JOINT VENTURE AGREEMENT
EXHIBIT 10.52
[***]
DENOTES CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT
NTC/MICRON
CONFIDENTIAL
This
JOINT VENTURE AGREEMENT,
dated this 21st day of April, 2008, is made and entered into by and between
MICRON SEMICONDUCTOR B.V. (hereinafter “MNL”), a private limited
liability company organized under the laws of the Netherlands and NANYA
TECHNOLOGY CORPORATION (Nanya Technology Corporation
[Translation from Chinese]) (hereinafter “NTC”), a company incorporated
under the laws of the Republic of China (“ROC” or “Taiwan”) (MNL and NTC are each
referred to individually as a “Shareholder,” and collectively
as the “Shareholders”).
RECITALS
A. Micron
Technology, Inc., a Delaware corporation (“Micron”), and NTC have entered
into that certain Master Agreement dated as of the date hereof (the “Master Agreement”) which
provides, among other things, that the Shareholders will enter into a joint
venture by contributing equally to the capital of a company incorporated in
Taiwan so as to enable such company to manufacture and sell Stack DRAM Products
exclusively to Micron and NTC.
B.
NTC has formed MeiYa Technology Corporation (MeiYa Technology Corporation
[Translation from Chinese]), a company incorporated under the laws of the
ROC (the “Joint Venture
Company”), as such joint venture company.
C.
The Shareholders are now entering into this Agreement to set forth certain
agreements regarding the ownership, governance and operation of the Joint
Venture Company.
NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto, intending to be legally
bound, do hereby agree as follows:
ARTICLE
I
DEFINITIONS;
INTERPRETATION
Section
1.1 Definitions. In
addition to the terms defined elsewhere in this Agreement, capitalized terms
used in this Agreement shall have the respective meanings set forth
below:
“Accountants” shall have the
meaning set forth in Section 10.2(c)(ii) of this Agreement.
“Affiliate” means, with respect
to any specified Person, any other Person that, directly or indirectly,
including through one or more intermediaries, controls, is controlled by, or is
under
common
control with such specified Person; and the term “affiliated” has a meaning
correlative to the foregoing.
“Agreement” means this Joint
Venture Agreement.
“Annual Budget” shall have the
meaning set forth in Section 7.5(b)(ii) of this Agreement.
“Annual Business Plan” shall
have the meaning set forth in Section 7.5(b)(i) of this Agreement.
“Answer Notice” shall have the
meaning set forth in Section 7.3(b) of this Agreement.
“Applicable Law” means any
applicable laws, statutes, rules, regulations, ordinances, orders, codes,
arbitration awards, judgments, decrees or other legal requirements of any
Governmental Entity.
“Articles of Incorporation”
means the Articles of Incorporation of the Joint Venture Company in the form and
substance as Exhibit
A attached to the Master Agreement, and as amended from time to
time.
“Baseline Flow” shall have the
meaning set forth in Section 7.2(b)(iv) of this Agreement.
“Board of Directors” means the
board of directors of the Joint Venture Company.
“Boundary Conditions” means,
with respect to any fab, a requirement that, at any point in time:
(i)
there shall be [***] qualified Process Nodes in use for the manufacture of Stack
DRAM Products; provided that at such
fab there also may be [***] unqualified Process Node in use for setup,
engineering and testing purposes so long as such unqualified Process Node is not
in use for the manufacture of Stack DRAM Products for eventual resale to end
customers of either Micron or NTC;
(ii)
such fab shall manufacture Stack DRAM Products with [***] Design IDs for Micron;
and
(iii) such
fab shall manufacture Stack DRAM Products with [***] Design IDs for
NTC.
“Business Day” means a day that
is not a Saturday, Sunday or other day on which commercial banking institutions
in either the ROC or the State of New York are authorized or required by
Applicable Law to be closed.
“Business Plan” means the
Initial Business Plan or any Annual Business Plan.
“Buyout Notice” shall have the
meaning set forth in Section 13.1(a) of this Agreement.
“Buyout Price” shall have the
meaning set forth in Section 12.3(a) of this Agreement.
“Buyout Shares” shall have the
meaning set forth in Section 13.1(a) of this Agreement.
“Chairman” means the Chairman
of the Board of Directors.
“Change Notice” shall have the
meaning set forth in Section 7.3(b) of this Agreement.
“Closing” means the remittance
of the capital contribution to the Joint Venture Company as set forth in Section
2.6 of the Master Agreement.
“Closing Date” means the date
on which the Closing occurs. For purposes of this Agreement and the
other agreements and instruments referenced herein, the Closing shall be deemed
to have occurred at 11:59 p.m. in Taipei, Taiwan on such date.
“Competitively Sensitive
Information” means any information, in whatever form, that has not been
made publicly available relating to products and services that Micron or a
Subsidiary of Micron, on the one hand, and NTC or a Subsidiary of NTC, on the
other hand, sells in competition with the other at the execution of this
Agreement or thereafter, including Stack DRAM Products, to the extent such
information of the Person selling such products and services includes price or
any element of price, customer terms or conditions of sale, seller-specific
costs, volume of sales, output (but not including the Joint Venture Company’s
output), bid terms of the foregoing type and such similar information as is
specifically identified electronically or in writing to the Joint Venture
Company by Micron or a Subsidiary of Micron, on the one hand, and NTC or a
Subsidiary of NTC, on the other hand, as competitively sensitive
information.
“Compliant Shareholder” shall
have the meaning set forth in Section 13.1(a) of this Agreement.
“Confidentiality Agreement”
shall have the meaning set forth in Section 15.13(a) of this
Agreement.
“Contributing Shareholder”
shall have the meaning set forth in Section 3.5 of this Agreement.
“Control” (whether or not
capitalized) means the power or authority, whether exercised or not, to direct
the business, management and policies of a Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise,
which power or authority shall conclusively be presumed to exist upon possession
of beneficial ownership or power to direct the vote of [***] of the votes
entitled to be cast at a meeting of the members, shareholders or other equity
holders of such Person or power to control the composition of a majority of the
board of directors or like governing body of such Person; and the terms “controlling” and “controlled” have meanings
correlative to the foregoing.
“Cure Period” shall have the
meaning set forth in Section 12.5 of this Agreement.
“Deadlock” shall have the
meaning set forth in Section 12.1 of this Agreement.
“Defaulting Shareholder” shall
have the meaning set forth in Section 12.4 of this Agreement.
“Design ID” means a part number
that is assigned to a unique Stack DRAM Design of a particular Stack DRAM
Product, which may include a number or letter designating a specific device
revision.
“Design SOW” means
[***].
“Divestiture Action” shall have
the meaning set forth in Section 2.4(c)(v) of this Agreement.
“DRAM Product” means any
stand-alone semiconductor device that is a dynamic random access memory device
and that is designed or developed primarily for the function of storing data, in
die, wafer or package form.
“Equity Interest” means a
Shareholder’s percentage ownership of the Shares as determined by dividing the
number of Shares owned by such Shareholder at the time of determination by the
total issued and outstanding Shares at the time of determination.
“Event of Default” shall have
the meaning set forth in Section 12.4 of this Agreement.
“Executive Vice President”
shall have the meaning set forth in Section 5.5(b) of this
Agreement.
“Exercise Notice” shall have
the meaning set forth in Section 12.6(a) of this Agreement.
“Fab Lease” means that certain
Lease and License Agreement between NTC, as landlord, and the Joint Venture
Company, as tenant, referred to on Schedule 2.3 of the
Master Agreement Disclosure Letter.
“Fair Value” means (i) if it is
after the Listing of the Joint Venture Company, the [***] of the Shares
immediately prior to the date of the Exercise Notice or the Buyout Notice, as
applicable; or (ii) if prior to the Listing of the Joint Venture Company, the
fair value immediately prior to the date of the Exercise Notice or Buyout
Notice, as applicable, as determined by independent appraisers selected as
follows: each Shareholder shall appoint one independent appraiser, which shall
be an internationally recognized accounting or investment banking firm, and
these two independent appraisers shall mutually select a third independent
appraiser. Each such appraiser shall in good faith conduct its own
independent appraisal to determine the fair value of the Shares (ignoring any
applicable minority discounts or effects of illiquidity that may be associated
with the Shares of the Joint Venture Company), and [***] that are the closest in
value shall be the Fair Value of the Shares.
“Filing” shall have the meaning
set forth in Section 2.4 of this Agreement.
“Filing Event” shall have the
meaning set forth in Section 2.4 of this Agreement.
“Fiscal Year” shall have the
meaning set forth in Section 10.1 of this Agreement.
“GAAP” means generally accepted
accounting principles, consistently applied for all periods at
issue.
“Governmental Entity” means any
governmental authority or entity, including any agency, board, bureau,
commission, court, municipality, department, subdivision or instrumentality
thereof, or any arbitrator or arbitration panel.
“ICDR” means the International
Centre for Dispute Resolution of the American Arbitration
Association.
“Imaging Product” means any (i)
semiconductor device having a plurality of photo elements (e.g., photodiodes,
photogates, etc.) for converting impinging light into an electrical
representation of the information in the light, (ii) image processor or other
semiconductor device for balancing, correcting, manipulating or otherwise
processing such electrical representation of the information in the impinging
light, or (iii) combination of the devices described in clauses (i) and
(ii).
“Initial Budget” shall have the
meaning set forth in Section 7.5(a)(iii) of this Agreement.
“Initial Business Plan” shall
have the meaning set forth in Section 7.5(a)(i) of this Agreement.
“Initial Period” shall have the
meaning set forth in Section 7.5(a)(i) of this Agreement.
“Initiating
Shareholder” shall have the meaning set forth in Section 7.3(b) of
this Agreement.
“JDP Agreement” means that
certain Joint Development Program Agreement between NTC and Micron referred to
on Schedule 2.1
of the Master Agreement Disclosure Letter.
“JDP Committee” means the
committee formed and operated by Micron and NTC to govern the performance of
Micron and NTC under the JDP Agreement in accordance with the JDP Committee
Charter.
“JDP Committee Charter” means
the charter attached as Schedule 2 to the JDP
Agreement.
“JDP Design” means any Stack
DRAM Design resulting from the research and development activities of Micron and
NTC pursuant to the JDP Agreement.
“JDP Process Node” means any
Primary Process Node or Optimized Process Node resulting from the research and
development activities of Micron and NTC pursuant to the JDP
Agreement.
“JDP Work Product” means
[***].
“Joint Venture Company” shall
have the meaning set forth in the Recitals to this Agreement.
“Joint Venture Documents” means
the Master Agreement and each of the agreements listed on Schedules 2.1 through
2.5 of the
Master Agreement Disclosure Letter.
“Joint Venture Reportable
Events” shall have the meaning set forth in Section 10.3 of this
Agreement.
“Leased Fab” means the Property
as that term is defined in the Fab Lease.
“Listing” shall have the
meaning set forth in Section 11.4(a) of this Agreement.
“Manufacturing Capacity” shall
have the meaning set forth in Section 7.2(b)(iv) of this Agreement.
“Manufacturing Committee” shall
have the meaning set forth in Section 7.2(b)(i) of this Agreement.
“Manufacturing Plan” shall have
the meaning set forth in Section 7.2(c) of this Agreement.
“Master Agreement” shall have
the meaning set forth in the Recitals to this Agreement.
“Master Agreement Disclosure
Letter” means that certain Master Agreement Disclosure Letter, between
NTC and Micron, dated as of the date hereof, containing the Schedules required
by the provisions of the Master Agreement.
“Micron” shall have the meaning
set forth in the Recitals to this Agreement.
“Micron Assigned Employee
Agreement” means that certain Micron Assigned Employee Agreement between
Micron and the Joint Venture Company referred to on Schedule 2.4 of the
Master Agreement Disclosure Letter.
[***]
“MNL” shall have the meaning
set forth in the preamble to this Agreement.
“NAND Flash Memory Product”
means a non-volatile semiconductor memory device containing memory cells that
are electrically programmable and electrically erasable whereby the memory cells
consist of one or more transistors that have a floating gate, charge trapping
regions or any other functionally equivalent structure utilizing one or more
different charge levels (including binary or multi-level cell structures), with
or without any on-chip control, I/O and other support circuitry, in wafer, die
or packaged form.
“Non-compliant Shareholder”
shall have the meaning set forth in Section 13.1(a) of this
Agreement.
“Non-contributing Shareholder”
shall have the meaning set forth in Section 3.5 of this Agreement.
