Exhibit 4.3
Investment Cooperation Agreement
This Agreement is entered on December 7, 2003 by and between:
PSi Technologies, Inc. ("PSi"), a corporation registered and existing under the
laws of the Republic of the Philippines, having registered address at
Electronics Ave., FTI Complex, Taguig, Metro Manila, Philippines; and
Management Committee of Chengdu Hi-Tech Zone ("CDHT"), a PRC government entity,
located at 00 Xxxxxxxx Xxxx, Xxxxxxx Hi-Tech Xxxx, Xxxxxxx 000000, Xxxxxxx
Xxxxxxxx.
Whereas:
1. PSi is contemplating an investment ("Investment"), the first phase ("Phase
No. 1") will commence within three (3) months from the execution of this
Agreement and the issuance of the Company's Business License, Customs
permits and other approvals necessary to establish an Assembly and Test
Facility Factory (the "Company") in Chengdu, Sichuan Province, the Peoples'
Republic of China;
2. PSi's Phase No. 1 investment is anticipated to be USD$20 million within
three years.
3. In support of the Investment by PSi, CDHT will provide support to PSi, its
affiliated companies and the Company in accordance with the terms and
conditions contained herein.
THEREFORE, upon friendly negotiations, the parties hereto reached agreement as
follows:
1. Lease of Factory and Land
(1) Factory A and Land A
i. Description
The area of Factory A is 2,592 sqm located on Land A with an area of
4,117.5 sqm. The property has been installed with seven (7)
connections such as water, power, gas, drainage, sewage,
telecommunications, internet and other accessory facilities
ii. Lease Terms and Conditions
a. The rent of Factory A is RMB8/sqm/month, which shall not be
changed during the lease term (including any extension of the
initial lease term). The rent shall be calculated on such basis
that the area of Factory A is 2,592 sqm. CDHT will not charge any
rent to the Company for Land A.
b. During the lease term, CDHT will charge a management fee for
garbage disposal and security services in an amount of
RMB1/sqm/month. The management fee is calculated on such basis
that the area of Factory A is 2,592 sqm.
c. The term of the lease for Factory A and Land A is 3 years from
the date on which the lease is to commence.
(2) Factory B and Land B
i. Description
The area of Factory B is 2,592 sqm located on Land B with an area of
4,117.5 sqm. The property has been installed with seven (7)
connections such as water, power, gas, drainage, sewage,
telecommunications, internet and other accessory facilities
ii. Lease Terms and Conditions
a. The rent for Factory B is RMB4/sqm/month until the Company
installs facilities in Factory B. Once the facilities are
installed in Factory B, the rent shall be increased to
RMB8/sqm/month. The rent is not subject to any change during the
term of the lease (including any extension of the initial lease
term). The rent is calculated based on the area of Factory B of
2,592 sqm. CDHT will not charge any rent to the Company for Land
B.
b. Once PSi or its affiliated companies or Company installs
facilities during the lease term, CDHT will charge a management
fee for garbage disposal and security services equivalent to
RMB1/sqm/month. The management fee is calculated on such basis
that the area of Factory B is 2,592 sqm.
c. The term of lease for Factory B and Land B is 3 years from the
date on which the lease is to commence.
(3) Expansion Land C and D
i. Description
a. The area of Land C is 17,500 sqm adjacent to Land A and B. The
area of Land D is 17,500 sqm adjacent to Land C. Both Land C and
Land D are installed with seven (7) connections, such as water,
power, gases, drainage, sewage, telecommunications, internet and
other accessory facilities
b. CDHT guarantees that at its own expense, the Land C and D will be
free and clear of all structures and occupants, that Land C and D
will be level with Lands A and B, and that the Land C and D will
be properly compacted so that it is fit to construct a building
without having to compact the soil further.
c. CDHT acknowledges and agrees that at the option of PSi and in
accordance with the Company's needs, a road may be constructed at
the expense of CDHT to run through Lands C and D as drawn in the
site map attached to this Agreement. The Company is entitled to
exclusive use of the road by fencing and blocking access that
road.
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ii. Purchase
a. Within the 3-year term commencing from date on which the lease is
to begin with respect to Xxxxxxx X, Xxxx X xxx Xxxxxxx X, Xxxx X
between the Company and the CDHT, the Company has an option to
purchase the use right to Land C and / or Land D. During the
above-mentioned 3-year term, the purchase price for the land is
RMB80/sqm.
b. At any time after the 3-year term, the Company has the right of
first refusal for purchase the use right of Land C and/or Land D
at the market price. The market price shall be evidenced by a
formal offer to purchase from a third party.
c. The use right to Land C and/or Land D is for a period of not less
than 50 years.
