EXHIBIT 10.23
JOINT VENTURE AGREEMENT
REGARDING
THE
ESTABLISHMENT AND OPERATION
OF
TFS ELECTRONIC MANUFACTURING SERVICES SDN. BHD.
BY
AND
AMONG
TFS INTERNATIONAL, LTD.,
TFS INTERNATIONAL II, LTD.,
UNICO SYSTEMS SDN. BHD.,
UNICO HOLDINGS BERHAD
AND
TFS ELECTRONIC MANUFACTURING SERVICES SDN. BHD.
DATED APRIL 1, 2003
XXXXX & XXXXXXXX
000 XXXXXX XXX
XXXX XXXX, XX 00000
TEL: 000-000-0000
FAX: 000-000-0000
JOINT VENTURE AGREEMENT
This JOINT VENTURE AGREEMENT (the "Agreement") is made and entered into
effective as of April 1, 2003, by and among TFS INTERNATIONAL, LTD., a Bermuda
exempted company with its registered office in Hamilton, Bermuda ("TFS
International"), TFS INTERNATIONAL II, LTD., a Bermuda exempted company with its
registered office in Hamilton, Bermuda ("TFS International II," with TFS
International and TFS International II collectively referred to as "TFS") UNICO
SYSTEMS SDN. BHD., a Malaysian company with its registered office in Kuala
Lumpur, Malaysia ("USSB") (each of TFS International, TFS International II, and
USSB a "Member"), UNICO HOLDINGS BERHAD, a Malaysian company with its registered
office in Kuala Lumpur, Malaysia ("Guarantor"), and TFS ELECTRONIC MANUFACTURING
SERVICES SDN. BHD., a Malaysian company with its registered office in Kuala
Lumpur, Malaysia (the "Company").
RECITALS
A. TFS International and TFS International II are wholly-owned
subsidiaries of Three-Five Systems, Inc., a Delaware corporation
("Three-Five"). Three-Five is the parent corporation and sole
shareholder of ETMA, a corporation with its principal place of business
in Redmond, Washington, involved in the business of electronic
manufacturing and support ("ETMA").
B. Guarantor is the ultimate parent company of USSB and certain other
Related Entities, as defined below, including Unico Technology Sdn.
Bhd., which are in the business of electronics manufacturing services
in Malaysia, and Guarantor desires to obtain the experience, expertise,
and capital of TFS and ETMA in order to further such business. As a
material inducement to TFS and the Company to enter into this Agreement
and the transactions contemplated hereby, Guarantor agrees to guaranty
the performance and obligations of USSB and USSB's and Guarantor's
Related Entities under this Agreement and the Ancillary Agreements, as
defined below.
C. The Members desire to establish the Company as a joint venture company
in Malaysia to carry out the Business, as defined below.
AGREEMENT
NOW, THEREFORE, intending to be legally bound, the parties agree as follows:
1. ADDITIONAL DEFINITIONS
The following terms will have the following meanings as used in this Agreement:
a. "Agreement" means this Joint Venture Agreement and all
Exhibits and Schedules attached hereto as amended, modified,
supplemented or restated from time to time.
b. "Agreement Intellectual Property" means Intellectual Property
created as a result of activities of the Members or the
Company in carrying out each parties'
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obligations under this Agreement. Notwithstanding the above,
Agreement Intellectual Property does not include Background
IP.
c. "Ancillary Agreements" means the agreements entered into in
connection with the transactions contemplated hereby,
including the Asset Transfer Agreement, the Equipment Lease
Agreement(s), the Tenancy Agreement(s), the Logistics and
Warehousing Agreement, the Trademark and Tradename License
Agreement(s), and the Sales and Marketing Agreement, referred
to in Sections 2(f) hereof.
d. "Articles" means the Memorandum and Articles of Association of
the Company to be amended and be effective as attached hereto
as EXHIBIT I.
e. "Authority" means any nation or government, any state or other
political subdivision thereof; any entity, authority or body
exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government,
including any government authority, agency, department, board,
commission or instrumentality of such government or any
political subdivision thereof; any court, tribunal or
arbitrator; and any self-regulatory organization, including
the federal, state, and local governments of Malaysia.
f. "Background IP" means Intellectual Property that is not
Agreement Intellectual Property and that each Member currently
owns or develops independent of this Agreement.
g. "Board" means the Board of Directors of the Company as
existing from time to time.
h. "Budget" means the approved budget of the Company forming part
of the Business Plan as defined below.
i. "Business" means the business of electronics manufacturing
services, and businesses related or ancillary thereto,
including certain of the employees and real property,
equipment, and other assets of USSB and its Related Entities
to be transferred or leased to the Company pursuant to the
Ancillary Agreements, and as such business may be modified and
expanded by the Company from time to time.
j. "Business Plan" means the Company's initial business plan for
carrying out its activities as approved by the parties and
attached hereto as SCHEDULE I, as such may be amended,
modified, or supplemented from time to time.
k. "Confidential Information" means data and information relating
to the Company or information of a Member (which does not rise
to the level of a Trade Secret) and which has material value
to the Disclosing Party, as defined in Section 6(a), and is
not generally known to its competitors, disclosed to a
Recipient Party, as defined in Section 6(a), in writing and
designated confidential or, if disclosed to a Recipient Party
other than in writing, confirmed in writing and designated
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confidential within thirty (30) days of such disclosure.
Confidential Information does not include any data or
information that:
(i) is available to the public or becomes available to
the public through no fault, unauthorized act or
omission by the Recipient Party;
(ii) is known by the Recipient Party at the time of
disclosure, as shown by prior written records;
(iii) is rightfully received by the Recipient Party from a
third party without a duty of confidentiality; or
(iv) is developed by or for the Recipient Party
independent of the disclosure hereunder.
l. "Consent" means any consent, approval, authorization, waiver,
permit, grant, franchise, concession, agreement, license,
certificate, exemption, order, registration, declaration,
filing, report, or notice of, with, or to the relevant party
or relevant Authority.
m. "Governmental Approval" means any Consent of, with, or to any
government-related Authority.
n. "Intellectual Property" refers to any Trade Secret and
know-how, including but not limited to scientific techniques,
technical discoveries and technical improvements, whether or
not patentable; trade names, whether or not registered;
copyrightable material, whether or not registered; original
designs; as well as patents, patent applications, trademarks,
trademark applications, copyright applications, registered
copyrights, utility patents; utility patent applications, and
similar rights recognized or granted by any region or country
in the world.
o. "Licensed Background IP" means that Intellectual Property of
the Members as identified in SCHEDULE II attached hereto,
which Schedule shall be amended from time to time so that each
Member meets its obligations under this Agreement.
P. "Loss" means any and all liabilities, damages, claims, costs,
expenses, judgements, interest and penalties, and other
expenses or losses, including reasonable attorneys',
accountants', and outside advisors' fees and disbursements
relating thereto.
q. "Related Entity" or "Related Entities" means any entity or
entities: (i) in the case of TFS, a majority of the
outstanding voting securities or membership interest of which
is held, either directly or indirectly through another entity,
by Three-Five, or (ii) in the case of USSB, a majority of the
outstanding voting securities or membership interest of which
is held, either directly or indirectly through another entity,
by Guarantor.
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r. "Trade Secrets" means information relating to the Company or
information of a Member, without regard to form (including,
but not limited to, technical or non-technical data, formulae,
patterns, compilations, programs, products, devices, methods,
techniques, drawings, blueprints, processes, financial data,
financial plans, product plans and/or lists of actual or
potential customers or suppliers), that is not commonly known
by or available to the public and that (i) the Disclosing
Party, derives economic value, actual or potential, from not
being known to, and not being readily ascertainable by proper
means by, other persons who can obtain economic value from its
disclosure or use, and (ii) is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy,
disclosed to a Recipient Party in writing and designated as
"Proprietary Information" or "Trade Secret" or, if disclosed
to a Recipient Party other than in writing, confirmed in
writing and designated as "Proprietary Information" or "Trade
Secret" within thirty (30) days of such disclosure. Trade
Secret does not include any data or information that:
(i) is available to the public or becomes available to
the public through no fault, unauthorized act or
omission by the Recipient Party;
(ii) is known by the Recipient Party at the time of
disclosure, as shown by prior written records;
(iii) is rightfully received by the Recipient Party from a
third party without a duty of confidentiality; or
(iv) is developed by or for the Recipient Party
independent of the disclosure hereunder.
s. "Work Product" means all information arising out of activities
under this Agreement whether in printed form, digitally stored
or encrypted materials, materials that may be perceived with
aid of a machine or stored in any other tangible form that was
not in existence prior to commencement of any work performed
by a Member under this Agreement (or any agreement entered
into pursuant to this Agreement) or is not thereafter
generated independently of such Member's performance under
this Agreement, including but not limited to Intellectual
Property.