“Non-Defaulting Shareholder”
shall have the meaning set forth in Section 12.5 of this Agreement.
“Notice of Default” shall have
the meaning set forth in Section 12.5 of this Agreement.
“NTC” shall have the meaning
set forth in the preamble to this Agreement.
“NTC Assigned Employee
Agreement” means that certain NTC Assigned Employee Agreement between NTC
and the Joint Venture Company referred to on Schedule 2.3 of the
Master Agreement Disclosure Letter.
[***]
“NT$” means the lawful currency
of the ROC.
“Offered Shares” means the
Shares as defined in Section 9.3(a) of this Agreement.
“Optimized Process Node” means
[***].
“Option Period” shall have the
meaning set forth in Section 9.3(b) of this Agreement.
“Other Shareholder” shall have
the meaning set forth in Section 7.3(b) of this Agreement.
“Output Percentage” means, with
respect to a Shareholder and subject to Sections 7.3(b) and 8.4(d), the
percentage as of the [***]; provided, however, that
notwithstanding anything to the contrary in this Agreement, if all of the Shares
owned by one Shareholder and its Subsidiaries (including its SPV) have been
Transferred to the other Shareholder and/or its Affiliates in accordance with
Section 3.5, 12.3, 12.6 or 13.1, the Output Percentage of the Shareholder that
Transferred such Shares shall, [***]; and provided further, however, that if
there is a merger or similar transaction involving the Joint Venture Company
that results in the Shareholders either not owning shares of the survivor or in
the Shareholders owning shares of the survivor in a relative proportion
different than their relative Equity Interests immediately prior to such
transaction, the Shareholders’ Output Percentages shall [***].
“Patent Rights” means all
rights associated with any and all issued and unexpired patents and pending
patent applications in any country in the world, together with any and all
divisionals, continuations, continuations-in-part, reissues, reexaminations,
extensions, foreign counterparts or equivalents of any of the foregoing,
wherever and whenever existing.
“Permitted Transfer” shall have
the meaning set forth in Section 9.2 of this Agreement.
“Person” means any natural
person, corporation, joint stock company, limited liability company,
association, partnership, firm, joint venture, organization, business, trust,
estate or any other entity or organization of any kind or
character.
“Phantom Shares” shall
have the meaning set forth in Section 7.3(b) of this Agreement.
“President” shall have the
meaning set forth in Section 5.5(a) of this Agreement.
“Primary Process Node” means
[***].
“Probe Testing” means testing,
using a wafer test program as set forth in the applicable specifications, of a
wafer that has completed all processing steps deemed necessary to complete the
creation of the desired Stack DRAM integrated circuits in the die on such wafer,
the purpose of which test is to determine how many and which of the die meet the
applicable criteria for such die set forth in the specifications.
“Process Node” means
[***].
“Process Technology” means that
process technology developed before expiration of the Term (as defined in the
JDP Agreement) and utilized in the manufacture of Stack DRAM wafers, including
Probe Testing and technology developed through Product Engineering thereof,
regardless of the form in which any of the foregoing is stored, but excluding
any Patent Rights and any technology, trade secrets or know-how that relate to
and are used in any back-end operations (after Probe Testing).
“Product Engineering” means any
one or more of the engineering activities described on Schedule 7 of the JDP
Agreement as applied to Stack DRAM Products or Stack DRAM Modules
“Proposing Shareholder” shall
have the meaning set forth in Section 12.3(a) of this Agreement.
“Receiving Party” shall
have the meaning set forth in Section 9.3(a) of this Agreement.
“Receiving Shareholder” shall
have the meaning set forth in Section 12.3(a) of this Agreement.
“Regulatory Law” shall have the
meaning set forth in Section 2.4 of this Agreement.
“Replacement Period” means,
with respect to any Shares Transferred to employees of a Transferring
Shareholder or its Wholly-Owned Subsidiary (or, if MNL is the Transferring
Shareholder, to employees of Micron or its Wholly-Owned Subsidiaries) as
contemplated by Section 8.4(b), the period [***].
“ROC” shall have the meaning
set forth in the preamble to this Agreement.
“ROC Company Law” means the Company Law of
the ROC, promulgated on December 26, 1929, and as last amended on February 3,
2006.
“ROC Securities Exchange Law”
means the Securities and Exchange Law of the ROC, promulgated on April 30, 1968,
and as last amended on May 30, 2006.
“Sale Offer” shall have the
meaning set forth in Section 9.3(a) of this Agreement.
“Share Acquisition” shall
have the meaning set forth in Section 7.3(b) of this Agreement.
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“Share Disposition” shall
have the meaning set forth in Section 7.3(b) of this Agreement.
“Shareholder” shall have the
meaning set forth in the preamble to this Agreement.
“Shareholders’ Meeting” or
“Shareholders’ Meetings”
shall have the meaning set forth in Section 6.2 of this Agreement.
“Shares” means the ordinary
shares of the Joint Venture Company, each having a par value of
[***].
“SOW” means a statement of the
work that describes research and development work to be performed under the JDP
Agreement and that has been adopted by the JDP Committee pursuant to Section 3.2
of the JDP Agreement.
“Software” means computer
program instruction code, whether in human readable source code form, machine
executable binary form, firmware, scripts, interpretive text, or
otherwise. The term “Software” does not include databases and other
information stored in electronic form, other than executable instruction codes
or source code that is intended to be compiled into executable instruction
codes.
“SPV” shall have the meaning
set forth in Section 8.4(a) of this Agreement.
“Stack DRAM” means dynamic
random access memory cell that functions by using a capacitor arrayed
predominantly above the semiconductor substrate.
“Stack DRAM Design” means, with respect to
a Stack DRAM Product, the corresponding design components, materials and
information listed on Schedule 3 of the JDP
Agreement or as otherwise determined by the JDP Committee in a SOW.
“Stack DRAM Module” means one
or more Stack DRAM Products in a JEDEC-compliant package or module (whether as
part of a SIMM, DIMM, multi-chip package, memory card or other memory module or
package).
“Stack DRAM Product” means any
memory comprising Stack DRAM, whether in die or wafer form.
“Subsidiary” means with respect
to any specified Person, any other Person that, directly or indirectly,
including through one or more intermediaries, is controlled by such specified
Person.
“Supply Agreement” means that
certain Supply Agreement among NTC, Micron and the Joint Venture Company
referred to on Schedule 2.5 of the
Master Agreement Disclosure Letter..
“Taiwan” shall have the meaning
set forth in the preamble to this Agreement.
“Taiwan GAAP” means GAAP used
in the ROC, as in effect from time to time.
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“Technology Transfer Agreement”
means that certain Technology Transfer Agreement among NTC, Micron and the Joint
Venture Company referred to on Schedule 2.5 of the
Master Agreement Disclosure Letter.
“Third Party” means any Person
other than Micron, NTC, the Joint Venture Company or any of their respective
Subsidiaries.
“Transfer” shall have the
meaning set forth in Section 9.1(a) of this Agreement.
“Transfer Notice” shall have
the meaning set forth in Section 9.3(a) of this Agreement.
“Transfer Period” shall have
the meaning set forth in Section 9.3(d) of this Agreement.
“Transfer Restriction Period”
shall have the meaning set forth in Section 9.1(a) of this
Agreement.
“Transferor” shall have the
meaning set forth in Section 9.3(a) of this Agreement.
“Transferred Technology” means
[***].
“Transferring Shareholder”
shall have the meaning set forth in Section 8.4(a) of this
Agreement.
“TTA 68-50” means that certain
Technology Transfer Agreement for 68-50 nm Process Nodes between Micron and the
Joint Venture Company referred to on Schedule 2.4 of the
Master Agreement Disclosure Letter.
“U.S. GAAP” means GAAP used in
the United States, as in effect from time to time.
“Vice-Chairman” means the Vice
Chairman of the Board of Directors.
“Wholly-Owned Subsidiary” of a
Person means a Subsidiary, all of the shares of stock or other ownership
interests of which are owned, directly or indirectly through one or more
intermediaries, by such Person, other than a nominal number of shares or a
nominal amount of other ownership interests issued in order to comply with
requirements that such shares or interests be held by one or more other Persons,
including requirements for directors’ qualifying shares or interests,
requirements to have or maintain two or more stockholders or equity owners or
other similar requirements.
Section
1.2 Certain
Interpretive Matters.
(a) Unless
the context requires otherwise, (i) all references to Sections, Articles,
Exhibits, Appendices or Schedules are to Sections, Articles, Exhibits,
Appendices or Schedules of or to this Agreement, (ii) each accounting term not
otherwise defined in this Agreement has the meaning commonly applied to it in
accordance with Taiwan GAAP, (iii) words in the singular include the plural and
vice versa, (iv) the term “including” means “including
without limitation,” and (v) the terms “herein,” “hereof,” “hereunder” and words of
similar import shall mean references to this
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Agreement
as a whole and not to any individual section or portion
hereof. Unless otherwise denoted, all references to “$” or dollar amounts will be
to lawful currency of the United States of America. All references to
“day” or “days” mean calendar
days.
(b) No
provision of this Agreement will be interpreted in favor of, or against, either
Shareholder by reason of the extent to which (i) such Shareholder or its counsel
participated in the drafting thereof, or (ii) such provision is inconsistent
with any prior draft of this Agreement or such provision.
ARTICLE
II
THE
JOINT VENTURE COMPANY
Section
2.1 General
Matters.
(a) Name. The
Joint Venture Company shall be named “MeiYa Technology
Corporation” [Translation from Chinese] in Chinese and “MeiYa Technology
Corporation” in English. The Shareholders acknowledge and agree that
the Joint Venture Company shall be continued as a company-limited-by-shares
under the laws of the ROC.
(b) Purpose. The
purpose of the Joint Venture Company shall be the manufacturing and sale of
certain Stack DRAM Products exclusively for and to Micron and NTC; and the entry
of, or engagement in, any such lawful transactions or activities in furtherance
of the foregoing purpose.
(c) Business
Scope. Subject to amendment by the Shareholders from time to
time and any necessary approval from the relevant Governmental Entities, the
registered business scope of the Joint Venture Company shall be as set forth in
its business license, other incorporation documents and the Articles of
Incorporation, all as mutually agreed upon by the Shareholders.
(d) Principal Place
of Business. The registered address and the principal place of
business of the Joint Venture Company shall be at 0X, 000-00 Xxxx Xxx Xxxxx XX,
Xxxxxx Xxxx, Xxxxxx, ROC. The Board of Directors may change the
registered address and the principal place of business of the Joint Venture
Company to such other place as the Board of Directors may from time to time
determine, and, if necessary, the Board of Directors shall cause the Joint
Venture Company’s registration documents to be amended in accordance with the
requirements of the Applicable Laws so as to effectuate the change in the
registered address and the principal place of business of the Joint Venture
Company. The Joint Venture Company may maintain offices and places of
business at such other place or places within or outside of Taiwan as the Board
of Directors may deem to be advisable.
Section
2.2 Articles of
Incorporation. The Shareholders shall, at or promptly after
the Closing, cause the Joint Venture Company to adopt the Articles of
Incorporation as its articles of incorporation and to file the Articles of
Incorporation in accordance with Applicable Laws of the ROC. In case
of any conflict or inconsistency between the provisions of the Articles of
Incorporation and the terms of this Agreement, the terms of
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this
Agreement shall prevail as between the Shareholders to the extent permitted
under the Applicable Laws. The Shareholders shall exercise all rights
available to them to give effect to the terms of this Agreement to the extent
permissible under the Applicable Laws and to take such reasonable steps to amend
the Articles of Incorporation as soon as practicable to the extent necessary to
remove any such conflict or inconsistency.
Section
2.3 Maintenance of Joint Venture
Company. The Shareholders shall cause the Board of Directors,
or officers of the Joint Venture Company, to make or cause to be made, from time
to time, filings and applications to the relevant Governmental Entities in the
ROC to amend any registration, license or permit of the Joint Venture Company as
the Board of Directors reasonably considers necessary or appropriate under the
Applicable Laws so as to ensure (a) the due incorporation and continuation of
the Joint Venture Company as a company-limited-by-shares under the laws of the
ROC and (b) compliance with the terms of this Agreement.
