance with the relevant laws and regulations if the matter is
not separately negotiated by both Party A and Party B.
Article
22
The
Agreement shall be executed in two counterparts with each of Party A and Party B
holding one counterpart.
Pegatron
Corporation
Representative:
Chen, Xxxx-Xxx
Address:
0X, Xx.00, Xxxxxx Xxxxxx, Xxxxxx Xxxxxxxx, Xxxxxx City
Pegatron
International Investment Co., Ltd.
Representative:
Hong, Chong-Ren
Address:
Xx.00, Xxxxxx Xxxxxx, Xxxxxx Xxxxxxxx, Xxxxxx Xxxx
0
(Translation
– In case of any discrepancy between the Chinese and English versions, the
Chinese version shall prevail.)
Spin-off
Plan
To
maximize the efficiency of the own-brand business and dedicated ODM business,
ASUSTeK Computer Inc. ("ASUS") is actively undertaking corporate restructuring
in hopes of efficiently dividing the businesses and increasing their
competitiveness. ASUS plans to spin off relevant businesses of the ODM business
(refers to ASUS' 100% owned long-term equity investment in Pegatron Corporation
("Pegatron")) to the Company's wholly-owned subsidiary Pegatron International
Investment Co., Ltd. ("Pegatron International", *Chinese name is 和碩國際投資股份有限公司) (the
"Spin-off"), whereby Pegatron International will issue new shares to ASUS and
all shareholders of ASUS as consideration. The following spin-off plan (the
"Spin-off Plan") is produced in accordance with the Enterprise Merger and
Acquisition Act, the Company Act and the relevant laws and regulations of the
Republic of China:
Article
1: Method of Spin-off and companies participating
in the Spin-off
The
Spin-off Plan is for the spin-off and transfer of the relevant businesses of the
ODM business (this refers to ASUS' 100% long-term equity investment in Pegatron)
by ASUS to the surviving company Pegatron International, whereby Pegatron
International will issue new shares to ASUS and all shareholders of ASUS as
consideration. It is expected that ASUS will acquire approximately 25% of the
equity in Pegatron International and all shareholders of ASUS will in total
acquire approximately 75% of the equity in Pegatron International. Pegatron
International will, from the record date of the Spin-off, assume 100% of ASUS'
equity investment in Pegatron, and ASUS will at the same time reduce capital by
the value of the business to be spun off (the "Business Value of the
Spin-off").
Companies
participating in this Spin-off are as follows:
Spun-off
Company: ASUS.
Surviving
Company to assume the business: Pegatron International.
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Article 2:
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The
proposed amendment to the Articles of Incorporation of the surviving
company assuming the business and the election of directors and
supervisors
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1.
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The
proposed amendments to the Articles of Incorporation of the surviving
company assuming the business: Please refer to Attachment
I.
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2.
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Election
of directors and supervisors: After the Spin-off, the directors and
supervisors elected before the record date of the Spin-off by Pegatron
International shall serve as the directors and supervisors of Pegatron
International.
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Article
3:
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Business
scope, business value, assets and liabilities assigned by the spun-off
company
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1. Scope
of the business to be transferred for the Spin-off:
8
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(a)
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Assets
of the long-term equity investment (this refers to ASUS' 100% long-term
equity investment in Pegatron) and the relevant ODM
business.
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(b)
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Assets,
liabilities, rights and obligations relationship, rights and interests,
tax incentives enjoyed by the businesses/properties to be spun-off and
assigned which have not yet expired or credited, licenses, approvals and
relevant legal relationships, factual relationships and status which are
related to the aforementioned long-term equity
investment.
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2.
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Business
Value of the Spin-off and the relevant adjustments of shareholders'
equity: The estimated value is NTD 92,894,089,000 calculated by
subtracting the liabilities from the assets of the Spin-off. However,
after deducting the adjustments of shareholders' equity totaling NTD
1,938,844,000, the net Business Value of the Spin-off is NTD
90,955,245,000.
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3.
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Assets
of the Spin-off: The assets of the Spin-off are estimated to be NTD
92,894,089,000 as reflected in Attachment
II.
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4.
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The
aforementioned business value of the Spin-off is temporarily based on the
book value on ASUS' financial statements as of September 30, 2009 reviewed
by the CPA, which shall be adjusted based on the book value of ASUS on
record date of the Spin-off.
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5.
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Where
there is a need to adjust the aforementioned scope of the business of the
Spin-off (including assets and liabilities), the shareholders' meeting may
authorize the board of directors to make the adjustments. The same applies
if the business value or the number of shares to be issued by Pegatron
International or the issuance price need to be
adjusted.
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Article 4:
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Share
exchange ratio in connection with the spin-off and transfer of the
business of the spun-off company to the surviving company and the
calculation basis
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1.