2. JOINT VENTURE COMPANY
a. LEGAL FORM. The Company will (i) operate as a private limited
company, or "Sendirian Berhad" in Malaysia, (ii) adopt and use
the name "TFS Electronic Manufacturing Services Sdn. Bhd."
under the Trademark and Tradename License Agreements, (iii)
adopt as its Memorandum and Articles of Association the
Articles attached hereto as EXHIBIT I, and (iv) have its
principal place of business in Penang, Malaysia and its
registered office in Kuala Lumpur, Malaysia; or such other
place as the Board may approve from time to time.
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b. PURPOSE. The purpose of the Company will be to promote and
carry out the Business, and to transact such other lawful
trade or business as the Board may approve from time to time.
c. AUTHORIZED CAPITAL. The authorized capital of the Company will
be 50,000,000 Ringgit divided into 50,000,000 ordinary shares
of 1 Ringgit each.
d. INITIAL CAPITALIZATION. Upon Closing, TFS and/or its Related
Entities will subscribe for and purchase 14,400,000 shares,
representing 60% of the issued capital, in exchange for a cash
amount in $ equal to 14,400,000 Ringgit at the exchange rate
prevailing at the date of Closing (currently approximately
$3,789,400) USSB will subscribe for and purchase 9,600,000
shares, representing 40% of the issued capital, in exchange
for 9,600,000 Ringgit (currently approximately $2,526,300).
All contributions will be used to fund the operations of the
Company as directed by the Board in accordance with the
Business Plan. Solely as a convenience to facilitate the
transactions contemplated by this Agreement, USSB may
subscribe for and purchase the initial outstanding two (2)
shares of the Company prior to the Closing, provided, however,
that USSB shall cause the Company to not engage in any act or
activity prior to the Closing that is not explicitly
contemplated by this Agreement or the Ancillary Agreements.
e. EXPENSES. Each party will bear its respective accounting, tax,
and consulting costs and fees and attorneys' costs and fees
incurred in connection with its due diligence review and
preparation and negotiation of this Agreement and the
Ancillary Agreements. Attorneys' costs and fees, out-of-pocket
costs, and other fees and expenses directly related to the
Company and the conduct of the Business will be allocated to
and paid or reimbursed by the Company, including,
incorporation expenses, post-incorporation registrations,
Governmental Approvals, obtaining a manufacturing license,
"pioneer" tax status, other licenses, and similar matters.
f. ANCILLARY AGREEMENTS. Concurrently herewith or as soon as
reasonably practicable and necessary following the execution
and delivery of this Agreement:
(i) the Company and USSB or certain of its Related
Entities will enter into the following agreements:
(A) an asset transfer agreement regarding
transfer of certain assets and employees
relating to the Business, in substantially
the form attached hereto as EXHIBIT II (the
"Asset Transfer Agreement");
(B) agreements for the lease of equipment and
certain other personal property, in
substantially the form attached hereto as
EXHIBIT III (the "Equipment Lease
Agreement");
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(C) agreements for the lease of real property
and facilities, in substantially the form
attached hereto as EXHIBIT IV (the "Tenancy
Agreement"); and
(D) an agreement for logistics and warehousing
services to be provided to the Company by
IPC Global Sdn. Bhd. ("IPC"), in
substantially the form attached hereto as
EXHIBIT V (the "Logistics and Warehousing
Agreement").
(ii) in addition, the Company and TFS or certain of its
Related Entities will enter into agreements for the
license and use of appropriate trademarks and
tradenames, in substantially the form attached hereto
as EXHIBIT VI. The Company will strictly adhere to
such agreements, including all payment and
intellectual property obligations. In addition the
Company and ETMA will enter into an agreement for
sales and marketing activities to be conducted by
ETMA, in substantially the form attached hereto as
EXHIBIT VII (the "Sales and Marketing Agreement").
g. TREATMENT OF AND LICENSE OF INTELLECTUAL PROPERTY
(i) Each party shall retain all its rights, title and
interest to any Background IP.
(ii) Agreement Intellectual Property conceived solely by
one Member shall be solely owned by the conceiving
Member. Agreement Intellectual Property jointly
conceived by both Members without the involvement of
the Company shall be jointly owned by both Members,
such that each Member shall have an equal, undivided
interest in and to such joint Agreement Intellectual
Property, with the unilateral right to sublicense and
transfer ownership of such joint Agreement
Intellectual Property, subject to any limitations
imposed by this Agreement, and provided, however,
that a Member shall not have the right to sublicense
or otherwise transfer the Agreement
Intellectual Property to any party that is not a
Related Entity and at least 99% of the outstanding
voting securities or membership interest of which is
held, either directly or indirectly through another
entity, by Three-Five in the case of TFS or Guarantor
in the case of USSB, without the prior written
consent of the other Member to the terms of such
sublicense or transfer.
(iii) Intellectual Property currently owned or acquired or
developed by the Company, including Agreement
Intellectual Property conceived by the Member(s) and
the Company, shall be owned by the Company, and the
Company agrees to grant to each Member, at the
request of such Member, a worldwide, perpetual,
irrevocable, royalty-free license to such
Intellectual Property, with the right to sublicense
and transfer such Intellectual Property, provided,
however, that the Member shall not have the right to
sublicense or otherwise transfer such Intellectual
Property to
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any party that is not a Related Entity and at least
99% of the outstanding voting securities or
membership interest of which is held, either directly
or indirectly through another entity, by Three-Five
in the case of TFS or Guarantor in the case of USSB,
without the prior written consent of the other Member
to the terms of such sublicense or transfer.
(iv) For so long as a Member remains a member of the
Company, each Member hereby grants the Company a
worldwide license to the Licensed Background IP owned
by such Member, to the extent that such Licensed
Background IP covers the products the Company
manufactures, uses, sells, and/or imports.
(v) Background IP of either Member may not be used by any
other Member or shareholder for any purpose, except
to carry out the purposes of this Agreement.
h. WORK PRODUCT
(i) The Company shall own all Work Product created in
connection with the purposes and in accordance with
the terms of this Agreement. Work Product that is
jointly conceived by the Company and one or both
Member(s) shall be jointly owned by the conceiving
parties. The Company hereby grants each Member a
worldwide, perpetual, royalty-free, irrevocable,
fully sub-licensable and fully paid license to all
Work Product that the Company owns or jointly owns
and which Work Product is created while the Member is
a member of the Company. Under the license granted
under this Section 2(h)(i) the Member shall have the
right to make, have made, use, sell, have sold, offer
to sell, import, have imported, any product,
composition, method or process covered by Work
Product for so long as the Company exists.
(ii) Upon the reasonable request of the Company during or
after the term of this Agreement, each Member agrees
to take such further actions and provide such further
executed documents as may be necessary or desirable
to transfer, perfect and/or defend the Company's
ownership of the Work Product. In such regard, upon
the Company's request, each such Member will: (A)
execute, acknowledge and deliver any requested
affidavits and documents of assignment and
conveyance; (B) obtain and aid in the enforcement of
copyrights, trademarks and, if applicable, patents
with respect to the Work Product in any country; (C)
provide testimony in connection with any proceeding
affecting the right, title or interest of the Company
in any Work Product; and (D) perform any other acts
deemed necessary or desirable to carry out the
purposes of this Agreement. The Company shall
reimburse all reasonable out-of-pocket expenses
incurred by a Member at the Company's request in
connection with the foregoing. The Company shall have
the right to obtain and hold in its own name
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copyrights, trademarks, registrations, patents and
any other statutory or other legal protection
available to it with respect to a Work Product.
(iii) The President shall, at the Company's expense and
under the direction of the Board, handle all claims
and defend any suit or proceeding brought against the
Company insofar as based on a claim that, without
alteration or further combination, any Work Product
developed by or on behalf of the Company pursuant to
this Agreement either (A) infringes any patent of any
jurisdiction, or (B) is defective or non-conforming.
i. FUNDING AND BORROWING. Funding that the Company may require
beyond the initial cash contributions of the shareholders will
be obtained through the accumulation of earnings, additional
cash contributions from the shareholders, or appropriate
credit facilities. The Company will not borrow funds or
otherwise incur indebtedness outside the ordinary course of
business without the approval of the Board as set forth in the
Articles or this Agreement, except in connection with a
Member's exercise of rights under the following Section 2(j).
