JOINT VENTURE CONTRACT
BETWEEN
SHANGHAI 20th RADIO FACTORY
AND
PARLEX CORPORATION
MASCON, INC.
FOR THE
ESTABLISHMENT OF
PARLEX (SHANGHAI) CIRCUIT CO., LTD.
May 29, 1995
Contents
of the
Joint Venture Contract
Chapter 1 General Provisions
Chapter 2 Parties to the Joint Venture Company
Chapter 3 Establishment of the Joint Venture Company
Chapter 4 Purpose, Scope and Scale of Production and Business
Chapter 5 Total Amount of Investment and Registered Capital
Chapter 6 Leasing of Premises and Equipment of the Joint Venture Company
Chapter 7 Licensing of Technology
Chapter 8 Sale of Products
Chapter 9 Profit Distribution
Chapter 10 Responsibilities of Each Party to the Joint Venture Company
Chapter 11 The Board of Directors
Chapter 12 Management Organization
Chapter 13 Purchase of Equipment, Raw Materials and Auxiliary Materials
Chapter 14 Labor Management
Chapter 15 Tax, Finance and Audit
Chapter 16 Foreign Exchange
Chapter 17 Duration of the Joint Venture Company
Chapter 18 Liquidation
Chapter 19 Insurance
Chapter 20 The Revision, Alteration and Termination of the Joint
Venture Contract
Chapter 21 Liabilities for Breach of Contract
Chapter 22 Resolution of Default
Chapter 23 Force Majeure
Chapter 24 Environmental Matters
Chapter 25 Applicable Law
Chapter 26 Settlement of Disputes
Chapter 27 Language
Chapter 28 Effectiveness of the Contract and Miscellaneous
Appendix 1 Registered Capital Investment Schedule of Parties B and C
Appendix 2 Registered Capital Investment Schedule of Party A
Appendix 3 Lease Agreement
Appendix 4 Equipment Leasing Agreement
Appendix 5 Articles of Association
Appendix 6 Agreement of Technology License and Technical Service
Appendix 7 Non-Disclosure Agreement
Chapter 1 General Provisions
In accordance with "The Law of the People's Republic of China on Joint
Ventures Using Chinese and Foreign Investment" and other relevant
Chinese laws and regulations, Shanghai 20th Radio Factory, the People's
Republic of China; Parlex Corporation; and Mascon, Inc. adhering to the
principle of equality and mutual benefit and through friendly
consultations, agree to jointly invest to establish a Joint Venture
Company in Shanghai, the People's Republic of China. The contract is
worked out hereunder.
Chapter 2 Parties to the Joint Venture Company
Parties to this contract are as follows:
2.1 Shanghai 20th Radio Factory, hereinafter referred to as Party A,
registered in Shanghai, the People's Republic of China.
Legal address: ▇▇. ▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, the People's
Republic of China, Post Code 200233.
Legal representative: Mr. Sui Guanliang;
Position: Manager;
Nationality: Chinese.
2.2 Parlex Corporation, hereinafter referred to as Party B, registered
in the United States of America.
Legal address: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇
Legal representative: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇;
Position: President;
Nationality: United States of America.
2.3 Mascon, Inc., hereinafter referred to as Party C, registered in
the United States of America
Legal address: ▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, ▇▇▇
Legal representative: ▇▇▇▇▇ ▇▇▇▇;
Position: President;
Nationality: United States of America.
Chapter 3 Establishment of the Joint Venture Company
3.1 In accordance with the "Law of the People's Republic of China on
Joint Ventures Using Chinese and Foreign Investment" and other
relevant laws and regulations, the three parties agree to jointly
invest to establish a Joint Venture Company to produce and engage
in the business of printed circuits and related parts and
assembly products in the People's Republic of China.
The name of the Joint Venture Company is Parlex (Shanghai) Circuit
Co., Ltd.
The legal address of the Joint Venture Company is at ▇▇. ▇▇▇
▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇, Post Code 200233.
3.2 The Joint Venture Company is a Chinese legal person and is subject
to the jurisdiction and protection of Chinese law. All activities
of the Joint Venture Company shall be governed by the laws,
decrees and pertinent rules and regulations of the People's
Republic of China.
3.3 The organizational form of the Joint Venture Company is a limited
liability company. Each party to the Joint Venture Company is
liable to the Joint Venture Company within the limit of the
capital subscribed by it. The profits and losses of the Joint
Venture Company shall be shared by the parties in proportion to
their contributions of the registered capital.