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Share
exchange ratio: Pursuant to the Business Value of the Spin-off, Pegatron
International anticipates to issue 2,286,053,935 new common shares, among
which 25% of the common shares totaling 571,513,484 shares will be issued
to the Company, and 75% of the common shares totaling 1,714,540,451 shares
will be issued to all the shareholders of the Company. That is, Pegatron
International will issue common shares to the original shareholders of the
Company where each 1,000 shares held by the shareholders of Company (as of
the record date of the Spin-off) is expected to be allocated 403.7274
shares of Pegatron International. However, such ratio will still be
determined based on the actual number of common shares issued by the
Company on the record date of the
Spin-off.
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2.
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Basis
of calculation: The aforementioned share exchange ratio is determined
based on the pro-forma book value of the assets and liabilities of the
business to be spun off assigned on the record date of the Spin-off and
the independent professional's fairness opinion on the share exchange
ratio for the Spin-off. Please refer to Attachment III
for the independent professional's fairness opinion on the share exchange
ratio for the Spin-off.
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Article
5:
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The total number of
shares, classes of shares, and amount of shares issued by the surviving
company which assumes the business; The total number of shares, classes of
shares, and amount of shares acquired by the spun-off company and its
shareholders and the requirement of cash payment for fractional
shares
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9
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1.
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Pegatron
International has issued 10,000 shares to present, and shall issue a total
of 2,286,053,935 common shares at a par value of NTD 10 per share as the
consideration for the business assumed. It is anticipated that the total
number of common shares issued by Pegatron International after the
assumption of business is 2,286,063,935
shares.
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2.
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On
the record date of the Spin-off, ASUS will hold 25% of the shares in
Pegatron International, and all shareholders of ASUS will hold a total of
75% of the shares in Pegatron International in proportion to their
shareholdings stipulated in the shareholders
roster.
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3.
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Pegatron
International shall issue new shares to ASUS and its shareholders on the
record date of the Spin-off. Pegatron International shall issue
571,513,484 new common shares to ASUS and shall issue 1,714,540,451 new
shares to all shareholders of ASUS on the record date of the Spin-off. For
fractional shares which are less than one share, Pegatron International
will round off to a dollar and, within 30 days from the record date of the
Spin-off, make a one-time cash payment to ASUS and the shareholders of
ASUS equal to the net worth per share of Pegatron International on the
record date of the Spin-off. In addition, all the fractional shares which
are less than one share will be consolidated into full shares, and the
Chairman of Pegatron International is authorized to seek specific persons
to subscribe for these shares at a cost equal to the net worth per
share.
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Article
6:
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The
business value and the assets assigned by the spun-off company, the number
of shares issued by the surviving company as consideration for the
business assumed, and adjustment to the exchange
ratio
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For the
ratio to exchange the new shares issued by Pegatron International stipulated in
the Spin-off Plan, where any of the following circumstances occurs, the
shareholders' meeting of ASUS may authorize its board of directors to amend the
number of shares to be issued or price per share, and the business value
obtained by Pegatron International as a result of the assumption of business
shall be adjusted accordingly:
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1.
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Where
there is a need for adjustment due to a significant increase or decrease
to the business value as a result of changes to the scope of assets or
other reasons on the record date of the Spin-off for the business to be
spun off and assigned under the Spin-off
Plan.
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2.
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Where
there is a need for other adjustments due to changes to the laws and
regulations or rulings of the relevant competent
authorities.
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Article
7: Capital Reduction
and cancellation of shares of spun-off company
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1.
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The
authorized capital of ASUS is NTD 47,500,000,000, divided into
4,750,000,000 shares, and its paid-in capital is NTD 42,467,774,840,
divided into 4,246,777,484 shares, at a par value of NTD 10 per share. For
the spin-off of its long-term equity investment to Pegatron International,
ASUS intends to reduce its capital by NTD 36,097,608,610 at a capital
reduction ratio of approximately 85%. After the Spin-off and capital
reduction, the paid-in capital of ASUS will be NTD 6,370,166,230, divided
into 637,016,623 shares.
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2.
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It
is expected that 850 shares will be reduced for each 1,000 shares based on
the shareholdings of the shareholders set forth in the shareholder roster
as of the record date of the Spin-off. However, the actual number of
shares reduced for each 1,000 shares will still be determined based on the
number of common shares actually issued by the Company on the record date of capital reduction. For
fractional shares which are less than one share after the capital
reduction, it will be paid in cash to a dollar (it will be rounded off)
based on the closing price of the shares of the Company on the first
trading date after the capital reduction. The Chairman is authorized to
contact and select specific persons to subscribe for such
shares.
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10
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3.
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If
there are any changes to the number of outstanding shares of ASUS prior to
the capital reduction date, the capital reduction ratio and the amount of
capital after capital reduction will be adjusted accordingly, and the
board of directors is authorized to handle the matters at full discretion
then.