Unless otherwise agreed or as set forth in the following
Section 2(j), TFS and USSB will bear any loan, guarantee or
other financial assistance granted to or on behalf of the
Company in proportion to their shareholdings.
j. ADDITIONAL CAPITAL CALL. If the Company's projected revenues
(with appropriate discount based on 12-month historical
results for bad debt, cancelled contracts, returned products,
and other relevant factors) plus liquid capital on hand are
insufficient to sustain the Company's operations for a period
of six (6) months based on the Company's Board-approved Budget
then in place, including capital expenditures, then in
addition to any Board actions that may be taken to reduce
expenditures (including employee reductions and restructuring
of supply and customer contracts and credit facilities), any
Member holding at least 10% of the outstanding voting stock of
the Company will have the right to demand an additional
capital call, upon the terms set forth below (the "Capital
Call"):
(i) The party demanding the Capital Call (the "Calling
Shareholder") shall send written notice (the "Call
Notice") to each other shareholder (each a "Receiving
Shareholder") and the Company setting forth the
financial conditions of the Company and demanding
that the shareholders contribute additional capital
to the Company through the purchase of additional
shares.
(ii) The Call Notice shall also set forth the amount of
such additional Capital Call, provided, however, that
the total amount of the Capital Call shall not be for
an amount less than $2,000,000 and shall be divided
among the shareholders proportionally to their
respective shareholdings in the Company at the time
of the Capital Call.
(iii) Within 15 days, each Receiving Shareholder shall
provide notice to the Calling Shareholder and the
Company regarding the Receiving
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Shareholder's intent to either participate in the
Capital Call or demand that the Company retain an
internationally-recognized accounting firm (other
than the Company's regular retained accountants or
auditors or their affiliates) to review the Company's
financial situation (acting as an expert and not as
an arbitrator) and provide a report to the Company
not later than sixty (60) days from the date of the
Receiving Shareholder's demand. If such accounting
firm determines that the conditions set forth above
for a Capital Call have not been met, then the fees
and costs associated with such review shall be borne
by the Calling Shareholder, and the Call Notice will
be void and of no further legal effect. If such
accounting firm determines that the conditions for a
Capital Call have been met, then the fees and costs
associated with such review shall be borne by the
Receiving Shareholder demanding such review, and the
Receiving Shareholder shall also be obligated to
participate in the Capital Call as initially made by
the Calling Shareholder.
(iv) If a shareholder does not participate in a Capital
Call, then such shareholder's additional share
allotment in the Capital Call shall be allocated
proportionally to the participating shareholders
resulting in a dilution of the non-participating
shareholder's percentage ownership in the Company.
(v) The parties acknowledge that the Company's potential
need for additional capital is an integral part of
the transactions contemplated hereby, and agree that
as a further incentive for each shareholder to
participate in a Capital Call, that in the event a
Member holding at least 10% of the outstanding voting
stock of the Company immediately prior to the Capital
Call does not participate in any Capital Call made
within two (2) years from the date of this Agreement,
then the shares purchased by the participating
shareholders in the Capital Call shall be purchased
at par value, including any re-allocated shares of
the non-participating shareholder pursuant to the
preceding paragraph.
(vi) In addition, in the event a Member holding at least
10% of the outstanding voting stock of the Company
immediately prior to the Capital Call does not
participate in the Capital Call, then the Member
participating in the Capital Call (the "Participating
Member") shall have the right, at its option and in
its sole discretion, to take, or cause the Company to
take, any or all of the following actions, which
shall not require shareholder or Board consent:
(A) cause the Company to issue any additional
shares not purchased by the participating
shareholders, up to the amount required by
the Capital Call, to any third party as
identified by the Participating Member;
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(B) cause the Company to borrow funds from the
Participating Member, up to the amount
required by the Capital Call, at an interest
rate equal to the lesser of LIBOR plus 500
basis points or the maximum allowable
interest rate under applicable law; and
(C) cause the Company to enter into a lending
arrangement with an outside lender to borrow
funds on commercially available terms, up to
the amount required by the Capital Call.
(vii) Notwithstanding anything to the contrary contained
herein, no shareholder shall be required to
participate in Capital Calls in an amount exceeding
in the aggregate an additional amount equal to such
shareholder's (or predecessor-in-interest's) initial
capital contribution at the Closing, such that no
shareholder will be required to invest in the
aggregate more than twice the amount of its initial
capital contribution at the Closing. The Company will
nevertheless be permitted to issue additional shares
outside of a Capital Call to the other shareholders
or third parties as determined by the Board and
subject to the shareholders' preemptive rights set
forth below.
k. PREEMPTIVE RIGHTS AND SHARE TRANSFERS. Except as contemplated
under the provisions regarding Capital Calls set forth above,
each shareholder will have a preemptive right to subscribe for
any additional shares of the Company in proportion to its
then-current shareholding. Neither party may pledge, assign,
sell or otherwise transfer or encumber any of its shares of
the Company to or in favor of any third party without the
prior consent of the other party, which consent will not be
unreasonably withheld. Pursuant to the foregoing, USSB will
have the right to sell any or all of its shareholding in the
Company to a venture capital firm having substantial expertise
in the electronics manufacturing services industry, subject to
the prior written consent of TFS, which consent will not be
unreasonably withheld. Except as contemplated in the preceding
sentence, each party will have a right of first refusal with
respect to any pledge, assignment, sale or other transfer or
encumbrance of the other party's shares in the Company.
l. SHAREHOLDER MEETINGS AND RESOLUTIONS. Subject to the
requirements set forth in this Agreement, the Company will
convene shareholders meetings or submit resolutions to the
decision of the shareholders as required under the Articles. A
quorum for a meeting of shareholders shall require the
participation (whether in person or by telephone or video
conference) of at least two (2) shareholders holding a
majority of the outstanding voting shares of the Company,
including at least one (1) shareholder representing TFS and
one (1) shareholder representing USSB, provided, however, that
if a quorum is not present within thirty (30) minutes after
the time set for such meeting, the meeting shall stand
adjourned to the date and time fifteen (15) business days from
the originally-scheduled date and time, and the participation
of any one or more shareholder(s) holding not less than 30% of
the outstanding voting shares of the Company in such
rescheduled meeting shall constitute a quorum at such meeting.
Shareholder resolutions may
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be adopted by the affirmative vote of a majority of the shares
participating in any such vote, except that a super-majority
vote may be required for certain actions as set forth in the
Articles or in the attached SCHEDULE III ("Shareholder
Super-Majority Matters").
m. BOARD OF DIRECTORS. Subject to the authority of the
shareholders, the Company's business and affairs will be
overseen by its Board, which will consist of five (5)
directors, unless such number is increased or decreased by
resolution of the shareholders. USSB initially will be
entitled to nominate two (2) directors for election to the
Board, who will be Tan Sri Xxxx Xxxxx Wen and Dato' Lai Pin
Yong. TFS initially will be entitled to nominate three (3)
directors for election to the Board, who will be Xxxx X.
Xxxxxxxxxx, Xxxxxxx X. Xxxxxxxx, and Xxx X. Xxxxxx. In the
event that a Member's shareholding falls below 30% of the
outstanding voting shares of the Company, such Member shall be
entitled to nominate only one (1) director for election to the
Board, provided, however, that if a Member's shareholding
falls below 10% of the outstanding voting shares of the
Company, such Member shall not be entitled to nominate any
directors for election to the Board. The shareholders will
elect an individual to serve as Chairman of the Board from
time to time, who shall initially be Xxx X. Xxxxxx. Each
director may be elected to serve any number of terms and will
serve in the manner set forth in the Articles. Each director
will serve without compensation, except as specifically
required by law, provided, however, that the Company will
reimburse a director's reasonable expenses incurred in
traveling to and attending meetings of the Board or any
committee of the Board, and provided, further, that the
Company will not be required to reimburse a director for
airfare in excess of the Malaysian Ringgit equivalent of
$2,600 for any single Board or committee meeting. A director
may be removed only by the shareholder nominating such
director for election to the Board, and any director who has
resigned or is removed shall not be entitled to any claims or
compensation against the Company related to such director's
service as a director of the Company, other than claims for
indemnification pursuant to any director indemnification
policy adopted by the Company.
n. BOARD MEETINGS AND RESOLUTIONS. Subject to the requirements
set forth in this Agreement, the Board will meet or otherwise
take resolutions in the manner set forth in the Articles. All
Board meetings will be conducted, and resolutions will be
prepared, in English. A quorum for a meeting of the Board
shall require the participation (whether in person or by
telephone or video conference) of at least three (3)
directors, including at least one (1) director nominated for
election to the Board by TFS and one (1) director nominated
for election to the Board by USSB, provided, however, that:
(i) if a quorum is not present within thirty (30) minutes
after the time set for such meeting, then the meeting
shall stand adjourned to a date and time determined
by the directors present, which shall be no later
than five (5) business days from the date and time of
the originally-scheduled meeting.