(4) General Terms
i. The site map of the aforesaid factories and pieces of land ("Factory
and Land") is attached to this Agreement as Annex A.
ii. CDHT hereby guarantees that it has full authorizations, power and
rights to lease the Factory and Land to the Company and sell the use
right of the Land. In addition, it has full rights and authorizations
to represent all and any owner of the factories (if any), or relevant
governmental authorities in charge of management of real estate and
land, to execute and deliver this Agreement.
iii. CDHT guarantees that no litigation, arbitration, disputes or other
legal administrative procedures is pending or threatening, which is
related to all the pieces of Land or Factories leased or sold to
Company. Nor is there any mortgage created in favor of any bank,
company or person, or lease or any other interest held by any third
parties attached to the Factories and the Lands.
iv. CDHT shall assume and pay all taxes and fees with respect to CDHT's
acquisition and lease of the use right of every piece of Land.
v. CDHT guarantees that every piece of Factory and Land is vacant from
all and any occupants when the Land is turned over to the Company.
Should there be any occupant on the Land, CDHT shall clear the land at
its own cost prior to the start of the lease or effectivity of
purchase.
vi. Unless otherwise expressly provided herein, Company may use the
Factory and Land freely and legally without any other additional
charges or taxes, unless in the case of taxes, mandated by future
government regulation or law.
vii. All terms and conditions with respect to any lease of factories and
land to the Company other than those provided herein shall be
determined by the definitive lease agreement executed by the Company
and CDHT or owner of factories or relevant governmental authorities.
viii. During the 3-year lease term, Company has the option to purchase
Factory A and the use right of Land A, Factory B and the use right of
Land B. CDHT shall provide sufficient assistance to Company to handle
all governmental procedures.
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(a) The purchase price for either Factory A or Factory B is
RMB880/sqm and for either Land A or Land B is RMB80/sqm.
(b) The rents paid by Company during the 3-year lease term will be
deducted from the purchase cost of the land and factory.
(c) The use right to Land A and Land B is for a period of not less
than 50 years.
ix. CDHT guarantees that the Company will obtain the right to use each
piece of Land for a term of at least 50 year should Company decide to
purchase use right of any of the Land.
x. Where the land is at the border of the Hi-Tech Zone, CDHT shall built
fence at its own expense.
xi. The address for Factory A and B shall be Sichuan Chengdu Export
Processing Zone, #1 New Century West Road, Tianfu Boulevard, Chengdu
610041, Sichuan Province.
2. Supply of Power
CDHT will cause the power supplier to provide the following services in
relation to the power supply:
i. CDHT will cause the relevant power bureau to provide lighting power to
Company. The Company shall pay for the consumed electricity based on
the standard electricity charge announced by the power bureau. The
current rate is as follows:
(a) Commercial Rate (current average price of RMB0.57 per kwh):
Applies to electricity usage for the office lighting;
(b) Industrial Rate (current average price of RMB0.47 per kwh):
Applies to all other usages except those stated above.
iii. CDHT will provide, at the Company's option, an electricity capacity of
300 kva with the necessary cables for the startup period of the
Company for no less than 1 year from the date on which the Company
starts its business operating in factories. The electricity
consumption will be charged at the Commercial Rate. The CDHT will, at
the Company's option, provide an additional 200 kva transformer.
However, the cost of necessary cables shall be borne by the Company.
iv. The Company has the option of building or sourcing a transformer(s)
from external sources or from CDHT. Should the Company decide to
source a transformer(s) from CDHT, CDHT shall ensure the completion of
the construction of such transformer within one month. In all
instances, CDHT shall connect the transformer within the red-line
border of the land.
v. The cost of electricity, water and gas consumed for the manufacture of
product for export, is subject to a tax rebate of 13%. Should the tax
rebate not be reflected in the bills issued to Company, CDHT shall
coordinate with the relevant service provider and/or relevant
governmental authority to ensure that the tax rebate is
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refunded to the Company. Further, CDHT will provide all assistance
required to obtain the refund from the service provider and/or
relevant governmental authority.
vi. CDHT will provide a power subsidy of 10% based on the actual power
consumption expenses (gross amount before tax rebate) to the Company
for the first five (5) years from the date of issuance of the
Company's business license; the rate of subsidy will be changed to 5%
for the following five years afterwards. Such subsidy will be payable
within one (1) month from the payment of the xxxx to the power bureau.
In the event the subsidy has not been paid within the one (1) month
period, the Company shall deduct the outstanding subsidy from the
lease payment or purchase price of the land and factories. Such
deduction shall not form part of the calculation for the purchase
amount of the land and factory, as specified in 1.4.viii.