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4.
|
For
the aforementioned capital reduction, including but not limited to, as
necessary due to changes of the laws and regulations, determinations of
the competent authorities or objective factual events, the board of
directors shall be authorized to have full discretion to handle the
relevant matters.
|
Article
8: Repurchase and
cancellation of dissenting shareholders' shares
Where a
shareholder of ASUS objects to the Spin-off Plan in writing before or during the
shareholders' meeting to resolve the Spin-off Plan or objects orally at the
meeting with records, and have waived their voting rights, he/she/it may request
ASUS to repurchase his/her/its shares, and ASUS shall repurchase the shares held
by such dissenting shareholder in accordance with the relevant laws and
regulations. The shares so repurchased may, within the scope allowed by laws and
regulations, (1) all or part of such repurchased shares may be transferred to
other shareholders of the company, (2) the corporate registration be amended
accordingly, (3) all or part of such repurchased shares may be sold within three
years of the repurchase date based on the market value. Shares not sold within
such period will be regarded as shares which have not been issued by the Company
and the corporate registration shall be amended accordingly.
Article
9: Duty to give
notice to creditors and public announcement
|
1.
|
After
the resolution of the Spin-off Plan is approved by the shareholders'
meeting of ASUS, ASUS shall notify each creditor of the Spin-off
resolution and make a public announcement, and shall set forth a period of
at least 30 days during which creditors may raise an objection. If a
creditor raises an objection during the given period, ASUS shall handle it
in accordance with the relevant laws and
regulations.
|
|
2.
|
If
the debts owed by ASUS to a creditor who has raised an objection in
accordance with the preceding requirement fall within the scope of the
Spin-off and assignment under the Spin-off Plan, the board of directors of
ASUS is authorized to adjust the business scope, business value, assets
and liabilities defined under Article 3. Where there is therefore a need
to adjust the exchange ratio or price of the new shares to be issued by
the surviving company, it shall be handled in accordance with Article
6.
|
Article
10: Rights and obligations and
relevant matters after the Spin-off
|
1.
|
All
ASUS' assets and liabilities of the Spin-off, and all its rights and
obligations still in effect as of the record date of the Spin-off shall,
from the record date of the Spin-off , be generally assumed by Pegatron
International in accordance with the Company Act. ASUS shall cooperate in
connection with the necessary relevant
procedures.
|
11
|
Article
11:
|
Record date
of the Spin-off
|
|
1.
|
The
record date of the Spin-off shall be determined by the board of directors
of ASUS after the Spin-off Plan is resolved by the shareholders' meeting
of ASUS and approved by the relevant competent authorities (including the
Financial Supervisory Commission of the Executive Yuan
and the Taiwan Stock Exchange, etc.). The record date of the Spin-off is
temporarily set on June 1, 2010. The board of directors of ASUS is
authorized to set the date where there is a need to change the record date
of the Spin-off.
|
|
2.
|
ASUS
shall, on the record date of the Spin-off, transfer its businesses and
assets to be spun off as stipulated in the Spin-off Plan to Pegatron
International.
|
|
Article
12:
|
Implementation
schedule of the plan, tentative completion date and handling of delay in
time
|
|
1.
|
It
is expected that the Spin-off Plan will be resolved and passed by the
shareholders' meeting convened by ASUS on February 9, 2010; provided that
its board of directors may set another date for the shareholders' meeting
depending on the actual
circumstances.
|
|
2.
|
If
there is a delay in the completion of the Spin-off Plan and the tentative
implementation schedule, the board of directors of both parties are
authorized to, based on the actual circumstances and needs, agree on the
date of the board meeting or shareholders' meeting to be convened in
accordance with the laws and regulations and other relevant matters. Where
it is desired to terminate the Spin-off Plan or the proposed Spin-off, the
board of directors of ASUS is authorized with full discretion to handle to
the extent permissible under the laws and regulations without requiring
prior resolution by the shareholders' meeting; provided that the board of
directors shall report to the shareholders' meeting
afterwards.
|
|
Article
13:
|
Allocation
of taxes and expenses
|
|
1.
|
Unless
otherwise provided by the Spin-off Plan, all the taxes and expenses
incurred as a result of the execution or performance of the Spin-off Plan
shall be shared and borne by both parties on an equal basis, unless such
tax or levy is exempted. If the Spin-off Plan does not take effect as it
is disapproved at the shareholders' meeting or is disapproved by the
relevant competent authorities or does not take effect for other reasons,
the attorney fees, accountant fees and relevant expenses incurred shall be
borne by ASUS.
|
|
2.
|
ASUS
and Pegatron International shall cooperate with each other to obtain the
tax incentives relating to this
project.
|
|
Article
14:
|
Governing
law
|
The
Spin-off Plan shall be construed in accordance with the laws of the Republic of
China. In the event of any disputes in relation to the Plan, the Taipei District
Court shall be the court of first instance.