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The directors present shall promptly notify all
directors of the date and time of such rescheduled
meeting, and the participation of any two (2)
directors, including at least one (1) director
nominated for election to the Board by TFS, shall
constitute a quorum at such rescheduled meeting; and
(ii) if a quorum is not present within thirty (30) minutes
after the time set for such rescheduled meeting, then
the rescheduled meeting shall stand adjourned to a
date and time determined by the directors present,
which shall be no later than five (5) business days
from the date and time of the rescheduled meeting.
The directors present shall promptly provide final
notice to all directors of the date and time of the
proposed final rescheduled meeting, and the
participation of any two (2) directors, including at
least one (1) director nominated for election to the
Board by TFS, shall constitute a quorum at such final
rescheduled meeting; and
(iii) if a quorum is not present within thirty (30) minutes
after the time set for such final rescheduled
meeting, then such failure to achieve a quorum at the
final rescheduled meeting shall constitute an Option
Event, as set forth in Section 8 below.
Board resolutions may be adopted in the absence of a meeting
by a written resolution signed by a majority of the members of
the Board, provided, that such resolution has been circulated
to all members of the Board, and subject to the restrictions
contained in the following sentence. Board resolutions may be
adopted by the affirmative vote of a majority of the directors
participating in any vote, except that a super-majority vote
may be required for certain actions as set forth in the
Articles or in the attached SCHEDULE IV ("Board Super-Majority
Matters").
O. BOARD OBSERVERS. For so long as USSB or its Related Entities
hold at least 10% of the outstanding voting shares of the
Company the Company shall invite two (2) representatives of
USSB ("Observers"), to participate in meetings of the Board in
an observational, non-director and non-voting capacity and, in
this respect, shall give the Observers notice of such meetings
at the same time as provided to the members of the Board;
provided, however, that the Observers shall agree in writing
to hold in confidence and trust all information received or
provided by the Company; and, provided further, that the
Company reserves the right to withhold any information and to
exclude the Observers from any meeting or portion thereof if
the Company, upon advice of counsel, reasonably believes that
access to such information or attendance at such meeting could
adversely affect the attorney-client privilege between the
Company and its counsel or would result in a disclosure of
trade secrets. It is anticipated that the initial Observers
will be _________________________ and
__________________________.
P. OFFICERS AND MANAGEMENT. The Board will appoint a President
(who will also be the Company's Chief Executive Officer) to
manage the Company's day-to-day business operations in
accordance with the Business Plan and Budget. The initial
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President will be Xx. Xxx Xxxx. Following the Closing, the
Board will hire or cause to be hired the initial Chief
Financial Officer, by majority vote of the Board, including
the affirmative vote of at least one (1) director nominated
for election to the Board by USSB. The Board may also appoint
such other officers or managers in accordance with the
Articles as may be necessary or appropriate from time to time
to conduct the Company's affairs. The President and Chief
Financial Officer shall have the specific power and authority
set forth in this Agreement, in any employment agreement, and
as otherwise delegated by the Board. The other officers or
managers shall have such power and authority as delegated to
them by the Chairman, President or the Board. All decisions
regarding other officers, agents and employees, including the
hiring and termination of such officers, agents and employees,
and the determination of their compensation, shall be made by
the President under the direction of the Board.
(iv) Power and Authority of President. The daily operation
and management of the Company shall be under the
direction of the President. The President shall
operate the Company subject to (A) the provisions of
the Budget and the Business Plan of the Company which
shall be approved by the Board not less often than
annually and more often as may be agreed, (B) basic
policy decisions adopted by the Members, and (C)
specific limitations and requirements of this
Agreement and any employment agreement. In addition,
the President will keep the Board informed about the
Company's business and financial results, and ensure
that all financial statements and other reports that
may be required under the Articles or applicable law
are prepared and submitted on a timely basis.
(v) Execution of Documents. The President shall have the
power and authority, subject to any express
provisions of this Agreement and the Articles to the
contrary and any limitations set forth by the Board
from time to time, to execute all documents or
instruments, perform all duties and powers and do all
things for and on behalf of the Company in all
matters necessary, desirable, convenient or
incidental to the purposes of the Company.
(vi) Banking Resolution and Check Signing Authority. The
Members hereby unanimously authorize the President to
open or continue all banking accounts as he deems
necessary and to enter into any deposit agreements as
are required by the financial institution at which
such accounts are opened. All accounts, depositary
agreements, or similar arrangements will be operated
in accordance with TFS' approved bank account
procedures, including signatory authority,
limitations on withdrawal of funds, and similar
requirements, as well as any other requirements or
limitations approved by the Board from time to time.
For so long as a Member, together with its Related
Entities, holds at least 10% of the Company's
outstanding voting shares, the Company will submit to
such Member weekly reports, in form and substance
reasonably acceptable to such
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Member, of all checks and payments issued and made by
the Company during the previous week, and hereby
grants such Member the right, during normal working
hours, to inspect, and if necessary, to take copies
of all invoices, deeds, mandates, or other
documentation which support or are connected to such
payments.
(vii) Filing of Documents. The President or other
authorized individual shall file or cause to be filed
all certificates or documents as may be determined by
the President to be necessary or appropriate for the
formation, continuation, qualification and operation
of the Company as a Sendirian Berhad in Malaysia and
any other jurisdiction in which the Company may elect
to do business.
(viii) Management Committee. The Company shall have a
Management Committee consisting of the President, the
Chief Financial Officer, and one (1) representative
appointed by each Member holding, together with its
Related Entities, at least 20% of the outstanding
voting shares of the Company. The initial appointee
of TFS shall be Xxx X. Xxxxxx, and the initial
appointee of USSB shall be and Dato' Lai Pin Yong.
The President of the Company shall keep the
Management Committee fully informed of all policies
and procedures adopted or implemented by the
President or other members of management, and shall
work with the Management Committee to ensure that all
policies and procedures are consistent with the
Company's Business Plan and other resolutions of the
shareholders and the Board. In the event that there
is a dispute or disagreement between the members of
the Management Committee or between the Management
Committee and the President regarding policies and
procedures to be adopted and implemented and such
dispute or disagreement is not resolved within 10
days or if the President or a member of the
Management Committee reasonably determines that such
matter requires immediate resolution, then either the
President or a member of the Management Committee may
inform the members of the Board regarding the matter
in question, and the resolution of the Board (or the
resolution of the shareholders, if required by the
Articles, this Agreement, or applicable law), shall
be the definitive resolution with respect to such
matter.
q. BUSINESS PLAN. The Company will perform its activities
pursuant to the terms of the Business Plan. Each year the
Company's President and management will prepare an updated
business plan for the next fiscal year that this Agreement is
in effect for submission to the Board for review and approval
at least thirty 30 days prior to the end of the then-current
fiscal year.
r. FISCAL YEAR. The fiscal year of the Company will begin on
January 1st and end on December 31st of each calendar year;
provided, however, that its first fiscal year will begin on
the registered incorporation date of the Company and end on
December 31, 2003.
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s. FINANCIAL STATEMENTS. The Company shall deliver to TFS and
USSB audited financial statements as at the end of each fiscal
year, including balance sheets, income statement, cash flows,
and changes in shareholders' equity, prepared in accordance
with United States generally accepted accounting principles
("U.S. GAAP"), all in reasonable detail and certified by
independent public accountants of internationally recognized
standing selected by the Company. The Company shall also
deliver to TFS and USSB monthly unaudited consolidated
financial statements, including balance sheet, income
statement, cash flows, and changes in shareholders' equity, in
reasonable detail and prepared in accordance with U.S. GAAP.
All such statements and submissions will be made available in
English.
t. BOOKS AND RECORDS. The Company will maintain complete and
accurate books of accounts and records in accordance with the
Articles and applicable Malaysian law. A complete and accurate
copy of all books and records will be kept in English. Subject
to limitations contained in applicable law, each shareholder
holding at least 10% of the outstanding capital stock of the
Company may each inspect and copy the Company's books and
records, directly or through their representatives, at any
time during normal business hours, provided, however, that
such shareholder may review but not take copies of Trade
Secrets or Confidential Information.