Section
2.4 Governmental
Approvals. In the event that either Shareholder takes or
desires to take any action contemplated by this Agreement that could reasonably
be expected to result in an event or transaction, including without limitation
(i) the purchase by either Shareholder of Shares pursuant to Section 3.5, 9.3,
12.3, 12.6 or Article XIII or (ii) the making of a contribution to
the capital of the Joint Venture Company as contemplated by Section 3.2 or 3.3,
which event or transaction, as to each of the foregoing, would require either
Shareholder to make a filing, notification or any other required or requested
submission under antitrust, competition, foreign investment, company or fair
trade law (any such event or transaction, a “Filing Event” and any such
filing, notification, or any such other required or requested submission, a
“Filing” and any such
law, a “Regulatory
Law”), then:
(a) the
Shareholder taking such action, in addition to complying with any other
applicable notice provisions under this Agreement, shall promptly notify the
other Shareholder of such Filing Event, which notification shall include an
indication that Filings under the Regulatory Law will be required;
(b) notwithstanding
any provision to the contrary in this Agreement, a Filing Event may not occur or
close until after any applicable waiting period (including any extension
thereof) under the Regulatory Law, as applicable to such Filing Event, shall
have expired or been terminated, and all approvals under regulatory Filings in
any jurisdiction that shall be necessary for such Filing Event to occur or close
shall have been obtained, and any applicable deadline for the occurrence or
closing of such Filing Event contained in this Agreement shall be delayed, so
long as both Shareholders are proceeding diligently in accordance with this
Section 2.4 to seek any such expiration, termination or approval, and so long as
there are no other outstanding conditions preventing the occurrence or closing
of the Filing Event;
(c) the
Shareholders shall, and shall cause any of their relevant Affiliates
to:
(i)
as promptly as practicable, make their respective Filings under the applicable
Regulatory Law;
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(ii)
promptly respond to any requests for additional
information from the applicable Governmental Entity;
(iii) subject
to applicable Regulatory Laws, use commercially reasonable efforts to cooperate
with each other in the preparation of, and coordinate, such Filings (including
the exchange of drafts between each party’s outside counsel) so as to reduce the
length of any review periods;
(iv) subject
to applicable Regulatory Laws, cooperate and use their respective commercially
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary under Regulatory Law in connection with
such Filing Event, including using commercially reasonable efforts to provide
information, obtain necessary exemptions, rulings, consents, clearances,
authorizations, approvals and waivers, and effect necessary registrations and
filings;
(v)
subject to applicable Regulatory Laws, use their commercially reasonable
efforts to (a) take actions that are necessary to prevent the applicable
Governmental Entity from filing an action with a court or Governmental Entity
that, if the Governmental Entity prevailed, would restrict, enjoin, prohibit or
otherwise prevent or materially delay the consummation of the Filing Event,
including an action by any such Governmental Entity seeking a requirement to (i)
sell, license or otherwise dispose of, or hold separate and agree to sell or
otherwise dispose of, assets, categories of assets or businesses of either
Shareholder, the Joint Venture Company, or any of their respective Subsidiaries;
(ii) terminate existing relationships and contractual rights and obligations of
either Shareholder, the Joint Venture Company or any of their respective
Subsidiaries; (iii) terminate any relevant joint venture or other arrangement;
or (iv) effectuate any other change or restructuring of either Shareholder or
the Joint Venture Company (as to each of the foregoing, a “Divestiture Action”), and (b)
contest and resist any action, including any legislative, administrative or
judicial action, and to have vacated, lifted, reversed or overturned any order
that restricts, enjoins, prohibits or otherwise prevents or materially delays
the occurrence or closing of such Filing Event; and
(vi) subject
to applicable Regulatory Laws, prior to the making or submission of any
analysis, appearance, presentation, memorandum, brief, argument, opinion or
proposal by or on behalf of either Shareholder in connection with proceedings
under or relating to the applicable Regulatory Law, consult and cooperate with
one another, and consider in good faith the views of one another, in connection
with any such analyses, appearances, presentations, memoranda, briefs,
arguments, opinions and proposals, and provide one another with copies of all
material communications from and filings with, any Governmental Entities in
connection with any Filing Event;
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(d) notwithstanding
anything to the contrary in this Section 2.4, nothing in this Section 2.4 shall
require either Shareholder or its respective Affiliates, or the Joint Venture
Company, to take any Divestiture Action; and
(e) if
the Filing Event is prevented from occurring or closing as a result of any
applicable Regulatory Laws, after exhausting all efforts required under this
Section 2.4 to obtain the necessary approval of any applicable Governmental
Entity, then the Shareholders shall negotiate in good faith to agree upon an
alternative event or transaction that would be permissible under applicable
Regulatory Laws, and would approximate, as closely as possible, the intent and
contemplated effect of the original Filing Event.
ARTICLE
III
CAPITALIZATION;
CONTRIBUTION OF CAPITAL
Section
3.1
Authorized
Capital. The Joint Venture Company shall have an initial
authorized capital of [***] divided into [***] Shares. In accordance
with Section 6.5, the authorized capital may be amended from time to time by the
Shareholders, as may be necessary or desirable to consummate the transactions
contemplated herein and in accordance with the Applicable Laws of the
ROC.
Section
3.2 Capital Contributions at or
Prior to the Closing.
(a) In
connection with the formation of the Joint Venture Company, NTC shall have
contributed to the Company, prior to the Closing, NT$ 1,000,000 as an initial
contribution to the capital of the Joint Venture Company for the subscription of
one hundred thousand (100,000) Shares.
(b) Pursuant
to the Master Agreement and subject to the terms and conditions thereof, at the
Closing, NTC shall contribute to the Joint Venture Company, through the
subscription of one hundred nineteen million nine hundred thousand
(119,900,000) Shares, NT$
1,199,000,000. Pursuant to the Master Agreement and subject to the
terms and conditions thereof, at the Closing, MNL shall contribute to the Joint
Venture Company, through the subscription of one hundred twenty million
(120,000,000) Shares, NT$
1,200,000,000.
Section
3.3 Additional Capital
Contributions. In addition to the capital contributions
referred to in Section 3.2, each of MNL and NTC commits to making, on or prior
to December 31, 2009, additional capital contributions of the NT$
equivalent (rounded down to the nearest NT$10,000) of $510 million each, for
total capital contributions by each Shareholder to the Joint Venture Company of
$550 million. The timing of the capital increase by the Joint Venture
Company and the injection of additional capital by the Shareholders under this
Section 3.3, including the per Share purchase price with respect to the purchase
of Shares at each capital increase, shall be mutually agreed by the Shareholders
and approved by the Board of Directors, as appropriate; provided, that, the
timing of the completion of the capital contributions by the Shareholders as
contemplated under this Section 3.3 shall in no event be later than December 31,
2009.
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Section
3.4 Further Capital
Contributions.
(a) No Further
Obligation. Unless otherwise agreed by the Shareholders in
writing, neither Shareholder shall be obligated to make any further contribution
of capital to the Joint Venture Company beyond those contemplated by Section 3.2
and Section 3.3.
(b) Future Cash
Requirements. To the extent possible, in addition to the use
of proceeds from the subscription of any Shares, all future cash requirements of
the Joint Venture Company shall be satisfied first from cash flow generated by
operations of the Joint Venture Company and second from financing that the Joint
Venture Company may procure pursuant to Article IV of this
Agreement.
Section
3.5 Failure of a Shareholder to
Contribute Capital.
(a) Put or Call
Rights. In the event that a Shareholder (for purpose of this
Section 3.5, the “Non-contributing Shareholder”)
fails to contribute to the capital of the Joint Venture Company as contemplated
by Section 3.2 and 3.3, the other Shareholder (for purpose of this Section 3.5,
the “Contributing
Shareholder”) shall have the right, but not the obligation, by written
notice to the Non-contributing Shareholder, to require the Non-contributing
Shareholder to:
(i)
[***]; or
(ii)
[***].
(b) Completion of
Put/Call.
(i)
The Shareholders shall in good faith complete the sale or purchase transaction
contemplated under Section 3.5(a) as soon as practicable, but in no event later
than [***] days after delivery of the notice by the Contributing
Shareholder.
(ii)
[***].
Section
3.6 Miscellaneous Capital
Provision.
(a) No
Interest. No interest shall be payable to a Shareholder on its
capital contributions to the Joint Venture Company. Except through a
reduction of capital or upon dissolution of the Joint Venture Company, a
Shareholder shall not be entitled to withdraw or the return of any of its
capital contributions.
(b) [***].
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ARTICLE
IV
BANK
LOANS
If the
Board of Directors shall at any time determine that there is a need for the
Joint Venture Company to obtain external financing, the Shareholders will assist
the Joint Venture Company to seek and obtain commercial loans or other financing
arrangements from banks and other financial institutions on competitive market
terms and otherwise as the Joint Venture Company may reasonably require; provided, however, that any
such loans from external sources shall be secured only by the assets of the
Joint Venture Company and repaid from the cash flow of the Joint Venture
Company. None of the Shareholders (or any of their representatives)
shall be obligated under this Agreement or otherwise to provide any guarantee or
security for any such loans in favor of the Joint Venture Company, unless
specifically agreed in writing by such Shareholder (or its duly authorized
representative). The Shareholders shall cause the Joint Venture
Company to use commercially reasonable efforts, from and after the Closing, to
obtain [***] in commercial loans to be used in accordance with the Initial
Business Plan.
ARTICLE
V
MANAGEMENT
OF THE JOINT VENTURE COMPANY
Section
5.1 Board of
Directors.
(a) Power and
Authority. The Board of Directors shall be responsible for the
overall management of the business, affairs and operations of the Joint Venture
Company. The Board of Directors shall have all the rights and powers
given to it under the Articles of Incorporation and the Applicable Laws of the
ROC, including without limitation, the ROC Company Law.
(b) Number of
Directors. The Articles of Incorporation shall provide for the
Joint Venture Company to have a Board of Directors consisting of [***]
directors. The directors shall be designated and elected as
follows:
(i)
MNL shall be entitled to designate a number of Persons as its
representatives to be elected as directors of the Joint Venture Company equal
to [***]; and
(ii) NTC
shall be entitled to designate a number of Persons as its representatives to be
elected as directors of the Joint Venture Company equal to [***].
(c) Agreement to
Vote.
(i) The
Shareholders agree to vote, in any meeting of the shareholders where directors
are elected, in a coordinated manner, to elect all of the Persons designated by
the Shareholders in accordance with Section 5.1(b) above, which shall
[***]. As soon as practicable after the Closing, the Shareholders
shall elect the [***].
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(ii) If
for any reason the Shareholders shall be unable to elect [***] Persons to be
their representatives to serve as directors pursuant to Section 5.1(b), the
Shareholders shall vote, in a coordinated manner, to elect as many of such
Persons as possible. The number of Persons so elected shall be
allocated between the Shareholders as follows:
(A) MNL
shall be entitled to designate a number of Persons to be so elected that is
equal to [***]; and
(B) NTC
shall be entitled to designate a number of Persons to be so elected that is
equal to [***].
(iii) Notwithstanding
Section 5.1(c)(ii) above, if [***].
(d) Removal and
Replacement. Any of the representatives serving as directors
on the Board of Directors may be removed or replaced for any reason by the
Shareholder that designated him or her. If any such representative
serving on the Board of Directors is so removed or replaced or otherwise ceases
to serve as a director on the Board of Directors, the Shareholder that
designated such representative shall be entitled to designate another Person to
fill such vacancy.
(e) Compensation. The
directors, except for the independent directors, if any, shall not receive any
compensation for serving as such, although the Board of Directors may authorize
the reimbursement of expenses reasonably incurred in connection with the
performance of their duties.
(f) Meetings of the
Board of Directors; Notice.
(i)
The Board of Directors shall meet from time to time but at least once per fiscal
quarter in Taiwan (or such other place as the Board of Directors may decide) by
not less than ten (10) days notice in writing. Emergency meetings of
the Board of Directors may be convened from time to time by the Chairman, or the
Vice-Chairman pursuant to Section 5.2(c), by not less than three (3) days notice
in writing.
(ii)
A notice of a meeting of the Board of Directors shall contain
the time, date, location and agenda for such meeting. The presence of
any director at a meeting (including attendance by means of video conference)
shall constitute a waiver of notice of the meeting with respect to such
director.
(iii) The
Board of Directors shall cause written minutes to be prepared of all actions,
determinations and resolutions taken by the Board of Directors and a copy
thereof sent to each director and supervisor of the Joint Venture Company within
twenty (20) days of each meeting.