3. Dormitories for Managers
(a) CDHT will lease to the Company dormitory units for the managers of the
Company at a rate of RMB500/unit/month. Such rate shall remain unchanged
for a period of three (3) years and any price increase thereafter shall be
in accordance with or lower than the changing rate of the PRC price index.
(b) Each unit has two (2) bedrooms, a toilet and a bathroom.
(c) Power, gas and water fees shall be borne by the Company. The CDHT will
install power meters to each unit and renovate the bathrooms for the use by
Company personnel.
(d) The full cost of all facilities such as bed, chairs and desks shall be
borne by the Company.
(e) All residents shall follow the property management regulations.
(f) CDHT will guarantee the availability of dormitory units to the Company upon
request by the Company within a one (1) week period if there are units
available in the dormitory building. In the event that there are no
available units, CDHT will construct another dormitory building, at no
expense to PSi, within a six (6) month period and at the originally agreed
lease rate and terms.
4. Dormitories for Operators
(a) CDHT will lease to the Company, dormitory units for the operators of the
Company at a rate of RMB160/unit/month. Such rate shall remain unchanged
for a period of three (3) years and any price increase thereafter shall be
in accordance with or lower than the change rate of the PRC price index.
(b) Each unit contains one (1) bedroom for 8 persons, and includes access to
common areas and facilities including toilet, bathroom and public kitchen.
(c) Power, gas and water fees shall be borne by the Company.
(d) The full cost of all facilities such as bed, chairs and desks shall be
borne by the Company.
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(e) All residents shall follow the property management regulations.
(f) CDHT will guarantee the availability of dormitory units to Company upon
request by the Company within a one (1) week period if there are available
units available in the dormitory building. In the event that there are no
available units, CDHT will construct another dormitory building, at no
expense to PSi, within a six (6) month period and at the previously agreed
lease rate and terms.
5. Canteen Services
(a) CDHT will provide non-profit canteen services to the Company.
The Company has option to use canteen services provided by any third
parties.
6. Taxes and Duties
CDHT represents and warrants to and covenants with PSi the following:
(a) Enterprise Income Tax - As a foreign investment company incorporating in a
high-tech zone, the Company is and will be entitled to the applicable
preferential treatment of 2-year tax exemption followed by 3-year enjoyment
of the lowest income tax rate (but in no case higher than 10%) starting
from its first profitable year. Afterwards, the Company will continue to
enjoy the applicable lowest tax rate (but in no case higher than 10%) if it
continues to export 70% of its products. If the Company exports less than
70% of its products, then the tax rate will be 15%.
(b) The Company is and will be entitled to exemption of the Custom duties and
VAT for machinery, equipments, construction materials, moulds, and spare
parts imported hereby. CDHT will assist the Company in the smooth
importation of second-hand equipments.
(c) The Company is and will be entitled to exemption of Custom duties and VAT
for raw materials, spare parts, packing materials, components and units
imported hereby.
(d) CDHT will provide bonded warehouse facility for the Company, including
refund of VAT on items produced locally such as machinery, equipment,
construction materials, raw materials, packaging materials, moulds and
spare parts, all of which are made in China.
(e) Other than those stipulated in the national government regulations, there
will be no other state, local, city, municipal income taxes, consumption
taxes, property taxes and fees.
7. Other Service
(a) CDHT encourages and supports PSi or its affiliates or the Company to
establish a semiconductor test and assembly facility in the Hi-tech Zone
and will provide all assistance, including the establishment of a work
team, determined by PSi or its affiliates or Company as necessary for
obtaining preferential policies on import and export, business
registration, tax and duties, foreign exchange control and environment
protection.
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(b) The CDHT shall offer the Company a training subsidy of RMB500,000 on annual
basis for a term of 5 years. The subsidy will be payable upon the
establishment of the Company and in the first month of each year
thereafter. In the event the subsidy has not been paid within the period
specified herein, the Company shall deduct the outstanding subsidy from the
lease payment or purchase price of the land and factories. Such deduction
shall not form part of the calculation for the purchase amount of the land
and factory, as specified in 1.4.viii.
The Company is and will be entitled to pay social benefits and social
securities on a preferential basis according to existing Hi-Tech Zone
policies, as follows:
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Current rates applied in Rates applicable for PSI
Chengdu project
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Retirement 20% 11%
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Medical insurance 7.5% 4%
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Unemployment
Insurance 2% 2%
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Accidental Injuries
insurance 0.6%-2% 1%
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Maternity insurance 0.6% 0.6%
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Housing reserve 6% 6%
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Total Ca 37% 24.6%
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CDHT guarantees that the Company will be able to pay the rate specified
above. CDHT shall coordinate with the relevant governmental authority and
shall obtain all the necessary approvals and clearances in the event that
any other governmental authority/(ies) challenges the legality of this
rate.