U. COMPLIANCE WITH LAW AND BUSINESS POLICIES. The parties agree
that all activities performed, directly or indirectly, by the
Company shall be carried out in accordance with all applicable
laws, regulations, procedures, and principles of transparency
and good corporate governance. Neither party shall pay or
promise to pay, or cause or permit the Company to pay or
promise to pay, directly or indirectly, any money, benefit or
other thing of value to any official, agent, consultant or
employee of any Authority or any political party or candidate
for political office, or to any officer or employee of any
customer, in order to assist the Company to obtain or retain
business, except for regular filing fees in the normal course
or except as specifically permitted by Company policies
approved by the Board or the shareholders. In addition, the
President and other officers will from time to time, at a
Member's reasonable request, confirm in writing their
compliance with the foregoing policy and laws related thereto.
V. EXTERNAL AUDITORS. The Board shall retain independent external
auditors of the Company, which external auditor shall
initially be Deloitte & Touche.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF USSB
Subject to any exceptions set forth in the Schedule of Exceptions, if
any, attached hereto, as of the date of this Agreement and the Closing Date,
USSB (which will include for purposes of this Section 3 any Related Entity that
is a party to any Ancillary Agreement or otherwise involved in the transactions
contemplated thereby) makes the following representations, warranties and
covenants, which have induced TFS to execute this Agreement:
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a. ORGANIZATION. USSB is a corporation duly organized, validly
existing and in good standing under the laws of Malaysia, with
full power and authority to execute and perform this Agreement
and the Ancillary Agreements.
b. ABSENCE OF LIABILITIES. USSB has no liabilities or obligations
(whether accrued, contingent or otherwise), including
liabilities for accounts payable, breach of contract,
infringement of intellectual property rights, taxes and
interest or penalties thereon, liabilities under guarantees or
hold harmless arrangements or other liabilities, that relate
to the Business or the assets to be acquired or leased by the
Company pursuant to this Agreement and the Ancillary
Agreements, or that may affect USSB's performance of this
Agreement or the Ancillary Agreements.
c. LITIGATION AND COMPLIANCE. USSB is not a party to any claim,
suit or other proceeding before any Authority, or subject to
any decree, judgement or judicial order, that may affect its
performance of this Agreement or the Ancillary Agreements and,
to its best knowledge, no such action is threatened by or
against it. To its best knowledge, USSB is in compliance with
all applicable statutes, laws and other governmental
regulations related to the Business.
d. CONSENTS. USSB has given all notices to and obtained all
Consents, including Governmental Approvals, that may be
necessary or appropriate for it to execute and perform this
Agreement and the Ancillary Agreements.
e. AUTHORITY. USSB has full power and authority to execute and
deliver this Agreement and the Ancillary Agreements, and to
carry out its obligations hereunder and thereunder, including
consummation of the transactions contemplated hereby and
thereby. USSB has obtained all necessary corporate approvals
for the execution, delivery, and performance of this Agreement
and the Ancillary Agreements. This Agreement has been duly
executed and delivered, and the Ancillary Agreements when
delivered will be duly executed and delivered, and each will
constitute the legal, valid and binding obligation of USSB
enforceable against it in accordance with its terms.
f. NO CONFLICT. None of the execution, delivery, or performance
of this Agreement or the Ancillary Agreements will constitute
a violation of, or be in conflict with, USSB's Memorandum or
Articles of Association or other constituent documents, or
will, with or without notice or the passage of time,
constitute a breach or violation of, be in conflict with,
create a default under, or result in the creation or
imposition of any liens upon any property of USSB pursuant to
(i) any contract, indenture, agreement, instrument, mortgage,
lease, or other commitment to which USSB is a party or by
which any of its properties are bound, or (ii) any law or
statute or any judgements, decree, order, regulation, or rule
of any Authority relating to USSB.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF TFS
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Subject to any exceptions set forth in the Schedule of Exceptions, if
any, attached hereto, as of the date of this Agreement and the Closing Date, TFS
(which will include for purposes of this Section 4 any Related Entity that is a
party to any Ancillary Agreement or otherwise involved in the transactions
contemplated thereby) makes the following representations, warranties and
covenants, which have induced USSB to execute this Agreement:
a. ORGANIZATION. TFS is a company duly organized, validly
existing and in good standing under the laws of Bermuda (or in
the case of any Related Entity, the relevant jurisdiction),
with full power and authority to execute and perform this
Agreement and the Ancillary Agreements.
b. ABSENCE OF LIABILITIES. TFS has no liabilities or obligations
(whether accrued, contingent or otherwise), including
liabilities for accounts payable, breach of contract,
infringement of intellectual property rights, taxes and
interest or penalties thereon, liabilities under guarantees or
hold harmless arrangements or other liabilities, that may
affect TFS' performance of this Agreement or the Ancillary
Agreements.
c. LITIGATION. TFS is not a party to any claim, suit or other
proceeding before any Authority, or subject to any decree,
judgement or judicial order, that may affect its performance
of this Agreement or the Ancillary Agreements and, to its best
knowledge, no such action is threatened by or against it.
d. CONSENTS. TFS has given all notices to and obtained all
Consents, including Governmental Approvals, that may be
necessary or appropriate for it to execute and perform this
Agreement and the Ancillary Agreements.
e. AUTHORITY. TFS has full power and authority to execute and
deliver this Agreement and the Ancillary Agreements, and to
carry out its obligations hereunder and thereunder, including
consummation of the transactions contemplated hereby and
thereby. TFS has obtained all necessary corporate approvals
for the execution, delivery, and performance of this Agreement
and the Ancillary Agreements. This Agreement has been duly
executed and delivered, and the Ancillary Agreements when
delivered will be duly executed and delivered, and each will
constitute the legal, valid and binding obligation of TFS
enforceable against it in accordance with its terms.
f. NO CONFLICT. None of the execution, delivery, or performance
of this Agreement or the Ancillary Agreements will constitute
a violation of, or be in conflict with, TFS's Certificate of
Incorporation, Bylaws or other constituent documents, or will,
with or without notice or the passage of time, constitute a
breach or violation of, be in conflict with, create a default
under, or result in the creation or imposition of any liens
upon any property of TFS pursuant to (i) any contract,
indenture, agreement, instrument, mortgage, lease, or other
commitment to which TFS is a party or by which any of its
properties are bound, or (ii) any law or statute or any
judgements, decree, order, regulation, or rule of any
Authority relating to TFS.
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5. CLOSING
a. CLOSING DATE. The consummation of the transactions
contemplated under Section 5(c) (the "Closing") will take
place at the offices of Xxxx & Partners, Xxxxx 00, Xxxxx X,
Xxxxxx Xxxxx, Xxxxx Xxxxxx City Center, 50088 Kuala Lumpur,
Malaysia, at a mutually convenient time, or at such other time
and place as the parties may mutually agree, but in any event
no later than five (5) days following the fulfillment, or
waiver by the appropriate party, of the conditions to Closing
set forth in this Section 5 (the "Closing Date").
b. CONDITIONS TO TFS' OBLIGATION TO CLOSE. TFS' obligation to
proceed with the Closing and to consummate the transactions
contemplated herein is subject to the fulfillment of the
following conditions on or before Closing:
(i) all representations and warranties made by USSB under
this Agreement will be true and accurate as of the
date of this Agreement and the Closing Date;
(ii) the Business to be transferred will have been
conducted from the date hereof to the Closing in the
ordinary course of business and in a manner
reasonably acceptable to TFS;
(iii) USSB and the Company will have obtained all Consents,
including Governmental Approvals, necessary to carry
out the transactions contemplated hereby, including
all Consents required under the Ancillary Agreements;
(iv) the appropriate USSB entities, including Unico
Technology Sdn. Bhd., will have surrendered their
manufacturing licenses related to the Business, to
the appropriate governmental Authority;
(v) due diligence regarding the Business will have been
completed satisfactory to TFS in its sole discretion;
(vi) the execution and delivery of the Deeds of Guarantee
by Guarantor, in substantially the form attached
hereto as EXHIBIT VIII;
(vii) the Company shall not have entered into any
transaction or agreement or undertaken any other
business or corporate action, other than those
actions and agreements explicitly contemplated by
this Agreement and the Ancillary Agreements; and
(viii) the execution, delivery and completion of the
Ancillary Agreements, except for conditions to
completion of an Ancillary Agreement which are
specifically identified in such Ancillary Agreement
as being subject to completion following the Closing
of this Agreement.