(g) Proxy and Video
Conference. In any case where a director cannot attend a
meeting of the Board of Directors, that director may appoint another director as
his or her proxy in accordance with the ROC Company Law. All or any
of the directors may
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participate
in a meeting of the Board of Directors by means of a video conference which
allows all persons participating in the meeting to see and hear each
other. A director so participating shall be deemed to be present in
person at the meeting and shall be entitled to vote or be counted in a quorum
accordingly.
(h) Quorum. The
presence of at least [***] of the directors in office (including at least [***]
directors (or with respect to a Shareholder that only appoints [***], that
[***]) appointed by each of the Shareholders), in person, by proxy or by video
conference, shall be necessary and sufficient to constitute a quorum for the
purpose of taking action by the directors at any meeting of the Board of
Directors. No action taken by the Board of Directors at any meeting
shall be valid unless the requisite quorum is present.
(i) Voting. Unless
a higher majority of votes is specifically required under the ROC Company Law or
the Articles of Incorporation, all actions, determinations or resolutions of the
Board of Directors shall require the affirmative vote of a [***] majority of the
directors present at any meeting of the Board of Directors at which a quorum is
present.
(j) Matters Requiring
the Approval of the Board of Directors. Each of the following
actions shall require the approval of the Board of Directors by resolution
adopted in accordance with Section 5.1(i) above (which approval may be obtained
through the adoption of a Business Plan by the Board of Directors in accordance
with Section 7.5, provided, that the
relevant Business Plan sets forth such action in reasonable
detail):
(i)
appointing or removing the Chairman or Vice Chairman of the Board of Directors
and appointing or removing the President, the Executive Vice President or any
Vice Presidents of the Joint Venture Company;
(ii) approving
or amending any Business Plan;
(iii) issuing
new Shares within the authorized capital of the Joint Venture
Company;
(iv) determining
long-term policies of the Joint Venture Company including substantial change in
the organizational structure and business operation of the Joint Venture
Company;
(v)
determining employment terms, including compensation packages,
of the President, the Executive Vice President and any Vice Presidents of the
Joint Venture Company;
(vi) adopting
or making any material changes to any employee benefit plan, including any
incentive compensation plan;
(vii) entering
into or amending any collective bargaining arrangements or waiving any material
provision or requirement thereof;
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(viii) establishing
Subsidiaries, opening and closing branch offices, acquiring or selling any
equity interests in another Person, establishing new business sites and closing
of existing ones;
(ix)
setting the limits of authorities of various executive positions and
approving the internal chart of authorities;
(x)
making capital expenditures (or a group of related capital
expenditures) in an amount equal to or greater than [***] individually or [***]
in the aggregate in any one fiscal quarter;
(xi)
borrowing or lending to, or guaranteeing the obligations of, any
Third Party;
(xii)
preparing and submitting the financial statements to the
shareholders of the Joint Venture Company for their approval;
(xiii)
pledging or hypothecating, or creating any encumbrance or other
security interest in, the Joint Venture Company’s assets;
(xiv) entering
into an agreement for the purchase, transfer, sale or any other disposal of
assets valued at an amount greater than [***];
(xv) entering
into, amending or terminating any material agreement relating to intellectual
property rights or know how;
(xvi) establishing,
modifying or eliminating any significant accounting or tax policy, procedure or
principle;
(xvii) commencing
or settling any litigation, except routine employment litigation
matters;
(xviii) redeeming
or repurchasing Shares;
(xix) selecting,
appointing and replacing attorneys, accountants, auditors and financial advisors
for the Joint Venture Company or any of its Subsidiaries;
(xx) preparing
and submitting proposals for surplus earning distributions and loss offset to
the shareholders of the Joint Venture Company for approval;
(xxi) making
any material purchase, sale or lease (as lessor or lessee) of any real
property;
(xxii) making
any public announcement by the Joint Venture Company or any Subsidiary of the
Joint Venture Company of any material non-public information;
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(xxiii) making
any filing with, public comments to or negotiation or discussion with, any
Governmental Entity (excluding regular operating filings and other routine
administrative matters);
(xxiv) establishing,
overseeing and modifying the investment policies of the Joint Venture Company
with respect to funds held by the Joint Venture Company.
(xxv) (i)
voluntarily commencing or determining not to contest in a timely and appropriate
manner any involuntary proceeding or filing any petition seeking relief under
bankruptcy, insolvency, receivership or similar laws, (ii) applying for or
consenting to the appointment of a receiver, trustee, custodian, conservator or
similar official for the Joint Venture Company or any Subsidiary of the Joint
Venture Company, or for a substantial part of their property or assets, (iii)
filing an answer admitting the material allegations of a petition filed against
the Joint Venture Company or any Subsidiary of the Joint Venture Company in any
proceeding described above, (iv) consenting to any order for relief issued with
respect to any proceeding described in this subsection (xxv), (v) making a
general assignment for the benefit of creditors, or (vi) admitting in writing
the Joint Venture Company’s inability, or the failure of the Joint Venture
Company or of any Subsidiary of the Joint Venture Company generally, to pay its
debts as they become due or taking any action for the purpose of effecting any
of the foregoing;
(xxvi) submitting
any matters to the shareholders of the Joint Venture Company for consideration
or approval as may be required by law; and
(xxvii) deciding
other important matters related to the Joint Venture Company that arise other
than in the ordinary course of business.
Section
5.2 Chairman and
Vice-Chairman.
(a) Chairman. The
Chairman of the Board of Directors shall be a director designated by NTC,
subject to the consent of MNL, which consent shall not be unreasonably withheld
(unless MNL has the right to appoint more directors than NTC, in which case, MNL
shall make the designation, subject to the consent of NTC, which consent shall
not be unreasonably withheld). The Chairman shall have such duties
and responsibilities as may be assigned to him or her by the Board of
Directors. The Chairman shall not have a second or casting
vote.
(b) Vice-Chairman. The
Vice-Chairman of the Board of Directors shall be a director designated by the
Shareholder that does not have the right to designate the Chairman, subject to
the consent of the other Shareholder, which consent shall not be unreasonably
withheld. The Vice-Chairman shall not have a second or casting
vote.
(c) Convening of the
Board of Directors Meeting. Meetings of the Board of Directors
shall be convened by the Chairman. Each director of the Joint Venture
Company shall have the right to request the Chairman to convene a meeting of the
Board of Directors indicating the proposed agenda. If the Chairman
does not, within one week (or within three (3) days for convening an emergency
meeting of the Board of
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Directors),
comply with such director’s request, the Vice-Chairman shall have the right to
convene the meeting of the Board of Directors as requested by such
director.
Section
5.3 Supervisors.
(a) Number of
Supervisors. The Articles of Incorporation shall provide for the Joint
Venture Company to have [***] supervisors. Each Shareholder shall be
entitled to designate [***] to be elected as a supervisor of the Joint Venture
Company.
(b) Agreement to
Vote. The Shareholders agree to vote, in any meeting of the
shareholders where supervisors are elected, in a coordinated manner, to elect
all of the Persons designated by the Shareholders in accordance with Section
5.3(a) above. As soon as practicable after the Closing, the
Shareholders shall elect the [***] designated by MNL, and the [***] designated
by NTC, to serve as supervisors of the Joint Venture Company.
(c) Removal and
Replacement. Any of the supervisors may be removed or replaced
for any reason by the Shareholder that designated him or her. If any
supervisor is so removed or replaced or otherwise ceases to serve as a
supervisor, the Shareholder that designated such supervisor shall be entitled to
designate another Person to fill such vacancy.
(d) Compensation. The
supervisors, except for the independent supervisors, if any, shall not receive
any compensation for serving as such, although the Board of Directors may
authorize the reimbursement of expenses reasonably incurred in connection with
the performance of their duties.
(e) Restriction on
Employment. The supervisors shall not be concurrently employed
by the Joint Venture Company in any other capacity.
Section
5.4 Independent Directors and
Independent Supervisors. To the extent that independent
directors and independent supervisors are required under the Applicable Laws of
the ROC, the Shareholders shall elect such minimum number of independent
directors and independent supervisors as required. Such independent
directors and independent supervisors shall be nominated [***].
Section
5.5 President and Executive Vice
President.
(a) President. The
Articles of Incorporation shall provide for the Joint Venture Company to have a
president (the “President”), who shall report
to the Board of Directors and serve at its pleasure. The President
shall have such daily operation and management responsibilities of the Joint
Venture Company as may be assigned or delegated by the Board of Directors from
time to time. [***].
(b) Executive Vice
President. The Articles of Incorporation shall provide for the
Joint Venture Company to have an executive vice president (the “Executive Vice President”),
who shall also report to the Board of Directors and serve at its
pleasure. The Executive Vice President shall work with and assist the
President in executing the
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daily
operation and management responsibilities of the Joint Venture Company and shall
have such other responsibilities as may be assigned or delegated by the Board of
Directors from time to time. [***].
(c) Termination and
Vacancy. The Board of Directors shall have the exclusive right
to terminate the services of the President and the Executive Vice President with
or without cause. In the event of any such termination or in the
event of any vacancy as a result of death, resignation, retirement or any other
reason, the Shareholder that nominated the President or the Executive Vice
President, as the case may be, shall be entitled to nominate another Person,
subject to the same consent requirement set forth in Sections 5.5(a) or (b)
above, as the case may be, to fill such vacancy for appointment by the Board of
Directors.
(d) Work as a
Team. The President and the Executive Vice President shall
work as a team in executing their duties and responsibilities.
Section
5.6 Other
Officers. The President and the Executive Vice President may
appoint, subject to the approval of the Board of Directors, and be assisted by
such other officers of the Joint Venture Company as the President and the
Executive Vice President may consider necessary or desirable from time to
time. Such other officers shall perform such duties and have such
powers specifically delegated to them by the Board of Directors from time to
time. The Board of Directors shall determine, from time to time, the
compensation, including any incentive compensation, for which such officers may
be offered. The Board of Directors may, from time to time, also
appoint, and assign titles to, other officers of the Joint Venture Company, and
delegate to such officers such authorities and duties as the Board of Directors
may deem advisable.
ARTICLE
VI
SHAREHOLDERS’
MEETINGS
Section
6.1 Annual
Meeting. The annual meetings of the shareholders of the Joint
Venture Company shall be convened at least once annually by not less than twenty
(20) days prior notice in writing accompanied by an agenda specifying the
business to be transacted.
Section
6.2 Special
Meeting. Special meetings of the shareholders of the Joint
Venture Company may be held from time to time and shall be convened by the Board
of Directors by not less than ten (10) days prior notice in writing accompanied
by an agenda specifying the business to be transacted. (Any annual
meetings of the shareholders and any special meetings of the shareholders shall
individually be referred to as a “Shareholders’ Meeting” and
collectively be referred to as “Shareholders’
Meetings.”)
Section
6.3 Quorum. Unless
a higher quorum is required under the Applicable Laws, the presence of the
shareholders of the Joint Venture Company representing [***] or more of the
issued and outstanding Shares of the Joint Venture Company shall be necessary
and sufficient to constitute a quorum for the purpose of taking action at any
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Shareholders’
Meeting of the Joint Venture Company. No action taken at a
Shareholders’ Meeting shall be valid unless the requisite quorum is
present.
Section
6.4 Voting. Each
Share shall entitle its holder to one vote. Unless a higher vote is
required under the Applicable Laws, all actions, determinations or resolutions
of the shareholders at any Shareholders’ Meeting of the Joint Venture Company
shall require the affirmative vote of [***] or more of the votes represented in
person or by proxy at the Shareholders’ Meeting at which a quorum is
present.
Section
6.5 Matters Requiring the
Approval of the Shareholders. Each of the following actions
shall require the approval of the shareholders of the Joint Venture Company by
resolution adopted in accordance with Section 6.4 above:
(a) amending,
restating or revoking the Articles of Incorporation;
(b)
electing or removing the directors or the supervisors;
(c) approving
the balance sheet and other financial statements received from the Board of
Directors;
(d) approval
of surplus earning distribution or loss offset proposals;
(e) any
merger, consolidation or other business combination to which the Joint Venture
Company is a party, or any other transaction to which the Joint Venture Company
is a party (other than where the Joint Venture Company is merged or combined
with or consolidated into a Wholly-Owned Subsidiary of the Joint Venture
Company), resulting in (i) a change of control of the Joint Venture Company,
other than a change of control that may occur pursuant to Section 3.5, 9.3,
12.3, 12.6 or 13.1 or (ii) the sale of all or substantially all assets of the
Joint Venture Company;
(f)
liquidation or dissolution of the Joint Venture Company; and
(g) other
actions reserved to the determination of the shareholders of the Joint Venture
Company by the ROC Company Law.