12
|
1.
|
If
any provisions under the Spin-off Plan are held invalid due to violation
of the relevant laws and regulations, only the part in violation shall be
invalid, and the other provisions shall remain valid. For the provisions
held invalid due to violation of the relevant laws and regulations, the
board of directors is, to the extent permitted by the laws, authorized by
the shareholders' meeting to determine and handle in accordance with
relevant laws and regulations.
|
|
2.
|
If
any provision of the Spin-off Plan needs to be amended as required by the
relevant competent authorities, such provision shall be amended
accordingly or by the board of directors of ASUS in accordance with the
requirement of the relevant competent
authorities.
|
|
3.
|
The
Spin-off Plan shall not take effect until it is submitted to and approved
by the shareholders' meeting of ASUS. However, if the Spin-off Plan is not
approved by the shareholders' meeting or disapproved by the relevant
competent authorities, the Spin-off Plan shall be deemed to be void ab
initio.
|
Article
16:
Matters
not covered under the Spin-off Plan shall be handled in accordance with the
relevant laws and regulations, and the requirements of the competent
authorities. In the absence of laws and regulations or rules of the competent
authorities, the board of directors is authorized by the shareholders’ meeting
of ASUS to handle such matters at full discretion.
Planner:
Representative:
Shih, Xxxxx-Xxxx
Pegatron
International Investment Co., Ltd.
Representative:
Xxxx, Xxx-Xian
Date:
January 1, 2010
13
(Translation
– In case of any inconsistencies between the Chinese and English version, the
Chinese version shall prevail.)
Comparison
Table for the Articles of Incorporation of Pegatron International Investment
Co., Ltd.
|
After
Amendment
|
Before
Amendment
|
Explanations
|
|
Article
5
The
authorized capital of the Company
is NTD 22,860,639,350, divided
into 2,286,063,935 shares, at a
par value of NTD 10 per share.
The
board of directors is authorized to
issue all the shares in one time.
|
Article
5
The
authorized capital of the Company
is NTD 100,000, divided
into 10,000 shares, at a par
value of NTD 10 per share.
The
board of directors is authorized
to issue all the shares
in one time.
|
The
authorized capital
of the Company
is increased
due to the Spin-off.
|
|
Article
24
These
Articles of Incorporation were adopted
on December 25, 2009.
The
first amendment was made on January
17, 2010.
|
Article
24
These
Articles of Incorporation were
adopted on December 25, 2009.
|
Addition
of the amendment
date.
|
14
(Translation
– In case of any inconsistencies between the Chinese and English version, the
Chinese version shall prevail.)
Value
of Business to Be Spun off and Relevant Adjustments to Shareholders'
Equity
September
30, 2009
|
In
NTD 1,000
|
|||||
|
Item
|
|
||||
|
Business
value - long-term equity investment
in Pegatron
|
$ | 92,894,089 | |||
|
Adjustments
to shareholder's equity:
|
|||||
|
Capital
surplus
|
53,232 | ||||
|
Cumulative
translation adjustment
|
1,212,495 | ||||
|
Unrealized
gain or loss on valuation
|
673,397 | ||||
|
Net
loss not recognized as pension fund
|
(280 | ) | |||
|
Subtotal
|
1,938,844 | ||||
|
Business
value minus the relevant adjustments to shareholder's
equity
|
$ | 90,955,245 | |||
15
(Translation
– In case of any inconsistencies between the Chinese and English version, the
Chinese version shall prevail.)
The
Independent Expert's Fairness Opinion on the Share Exchange Ratio for the
Spin-off
To
maximize the efficiency of the own-brand business and dedicated ODM business,
ASUSTeK Computer Inc. ("ASUS") is actively undergoing corporate restructuring
and professional business division, and plans to spin off the assets and
business of the ODM business - 100% owned long-term equity investment in
Pegatron Corporation ("Pegatron") to the existing company Pegatron International
Investment Co., Ltd. ("Pegatron International", *Chinese name is 和碩國際投資股份有限公司),
whereby Pegatron International will issue new shares to ASUS and all
shareholders of ASUS as consideration.
|
1.
|
Calculation
of share exchange ratio of spin-off
|
The value
of the business to be spun off and assigned by ASUS (the "Business Value of the
Spin-off") and the issuance price of Pegatron International are explained
below:
|
|
(a)
|
The
Business Value of the Spin-off
|
The
Business Value of the Spin-off is NTD 92,894,089,000 by reference to the book
value of the long-term equity investment – Pegatron as of September 30, 2009
reviewed by the CPA. The Business Value of the Spin-off is detailed
below:
Business
Value of the Spin-off
Unit:
NTD, thousand
|
|
||
|
Item
|
Number of
Shares
|
Business
Value
|
|
Long-Term
Equity Investment - Pegatron
|
2,286,053,935
shares (Note 1)
|
NTD
92,894,089,000 (Note 2)
|
|
|
||
Source
of information: Provided by ASUS
(Note
1) As of September 30, 2009, Pegatron has 1,884,628,141 common shares as
recorded in the financial statements reviewed by KPMG Taiwan. After the ex-right
record date for capital increase out of earnings on October 16, 2009, the number
of common shares of Pegatron was increased to 2,286,053,935.