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c. CONDITIONS TO USSB'S OBLIGATION TO CLOSE. USSB's obligation to
proceed with the Closing and to consummate the transactions
contemplated herein is subject to the fulfillment of the
following conditions on or before Closing:
(i) all representations and warranties made by TFS under
this Agreement will be true and accurate as of the
date of this Agreement and the Closing Date.
d. CONDITIONS TO PARTIES' OBLIGATION TO CLOSE. The obligations of
both TFS and USSB to proceed with the Closing and to
consummate the transactions contemplated herein are subject to
the fulfillment of the following conditions on or before
Closing:
(i) USSB and TFS will have agreed upon employment terms
and other employment incentives for each management
team member transferring to the Company;
(ii) no action or proceeding will have been initiated or,
to the best knowledge of either party, threatened
that may prevent the consummation of this Agreement;
and
(iii) the Company will have received the necessary Consents
from Authorities to enable it to conduct the Business
in the manner set forth in the Business Plan,
including Consents for incentives, tax benefits and
similar matters.
e. CLOSING. At the Closing, USSB and TFS (and their respective
Related Entities, as applicable) will make the following
deliveries and cause the following actions to be taken:
(i) USSB and TFS will deliver the Consents obtained and
other documents evidencing the transfer, lease or
provision to the Company of the assets and employees
related to the Business, as well as any other Closing
deliveries contemplated in the Ancillary Agreements;
(ii) USSB and TFS will deliver copies of their respective
Board consents and other corporate approvals obtained
in connection with the transactions contemplated
hereby;
(iii) USSB and TFS will subscribe for their respective
shares of the Company and transfer their respective
cash contributions into the bank account established
for such purpose;
(iv) the Articles will be executed and filed with the
appropriate Authority;
(v) USSB and TFS will convene a shareholders' meeting to
elect the Board, the auditors, and to adopt any other
resolutions that may be necessary or appropriate;
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(vi) the Board will convene a directors meeting to elect
the officers of the Company and to adopt any other
resolutions that may be necessary or appropriate;
(vii) USSB and TFS will make such other deliveries and take
such other actions that may be reasonably necessary
in order to effect the Closing as contemplated under
this Agreement and the Ancillary Agreements.
f. POST-CLOSING ACTIONS. Promptly following the Closing, in
addition to other actions that may be required under this
Agreement or the Ancillary Agreements:
(i) the Company's management will carry out all required
filings and registrations and obtain any other
Consents necessary to formalize and carry out the
transactions contemplated hereby, including
registration of the parties as shareholders and the
increase in the Company's paid up capital;
(ii) the parties will use best efforts to complete such
documents and carry out all required filings and
registrations in order to obtain "pioneer" tax status
with respect to the Company and its operations; and
(iii) the parties will use best efforts to agree on a
framework regarding, and to finalize documents to
carry out, the use and benefit of certain equipment
and facilities of IPC and to ensure that the status
and incentives currently enjoyed by IPC are
maintained or transferred to a new entity, as the
case may be, with the intent that such operations
will be jointly owned, with 60% initially held by TFS
and 40% initially held by USSB, or their respective
Related Entities.
6. CONFIDENTIALITY
a. CONFIDENTIAL INFORMATION. During the term of this Agreement
and for a period of three (3) years after the termination of
this Agreement, the Company and each Member expressly
covenants and agrees that neither the Company nor such Member
nor any of their Related Entities (collectively, the
"Recipient Party") will disclose, divulge, furnish or make
accessible to anyone (other than the Company or any of the
Company's Related Entities or representatives) any
Confidential Information of the other Member or of the Company
(collectively, the "Disclosing Party"), or in any way use any
Confidential Information of the Disclosing Party in the
conduct of any business other than the business of the
Company; provided, however, that nothing in this Section 6(a)
will (i) prohibit the Recipient Party from using Confidential
Information in connection with its exercise of rights granted
under Section 2(i) or (ii) prohibit the disclosure of any
Confidential Information (A) that is required to be disclosed
by the Recipient Party or any such Affiliate in connection
with any action or other proceeding before any Authority, (B)
in connection with the enforcement of any of the rights of the
Recipient Party
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hereunder, or (C) in connection with the defense by the
Recipient Party of any claim asserted against it hereunder;
provided, however, that in the case of a disclosure
contemplated by clause (ii)(A), to the extent reasonably
practicable, no disclosure shall be made until the Recipient
Party shall give notice to the Disclosing Party of the
intention to disclose such Confidential Information so that
the Disclosing Party may contest the need for disclosure, and
the Recipient Party will cooperate with the Disclosing Party
in connection with any such proceeding.
b. TRADE SECRETS. The Company and each Member expressly covenants
and agrees that neither the Company nor such Member nor any of
their Related Entities (collectively, the "Recipient Party")
will disclose, divulge, furnish or make accessible to anyone
(other than the Company or any of the Company's Related
Entities or representatives) any Trade Secret of the other
Member or of the Company (collectively, the "Disclosing
Party"), or in any way use any Trade Secret of the Disclosing
Party in the conduct of any business other than the business
of the Company; provided, however, that nothing in this
Section 6(a) will (i) prohibit the Recipient Party from using
Trade Secrets in connection with its exercise of rights
granted under Section 2(i) or (ii) prohibit the disclosure of
any Trade Secret (A) that is required to be disclosed by the
Recipient Party or any such Affiliate in connection with any
action or other proceeding before any Authority, (B) in
connection with the enforcement of any of the rights of the
Recipient Party hereunder, or (C) in connection with the
defense by the Recipient Party of any claim asserted against
it hereunder; provided, however, that in the case of a
disclosure contemplated by clause (ii)(A), to the extent
reasonably practicable, no disclosure shall be made until the
Recipient Party shall give notice to the Disclosing Party of
the intention to disclose such Trade Secret so that the
Disclosing Party may contest the need for disclosure, and the
Recipient Party will cooperate with the Disclosing Party in
connection with any such proceeding.
C. PROTECTIVE ACTIONS. Each party will use the other party's
Intellectual Property solely to fulfill the purposes of this
Agreement, and will take all reasonable precautions necessary
to safeguard the confidentiality of the other party's
Confidential Information and Trade Secrets, including (i)
those required under this Section 6, (ii) those taken by such
party to protect its own confidential information and (iii)
those which the other party may reasonably request from time
to time. Each party acknowledges that any unauthorized use or
disclosure of the Confidential Information or Trade Secrets of
the other party may cause irreparable damage to the other
party. If an unauthorized use or disclosure occurs, such party
will, at its expense, take all steps that are necessary to
recover the other party's Confidential Information and Trade
Secrets and to prevent its subsequent unauthorized use or
dissemination, including availing itself of actions for
seizure and injunctive relief. If such party fails to take
these steps in a timely and adequate manner, the other party
may take them at such party's expense.
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7. INDEMNIFICATION
a. INDEMNIFICATION OF THE COMPANY AND TFS. USSB acknowledges and
agrees that with the exception of assumed liabilities
specifically set forth in the Asset Transfer Agreement, if
any, the Company is not assuming any fixed or contingent
liabilities associated with the Business, and USSB hereby
agrees, and, if applicable under the relevant agreement, shall
cause its Related Entities, to indemnify and hold harmless the
Company and TFS from any Loss incurred as a result of, arising
out of, or resulting from, or related to: (i) the conduct of
the Business prior to the Closing, or (ii) any breach of any
representation, warranty, or covenant made by USSB or its
Related Entities contained in this Agreement or the Ancillary
Agreements, and such indemnification shall be in addition to
any other rights the Company or TFS may have hereunder or
thereunder. Notwithstanding anything to the contrary contained
herein, USSB's obligation to indemnify TFS shall be limited to
the aggregate amount of TFS' actual investment in the Company
through purchase of shares, additional contributions to
capital or loans as of the date of such indemnification, plus
TFS' reasonable attorneys' fees and other fees and costs of
defending against any Third Party Claim, as defined below. In
addition, USSB's obligation to indemnify the Company shall be
limited to the amount required to bring the Company's net
shareholders' equity to an amount equal to the amount of the
shareholders' aggregate investment in the Company through
purchase of shares, additional contributions to capital or
loans as of the date of such indemnification.