ARTICLE
VII
OPERATIONS
Section
7.1
Manufacturing
Facility; Fab Equipment.
(a) Fab
Equipment. Subject to the mutual agreement of the
Shareholders, the Joint Venture Company may purchase, at fair market value,
NTC’s idle equipment that is suitable for use in connection with the
manufacturing of Stack DRAM Products in the Leased Fab.
(b) Upgrade and
Enhancements. [***].
Section
7.2 Manufacturing
Operations.
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(a) Front-End
Manufacturing Operations. The Joint Venture Company’s
front-end manufacturing operations will utilize the Transferred Technology, JDP
Designs, JDP Process Nodes and JDP Work Product, and operate, at all times,
within the Boundary Conditions, and in a manner consistent with the process of
records and model of records in the Transferred Technology, JDP Designs, JDP
Work Product and JDP Process Nodes, as any of the foregoing is transferred to
the Joint Venture Company pursuant to the TTA 68-50 or the Technology Transfer
Agreement. The Shareholders shall cause the Joint Venture Company not
to operate outside of the processes of records and models of records so
transferred. Unless both Shareholders agree otherwise,
[***].
(b) Manufacturing
Committee.
(i)
The Shareholders shall jointly establish a manufacturing
committee (the “Manufacturing
Committee”) of the Joint Venture Company, [***]. The members
of the Manufacturing Committee shall serve at the pleasure of the Shareholder
appointing them and may be removed from the Manufacturing Committee and replaced
by such Shareholder at any time with or without cause.
(ii)
NTC’s members of the Manufacturing Committee shall generally be
employees of NTC, and MNL’s members of the Manufacturing Committee shall
generally be employees of Micron, in each case who are responsible for product
loading and planning decisions and who can coordinate the loading of product at
the Joint Venture Company level.
(iii) The
Manufacturing Committee shall be responsible for [***]. In reaching
such decisions, the Manufacturing Committee may take advice and input from such
sources as it deems appropriate.
(iv) In
the event that the members of the Manufacturing Committee cannot agree on
product loading decisions, then the Manufacturing Committee will permit, with
respect to each Process Node, [***].
(v)
On a quarterly basis, or as otherwise determined by the
Manufacturing Committee, the Manufacturing Committee shall determine the
Baseline Flow and calculate [***] available for each Process Node
for allocation at each fab of the Joint Venture Company to each of Micron and
NTC based on, [***]. The Manufacturing Committee shall develop the
loading plan for wafer starts at each fab of the Joint Venture Company for any
given week based on the available Manufacturing Capacity for such fab for such
week, so that Micron shall receive a share of Manufacturing Capacity for such
week based on MNL’s Output Percentage and NTC shall receive a share of
Manufacturing Capacity for such week based on its Output
Percentage.
(vi) Requests
of Micron and NTC for products or product mixes different from the pre planned Baseline
Flow with respect to a fab shall be honored, except to the extent honoring such
request would lead to wafer starts for the non-Baseline Flow products at such
fab resulting in Micron or NTC receiving more than the
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Manufacturing
Capacity allocated to such Person under the current Baseline Flow for such
fab. To the extent that both Micron and NTC request changes in
products or product mixes at a given fab that result in [***], the Manufacturing
Committee shall re-determine the allocation of Manufacturing Capacity based on
[***], which shall then be the basis for its loading plans with respect to such
fab.
(vii) The
Shareholders shall cause the Joint Venture Company to ensure that Manufacturing
Capacity at each fab is allocated as provided for in this Section
7.2.
(viii) The
Manufacturing Committee shall meet at such times as may be helpful or necessary
for the efficient operation of the Company but in no event less than
monthly. The Manufacturing Committee shall provide an annual report
to the Joint Venture Company for use in a Business Plan and the Manufacturing
Plan.
(c) Manufacturing
Plan. The Joint Venture Company shall prepare an annual
manufacturing plan (the “Manufacturing Plan”) under the
direction of the President, with input from the Executive Vice President, the
Shareholders and the Manufacturing Committee or such other persons or committees
charged with such responsibility from time to time by the
Shareholders. The Manufacturing Plan shall seek to optimize the
efficiency and output of the Joint Venture Company and shall be updated monthly
by the Manufacturing Committee. The Manufacturing Plan shall address
various manufacturing issues, including without limitation, the Stack DRAM
Products to be manufactured, priority of wafer starts and weekly
output.
Section
7.3 Output Rights and
Obligations.
(a) Supply
Agreement. As contemplated by the Master Agreement, Micron and
NTC will enter into the Supply Agreement with the Joint Venture Company, which
Supply Agreement shall provide for the right and obligation of each Shareholder
to purchase its Output Percentage of the Stack DRAM Products of the Joint
Venture Company. No amendment or modification of the terms or
conditions of the Supply Agreement shall be made without prior written notice to
and the prior written consent of NTC and Micron.
(b) Output
Percentage. As of the Closing, each Shareholder’s Output
Percentage shall be [***]. After the Closing, each time a Shareholder
(A) transfers, sells or otherwise disposes of Shares (a “Share Disposition”) (it being
agreed that any Shares Transferred to employees of a Transferring Shareholder or
its Wholly-Owned Subsidiary (or, if MNL is the Transferring Shareholder, to
employees of Micron or its Wholly-Owned Subsidiaries) as contemplated by Section
8.4(b) that are not replaced during the Replacement Period through purchases as
contemplated by the last sentence of Section 8.4(d) shall be deemed to have been
disposed of in a Share Disposition on, and only as of, the last day of the
Replacement Period) or (B) purchases, acquires or otherwise receives (other than
purchases during the Replacement Period contemplated by the last sentence of
Section 8.4(d) and purchases contemplated by Section 8.4(e)), without violation
of this Agreement, Shares (a “Share Acquisition”), the
Shareholder
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that is
participating in such transaction (the “Initiating Shareholder”)
shall, contemporaneously with the occurrence of such transaction, provide
written notice thereof (the “Change Notice”) to the other
Shareholder (the “Other
Shareholder”), which notice shall specify, in the case of a Share
Disposition, the number of Shares transferred, sold and disposed of, or, in the
case of a Share Acquisition, the number of Shares purchased, acquired or
otherwise received, by the Initiating Shareholder. In the case of a
Share Disposition, the Other Shareholder shall have [***] days from the delivery
of the Change Notice to determine (which determination shall be effectuated by
delivering written notice (an “Answer Notice”) to the
Initiating Shareholder) whether the Other Shareholder’s Output Percentage should
increase, which increase shall take effect on the date that is [***] days
following the delivery of such Answer Notice. In the case of a Share
Acquisition, the Initiating Shareholder shall have [***] days from the delivery
of the Change Notice to determine (which determination shall be effectuated by
delivering written notice (also an “Answer Notice”) to the Other
Shareholder) whether the Initiating Shareholder’s Output Percentage should
increase, which increase shall take effect on the date that is [***] days
following the delivery of such Answer Notice. If the determination is
so made that a Shareholder’s Output Percentage should not increase, then, for
purposes of this Section 7.3 only (X) in the case of a Share Disposition, the
Initiating Shareholder shall be deemed, for purposes of this Section 7.3 only,
to continue to own the number of Shares transferred, sold or otherwise disposed
of in the Share Disposition (such deemed Shares being referred to as “Phantom Shares”) and (Y) in
the case of a Share Acquisition, the Other Shareholder shall be deemed, for
purposes of this Section 7.3 only, to own such number of Shares as is necessary
so that its Output Percentage will not change as a result of the Share
Acquisition (such deemed Shares also being referred to as “Phantom
Shares”). Notwithstanding anything to the contrary in this
Section 7.3(b), the Shareholders shall not be required to give a Change Notice
or otherwise comply with the procedures in this Section 7.3(b) if there are
Share Dispositions or Share Acquisitions by both Shareholders that occur
contemporaneously with respect to which, if both Initiating Shareholders gave
Change Notices and both Shareholders giving an Answer Notice elected to increase
a Shareholder's Output Percentage as a result thereof, no change in the
Shareholders' Output Percentages would occur.
Section
7.4 Marketing and
Sales. With respect to Stack DRAM Products purchased from the
Joint Venture Company, each of Micron and NTC shall be free to compete against
each other, anywhere in the world and with any customers, using its own
marketing and sales channels and personnel. The Shareholders agree
that appropriate safeguards shall be put in place by each Shareholder, and the
Shareholders shall cause the Joint Venture Company to put in place such
safeguards, to ensure compliance with all applicable competition or anti-trust
laws.
Section
7.5 Business Plans and
Budgets.
(a) Initial Business
Plan; Initial Budget.
(i)
As contemplated by the Master Agreement, the Shareholders shall work in good
faith to prepare, at or prior to the Closing, a mutually acceptable initial
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business
plan covering the operations and business planning of the Joint Venture Company
(“Initial Business
Plan”) from the commencement of the business of the Joint Venture Company
until [***] (such period, the “Initial Period”).
(ii)
The Initial Business Plan shall cover [***].
(iii) The
Initial Business Plan shall include an initial budget (“Initial Budget”) which shall
cover [***] of the Joint Venture Company to be made during the Initial Period
and the capital contributions, if any, required by this Agreement to be made by
the Shareholders during the Initial Period.
(iv) At
least [***] days before the beginning of the second Fiscal Year of the Initial
Period, the Board of Directors on its own initiative, or at a Shareholder’s
request, shall (in consultation with the President and the Executive Vice
President) review the Initial Business Plan and determine whether any amendment
thereto is necessary or appropriate. Upon a determination by the
Board of Directors that an amendment to the Initial Business Plan is necessary
or appropriate, the Board of Directors may approve such amendment and the
President and the Executive Vice President shall thereupon implement such
amendment to the Initial Business Plan.
(v) Except
pursuant to Section 7.5(a)(iv) above, the Initial Business Plan shall not be
amended, updated, modified or superseded without the written consent of the
Shareholders.
(b) Annual Business
Plan; Annual Budget.
(i)
For each Fiscal Year after the end of the Initial Period, the
President shall, in consultation with the Executive Vice President and with
input from the Manufacturing Committee or such other relevant Persons or
committees charged by the Shareholders with responsibility for such matters from
time to time, prepare and submit to the Board of Directors for approval, an
annual business plan (the “Annual Business Plan”) at
least [***] days prior to the beginning of the next Fiscal Year.
(ii) The
Annual Business Plan shall include an annual budget (“Annual Budget”) which shall
cover [***] of the Joint Venture Company to be made during the period covered by
the Annual Budget and the capital contributions, if any, required to be made by
the Shareholders during such period.
(iii) The
Annual Business Plan, including the Annual Budget, shall not be amended,
updated, modified or superseded without the approval of the Board of
Directors.
(c) Transition Supply
Obligation. With respect to a Share Disposition of all (but
not less than all) of the Shares then owned by a Shareholder as contemplated
under Sections 12.3, 12.6 and 13.1, the Shareholder that remains a Shareholder
of the Joint Venture Company after such Share Disposition shall,
[***].
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ARTICLE
VIII
EMPLOYEE
MATTERS
Section
8.1 Employees.
(a) Employees of the
Joint Venture Company. The Joint Venture Company shall employ
its own personnel, including without limitation, administrative staff,
operators, technicians and engineers, and shall be their exclusive
employer. If any current employee of NTC who has been continuously
employed by NTC during the [***] (i) permanently transfers to the Joint Venture
Company within [***] and (ii) such employee, during the [***] following such
transfer has remained an employee of the Joint Venture Company and has not
delivered to the Joint Venture Company, or received from the Joint Venture
Company, a notice of termination, then NTC shall (x) [***].
(b) Hiring. The
number, position and compensation of the employees of the Joint Venture Company
shall be as determined by the President in consultation with the Executive Vice
President, subject to approval of the Board of Directors, which approval may
take the form of an Annual Business Plan.
(c) Employee
Policies. Subject to the approval of the Board of Directors,
the Joint Venture Company shall put in place and implement such employee
policies, programs and benefits as determined by the President in consultation
with the Executive Vice President or as may otherwise be required by Applicable
Laws.
Section
8.2 Assigned
Employees.