(Note
2) Based on the book value of ASUS recorded in the financial statements as of
September 30, 2009 reviewed by KPMG Taiwan.
|
|
(b)
|
Determination
of the issuance price of Pegatron
International
|
Pegatron
International will issue 2,286,053,935 common shares as consideration (among
which approximately 25% of Pegatron International's equity totaling 571,513,484
shares will be acquired by ASUS, and approximately 75% of Pegatron
International's equity totaling 1,714,540,451 shares will be acquired by all the
shareholders of ASUS) for the assumption of the ODM business of ASUS (that is,
the long-term equity investment – Pegatron) with a business value of NTD
92,894,089,000.
16
|
The
fairness of the share exchange ratio for the
Spin-off
|
ASUS will
assign the businesses relating to its ODM business through spin-off for general
assumption by Pegatron International, and Pegatron International will issue new
shares to ASUS and all of its shareholders in accordance with Paragraph 6,
Article 4 of the Enterprise Merger and Acquisition Act as consideration for the
assumption of the net assets. Hence, the share exchange ratio of both parties is
based on the Business Value of the Spin-off as explained below:
|
|
(a)
|
Business
Value of the Spin-off
|
|
|
(i)
|
The
main purpose of the spin-off is to implement the business model of
dividing between own-brand business and dedicated ODM business, rather
than the actual trading of assets and securities. According to the 2002
ruling (Ji-Mi-Zi-No.128) and 2003 rulings (Ji-Mi-Zi-No.106 and 107) of the
Accounting Research and Development Foundation, in relation to the
accounting treatments for a spin-off, when the enterprise (transferor)
assigns its business to another company (transferee) and obtains the
equity issued, if the shareholding relative to equity of the transferee
acquired by the shareholder of the transferor remains the same, its
accounting process shall be as follows: the net value which is the value
after subtracting the liabilities from the book value of the original
assets, will act as the cost for acquisition of the equity, among which,
the par value shall act as the capital stock and the remainder will become
capital surplus.
|
|
|
(ii)
|
As
the shareholding relative to the equity of Pegatron International
(transferee) acquired by the shareholders of ASUS remains the same, it is
reasonable for ASUS to transfer the spun-off assets at a book value of NTD
92,894,089,000 to Pegatron
International.
|
|
|
(b)
|
Equity
value of the new shares issued by Pegatron
International
|
According
to the ruling of the Ministry of Economic Affairs dated August 1, 2003
(Jing-Shang-Zi-No.09202156990), the adjustment items of shareholders' equity
directly related to the spun-off net assets shall be transferred with the
spun-off net assets. Hence, the net assets of NTD 92,894,089,000 to be assumed
by Pegatron International shall include the adjustment items of shareholders'
equity totaling NTD 1,938,844,000 to be transferred with the transferred assets,
and the amount after deducting the aforementioned adjustment items of
shareholders' equity is NTD 90,955,245,000. Furthermore, Pegatron International
plans to issue 2,286,053,935 common shares to ASUS and all of its shareholders
as consideration for assuming the relevant business of ASUS's ODM business, and
the total business value after assumption is the same as the net equity value
after the issuance of new shares. Hence, the share exchange ratio for this
spin-off complies with relevant accounting process and is regarded as
fair.
|
3.
|
In
summary, the calculation of the share exchange value and share exchange
ratio for the spin-off of businesses relating to the ODM business to
Pegatron International is based on the financial statements as of
September 30, 2009 reviewed by the CPA. After referring to the rulings of
the Accounting Research and Development Foundation, it is assessed that
the share exchange value and ratio of the spin-off is
fair.
|
|
4.
|
The fairness
evaluation of the spin-off is based on the financial reports as of
September 30, 2009 reviewed by the CPA. However, the actual spin-off value
shall still be based on the book value of ASUS on the record date of the spin-off. If
there is a need for adjustment due to material changes to the relevant
business value, we will update the opinion based on the most updated
information in accordance with the engagement by
ASUS.
|
17
The
information listed in this opinion is provided by ASUS. The CPA has evaluated
the share exchange ratio of the spin-off as an independent third person and has
not in fact participated in the transaction between both parties and the content
planning for the spin-off.
This
opinion is only provided to the board of directors and shareholders meeting of
ASUS for reference or for reporting to relevant competent authorities, and may
not be used for other purposes.