Chapter 4 Purpose, Scope and Scale of Production and Business
4.1 The purpose of the parties to the Joint Venture Contract is in
conformity with the wish of enhancing the economic cooperation and
technical exchange, to import know-how and processing equipment of
manufacturing circuits and other related products, to change
obsolete processed products with new ones, upgrade quality of
products, develop marketable products, and gain competitive
position in the world market in quality and price, so as to ensure
satisfactory economic benefits for each investor.
4.2 The scope of the production and operation of the Joint Venture
Company are to manufacture and sell printed circuits and related
parts and assembly products.
4.3 It is estimated that the scale of production of the Joint Venture
Company shall reach the production plan within 4 years after
beginning its production. The estimated production plan is as
follows.
*
* Confidential information has been omitted and filed separately with the
Commission.
4.4 Contract Products refer to the flexible single-sided, double-
sided, multilayer and rigid-flexible circuits as well as related
parts and assembly products.
Chapter 5 Total Amount of Investment and Registered Capital
5.1 The total amount of investment of the Joint Venture Company (the
"Total Investment") is USD 4.5 million, of which the registered
capital is USD 3 million. The difference between the total amount
of investment and the registered capital shall be borrowed from
the bank by the Joint Venture Company.
5.2 The registered capital contributed by the parties will be as
follows:
*
5.3 The value of all the equipment and real materials contributed by
Party A shall be converted into US Dollars at the middle value of
the exchange rate quoted by the People's Bank of China on the date
this contract is signed and shall not be affected by later changes
of the exchange rate.
5.4 All the equipment and attached installations contributed by Party
A shall be examined and approved through the Shanghai State-owned
Asset Administration. The value of which shall be accorded with
what the Shanghai State-Owned Asset Administration shall examine
and approve, and determined prior to the signing of the Joint
Venture Contract.
5.5 The initial registered capital investment of Party A, Party B and
Party C is set forth in Appendix 1 and Appendix 2. * of the
registered capital investment shall be paid within the first three
months after the date the business license is issued. The balance
of the registered capital investment shall be paid in over the
subsequent * according to the schedule in Appendix 1
and Appendix 2.
5.6 The working capital needed by the Joint Venture Company may be
borrowed from a bank. The interest on loans shall be recognized
as an expense and borne by the Joint Venture Company.
5.7 Any party delaying the payment of their investment in whole or in
part shall pay the Joint Venture Company interest on the unpaid
balance to the Joint Venture Company as per Chapter 21 of this
Joint Venture Contract.
5.8 After the investment subscribed is paid by the parties to the
Joint Venture Company, a Chinese registered public accountant
shall verify it and provide a certificate of verification, in
accordance with which the Joint Venture Company shall issue
investment certificates which include the following items: name
of the Joint Venture Company; date of establishment; the
investment contribution; and date, and month and year of issuance
of investment certificate.
* Confidential information has been omitted and filed separately with the
Commission.
5.9 The Joint Venture Company shall not reduce its registered capital
during the life of the Joint Venture Company.
5.10 In the event that one of the parties (the "Seller") intends to
sell all or part of their interest in the Joint Venture Company,
the other two parties have a preemptive right to purchase it in
accordance with the following provisions:
5.10.1 The Seller shall first obtain a bona fide offer from a
third party (the "Third Party") to purchase such interest
in the Joint Venture Company (the "Offered Interest").
The Seller shall first offer the Offered Interest for
purchase by the other parties (the "Other Parties") at
the same price and upon the same terms and conditions
offered by the Third Party. The Other Parties shall have
the right, for a period of sixty days after the receipt
of such offer, to purchase all but not less than all of
the Offered Interest at the price and on the terms and
conditions offered by the Third Party. Such right shall
be allocated among the Other Parties in proportion to
their shares in the registered capital of the Joint
Venture Company, provided that if one of the Other
Parties elects to purchase less than its full share, the
balance shall be distributed proportionally among the
others. If the Other Parties exercise their right to
purchase the Offered Interest, they shall give written
notice of exercise within 60 days after their receipt of
the offer from the Seller, and the Seller and the Other
Parties shall complete the purchase and sale of the
Offered Interest within 30 days after the expiration of
such 60-period. In the event that all of the Offered
Interest is not purchased pursuant to the above
provisions (whether or not one or more parties have given
notice of election to purchase a part, but not all, of
the Offered Interest), the Seller may sell such Offered
Interest to the Third Party at the same price and upon
the same terms and conditions offered by the Seller to
the other parties, provided that (i) the Third Party
agrees in writing to be bound by the terms and conditions
of this Joint Venture Contract and executes copies of
such other documents required hereunder; (ii) the payment
for and transfer of the Offered Interest by and to the
Third Party is effected no later than ninety (90) days
after the expiration of all periods during which the
other parties have the right to give notice of their
election to purchase the Offered Interest; and (iii) such
transfer is approved by the Board of Directors under
Chapter 5.12. To the extent that the Offered Interest is
not purchased pursuant to the above provisions, then the
Seller shall not sell, transfer or dispose of such
Offered Interest without again complying with the
provisions of this Chapter 5.10.1.