B. INDEMNIFICATION OF USSB. TFS hereby agrees, and, if applicable
under the relevant agreement, shall cause its Related
Entities, to indemnify and hold harmless the Company and USSB
from any Loss arising out of, or resulting from, or related to
any breach of any representation, warranty, or covenant made
by TFS or its Related Entities contained in this Agreement or
the Ancillary Agreements, and such indemnification shall be in
addition to any other rights USSB may have hereunder or
thereunder. Notwithstanding anything to the contrary contained
herein, TFS' obligation to indemnify USSB shall be limited to
the aggregate amount of USSB's actual investment in the
Company through purchase of shares, additional contributions
to capital, or loans as of the date of such indemnification,
plus USSB's reasonable attorneys' fees and other fees and
costs of defending against any Third Party Claim, as defined
below.
C. INDEMNIFICATION PROCEDURES:
(i) If any third party shall notify either party (the
"Indemnified Party") with respect to any matter (a
"Third Party Claim") which may give rise to a claim
for indemnification against the other party (the
"Indemnifying Party") hereunder, then the Indemnified
Party shall promptly (and in any event within seven
(7) days after receiving notice of the Third Party
Claim) notify the Indemnifying Party thereof in
writing.
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(ii) The Indemnifying Party shall have the right at any
time to assume and thereafter conduct the defense of
the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party,
provided, however, that the Indemnified Party shall
have the right to retain its own counsel, with
reasonable fees and expenses paid by the Indemnifying
Party, if either (A) representation of the
Indemnified Party by counsel retained by the
Indemnifying Party would be inappropriate because of
actual or potential conflicting interests between the
Indemnified Party and the Indemnifying Party, or (B)
the Indemnifying Party fails to defend such action,
suit, or proceeding.
(iii) Unless and until the Indemnifying Party assumes the
defense of the Third Party Claim as provided herein,
the Indemnified Party may defend against the Third
Party Claim in any manner it reasonably may deem
appropriate.
(iv) In no event shall the either party consent to the
entry of any judgement or enter into any settlement
with respect to the Third Party Claim without the
prior written consent of the other party, which
consent shall not be reasonably withheld.
8. PUT-CALL OPTION UPON CERTAIN EVENTS
a. PUT-CALL OPTION. Each Member (which for purposes of this
Section 8 shall include any Related Entity holding shares of
the Company or any successor in interest) will have the right
to put all shares (but not less than all shares) owned by such
party in the Company to the other Member, coupled with a call
obligation to purchase all shares (but not less than all
shares) owned by the other party in the Company in accordance
with the procedures set forth in this Section 8 (the "Put-Call
Option").
b. OPTION EVENT. Any of the following events will constitute an
"Option Event":
(i) if the representations and warranties of the other
Member or its relevant Related Entity in this
Agreement and the Ancillary Agreements are not true
and correct in all material respects, unless the
breach of such representation or warranty does not
result in a material adverse effect to the party for
whose benefit such representations and warranties
were included in the Agreement or the Ancillary
Agreements;
(ii) if the other Member breaches any material obligation
under this Agreement or an Ancillary Agreement and
such party fails to cure the breach to the notifying
party's reasonable satisfaction within fifteen (15)
days after it demands such cure in writing;
(iii) if the other Member ceases to conduct business in the
normal course, is declared insolvent, undergoes any
procedure for the suspension of
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payments or makes a general assignment for the
benefit of creditors or a petition for bankruptcy,
reorganization, dissolution or liquidation is filed
by or against it;
(iv) if the shareholders are unable to duly adopt a
resolution regarding any Shareholder Super-Majority
Matter within thirty (30) days after it was first
presented to the shareholders;
(v) if there is a failure to achieve a quorum at a
meeting of the Board and at two successive
rescheduled meetings as set forth in Section
2(n)(iii); or
(vi) if the directors are unable to duly adopt a
resolution regarding the appointment of a Chairman or
President of the Company within thirty (30) days
after it was first presented to the Board.
c. EVENT NOTICE. Upon the occurrence of an Option Event, a Member
may provide notice to the other Member (the "Event Notice")
regarding the occurrence of such Option Event and setting
forth a demand for resolution or cure of the Option Event and
proposing a date, time, and venue for the Members to meet to
resolve the matter, which date shall be no later than ten (10)
days from the date of the Event Notice. Each Member shall act
in good faith to resolve the Option Event, and upon resolution
of the Option Event, the Members shall execute a statement
setting forth their agreement regarding resolution of the
Option Event and shall take such actions as may be necessary
to ensure that such Option Event is promptly resolved or
cured. Following delivery of the Event Notice, each Member
shall have the right to review the Company's books and records
during normal business hours and otherwise perform due
diligence, at such Member's expense, until such time as the
Option Event shall have been resolved or cured or until the
Put-Call Notice shall have been exercised or withdrawn, as set
forth below.
d. PUT-CALL NOTICE. If the parties are unable to resolve an
Option Event within fifteen (15) days from the date of the
Event Notice, then either Member (the "Initiating Party") may
provide written notice (the "Put-Call Notice") to the other
party (the "Responding Party") identifying the Option Event
and stating a specific price per share (the "Option Price") at
which the Initiating Party is offering to both (i) sell all of
its shares in the Company to the Responding Party, and (ii)
buy all of the Responding Party's shares in the Company.
e. RESPONDING NOTICE. Within fifteen (15) days following receipt
of the Put-Call Notice, the Responding Party shall provide
written notice to the Initiating Party (the "Responding
Notice") electing to either (i) purchase all shares of the
Initiating Party at the Option Price, or (ii) sell all of its
shares to the Initiating Party at the Option Price. The
Responding Party and the Initiating Party shall thereafter
take all steps necessary to consummate such transfer of the
relevant shares within ten (10) days, subject to receipt of
any Governmental Approvals required for such transfer.
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f. FAILURE TO PROPERLY RESPOND. In the event the Responding Party
fails to deliver a Responding Notice within the 15-day period
set forth above, or delivers a Responding Notice that fails to
make one of the two permissible elections set forth above, the
Responding Party shall be deemed to have elected to sell all
of its shares to the Initiating Party at the Option Price, and
the Company shall promptly take such actions and make such
entries in its books and records to formalize the transfer of
such shares to the Initiating Party, upon receipt of adequate
documentation from the Initiating Party demonstrating delivery
to the Responding Party of the Option Price for such shares.
9. TERM AND TERMINATION
a. TERM. This Agreement will become effective, as of the date
first set forth above, upon its execution by TFS and USSB and
will remain in effect thereafter perpetually, unless earlier
terminated pursuant to Section 9(b) below.
b. TERMINATION. This Agreement will terminate:
(i) automatically if the parties fail to consummate the
Closing on or before April 30, 2003, for any reason,
subject to extension by mutual agreement of the
parties;
(ii) by the written agreement of the parties; or
(iii) by either party by written notice if neither party
has elected to provide a Put-Call Notice within sixty
(60) days after the delivery of an Event Notice
regarding the occurrence of the Option Event set
forth in 8(b)(iv) above, and such Option Event
remains unresolved.
c. CONSEQUENCES OF TERMINATION. Unless otherwise agreed, upon the
termination of this Agreement for any reason, the Company will
be dissolved and liquidated in accordance with applicable law,
unless previously dissolved or liquidated. The provisions of
Sections 6, 9(c), 10(c), 10(g), and 10(h) will survive the
expiration of this Agreement or its termination for any
reason.
10. MISCELLANEOUS PROVISIONS
a. NO AGENCY. TFS and USSB are independent parties. Nothing in
this Agreement will be construed to constitute either party as
an agent, employee or legal representative of the other party.
Neither party will either have nor represent itself to have
any authority to bind the other party or to act on its behalf,
except as set forth in a duly executed power of attorney.
b. FURTHER ASSURANCES. The parties agree to cooperate in good
faith in soliciting any Governmental Approval that may be
required to consummate and perform this Agreement, and to
provide such documents and information as may be
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required to carry out the intent of this Agreement. The
parties further agree to use commercially reasonable efforts
to achieve the objectives of this Agreement and agree to act
in good faith, and shall cause their representatives and
Related Entities to act in good faith, in carrying out the
purposes and objectives of this Agreement.
c. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations, warranties and covenants of the parties will
survive the Closing. In case of any misrepresentation or
breach of warranty or covenant, in addition to any other
rights the other party may have under this Agreement, the
breaching party will indemnify the other party against any
damage that it may incur as a result of such misrepresentation
or breach.
d. FORCE MAJEURE. Neither party will be liable for failure or
delay in performing any obligation under this Agreement that
is due to causes beyond its reasonable control, such as
natural catastrophes, terrorist acts, governmental acts or
omissions, laws or regulations, labor strikes or difficulties
(except for labor strikes or difficulties related to the
Business) or transportation stoppages or slowdowns.
e. NOTICES. Any notice, approval or other communication required
or permitted under this Agreement will be given in writing and
will be sent by facsimile, courier or registered airmail,
postage prepaid, to the address specified below or to any
other address that may be designated by prior notice. Any
notice or other communication will be deemed to have been
delivered upon actual receipt by the recipient.