(a) Micron Assigned
Employee Agreement. Certain employees of Micron may be
assigned or transferred to work at or with the Joint Venture
Company. In connection therewith, Micron and the Joint Venture
Company shall enter into the Micron Assigned Employee Agreement.
(b) NTC Assigned
Employee Agreement. Certain employees of NTC may be assigned
or transferred to work at or with the Joint Venture Company. In
connection therewith, NTC and the Joint Venture Company shall enter into the NTC
Assigned Employee Agreement.
Section
8.3 Employment and
Service-Related Forms. The Joint Venture Company shall have
policies applicable to, and ensure that all of its officers, employees and
third-party independent contractors, third-party consultants, and other
third-party service providers enter into appropriate agreements with respect to,
(a) protection of confidential information of the Joint Venture Company, (b)
compliance with Applicable Laws, (c) other matters related to the delivery of
services to, or employment of such Person by, the Joint Venture Company, (d)
intellectual property creation and assignment documents, including invention
disclosures, pursuant to which ownership to any intellectual property created in
the course of employment with (or service to) the Joint Venture Company shall be
transferred and assigned to the Joint Venture Company or its designee, as
appropriate.
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Section
8.4 SPV
Equity. Notwithstanding any provision in this Agreement to the
contrary:
(a) Transfer of
Shares to SPV. Each Shareholder (a “Transferring Shareholder”) may
Transfer a number of Shares, up to a maximum of [***]% of the Shares it
purchased from the Joint Venture Company as contemplated by Sections 3.2 and
3.3, to a Wholly-Owned Subsidiary of such Transferring Shareholder (each, an
“SPV”). For
so long as the SPV holds any Shares, such Transferring Shareholder shall be
required to retain 100% of the equity and voting interests of such
SPV.
(b) Transfer of
Shares by SPV. Any SPV may, at any time and from time to time,
Transfer to the employees of such Transferring Shareholder or its Wholly-Owned
Subsidiaries (or, in the case of MNL, to the employees of Micron or its
Wholly-Owned Subsidiaries) any or all of the Shares such SPV received as a
result of the Transfer contemplated by Section 8.4(a). In connection
with any such Transfer, the Transferring Shareholder shall cause the Person
receiving such Shares to agree, for the benefit of the Shareholder that is not
the Transferring Shareholder, to restrictions (including with respect to voting
and transfer) with respect to such Shares equivalent to the restrictions that
would be imposed by this Agreement on the Transferring Shareholder if such
Shares were held by the Transferring Shareholder. The Transferring
Shareholder shall use reasonable efforts to enforce such restrictions, provided, however, that any
non-compliance or violation of such restrictions by the Persons receiving Shares
as contemplated by this Section 8.4(b) shall not in any way affect the deemed
ownership by the Shareholders as contemplated under Section 8.4(d) and shall not
be regarded as a breach of this Agreement by the Transferring
Shareholder.
(c) No Other
Transfer. Each Transferring Shareholder shall prevent its SPV,
if any, from Transferring Shares other than as contemplated by Section
8.4(b).
(d) Deemed Owned by
Shareholders. [***].
(e) Repurchase. With
respect to a Transferring Shareholder that has not violated this Section 8.4,
such Transferring Shareholder shall not be in violation of this Agreement if, at
any time and from time to time, it repurchases from its SPV or from Persons to
whom the SPV Transferred Shares in accordance with Section 8.4(b), any or all of
the Shares such Transferring Shareholder Transferred to its SPV in accordance
with Section 8.4(a). If, after the Listing, a Transferring
Shareholder repurchases Shares from Persons to whom its SPV Transferred Shares
in accordance with Section 8.4(b), the Shareholder that is not the Transferring
Shareholder shall be deemed to own [***] for each Share the Transferring
Shareholder so purchases.
ARTICLE
IX
TRANSFER
RESTRICTIONS
Section
9.1 Restrictions on
Transfer.
(a) General
Restriction. Except as permitted under Section 8.4 and this
Article IX, no Shareholder shall, until [***] (such period, the “Transfer Restriction Period”),
sell,
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exchange,
transfer, dispose of, encumber, pledge, mortgage or hypothecate (each a “Transfer”), whether directly
or indirectly, and shall not make any agreement or commitment to do any of the
same, any or all of its rights, title or interest in or to any Shares without
the prior written consent of the other Shareholder (except as contemplated by
Section 3.5, 12.3, 12.6, or 13.1). The foregoing consent shall not be
unreasonably withheld or delayed where a Shareholder proposes to pledge or
otherwise encumber its shares in the Joint Venture Company as collateral to
secure any loan to the Joint Venture Company for any purpose relating, directly
or indirectly, to the businesses of the Joint Venture Company.
(b) Other Transfer
Prohibitions.
(i)
A Shareholder shall in no event Transfer any part of the Shares of the Joint
Venture Company owned by it to any Person if after such Transfer such
Shareholder’s Equity Interest would be below [***]%.
(ii) The
Shareholders agree that:
(A) MNL
shall in no event Transfer any part of the Shares of the Joint Venture Company
owned by it to [***] without the prior written consent of NTC; and
(B) NTC
shall in no event Transfer any part of the Shares of the Joint Venture Company
owned by it to [***] without the prior written consent of MNL.
(c) Change of Control
Event. [***].
(d) Transferee to be
Bound. Notwithstanding consent being given by one Shareholder
to the other Shareholder for the Transfer of any part of the Shares of the Joint
Venture Company owned by the transferring Shareholder to any Person, the
transferring Shareholder shall cause and procure the transferee to agree in
writing to perform and be bound by all duties and obligations of the
transferring Shareholder, including the any transfer restrictions under Section
9.1 of this Agreement, except where the Transfer is made through open market
trades which are not, directly or indirectly, related to a negotiated
transaction between the transferring Shareholder and the
transferee.
Section
9.2 Permitted
Transfers. Notwithstanding Section 9.1, a Shareholder may
Transfer all (but not less than all) of its shares in the Joint Venture Company
to [***] (a “Permitted
Transfer”); provided,
that:
(a) such
transferee shall agree in writing to perform and be bound by all duties and
obligations of the transferring Shareholder, including the obligations set forth
in this Agreement and any Joint Venture Documents to which the transferring
Shareholder is a party;
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(b) the
transferring Shareholder shall not be released from its duties and obligations
under this Agreement or any other Joint Venture Documents and shall remain fully
liable for the performance thereof by such transferee;
(c) [***];
and
(d) at
least [***] days prior written notice of any such Transfer by a Shareholder of
shares in the Joint Venture Company shall be provided to the other
Shareholder.
(e) prior
to the effectiveness of a Transfer permitted under this Section 9.2, the
transferring Shareholder shall deliver to the Board of Directors and the other
Shareholder a certificate stating that:
(i)
the transferring Shareholder is not in breach of any provisions of this
Agreement or any other Joint Venture Documents to which the transferring
Shareholder is a party;
(ii)
immediately after giving effect to such Transfer, there will exist no event of
default or an event or condition that, with the giving of notice or lapse of
time or both, would constitute an event of default of the Transferor or such
transferee under this Agreement or any of the Joint Venture Documents;
and
(iii) the
Transfer will not, and could not reasonably be expected to, cause an adverse
effect on the Joint Venture Company or the other Shareholder, including any
material adverse tax consequences or an adverse effect due to the loss of
intellectual property rights.
Section
9.3 Right of First
Refusal.
(a) Transfer
Notice. At any time during the term of this Agreement, and
further subject to Section 9.1, if a Shareholder proposes to Transfer all or any
part of the shares in the Joint Venture Company in one or more related
transactions (such Shareholder a “Transferor”) to any party
other than a Wholly-Owned Subsidiary of Micron or the Transferor, then the
Transferor shall give the other Shareholder (the “Receiving Party”) a written
notice of the Transferor’s intention to make the Transfer (the “Transfer Notice”), which shall
include [***]. The Transfer Notice shall also certify that the
Transferor has received a firm offer from the prospective transferee and in good
faith believes a binding agreement for such Transfer is obtainable on the terms
set forth in the Transfer Notice.
(b) Option to
Purchase. The Receiving Party shall have the first right and
option, at its sole discretion, but not the obligation, to purchase all (but not
less than all) of the Offered Shares pursuant to the Sale Offer by delivering a
written notice to the Transferor within [***] days from the date of the Sale
Offer (such period, the “Option
Period”) stating the Receiving Party’s intention to exercise its right
and option to purchase the Offered Shares.
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(c) Closing of
Transfer to Receiving Party. The Transfer of
Offered Shares resulting from acceptance of the Sale Offer by the Receiving
Party in accordance with paragraph (b) above shall take place at a closing on a
date designated by the Receiving Party within [***] days following such
acceptance (or, if any governmental or regulatory approvals, consents, filings
or authorizations are required in connection with such Transfer, within [***]
days following the receipt of all such approvals, consents, filings or
authorizations), or at such other time as the Transferor and the Receiving Party
may otherwise agree. At such closing, the Transferor shall be
obligated to sell and Transfer the Offered Shares and the Receiving Party shall
pay the purchase price for such shares in accordance with the terms and
conditions set forth in the Sale Offer.
(d) Sale to Third
Party. If the Receiving Party elects not to, or fails to give
any notice of its intention to, purchase all of the Offered Shares within the
Option Period, then, subject to Section 9.1, the Transferor shall have the right
for [***] days thereafter (hereinafter the “Transfer Period”) to Transfer
the Offered Shares to the prospective transferee identified in the Transfer
Notice; provided, however,
[***]. If such Transfer is not completed within the Transfer Period,
the Transferor shall no longer be permitted to sell such Offered Shares except
to again comply with the provisions of this Section 9.3.
ARTICLE
X
ACCOUNTING;
FINANCIAL MATTERS
Section
10.1 Accounting. The
Shareholders shall use reasonable efforts to cause the Joint Venture Company’s
books of account and records to be kept and maintained in accordance with Taiwan
GAAP applied on a consistent basis. The Shareholders shall use
reasonable efforts to cause the fiscal year of the Joint Venture Company to be
from January 1 to December 31 (“Fiscal Year”) and the fiscal
quarter of the Joint Venture Company to be based on calendar months (ending on
the last day of each three-month period).
Section
10.2 Access to
Information.
(a) Inspection. To
the extent not in violation of Applicable Laws, each Shareholder and its agents
(which may include employees of the Shareholder (or, in the case of MNL, of
Micron) or the Shareholder’s independent certified public accountants (or, in
the case of MNL, Micron’s independent certified public accountants)) shall have
the right, at any reasonable time, to inspect, review, copy and audit (or cause
to be audited) at the expense of the inspecting Shareholder any and all
properties, assets, books of account, corporate records, contracts,
documentation and any other material of the Joint Venture Company or any of its
Subsidiaries, at the request of the inspecting Shareholder, whether in the
possession of the foregoing or its (or their) independent certified public
accountants. Upon such request, the Shareholders shall use reasonable
efforts to cause the Joint Venture Company and each of its relevant Subsidiaries
to use reasonable efforts to make available (or cause to make available) to such
inspecting Shareholder the Joint Venture Company’s accountants and key employees
for
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interviews
to verify information furnished or to enable such Shareholder to otherwise
review the Joint Venture Company or any of its Subsidiaries and their
operations.
(b) Competitively
Sensitive Information. The Shareholders recognize that the
Joint Venture Company may, from time to time, be in possession of Competitively
Sensitive Information belonging to a Shareholder, and in no event shall a
Shareholder be entitled to access any Competitively Sensitive Information of the
other Shareholder in the possession of the Joint Venture Company. The
Shareholders shall use reasonable efforts to cause the Joint Venture Company to
maintain procedures reasonably acceptable to both Shareholders (including
requiring that the Shareholders use reasonable efforts to label or otherwise
identify Competitively Sensitive Information as such) to ensure that the Joint
Venture Company will not disclose or provide Competitively Sensitive Information
of one Shareholder to the other Shareholder (other than to a Joint Venture
Company employee or to an assigned employee of the other Shareholder to the
extent required for such employee or assigned employee to perform his or her
duties for the Joint Venture Company) or any third party unless such disclosure
is specifically requested by the Shareholder providing such Competitively
Sensitive Information.