5.10.2 Each party shall have the right to transfer all or part
of its respective rights and interests in the Joint
Venture Company to one or several of its affiliated
companies without following the procedure set forth in
Chapter 5.10.1 above. Each party hereby consents to any
such transfer by another party to an affiliated company
and waives any preemptive rights in respect of such
transfer. For this purpose, an "affiliated company" of a
party is a company which controls, is controlled by, or
is under common control with such party.
5.11 In the event that one of the parties merges with or is acquired by
another company, all rights and privileges of this contract shall
be transferred to the resulting or acquiring company without
penalty.
5.12 Any increase or assignment of the registered capital or Total
Investment, other than as stipulated or excepted in Chapter 5.11,
shall be unanimously approved at a meeting of the Board of
Directors and submitted to the original examination and approval
authority for approval. In the case of a transfer effected in
compliance with Chapter 5.10.1 or Chapter 5.10.2, each Party
agrees to instruct its representatives on the Board of Directors
to vote to approve the resulting assignment of the transferring
party's registered capital and total investment. Registration
procedures for change shall be dealt with at the original
registration and administration office.
Chapter 6 Leasing of Premises and Equipment of the Joint Venture Company
6.1 Party A, Party B and Party C understand clearly and agree that the
Joint Venture Company shall lease premises from Party A. The
rental shall be stipulated in the leasing agreement which the
Joint Venture Company shall conclude with Party A. For details,
see Appendix 3 of the contract.
6.2 Party A, Party B and Party C understand clearly and agree that the
Joint Venture Company shall lease or purchase part of the
equipment from Party A. The details of the leased equipment are
in Appendix 4.
Chapter 7 Licensing of Technology
7.1 The Joint Venture Company will be licensed by Party B to use the
technology of Party B (the "Licensed Technology") described in an
Agreement of Technology License and Technical Service to be
entered into between the Joint Venture Company and Party B, the
specific contents, scope and requirements of which are set forth
in Appendix 6. The license to use the Licensed Technology shall
be contributed as part of Party B's investment in the Joint
Venture Company.
7.2 Party B shall ensure that the Licensed Technology represents, as
of the date of execution of this Joint Venture Contract, all of
the technology utilized by Party B in manufacturing in its own
facilities the same type of products to be manufactured by the
Joint Venture Company, except for the PAL Flex[Registration ▇▇▇▇]
manufacturing technology; provided, however, that it is understood
that the quality and performance of products to be manufactured by
the Joint Venture Company using the Licensed Technology will be
dependent upon the Joint Venture Company's ability to execute the
manufacturing processes and procure suitable raw materials and
components, and, accordingly, Party B cannot represent or warrant
that the products manufactured by the Joint Venture Company will
be of the same quality as products manufactured by Party B.
7.3 In consideration of Party B's license of technology and Technical
Service under the Agreement of Technology License and Technical
Services, the three investing parties of the Joint Venture Company
agree the value of technology is:
*
The parties agree that the value for the above mentioned items B
and C include all expenses incurred in the implementation during
the first year;
The cost for the technology license shall be borne only once. The
technology and information provided to the Joint Venture Company
by Party B as required by the Agreement of Technology License and
Technical Service will subsequently be free of charge. The
technology and information provided to Party B by the Joint
Venture Company as required by the Agreement of Technology License
and Technical Services will subsequently be free of charge;
The value of the Technology License will be used by Party B as
investment in the Joint Venture Company;
The value of the Technical Training will be used by Party B as
investment in the Joint Venture Company;
The value of the Technical Support will be used by Party B as
investment in the Joint Venture Company.
Chapter 8 Sale of Products
8.1 The Joint Venture Company shall be responsible for the marketing
and sales of its products inside and outside the People's Republic
of China. A pricing policy will be proposed by the General
Manager, and approved by the Board of Directors, designed to
achieve pricing, on average, no less than the most competitive
international prices in order to maximize profitability.