If to TFS:
TFS International, Ltd.
c/o: Xxxxxx X. Xxxxxxx
0000 Xxxxx Xxxxxx Xxxxx
Xxxxx, XX 00000
U.S.A.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with courtesy copies to:
Xxxxx & XxXxxxxx
Attn: Xxxxxxx X. Xxxxx or Xxxx X. Xxxxxxxx
000 Xxxxxx Xxx
Xxxx Xxxx, XX 00000
U.S.A.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Xxxx & Partners
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Correspondent Law Firm of Xxxxx & XxXxxxxx
Attn: Xxxxx X. X. Xxxx or Xxxxx Xxxxx Xxxx
Xxxxx 00 - Xxxxx X, Xxxxxx Xxxxx
Xxxxx Xxxxxx Xxxx Xxxxxx
00000 Xxxxx Xxxxxx, Xxxxxxxx
Telephone: (00-0) 0000-0000
Facsimile: (00-0) 0000-0000
If to USSB:
Unico Systems Sdn. Bhd.
Attn: Xxxx Xxxxx Xxx
0xx Xxxxx, Xxxxxx Xxxxxxxx
Xxxxx Xxxxxxx
Xx. 00, Xxxxx Xxxx
00000 Xxxxx Xxxxxx, Xxxxxxxx
Telephone: (000) 0000 0000
Facsimile: (000) 0000 0000
with a courtesy copy to:
Xxxxx & Xxxxxxxx
Attn: Xxxxxx X. X. Xxxx
27th Floor, West Wing, Menara Maybank
Xx. 000, Xxx Xxx Xxxxx
00000 Xxxxx Xxxxxx, Xxxxxxxx
Telephone: 00-0-0000-0000
Facsimile: 00-0-0000-0000
f. ASSIGNMENT. Neither party may assign, delegate, sub-contract
or otherwise transfer this Agreement or any of its rights or
obligations without the other party's prior consent, except as
contemplated by the Ancillary Agreements.
g. ARBITRATION.
(i) General. The parties agree that any dispute arising
out of or in connection with this Agreement,
including any question regarding its existence,
validity or termination, shall be referred to and
finally resolved by arbitration in Singapore at the
Singapore International Arbitration Centre ("SIAC")
in accordance with the arbitration rules of SIAC
which are deemed to be incorporated by reference into
this clause.
(ii) Proceeding. The arbitral tribunal shall consist of
three (3) arbitrators, one to be appointed by each of
the parties and the third arbitrator shall be
appointed by the chairman of SIAC and the arbitrator
so appointed shall serve as the chairman of the
arbitration tribunal.
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(iii) Language. The language of the arbitration shall be
English.
(iv) Award. The arbitral award will be the exclusive
remedy of the parties for all claims, counterclaims,
issues or accountings presented or plead to the
arbitrator. The award will (A) be granted and paid in
U.S. dollars exclusive of any tax, deduction or
offset and (B) include interest from the date of that
the award is rendered until it is fully paid,
computed at the then-current LIBOR rate, plus 5%.
Judgement upon the arbitral award may be entered in
any court that has jurisdiction thereof.
(v) Enforcement. If necessary, the arbitral award may be
enforced in any court of competent jurisdiction or
appropriate administrative body. Any additional
costs, fees or expenses incurred in enforcing the
arbitral award will be charged against the party that
resists its enforcement.
(vi) Legal Actions. Notwithstanding the provisions of
Sections 10(g)(i)-(v) above, prior to arbitration or
pending the result of the arbitration, any party may
bring an action: (A) for injunctive or other similar
prohibitory relief in any court of competent
jurisdiction, and (B) for any interlocutory or
interim relief, including, without limitation, any
proceedings for the detention, custody or
preservation of any property.
h. GOVERNING LAW. This Agreement will be governed by and
interpreted in accordance with the laws of the State of
Delaware, excluding its conflict of law principles, except
that Malaysian law will be applicable in relation to matters
that specifically govern private limited companies
incorporated under the Malaysian Companies Xxx 0000, including
substantive issues related to the corporate governance or
structure of the Company. TFS and USSB exclude the United
Nations Convention on Contracts for the International Sale of
Goods from this Agreement and any transaction between them
that may be implemented in connection with this Agreement.
i. SUPREMACY. In the event of a conflict or inconsistency between
the terms and provisions of this Agreement and the Articles or
other constituent documents of the Company, the terms and
provisions of this Agreement shall prevail, to the extent of
such conflict or inconsistency, and the Members shall exercise
their respective voting rights as shareholders and take such
further actions as may be necessary to ensure that the terms
and provisions of this Agreement prevail.
j. INTERPRETATION. The terms that are defined in this Agreement
may be used in the singular or the plural, as the context
requires. References to "days" mean calendar days, unless
specified otherwise. References to a "person" mean an
individual, partnership, company, corporation or other legal
entity, as the context requires. The word "including" is
exemplary and not exhaustive and means "including, but not
limited to," the relevant items in question. The symbol "$"
refers to the lawful currency of the United States of America,
unless specifically indicated otherwise. Headings are intended
only for reference purposes. The
-28-
word "stock," with reference to the Company's capital stock,
means shares of the Company or shares that have been converted
into formal `stock' under Malaysian corporate law, and is
intended to be inclusive of both shares and stock as the
context permits. In case of any conflict between this
Agreement and the Exhibits and Schedules, the terms of the
Exhibits and Schedules will prevail. This Agreement will be
interpreted and performed in English.
k. SEVERABILITY. If any provision of this Agreement is held to be
unenforceable, in whole or in part, by a tribunal of competent
jurisdiction, such holding will not affect the validity of the
other provisions of this Agreement.
l. WAIVER, AMENDMENT, MODIFICATION. Except as otherwise provided
above, any waiver, amendment or other modification of this
Agreement will not be effective unless in writing and signed
by the party against whom enforcement is sought. In addition,
the failure by a party to enforce any provision of this
Agreement shall not be deemed a waiver of such provision, nor
shall it prevent such party from enforcing such provision in
the future.
m. ENTIRE AGREEMENT. This Agreement, the Schedules and Exhibits,
the Ancillary Agreements, and the other documents delivered
concurrently herewith constitute the complete and entire
statement of all terms, conditions and representations of the
agreement between TFS and USSB with respect to its subject
matter and supersede all prior writings or understandings.
n. COUNTERPARTS. This Agreement may be executed in counterparts,
including facsimile copies, which when taken together shall
constitute a single instrument.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
TFS INTERNATIONAL, LTD. UNICO SYSTEMS SDN. BHD.
By: /s/Xxxxxx Xxxxxx By: /s/Xxxx Xxxxx Xxx
----------------------- --------------------------------
Name: Xxxxxx Xxxxxx Name: Xxxx Xxxxx Ye
Title: General Manager Title: General Manager, Finance
TFS INTERNATIONAL II, LTD. TFS ELECTRONIC ANUFACTURING
SERVICES SDN. BHD.
By: /s/Xxxxxx Xxxxxx By: /s/Xxxxxx Xxxxxx
----------------------- --------------------------------
Name: Xxxxxx Xxxxxx Name: Xxxxxx Xxxxxx
Title: General Manager Title: General Manager
AGREED AND ACKNOWLEDGED BY GUARANTOR:
UNICO HOLDINGS BERHAD
By: /s/Xxxx Xxxxx Xxx
Name: Xxxx Xxxxx Xxx
Title: General Manager, Finance
SIGNATURE PAGE TO JOINT VENTURE AGREEMENT
EXHIBITS:
I. Memorandum and Articles of Association
II. Asset Transfer Agreement
III. Equipment Lease Agreement
IV. Tenancy Agreement
V. Logistics and Warehousing Agreement
VI. Trademark and Tradename License Agreement
VII. Sales and Marketing Agreement
VIII. Deeds of Guarantee
SCHEDULES:
I. Business Plan and Budget
II. Schedule of Licensed Background IP
III. Shareholder Super-Majority Matters IV. Board Super-Majority Matters
IV. Board Super-Majority Matter