(c) Information
Right. The Shareholders shall use reasonable efforts to cause
the Joint Venture Company to, and to cause the Board of Directors to cause the
Joint Venture Company to, provide to each Shareholder the
following:
(i)
Monthly Reports. At the end of each fiscal month,
the Joint Venture Company, and, if requested, each of its Subsidiaries, if any,
shall provide each Shareholder with the following monthly reports prepared in
accordance with Taiwan GAAP consistently applied, in each case within the time
period specified below:
(A) monthly
cash flow report within [***] days after the end of each fiscal
month;
(B) month-end
balance sheet within [***] days after the end of each fiscal month;
(C) monthly
income statement within [***] days after the end of each fiscal
month;
(D) monthly
operational spending summary within [***] days after the end of each fiscal
month; and
(E) such
other reports as may be reasonably requested by each Shareholder.
(ii)
Quarterly Reports. As soon as available, but not
later than [***] days after the end of each fiscal quarter (other than fiscal
quarters ending on the last day of a Fiscal Year, provided that the
information required by this Section 10.2(c)(ii) will be included in the reports
delivered pursuant to Section 10.2(c)(iii)
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below for
the Fiscal Year ending on such date), the Joint Venture Company shall provide to
each Shareholder a consolidated balance sheet of the Joint Venture Company as of
the end of such period and consolidated statements of income, cash flows and
changes in shareholders’ equity, as applicable, for such fiscal quarter and for
the period commencing at the end of the previous Fiscal Year and ending with the
end of such period, setting forth in each case in comparative form the
corresponding figures for the corresponding period of the preceding fiscal year,
each prepared in accordance with Taiwan GAAP. The quarterly financial
statements shall be reviewed by a firm of independent certified public
accountants selected from time to time by the Board of Directors (the “Accountants”). The
Joint Venture Company shall also prepare a reconciliation of its quarterly
financial statements to U.S. GAAP at the end of each fiscal
quarter.
(iii) Annual
Financial Statements. As soon as available, but not later than [***]
days after the end of each Fiscal Year of the Joint Venture Company, audited
consolidated financial statements of the Joint Venture Company and its
Subsidiaries, which shall include statements of income, cash flows and of
changes in shareholders’ equity, as applicable, for such Fiscal Year and a
balance sheet as of the last day thereof, each prepared in accordance with
Taiwan GAAP, consistently applied, and accompanied by the report of the
Accountants. The Joint Venture Company shall also prepare a
reconciliation of its annual audited financial statements to U.S. GAAP at the
end of each Fiscal Year.
Section
10.3 Reportable
Events. The Shareholders shall use reasonable efforts to cause
the Joint Venture Company to provide notice to the Shareholders of any Joint
Venture Company Reportable Event as soon as possible and in any event no later
than [***] days after the Joint Venture Company becomes aware of such Joint
Venture Reportable Event. The following events shall be “Joint Venture Reportable
Events”:
(a) Receipt
by the Joint Venture Company or any of its Subsidiaries of an offer by any
Person to buy an equity interest in the Joint Venture Company or any of its
Subsidiaries or a significant amount of its assets or to merge or consolidate
with the Joint Venture Company or any of its Subsidiaries, or any indication of
interest from any Person with respect to any such transaction;
(b) The
commencement, or threat delivered in writing, of any lawsuit involving the Joint
Venture Company or any of its Subsidiaries;
(c) The
receipt by the Joint Venture Company or any of its Subsidiaries of a notice that
the Joint Venture Company or any of its Subsidiaries is in default under any
loan agreement to which the Joint Venture Company or any of its Subsidiaries is
a party;
(d) Any
breach by the Joint Venture Company or any of its Subsidiaries or a Shareholder
or an Affiliate of a Shareholder of any contract between the Joint Venture
Company or any of its Subsidiaries and a Shareholder or an Affiliate of a
Shareholder;
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(e) The
removal or resignation of the auditor for the Joint Venture Company, or any
adoption, or material modification, of any significant accounting policy or tax
policy other than those required by Taiwan GAAP; or
(f) Any
other event that has had or could reasonably be expected to have a material
adverse effect on the business, results of operations, financial condition or
assets of the Joint Venture Company or any of its Subsidiaries.
Section
10.4 Dividend
Policy.
(a) Unless
otherwise agreed by the Shareholders, the Shareholders shall use reasonable
efforts to cause the Joint Venture Company to not declare and pay any dividend,
in cash or shares, or otherwise make any distributions until [***].
(b) Thereafter,
dividends and other distributions shall be as determined and approved by the
shareholders of the Joint Venture Company.
(c) Notwithstanding
anything in this Agreement to the contrary, the Shareholders shall use
reasonable efforts to cause the Joint Venture Company to not make any
distribution of cash or other property to any shareholder if the distribution
would violate any agreement to which the Joint Venture Company or any of its
Subsidiaries is a party or by which it or any of them is bound.
Section
10.5 Bank Accounts and
Funds. The Shareholders shall use reasonable efforts to cause
the funds of the Joint Venture Company, including any cash capital
contributions, to be deposited in an interest-bearing account or accounts in the
name of the Joint Venture Company and to not be commingled with the funds of any
Shareholder or any other Person. The Shareholders shall use
reasonable efforts to cause the checks, orders or withdrawals to be signed by
any one or more Persons as authorized by the Board of Directors.
Section
10.6 Internal
Controls. The Shareholders shall use reasonable efforts to
cause the Joint Venture Company to have in place a system of internal accounting
controls, in accordance with the policies agreed by the Shareholders, which
shall be approved by the Board of Directors and monitored by the President and
the Executive Vice President. Changes to the Joint Venture Company’s
system of internal accounting controls shall be made at the request of either
Shareholder, subject to the approval of the Board of Directors; provided, however, that in the
event one Shareholder is required to consolidate the financial results of the
Joint Venture Company under applicable GAAP, the internal controls and
accounting systems of the Joint Venture Company shall be modified as necessary
to satisfy that Shareholder’s requirements relating to internal controls and
financial reporting and such Shareholder shall be entitled to receive the
information and perform the testing that it deems necessary or advisable to
satisfy its responsibilities related thereto.
Section
10.7 The
Shareholders shall use their respective best efforts to cause the Joint Venture
Company to comply with, and establish appropriate procedures to ensure
compliance with, the United States Foreign Corrupt Practices Act of 1977, as
amended.
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ARTICLE
XI
OTHER
AGREEMENTS AND COVENANTS
Section
11.1 Tax
Cooperation. The Shareholders shall cooperate in a good faith,
commercially reasonable manner to maximize tax benefits and minimize tax costs
of the Joint Venture Company and of the Shareholders or their Affiliates with
respect to the activities of the Joint Venture Company, consistent with the
overall goals of the Joint Venture Documents. Such cooperation shall
include (a) NTC’s use of reasonable efforts to assist Micron, MNL and the Joint
Venture Company in applying for applicable tax incentives and for a tax
withholding exemption in Taiwan, the Netherlands and such other jurisdictions as
may be relevant, with respect to payments made by either, NTC or the Joint
Venture Company to Micron or MNL, or by MNL or an Affiliate of MNL to the Joint
Venture Company and (b) MNL’s use of reasonable efforts to assist NTC in
applying for applicable tax incentives and for a tax withholding exemption in
Taiwan, the Netherlands and such other jurisdictions as may be relevant, with
respect to payments made by either, the Joint Venture Company to NTC, or by NTC
or an Affiliate of NTC to the Joint Venture Company. Additional
assistance may include one Shareholder assisting the other Shareholder in
amending one or more of the Joint Venture Documents or seeking a ruling from a
taxing authority; provided, however, that neither
of the Shareholders shall be required to consent to amend any of the Joint
Venture Documents or take other action that such Shareholder reasonably
determines is not commercially reasonable; provided, further, that if one
Shareholder (and its Affiliates) is not likely (based on reasonable assumptions
and projections) to benefit directly or indirectly from an action requested by
the other Shareholder pursuant to this Section 11.1, then the Shareholders shall
use good faith commercially reasonable efforts to enter into an agreement
requiring the requesting Shareholder to reimburse the other Shareholder for the
reasonable out-of-pocket costs incurred by that other Shareholder to effect the
change desired by the requesting Shareholder, and the other Shareholder shall
not be required to incur such costs until such an agreement has been entered
into.
Section
11.2 Use of Shareholder
Names. Except as may be expressly provided in the Joint
Venture Documents, nothing in this Agreement shall be construed as conferring on
the Joint Venture Company, any Subsidiary of the Joint Venture Company or either
Shareholder the right to use in advertising, publicity, marketing or other
promotional activities any name, trade name, trademark, service xxxx or other
designation, or any derivation thereof, of the Shareholders (in the case of a
Shareholder, the other Shareholder).
Section
11.3 Insurance. Until
the Lease Commencement Date (as defined in the Fab Lease), NTC shall cause the
Joint Venture Company to be at all times covered by insurance policies of NTC,
with coverage consistent with the terms described on Schedule 5.2(B) of the
Master Agreement Disclosure Letter. From and after the Lease
Commencement Date, the Shareholders shall use commercially reasonable efforts to
cause the Joint Venture Company and the Leased Fab to at all times be covered by
insurance of the types and in the amounts set forth on Appendix I
hereto. Such new insurance coverage may be provided through the
coverage under one or more insurance policies maintained by Micron or
NTC.
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Section
11.4 Public Company Status;
Listing.
(a) The
Shareholders shall cooperate in a good faith, commercially reasonable manner to
cause the listing of the Shares of Joint Venture Company on a nationally or
internationally recognized stock exchange or market, including, without
limitation, listing on the Taiwan Stock Exchange or any other recognized stock
exchange or market in Taiwan (the “Listing”).
(b) The
Shareholders agree that if the Joint Venture Company is required, or elects, to
register as a “public company” under the ROC Company Law, to issue its Shares to
the public or employees or otherwise become subject to regulation under the ROC
Securities Exchange Law or any Applicable Law which may potentially affect the
Shareholders’ respective rights to the ownership or management of the Joint
Venture Company, each Shareholder shall cause such registration
or issuance to be structured, and otherwise act and cause the Joint
Venture Company to act, so as to preserve, to the maximum extent possible, the
terms of this Agreement, both in letter and in spirit.
Section
11.5 Shareholders’
Covenants. Each Shareholder agrees and covenants that it will
not, without the prior written consent of the other Shareholder:
(a) confess
any judgment against the Joint Venture Company;
(b) enter
into any agreement on behalf of, or otherwise purport to bind, the other
Shareholder or the Joint Venture Company;
(c) cause
the Joint Venture Company to take any action in contravention of the Articles of
Incorporation;
(d) cause
the Joint Venture Company to dispose of the goodwill or the business
opportunities of the Joint Venture Company; or
(e) cause
the Joint Venture Company to assign or place its property in trust for creditors
or on the assignee's promise to pay any indebtedness of the Joint Venture
Company.
Section
11.6 Contractual Relationship
Between the
Joint Venture Company and Any Shareholder. With respect to any
contract (including under the Fab Lease or the Supply Agreement) between the
Joint Venture Company and a Shareholder (or an Affiliate of a Shareholder), the
other Shareholder shall have the right to demand that the Joint Venture Company,
and shall have the right to cause the Joint Venture Company to, take any action,
pursue any right, enforce any obligation or seek recourse pursuant to or under
such contract, including with respect to the assertion of any claim or
cause of action for breach of contract against the Shareholder (or an Affiliate
of the Shareholder) involved in such contractual relationship with the Joint
Venture Company. In respect thereof, each Shareholder agrees
that it will not, and it shall cause its representatives elected as directors of
the Joint Venture Company to not, interfere with or otherwise obstruct in any
respect such action, pursuit, enforcement or recourse.
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ARTICLE
XII
DEADLOCK;
EVENTS OF DEFAULT
Section
12.1 Deadlock. A
“Deadlock” shall [***],
is required for approval, and such matter is not approved because the
affirmative vote of [***], is not obtained.