8.2 The Joint Venture Company shall be responsible for the sale of
products in all parts of the People's Republic of China except
Hong Kong, Macau and Taiwan (hereinafter referred to as "Territory
A"), and shall develop the market in Territory A through its
direct sales force or its sales representatives, making its best
efforts to increase market share. Commissions to the Joint
Venture Company's sales representatives in Territory A, if
applicable, shall be determined by the General Manager.
* Confidential information has been omitted and filed separately with the
Commission.
8.3 Party B and Party C shall be responsible for the sales of products
outside of Territory A. The contract or contracts for the foreign
sales of products by the Joint Venture Company to Party B or Party
C, as the case may be, shall be concluded separately from this
Joint Venture Contract and shall provide, without limitation, that
(i) the relationship between the Joint Venture Company, on the one
hand, and Party B and Party C on the other hand, under Chapter
8.3.1, shall be that of independent vendor and vendee and shall
not be construed to constitute an agency relationship; and that
(ii) Party B or Party C, as the case may be, shall negotiate and
obtain orders for the products outside of Territory A and submit
orders to the Joint Venture Company for manufacturing and shipment
by the Joint Venture Company all in accordance with the terms and
conditions set forth in such orders. Party B and Party C may use
either of the following options for compensation in the sale of
the products.
8.3.1 Party B or Party C, as the case may be, may purchase the
products for resale to the third party. The Joint Venture
Company shall sell the products to Party B or Party C, as
the case may be, at a reasonable distributor's discount
from the prices set forth in the Joint Venture Company's
price list used in sales to customers in Territory A.
Party B or Party C, as the case may be, shall resell the
products at prices fixed by them, and the Joint Venture
Company shall retain no control over such resale prices.
8.3.2 Party B or Party C, as the case may be, may sell the
products to a third Party as agent on behalf of the Joint
Venture Company at the prices set forth in the Joint
Venture Company's international price list. Party B or
Party C shall be paid a reasonable representative's
commission from the Joint Venture Company for the sales of
those products.
The value of the foreign sales of products, either directly or
indirectly, is estimated to become at least 70% of the total sales
of the Joint Venture Company. For the purposes hereof, the three
parties agree that foreign sales of products shall include sales
of products made to customers in Territory A which incorporate
such products into their products manufactured for resale outside
of Territory A.
8.4 The Joint Venture Company shall be licensed to use the relevant
trademarks and patents owned by Party B subject to the terms and
conditions set forth in the Agreement of Technology License and
Technical Service.
Chapter 9 Profit Distribution
9.1 Profits cannot be distributed unless the Joint Venture Company has
a positive retained earnings that year.
9.2 The profits of the Joint Venture Company cannot be distributed
unless the losses of previous years have been made up. Profits
remaining from previous fiscal year can be distributed together
with the current fiscal year.
9.3 The distribution of profits remaining after payment of taxes and
deduction of the reserve fund, expansion fund, and bonus and
welfare fund, shall be determined by the Board of Directors of the
Joint Venture Company. At the first Board of Directors meeting, a
schedule for profit distribution shall be determined and agreed
to. The Board of Directors may elect to retain a part or all of
the profits for business expansion. Any profits that are
distributed shall be distributed to the parties in proportion to
the amounts of their respective contributions to the registered
capital of the Joint Venture Company.