(c) The basic wages on which social securities will be paid by the Company
shall not be lower than the lowest wage level of Chengdu, i.e.910
yuan/month, and shall not be higher than three times of the lowest wage
level. The aforesaid preferential rates shall not prejudice the level of
social security applicable to the staff of the Company.
8. General Provisions
(a) Options to Choose Service Providers
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Notwithstanding the provisions contained herein, PSi or its affiliated
companies or the Company shall have the right to choose any service
provider to provide relevant service described in this Agreement
rather than CDHT.
(b) Confidentiality
Other than for the purpose of performance of this Agreement, CDHT
shall not disclose to any third party, without the prior written
consent of PSi, (i) any information on potential investment by PSi or
any of its Affiliates; (ii) any content of this Agreement and any
terms and conditions agreed by PSi and CDHT orally or in writing.
(c) Non Assignability
This Agreement and the rights and obligations hereunder shall not be
assignable by either Party without the prior written consent of the
other Party, except that a party may assign this Agreement to the
successor of all or substantially all of its business assets or an
Affiliated Company without such consent.
For the purposes of this Agreement, an Affiliated Company shall mean
any legal entity that either Party may delegate and/or assign all or
part of the performance of its rights and obligations hereunder,
wherein at least fifty one (51) percent of the voting shares (or
similar voting rights), now or hereunder owned or controlled, directly
or indirectly by PSi or CDHT, as the case may be, or in which PSi or
CDHT, as the case may be, otherwise has the ability to direct the
management, but such legal entity shall be considered to be an
Affiliated Company only for so long as such control exists.
(d) PSi's Investment
CDHT acknowledges and agrees that there are several factors that will
affect PSi or its affiliated companies' decision to make an investment
in the Hi-Tech Zone, or the final amount of that investment, whether
in the Phase No. 1 or in subsequent phases. Based upon the above
understanding, should PSi or its affiliated companies decide not to
invest in Hi-Tech Zone or alter its investment amount after the
execution and delivery of this Agreement, PSi or its affiliated
companies shall not bear any liability to CDHT notwithstanding any
provision in this agreement. In the event PSi cancels the investment
project, then the CDHT will not be liable to the obligations as
committed in this agreement.
(e) Most Favorable Treatment
CDHT undertakes to make its best efforts to help the Company to obtain
the most favorable treatment in PRC as a wholly owned foreign
enterprise in Hi-Tech Zone during the term of this Agreement, while
realizing that relevant PRC laws and regulations may be amended from
time to time.
(f) Entire Agreement
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This Agreement shall constitute the entire agreement between the
parties hereto with regard to the subject matter hereof and supersede
all previous discussions, negotiations and agreements between the
Parties regarding the subject matter hereof.
(g) Effectiveness
The obligations of PSi under this Agreement shall become effective
upon the issuance by the relevant Governmental Authority/ies of the
Company's business license, customs permits, and such other approvals
and permits as may be necessary to establish and operate an Assembly
and Test Facility Factory in the Sichuan Chengdu Export Processing
Zone, Chengdu, Sichuan Province. The obligations of all other parties
to this contract shall become effective from the execution date and
continuously effective during the operational period of the Company.
(h) Validity of the Agreement
If any provisions contained herein become illegal under PRC laws
during the term of this Agreement, the parties shall, through friendly
negotiations, reach supplemental agreements in accordance to Section
8(f) of this Agreement. The invalidity, nullity and unenforceability
of any provision hereof shall not influence or prejudice the validity,
effectiveness and enforceability of other provisions hereof.
(i) Termination
PSi has right to terminate this Agreement upon giving a one-month
prior written notice to CDHT.
(j) Language and Copies
This Agreement shall be written in both English and Chinese. This
Agreement will be signed in 4 (four) originals, with each party
holding two (2). All the signed originals shall bear equal legal
effects.
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This Agreement is signed by the duly authorized representatives of each of
the parties hereto on the date first written above.
PSi TECHNOLOGIES, INC. CHENGDU HI-TECH ZONE
By: By:
/s/ Xxxxxx X. Xxxxx, Xx. /s/ Jing Gang
------------------------------------- ----------------------------------------
Name: Xxxxxx X. Xxxxx, Xx. Name: Jing Gang
Title: Chairman and CEO Title: Director of the Management
Committee of Chengdu Hi-Tech Zone and
Assistant to the Mayor of the People's
Government of Chengdu
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Annex A
Site Map of Factory and Land
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