Section
12.2 Resolution of a
Deadlock. If a Deadlock occurs, the Shareholders
shall:
(a) first,
submit the matter that was the subject of the Deadlock to the president of each
of Micron and NTC by providing notice of the Deadlock to such Persons, and the
Shareholders shall use reasonable efforts to cause such Persons to make a good
faith effort to hold at least [***] in-person meetings between them to resolve
the Deadlock within [***] days of their receipt of the notice of
Deadlock;
(b) next,
if the president of each of Micron and NTC are unable to resolve the Deadlock in
the given [***] days, then submit the matter to the chairman of each of Micron
and NTC for resolution, and the Shareholders shall use reasonable efforts to
cause such Persons to make a good faith effort to hold at least [***] in-person
[***] between them to resolve the Deadlock within [***] days following the
submission of the Deadlock to them;
(c) next,
if the chairman of each of Micron and NTC are unable to resolve the Deadlock in
the given [***] days, either Shareholder may commence mediation by providing to
ICDR and the other Shareholder a written request for mediation, setting forth
the subject of the Deadlock and the relief requested. The Shareholders will
cooperate with ICDR and with one another in selecting a mediator from an ICDR
panel of neutrals, and in scheduling the mediation proceedings to be held in
[***] during the [***] days following the commencement of mediation. The
Shareholders covenant that they will participate in the mediation in good faith,
and that they will share equally in its costs. All offers, promises,
conduct and statements, whether oral or written, made in the course of the
mediation by any of the Shareholders, by any of their respective agents,
employees, experts and attorneys and by the mediator and any ICDR employees are
confidential, privileged and inadmissible for any purpose, including
impeachment, in any litigation or other proceeding involving the Shareholders,
provided, that
evidence that is otherwise admissible or discoverable shall not be rendered
inadmissible or non-discoverable as a result of its use in the mediation. Either
Shareholder may seek equitable relief prior to the mediation to preserve the
status quo pending the completion of that process. The provisions of
this Section 12.2(c) may be enforced by any court of competent jurisdiction, and
the Shareholder seeking enforcement shall be entitled to an award of all costs,
fees and expenses, including attorneys’ fees, to be paid by the Shareholder
against whom enforcement is ordered.
Section
12.3 Buyout from
Deadlock.
[***].
Section
12.4 Event of
Default. An “Event of Default” shall occur
if (a) a Shareholder (the “Defaulting Shareholder”)
breaches or fails to perform in any material respect any
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material
obligation under this Agreement (other than an obligation to contribute capital
to the Joint Venture Company as contemplated by Sections 3.2 and 3.3) and (b) at
the end of the Cure Period therefor such breach or failure remains
uncured.
Section
12.5 Cure
Period. Upon a Shareholder’s breach or failure to perform an
obligation under this Agreement (other than an obligation to contribute capital
to the Joint Venture Company as contemplated by Sections 3.2 and 3.3), the other
Shareholder (the “Non-Defaulting Shareholder”)
shall have the right to deliver to the Defaulting Shareholder a notice of
default (a “Notice of
Default”). The Notice of Default shall set forth the nature of
the Defaulting Shareholder’s breach or failure of performance. If the
Defaulting Shareholder fails to cure the breach or failure within the Cure
Period, the Non-Defaulting Shareholder shall be entitled to take such action as
set forth in Section 12.6. For purposes hereof, “Cure Period” means a period
commencing on the date that the Notice of Default is provided by the
Non-Defaulting Shareholder and ending (a) [***] days after Notice of Default is
so provided, or (b) in the case of any obligation (other than an obligation to
pay money) which cannot reasonably be cured within such [***] day period, such
longer period not to exceed [***] days after the Notice of Default is so
provided as is necessary to effect a cure of the Event of Default, so long as
the Defaulting Shareholder diligently attempts to effect a cure throughout such
period.
Section
12.6 Default
Remedy.
(a) Upon
the occurrence of an Event of Default, the Non-Defaulting Shareholder shall have
the right, but not the obligation, by notice delivered in writing to the
Defaulting Shareholder not later than [***] days after the expiration of the
applicable Cure Period (the “Exercise Notice”), to require
the Defaulting Shareholder to:
[***].
(b) The
Shareholders shall in good faith complete the sale and purchase transaction
contemplated under Section 12.6(a) as soon as practicable, but in no event later
than [***] days after the determination of Fair
Value. [***]
(c) Notwithstanding
anything to the contrary and in addition to the remedies provided under this
Section 12.6, the Joint Venture Company and the Non-Defaulting Shareholder may
also pursue all other legal and equitable rights and remedies against the
Defaulting Shareholder available to it. The Defaulting Shareholder
shall pay all costs, including reasonable attorneys’ fees, incurred by the Joint
Venture Company and the Non-Defaulting Shareholder in pursuing any and all such
legal remedies.
ARTICLE
XIII
BUYOUT
Section
13.1 Buyout
Right.
(a) Exercise of
Buyout Right. If at any time, the Equity Interest of a
Shareholder (for purposes of this Section 13.1, the “Non-compliant Shareholder”)
falls below [***] of the Equity Interest of the other Shareholder (for purposes
of this Section 13.1,
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the
“Compliant
Shareholder”), the Compliant Shareholder shall have the right,
but not the obligation, by notice to the Non-compliant Shareholder in writing
(such notice, the “Buyout
Notice”), to purchase all (but not less than all) of the Shares of the
Joint Venture Company then owned by the Non-compliant Shareholder and its
Subsidiaries (including its SPV) (such Shares, the “Buyout Shares”) at
[***].
(b) Completion of
Buyout.
(i)
The Shareholders shall in good faith complete the sale and
purchase transaction contemplated under Section 13.1(a) as soon as practicable,
but in no event later than [***] days after deliver of the Buyout
Notice.
(ii)
[***].
ARTICLE
XIV
TERMINATION
Section
14.1 Effective
Date. Subject to obtaining relevant regulatory approvals as
may be required, this Agreement shall become effective on the Closing Date, and
continue in force unless terminated in accordance with this
Agreement.
Section
14.2 Termination. This
Agreement shall terminate upon the Transfer of all of the Shares owned by one
Shareholder and its Affiliates to the other Shareholder and/or its Affiliates in
accordance with Section 3.5, 12.3, 12.6 and 13.1; provided, that the
following provisions shall survive termination of this
Agreement: Sections 7.2 (to the extent Micron and NTC both continue
to purchase Stack DRAM Products from the Joint Venture Company under the Supply
Agreement), 7.3 (to the extent Micron and NTC both continue to purchase Stack
DRAM Products from the Joint Venture Company under the Supply Agreement),
7.5(c), 11.2 and 14.2 and Article XV.
ARTICLE
XV
GENERAL
PROVISIONS
Section
15.1 Notices. All
notices and other communications hereunder shall be in writing and shall be
deemed duly given upon (a) transmitter’s confirmation of a receipt of a
facsimile transmission, (b) confirmed delivery by a standard overnight or
recognized international carrier or when delivered by hand, or (c) delivery in
person, addressed at the following addresses (or at such other address for a
Shareholder as shall be specified by like notice):
if to
NTC:
Nanya
Technology Corporation
Hwa-Ya
Technology Park 669
Fuhsing 3
RD. Kueishan
Taoyuan,
Taiwan, ROC
Attn: Legal department
Facsimile:
886-3-396-2226
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if to
MNL:
Micron
Semiconductor B.V.
Xxxxxxxxx
000 Xxxxxxxxx 0
0000XX
Xxxxxxxxx
Xxx
Xxxxxxxxxxx
Attn: Managing
Director
Facsimile: 020-5722650
with a
mandatory copy to Micron:
Micron
Technology, Inc.
0000 X.
Xxxxxxx Xxx
Mail Stop
0-000
Xxxxx, XX
00000
Attn:
General Counsel
Facsimile:
(000) 000-0000
Section
15.2 Waiver. The
failure at any time of a Shareholder to require performance by the other
Shareholder of any responsibility or obligation required by this Agreement shall
in no way affect a Shareholder’s right to require such performance at any time
thereafter, nor shall the waiver by a Shareholder of a breach of any provision
of this Agreement by the other Shareholder constitute a waiver of any other
breach of the same or any other provision nor constitute a waiver of the
responsibility or obligation itself.
Section
15.3 Assignment. [***].
Section
15.4 Amendment. This
Agreement may not be amended or modified without the written consent of the
Shareholders.
Section
15.5 Third Party
Rights.
(a) The
Shareholders agree that the Joint Venture Company shall be a third party
beneficiary to the agreements made hereunder by the Shareholders, and the Joint
Venture Company shall have the right to enforce such agreements directly to the
extent it deems such enforcement necessary or advisable to protect its rights
hereunder.
(b) Nothing
in this Agreement, whether express or implied, is intended or shall be construed
to confer, directly or indirectly, upon or give to any Person, other than the
Shareholders and the Joint Venture Company, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any covenant, condition or
other provision contained herein.
Section
15.6 Governing
Law. This Agreement shall be governed by and construed in
accordance with the laws of the ROC, without giving effect to its conflict of
laws principles.
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Section
15.7 Jurisdiction;
Venue. Any suit, action or proceeding seeking to enforce any
provision of, or based on any matter arising out of or in connection with, this
Agreement shall be brought in the Taipei District Court, located in Taipei,
Taiwan, and each of the
Parties hereby consents and submits to the exclusive jurisdiction of such court
(and of the appropriate appellate courts therefrom) in any such suit, action or
proceeding and irrevocably waives, to the fullest extent permitted by Applicable
Law, any objection which it may now or hereafter have to the laying of the venue
of any such suit, action or proceeding in any such court or that any such suit,
action or proceeding which is brought in any such court has been brought in an
inconvenient forum.
Section
15.8 Headings. The
headings of the Articles and Sections in this Agreement are provided for
convenience of reference only and shall not be deemed to constitute a part
hereof.
Section
15.9 Entire
Agreement. This Agreement, together with the Appendices,
Exhibits and Schedules hereto and the agreements (including the Joint Venture
Documents) and instruments referred to herein, constitute the entire agreement
of the Shareholders with respect to the subject matter hereof and supersede all
prior agreements and understandings, oral and written, between the Shareholders
with respect to the subject matter hereof.
Section
15.10 Taxes and
Expenses. Except as otherwise set forth in this Agreement, all
taxes, fees and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the Shareholder incurring such
expenses.
Section
15.11 Severability. Should
any provision of this Agreement be deemed in contradiction with the laws of any
jurisdiction in which it is to be performed or unenforceable for any reason,
such provision shall be deemed null and void, but this Agreement shall remain in
full force and effect in all other respects. Should any provision of
this Agreement be or become ineffective because of changes in Applicable Law or
interpretations thereof, or should this Agreement fail to include a provision
that is required as a matter of law, the validity of the other provisions of
this Agreement shall not be affected thereby. If such circumstances
arise, the Shareholders shall negotiate in good faith appropriate modifications
to this Agreement to reflect those changes that are required by Applicable
Law.
Section
15.12 Counterparts. This
Agreement may be executed in several counterparts, each of which shall be deemed
an original, but all of which together shall constitute one and the same
instrument.
Section
15.13 Confidential
Information.
(a) The
Shareholders shall abide by the terms of that certain Mutual Confidentiality
Agreement among Micron, MNL and NTC dated as of the date of this Agreement (to
be joined by the Joint Venture Company at or before the Closing Date), and as
may be amended or replaced from time to time (the “Confidentiality Agreement”),
which agreement is incorporated herein by reference. The Shareholders
agree that the
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Confidentiality
Agreement shall govern the confidentiality, non-disclosure and non-use
obligations between the Shareholders respecting the information provided or
disclosed in connection with this Agreement.
(b) If
the Confidentiality Agreement is terminated or expires and is not replaced, such
Confidentiality Agreement shall continue with respect to confidential
information provided in connection with this Agreement, notwithstanding such
expiration or termination, for the duration of the term of this Agreement or
until a new Confidentiality Agreement is entered into between the
Shareholders. To the extent there is a conflict between this
Agreement and the Confidentiality Agreement, the terms of this Agreement shall
control.
(c) The
terms and conditions of this Agreement shall be considered “Confidential
Information” under the Confidentiality Agreement for which each of Micron and
NTC is considered a “Receiving Party” under such Confidentiality
Agreement.
[SIGNATURE
PAGE FOLLOWS]
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IN
WITNESS WHEREOF, this Agreement has been executed and delivered as of the date
first written above.
NANYA
TECHNOLOGY CORPORATION
By: /s/ Xxx
Xxxx
Print
Name: Xxx Xxxx
Title:
President
MICRON
SEMICONDUCTOR B.V.
By: /s/ Xxxx
Xxxxxx
Print
Name: Xxxx Xxxxxx
Title:
Proxy Holder
THIS
IS THE SIGNATURE PAGE FOR THE JOINT VENTURE AGREEMENT
ENTERED
INTO BY AND BETWEEN NTC AND MNL
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APPENDIX
I
Insurance
[***]
Joint
Venture Agreement
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