Chapter 10 Responsibilities of Each Party to the Joint Venture Company
Party A, Party B and Party C shall be responsible for the following
matters:
10.1 Party A shall be responsible for:
10.1.1 Handling the applications for approval, registration,
obtaining of the business license and other matters
concerning the establishment of the Joint Venture Company
from the appropriate departments of the Chinese
government;
10.1.2 Providing the equipment, installation and cash as
investment as stipulated in Chapter 5 and Appendix 2;
10.1.3 Assisting the customs clearance procedures of the
machinery and equipment imported from outside of the
People's Republic of China by the Joint Venture Company,
and their transportation within the territory of the
People's Republic of China;
10.1.4 Assisting the Joint Venture Company in purchasing
equipment, raw materials, office supplies, transportation
vehicles, communication facilities, etc. within the
territory of the People's Republic of China;
10.1.5 Assisting the Joint Venture Company to arrange water
supply, electricity supply, gas supply, communication,
transportation service and engineering consulting, and
other necessary utilities and services;
10.1.6 Assisting the Joint Venture Company in recruiting the
local management personnel, technicians, workers and
other personnel needed;
10.1.7 Assisting the foreign personnel in applying for entry
visas and certificates for employment, and other related
matters to enable foreign personnel to work, consult or
advise the Joint Venture Company in the People's Republic
of China;
10.1.8 In accordance with the Chinese laws and regulations,
assisting the Joint Venture Company to gain the
preferential treatment of tax exemption, and other
preferences in connection with investment and operation;
10.1.9 In consideration of the Joint Venture Company's being
provided access to proprietary technology of Party B,
Party A agrees not to compete with Party B or the Joint
Venture Company in the manufacture of Contract Products
(as defined in the Chapter 4 hereof) during the term of
the Joint Venture Company unless otherwise agreed to in
writing by Party B. Party A's efforts will include, but
are not limited to the following:
(i) As members of their respective Boards of
Directors, Party A will oppose all efforts by the
other Joint Ventures with facilities on Party A's
premises to manufacture products competitive with
the Joint Venture's Contract Products.
(ii) Party A will ensure that the Joint Venture will
receive priority for waste treatment, water and
utilities for the manufacture of Contract
Products.
(iii) Party A will not approve expansion requests by
the other Joint Ventures on Party A's premises
for the purpose of manufacturing products
competitive to the Joint Venture's Contract
Products.
(iv) Party A shall not establish any relationship with
any organization in competition with Party B or
the Joint Venture Company.
10.2 Party B and Party C shall be responsible for:
10.2.1 Contributing the investment stipulated in Chapter 5 of
this Joint Venture Contract and Appendix 1;
10.2.2 Handling the matters entrusted by the Joint Venture
Company concerning the purchasing of selected equipment
and materials from the outside of the People's Republic
of China and arranging the procedure for transportation
to Shanghai;
10.2.3 Providing technicians for the installation and the
initial verification of suitable operation of the
equipment imported to fulfill the intentions of the
contract;
10.2.4 Providing appropriate personnel and information for
technical personnel of the Joint Venture Company inside
and outside of the People's Republic of China as intended
in Appendix 1 and described in Chapter 4 of the Agreement
of Technology License and Technical Services;
10.2.5 Assist in obtaining entry visa, work license and
traveling matter for the personnel of Party A invited to
visit the facilities of Party B.
10.2.6 In consideration of the Joint Venture Company being
provided access to proprietary technology of Party B,
Party C agrees not to compete with Party B or the Joint
Venture Company in the manufacture or sale of Contract
Products (as defined in Chapter 4) during the term of the
Joint Venture Company unless otherwise agreed to in
writing by Party B.
10.2.7 Party B agrees not to compete with the Joint Venture
Company in the establishment or support of any new
organization which manufactures or sells Contract
Products in China, unless the capacity or technology
capabilities of the joint venture are insufficient to
meet the market demands. Any relationship that Party B
has previously established prior to the signing of this
contract is specifically excluded from this provision.
Chapter 11 The Board of Directors
11.1 The Board of Directors of the Joint Venture Company shall be
established on the date of issuance of the business license to the
Joint Venture Company. The Board of Directors shall be composed
of five Directors of whom two shall be appointed by Party A, two
by Party B and one by Party C. The Chairman of the Board of
Directors shall be appointed by Party A, and the Vice-Chairman of
the Board of Directors shall be appointed by Party B. The term
of office for the Directors and the Chairman and Vice-Chairman of
the Board of Directors shall be four years and they may be
continuously reappointed by their respective appointing parties.
The appointing parties may change the Directors whom they
appointed at any time. If a director is replaced prior to
completing his term, the newly appointed director shall serve for
the remainder of that term. A notice in writing shall be sent to
the other parties and the Board of Directors when a Party changes
any Director.