PricewaterhouseCoopers
Taiwan
Xxxx,
Xxx-Jin, CPA
Date:
December 30, 2009
18
(Translation
– In case of any inconsistencies between the Chinese and English version, the
Chinese version shall prevail.)
Declaration
of Independency
Pegatron
International Investment Co., Ltd.
The CPA
being engaged to issue an expert's opinion on the fairness of the share exchange
ratio for the spin-off of ASUSTeK Computer Inc. ("ASUS") has prepared the
opinion from an absolute independent position. There is no direct or indirect
interest between the spun-off company ASUS, the transferee Pegatron
International Investment Co., Ltd. ("Pegatron International") and the CPA which
will affect the fairness and independency of the CPA, and the CPA declares as
follows:
|
1.
|
The
CPA does not concurrently undertake any regular work with ASUS, Pegatron
International and its affiliates where regular salary is received, such as
serving as the responsible person, director, supervisor, manager or
employee.
|
|
2.
|
There
is no joint investment or enjoyment of interest between the CPA and ASUS,
Pegatron International and its
affiliates.
|
|
3.
|
The
CPA and ASUS and Pegatron International did not execute any agreement in
connection with potential audit
fees.
|
|
4.
|
There
is no violation of other matters which may affect the absolute
independency of the CPA.
|
PricewaterhouseCoopers
Taiwan
Xxxx,
Xxx-Jin, CPA
Date:
December 30, 2009
19
Appendix II
(Translation
– In case of any discrepancy between the Chinese and English versions, the
Chinese version shall prevail.)
Articles
of Incorporation of PEGATRON CORPORATION
CHAPTER
I GENERAL PROVISIONS
|
Article
1:
|
This
Company is incorporated under the Company Act, with the name
of 和碩
|
|
|
聯 合 科 技 股 份 有 限 公
司, and the English
name
of PEGATRON
CORPORATION.
|
||
| Article 2: |
The
business scope of the Company is as following:
|
|
|
1.
|
CC01101
Restrained Telecom Radio Frequency Equipments and Materials
Manufacturing.
|
|
|
2.
|
F401021
Restrained Telecom Radio Frequency Equipments and Materials
Import.
|
|
|
3.
|
All
business items that are not prohibited or restricted by laws and
regulations, except for those subject to special
approval.
|
|
|
Article
3:
|
The
Company has its head office in Taipei City, and the Company may establish
branches in and out of this country.
|
|
|
Article
4:
|
The
method of the public announcement of the Company shall be made in
accordance with Article 28 of the Company
Act.
|
|
CHAPTER
II SHARES
|
Article
5:
|
The
authorized capital of the Company is NTD 25,000,000,000, divided into
2,500,000,000 shares, at a par value of NTD 10 per share. The shares may
be issued in installments, and the shares which have not been issued would
be authorized to board of directors to issue in installments. The
registered capital keeps NTD 2,000,000,000 divided into 200,000,000 shares
provided for exercise of the option of stock option certificates,
preferred shares with warrants and warrants attached to corporate bonds,
which may be issued in installments pursuant to the resolution of board of
directors.
|
|
Article
6:
|
The
total amount of the investments of the Company is not be subject to the
limit of 40% of its paid-in capital as set forth under Article 13 of the
Company Act.
|
|
Article
7:
|
Share
certificates of the Company shall be in registered form, attached with
serial numbers and signed or sealed by at least three directors, and
issued after the authentication in accordance with laws. The issued shares
may be exempted from printing any share certificate and a consolidated
share certificate representing the total number of each issuance may be
printed.
|
|
Article
8:
|
The
amendment and transfer of shares under the shareholders' register of the
Company set out in the preceding Paragraph shall be closed during 30 days
prior to the date of an ordinary shareholders' meeting, 15 days prior to
the date of an extraordinary shareholders' meeting, or 5 days prior to the
record dates for distribution of dividends, bonus or other benefits. After
the public issuance of the Company’s shares, the shareholders' register
shall be closed during 60 days prior to the date of an ordinary
shareholders' meeting, 30 days prior to the date of an extraordinary
shareholders' meeting.
|
20
|
For
transfer of shares, an application to the Company for amendment to the
shareholders' register shall be signed or sealed by the transferor and the
transferee. Transfer of shares shall not be set up as a defense against
the Company after finishing the transfer process.
|
|
|
Article
10:
|
In
the event of loss of share certificates, the holder of the shares shall
formally notify the Company and publicly declare the loss on a newspaper
circulating in the place where the Company is
located for three consecutive days. If no objection was made within thirty
(30) days after the third day the declaration was firstly made on
newspapers, the shareholder may apply to the Company to reissue the
certificates of shares.
|
|
CHAPTER
III SHAREHOLDER'S MEETING
|
|
|
Article
11:
|
The
Company's shareholders' meeting shall be
of two types, ordinary shareholders' meeting
and extraordinary shareholders' meeting.