11.2 The Board of Directors is the organization of the highest
authority of the Joint Venture Company and shall decide the
following major matters, subject to either unanimous or majority
approval pursuant to Chapter 6.2 of the Articles of Association of
the Joint Venture Company:
11.2.1 Revising the Articles of Association of the Joint Venture
Company;
11.2.2 Deciding on the increase or assignment of the registered
capital and/or total investment of the Joint Venture
Company;
11.2.3 Deciding on the termination of the Joint Venture Company
or merger with another economic organization;
11.2.4 Assuming the responsibility of liquidation at the time of
termination;
11.2.5 Examining and approving the annual financial statements,
annual business plan, distribution of profits and
contribution to the reserve fund, expansion fund, and
bonus and welfare fund presented by the General Manager;
11.2.6 Adopting the major policies and regulations of the
management of the Joint Venture Company and any revisions
thereafter;
11.2.7 Approving the appointment of the General Manager,
Financial Manager, Deputy General Manager, Chief
Engineer, and Manufacturing Manager and their salaries
and welfare;
11.2.8 Deciding the upper limit of working capital and bank loan
indebted by the Joint Venture Company;
11.2.9 Deciding the employee's welfare policy.
11.3 The Chairman of Board of Directors is the legal representative of
the Joint Venture Company. In case the Chairman of Board of
Directors may be unable to execute his duty for whatever reason,
the Vice-Chairman or other Director shall be authorized as his
temporary proxy.
11.4 The Chairman of the Board of Directors shall convene the Board at
least twice per year for the first five years and once per year
thereafter. The Chairman shall preside over each meeting. The
second meeting in the first five years may be waived if agreed to
by all three parties. The Chairman shall notify the board members
one month in advance of the meeting in writing and provide a
written agenda including the draft resolutions to be voted on.
If requested by more than one-third of the Board of Directors, the
Chairman shall convene a Board of Directors meeting. This meeting
shall occur no sooner than fifteen (15) days and no later than
thirty (30) days from the Chairman's written notification of all
members. If the Chairman fails to convene the meeting after such
request, then the Directors who made the request may convene such
meeting by written notification to the Chairman and the other
Directors.
At least two-thirds of the members of the Board of Directors must
be present for a meeting of the Board to convene.
All records of the Board of Directors shall be kept. The minutes
of meeting of the Board of Directors shall be kept in both English
and Chinese and shall be signed by all attendees of the meeting.
Each party shall be given one copy of the signed minutes for their
records. Both versions shall be certified to be the same by an
independent legal counsel. The meetings shall normally be held at
the legal address of the Joint Venture Company.
11.5 All expenses for the Board of Directors of the Joint Venture
Company shall be decided by the Board of Directors.
11.6 Any Director may participate in a meeting of the Board of
Directors by means of conference telephone or similar
communications equipment by means of which all persons
participating in the meeting can hear each other or by any other
means permitted by law. Such participation shall constitute
presence in person at such meeting. All formal actions taken at
such meeting shall be confirmed by a writing delivered by fax.
11.7 Should any of the Directors be unable to participate in a meeting
of the Board, he may present a proxy in written form to the Board
of Directors. Upon receipt of notice of the meeting and in the
event that any Director neither attends nor entrusts others to
attend the meeting on his behalf, he shall be deemed absent and
shall forfeit all voting rights for the meeting he is absent from.
Chapter 12 Management Organization
12.1 All the parties have confirmed that the Joint Venture Company
shall implement the responsibility system under the leadership of
the Board of Directors. The General Manager is responsible for
the daily management and operation of the Joint Venture Company.
12.2 The management organization shall have one General Manager
recommended by Party B and one Deputy General Manager recommended
by Party A. The General Manager and Deputy General Manager shall
be approved by the Board of Directors. The General Manager and
Deputy General Manager shall be appointed for two year periods.
The Board of Directors has the option to renew the terms of the
General Manager and Deputy General Manager for additional two year
periods thereafter. The Chairman and Vice-Chairman of the Board
of Directors and Directors can hold posts as General Manager,
Deputy General Manager or other senior staff concurrently. The
Joint Venture Company shall be exclusively responsible for
compensating the General Manager, the Deputy Manager and all other
managers and employees of the Joint Venture Company.
12.3 The functions and responsibilities of the General Manager shall be
to carry out the decisions made by the meeting of the Board of
Directors, to organize and lead the daily management and operation
of the Joint Venture Company and to establish the sales strategy
and pricing of products sold by the Joint Venture Company, inside
and outside of the People's Republic of China. The Deputy General
Manager shall assist the General Manager in his work. The major
issues of the Joint Venture Company shall be decided through
consultations among the General Manager and the Deputy General
Manager. The General Manager and such other officers appointed by
the Board of Directors shall have the authority to execute
contracts and other instruments on behalf of the Joint Venture
Company and to act for the Joint Venture Company in accordance
with authority identified in a vote taken by a majority of the
Board of Directors, either generally or as to specific matters.