Ordinary shareholders' meeting shall be convened once a fiscal year.
Extraordinary shareholders' meeting shall be convened when necessary in
accordance with the relevant laws and regulations.
|
|
Article
12:
|
When the
shareholders meeting was convened by the Board of Directors, the
shareholders' meeting shall be presided by the Chairman of the Board
of Directors. If
the Chairman is absent, the Chairman may designate one of the directors to
act on his/her behalf. Where the Chairman does not designate a proxy, the
directors may elect a person among themselves to act as the chairman of
the meeting. When the shareholders meeting was convened by other persons
who has the convening right, the shareholders' meeting shall be presided
by the convener. When there are two or more conveners, the
conveners shall elect among themselves to act as the chairman of the
meeting.
|
|
Article
13:
|
When
a shareholder for any reasons cannot attend the shareholders' meeting in
person, he/she/it may attend the meeting by proxy by executing a power of
attorney printed by the Company stating therein the scope of power
authorized to the proxy and signed and sealed by such
shareholder.
|
|
Article
14:
|
Except
in the circumstances set forth in Article 179 of the Company Act where
there is no voting right for a share, each shareholder of the Company
shall have one vote for each share held.
|
|
Article
15:
|
Unless
otherwise specified in the Company Act, resolutions at a shareholders'
meeting shall be adopted by a majority vote of the shareholders present in
person or through proxy, who represent more than one-half of the total
number of voting shares.
|
|
Article
16:
|
If
the shareholder of the Company is composed of a sole institutional
shareholder, functions of the Company's shareholders' meetings shall be
carried out by the Company's board of directors. In that case, all
provision in connection with shareholders' meetings herein shall not
apply.
|
|
CHAPTER
IV DIRECTORS, SUPERVISORS AND
MANAGERS
|
|
|
Article
17
|
The
Company shall have three (3) to five (5) directors and one (1) to three
(3) supervisors. The term of their offices shall be three (3) years. They
shall be elected from among persons with full legal capacity by the
shareholders’ meeting and may be re-elected for consecutive terms. During
the term of their offices, the Company may purchase liability insurance
for the directors and supervisors to indemnify the potential liabilities,
according to the relevant laws, to be borne by the directors and
supervisors when they perform their duties for the Company.
|
21
|
After
the public issuance of the Company’s shares, the Company may have
independent directors within the aforementioned number of directors and
the number of independent directors shall be no less than one-fifth of the
total number of directors and shall not be less than two (2). The election
of independent directors shall adopt the candidate nomination system, and
the shareholders shall elect the independent directors from the list of
the candidates of the independent directors. The professional
qualifications, shareholdings, restrictions on concurrent position,
nomination, and other compliance matters shall be handled in accordance
with relevant regulations of the securities
authorities.
|
||
|
Article
18:
|
The
board of directors is composed of directors. The functions and
responsibilities of the board of directors shall be as
follows:
|
|
|
1.
|
To
determine the business plans,
|
|
|
2.
|
To
propose distribution of profit or appropriation of
losses,
|
|
|
3.
|
To
propose capital increase or decrease,
|
|
|
4.
|
To
enact important rules and organizational regulations of the
Company,
|
|
|
5.
|
To
engage and terminate the manager of the Company,
|
|
|
6.
|
To
determine the establishment and winding-up of branches,
|
|
|
7.
|
To
produce the budget and the final accounts, and
|
|
|
8.
|
To
perform other duties authorized by the Company Act or the resolution of
the shareholders' meeting(s).
|
|
|
Article
19:
|
The
Chairman will be elected from among directors by a majority vote at a
board meeting at which at least two-thirds (2/3) of directors are present.
The Chairman shall be the representative of the Company
externally.
|
|
|
Article
20:
|
Board
meetings shall be convened by the Chairman unless the Company Act provides
otherwise. Unless otherwise provided for in the Company Act, resolutions
of the board of directors shall be adopted by a majority of the directors
at a meeting attended by a majority of the directors.
|
|
|
Article
21:
|
The
Chairman will preside at the board meetings. In the event that the
Chairman is on leave or unable to perform his/her duties, the Chairman
shall appoint one director to be the deputy, if the Chairman does not
appoint deputy, the deputy shall be the person elected by the directors.