Department managers shall be appointed by the General Manager in
consultation with the Deputy General Manager, shall be
respectively responsible for the work of the various departments,
shall handle the matters handed over by the General Manager and
Deputy General Manager and shall be responsible to them. During
the General Manager's absence, daily affairs of the company shall
be carried on by the Deputy General Manager or other senior
management staff.
12.4 The functions and responsibilities of the General Manager shall be
defined in the Articles of Association.
12.5 The Joint Venture Company has a Chief Engineer, responsible for
technology, a Manufacturing Manager, responsible for production,
and a Financial Manager, responsible for finance and accounting,
all of whom shall be recommended by the General Manager for the
approval of the Board of Directors.
12.6 The Board of Directors may decide to dismiss the General Manager
and Deputy General Manager, Financial Manager, Manufacturing
Manager, or Chief Engineer at any time. If it is necessary, the
General Manager may suggest to the Board of Directors to dismiss
the Deputy General Manager, Financial Manager, Manufacturing
Manager, and Chief Engineer. Other than as previously provided
for, the General Manager may dismiss managers of other departments
or other staff at any time, as he deems necessary.
12.7 If they so desire, the General Manager, Deputy General Manager,
Chief Engineer, Financial Manager and Manufacturing Manager shall
submit their resignation to the Board of Directors in writing at
least ninety (90) days in advance.
12.8 In the case of graft or dereliction of duty by the General
Manager, Deputy Manager, Chief Engineer, Financial Manager, or
Manufacturing Manager, the Board of Directors may dismiss them at
any time, with no further obligations under the individual's
employment contract in force at the time.
12.9 The General Manager and Deputy General Manager, within his
employment term and for 12 months thereafter, shall not hold any
position in other organizations in the People's Republic of China
which would present a conflict of interest with the Joint Venture
Company.
Chapter 13 Purchase of Equipment, Raw Materials and Auxiliary Materials
A best effort shall be made to purchase the raw materials, fuel,
auxiliary parts, vehicles, and office supplies in the People's Republic
of China, as long as conditions such as price, quality, technology,
delivery and other pertinent matters are favorable.
Chapter 14 Labor Management
14.1 A labor policy subject to the laws and regulations of the People's
Republic of China shall be presented by the General Manager to the
Board of Directors for review and approval.
14.2 Concerning the recruitment, employment, dismissal and resignation,
wages, labor insurance, welfare, rewards, penalty and other
matters of the staff and workers of the Joint Venture Company,
these matters shall be executed by the General Manager according
to the "Regulations of the People's Republic of China on Labor
Management in Joint Ventures Using Chinese and Foreign Investment"
and "Regulations of Shanghai Municipality on Labor and Personnel
Management in Joint Ventures Using Chinese and Foreign
Investment."
Chapter 15 Tax, Finance and Audit
15.1 The Joint Venture Company shall pay taxes in accordance with the
stipulations of the related laws and regulations of the People's
Republic of China.
15.2 Staff members and workers of the Joint Venture Company shall pay
individual income tax according to the individual "Income Tax Law
of the People's Republic of China."
15.3 The accounting system of the Joint Venture Company shall be
formulated in accordance with the People's Republic of China's
relevant laws and procedures on financial affairs and accounting,
and in consideration of the conditions of the Joint Venture
Company, and to be filed with local financial departments and tax
authorities.
15.4 The fiscal year of the Joint Venture Company shall coincide with
the calendar year, i.e. from January 1 to December 31 on the
Gregorian Calendar. The Joint Venture Company shall maintain a
second set of books to accommodate the reporting requirements of
Party B.
15.5 The accounting of the Joint Venture Company shall adopt the
internationally adopted accrual basis and debit and credit
accounting system in their work. All vouchers, account books,
statistic statements should be prepared in Chinese, and reports in
English.
15.6 The Joint Venture Company shall adopt Renminbi as its bookkeeping
basis currency. The conversion of Renminbi to other currency
shall be in accordance with the middle value of the exchange rate
of the converting day quoted by the People's Bank of China. This
shall be the effective exchange rate for the Joint Venture
Contract.
15.7 The Joint Venture Company should open Renminbi deposit accounts
and foreign exchange deposit accounts in banks approved by the
State Administration of Exchange Control and the Board of
Directors.
15.8 The Joint Venture Company shall employ an accountant registered in
the People's Republic of China to be responsible for auditing and
to forward the reports to the General Manager and the Board of
Directors. Any party to the Joint Venture Company shall have the
right to employ an auditor at their own expense to perform an
annual financial audit and examination. This report shall be for
reference only to other parties.