The directors shall personally attend the board meeting, and if the
directors cannot attend the board meeting for certain reasons, he/she may
appoint another director as his/her proxy each time with a power of
attorney stating the scope of authority with reference to the subjects to
be discussed at the meeting and powers granted; provided that a director
may act as the proxy for only one another director. For the directors who
live overseas, he/she may appoint other shareholders who live domestically
in writing to be his/her deputy to attend the board meeting regularly. The
board meeting may be convened via video conference, and the directors who
attend the board meeting via video conference shall be deemed to have
attended the meeting in person.
|
|
|
Article
21-1:
|
Convening
the board meeting shall be handled in accordance with Article 204 of the
Company Act. If the board meeting needs to be convened due to emergency,
notice may be made by telephone, fax, or e-mail instead of written notice,
and the board meeting may be convened at any time.
|
|
|
Article
22:
|
The power and duties of supervisors are as follows: | |
|
1.
|
To
audit the financial status of the Company,
|
|
|
2.
|
To
audit the accounting books and documents of the
Company,
|
|
|
3.
|
To
inquire about the business of the
Company,
|
|
22
|
4.
|
To
approve the budget and the final accounts,
|
|
|
5.
|
To
review the proposal of distribution of profit or appropriation of losses,
and
|
|
|
6.
|
To
perform other duties authorized by the Company
Act.
|
|
Article
23:
|
The
board of directors is authorized to determine the remuneration of
directors and supervisor taking into account their participation in the
Company's business
and their contribution value, and domestic and overseas industry standards.
Furthermore,
if the director of the Company holds any position in the Company,
in
addition to the remuneration distributed pursuant to Article 28 hereof,
monthly payment of salary based on the standard of general managers may also be
granted.
|
|
Article
24:
|
The
Company may have various managers. The appointment, discharge and the remuneration of the managers
shall be handled in accordance with Article 29 of the Company
Act.
|
|
CHAPTER
V ACCOUNTING
|
|
Article
25:
|
The fiscal year of the Company commences from January 1 to December 31. Final accounts shall be handled at the end of each fiscal year. |
|
Article
26:
|
After the end of each fiscal year, the board of directors shall produce the following documents and statements for the supervisor to review 30 days before the ordinary shareholders' meeting is convened, and then submit the same and the supervisor's report to the ordinary shareholders' meeting for recognition: |
|
1.
|
Business
Report,
|
|
|
2.
|
Financial
Statements, and
|
|
|
3.
|
Proposal
for distribution of profit or appropriation of
losses.
|
|
Article
27:
|
The distribution of dividend and profit shall be based on the shareholding of each shareholder. If the Company does not have any earnings, no dividend or profit may be distributed. | |
|
Article
28:
|
When it is determined that the Company has earnings for a fiscal year, , the earnings shall firstly be appropriated to profit-seeking enterprise tax payable, and make up the losses of previous years. Then, the Company shall provide 10% of the remaining earnings as the legal reserve if there is any remaining amount, unless such legal reserve has amounted to the total capital, and then set aside the special reserve in accordance with the requirements under the laws and regulations or of the competent authorities. Should there be any residual, it shall be distributed according to the following sequence: | |
|
1.
|
At
least 10% of the remaining amount shall be allocated as employee bonus,
which may be paid in cash or in the form of shares. Where the employee
bonus is distributed in the form of shares, qualified employees of the
subordinate companies may be included. The qualification shall be
determined by the board of directors.
|
|
|
2.
|
At
most 1% of the remaining amount shall be allocated as directors' and
supervisors' remuneration.
|
|
|
3.
|
The
remaining may then be distributed after the board of directors has made
proposal of earnings distribution pursuant to the dividend policy under
Article 28-1 hereof, and the shareholders' meeting has resolved the
same.
|
|
Article
28-1:
|
The distribution of the dividends of the Company will coordinate with the surplus of that year based on the principle of stabilization. Due to the Industry of the company changes instantly and considering the future financing requirement and the long term business plan, the company takes a balance dividend policy. If the Company would set aside cash dividend, it would be at least ten percent (10%) of the total dividend in the shareholders bonus to be distributed under Article 28. | |
23
|
Article
29:
|
The
distribution of the dividends to shareholders would be limited to the
shareholders recorded in the shareholders' register 5 days prior to the
record date for distribution of dividends and bonus as
determined.
|
ARTICLE
VI SUPPLEMENTARY PROVISIONS
|
Article
30:
|
The
Company may provide guarantee as necessary for the
business.
|
|
Article
31:
|
The
organizational rules and operating rules of the Company shall be enacted
separately.
|
|
Article
32:
|
If
there is any matter not covered herein, the Company Act and the relevant
laws and regulations shall govern.
|
|
Article
33:
|
This
Articles of Incorporation was established on June 21, 2007 by consent of
all promoters in the promoters' meeting. The first amendment to the
Articles of Incorporation was made on July 2, 2007. The second amendment
to the Articles of Incorporation was made on September 7, 2007. The third
amendment to the Articles of Incorporation was made on September 29, 2007.
The forth amendment to the Articles of Incorporation was made on October
30, 2007. The fifth amendment to the Articles of Incorporation was made on
April 24, 2008. The sixth amendment to the Articles of Incorporation was
made on June 30,
2009.
|
Pegatron
Corporation
Chairman:
Xxxx, Xxx-Xian
24