15.9 The Financial Manager shall prepare the balance sheet, income
statement and statement of cash flows of the previous year by the
end of the first three months of the next fiscal year. The
General Manager shall present the financial statements and
proposal for profit distribution, if any, to the Board of
Directors for examination and approval. Unaudited monthly
financial statements, similar to those prepared yearly, shall be
submitted to all members of the Board of Directors within 30 days
of the end of the month.
15.10 Subject to the "Detailed Rules and Regulations for the
Implementation of the Income Tax Law of the People's Republic of
China Concerning Enterprises with Foreign Investment and Foreign
Enterprises," the Board of Directors shall decide the depreciation
period of the fixed assets.
Chapter 16 Foreign Exchange
16.1 All matters concerning foreign exchange for Joint Venture Company
shall be handled according to the "Interim Regulations on Foreign
Exchange Control of the People's Republic of China" and relevant
regulations.
16.2 The Joint Venture Company shall make their best effort to transact
sales in foreign currency. To the extent that the Board of
Directors decides to distribute profits, the profits shall be
distributed to the parties in proportion to their contributions of
registered capital. Party B and Party C enjoy the priority to
have profits distributed in foreign currency if profits in foreign
currency exist.
Chapter 17 Duration of the Joint Venture Company
The duration of the Joint Venture Company shall be fifty (50) years
commencing on the date of issuance of the business license to the Joint
Venture Company. An application for the extension of the duration of
the Joint Venture Company proposed by one Party and unanimously approved
by the Board of Directors, shall be submitted to the original
authorities for approval six months prior to the end of the initial
fifty-year term.
Chapter 18 Liquidation
18.1 Upon the termination of the Joint Venture Company according to the
law, the Board of Directors shall work out procedures and
principles for the liquidation, nominate candidates for the
liquidation committee, and set up the liquidation committee for
liquidating the Joint Venture Company's assets.
18.2 The tasks of the liquidation committee are: to conduct the check
of the property of the Joint Venture Company, its claim and
indebtedness; to work out the statement of assets and liabilities
and list of property; and to formulate a liquidation plan. All
these shall be carried out upon the approval of the Board of
Directors. During the process of liquidation, the liquidation
committee shall represent the company to ▇▇▇ and be sued.
18.3 The liquidation expenses and remuneration to the members of
liquidation committee shall be paid on a priority basis from the
existing assets of the Joint Venture Company as determined by the
Board of Directors.
18.4 The remaining property after the clearance of debts of the Joint
Venture Company shall be distributed among the parties to the
Joint Venture Company according the proportion of each party's
investment in the registered capital. Party B and Party C enjoy
the priority to have the remaining assets distributed to them in
foreign currency if such foreign currency exists.
18.5 On completion of the liquidation, the Joint Venture Company shall
submit a liquidation report to the original examination and
approval authority, go through the formalities for nullifying its
registration in the original registration office and return its
business license. At the same time, a public announcement shall
be made.
18.6 After liquidation of the Joint Venture Company, its account books
shall be left in the care of Party A. Any Party shall have the
right to view and the right to obtain a copy of these account
books at their expense.
Chapter 19 Insurance
All insurance policies of the Joint Venture Company shall be
underwritten with any insurance company doing business in the People's
Republic of China. The types of insurance, the insured value and the
duration of the insurance shall be decided by the Board of Directors.
Chapter 20 The Revision, Alteration and Termination of the Joint Venture
Contract
20.1 The revision, alteration or termination of this Contract and its
Appendices shall come into effect only after the written agreement
has been signed by all parties and approved by the original
examination and approval authority.
20.2 In case of inability of the parties to carry out the Contract as a
result of Force Majeure or to continue operation due to losses in
successive years, the Contract may be terminated with the
unanimous decision of the Board of Directors and approval by the
original examination and approval authority.
Chapter 21 Liabilities for Breach of the Contract
Should any party fail to pay on time its amount of contribution in
accordance with the stipulations of Chapter 5.5 of this contract, the
breaching party shall pay to the Joint Venture Company interest at an
annual rate of one percent (1%) plus the prime lending rate established
from time to time by Citibank, N.A., of the delinquent contribution,
payable monthly starting thirty (30) days after notification of
delinquency. Should the breaching party fail to pay such amount for
three months, that party shall pay the Joint Venture Company interest at
an annual rate of a maximum of three percent (3%) plus the prime lending
rate established from time to time by Citibank, N.A., of the delinquent
contribution, payable monthly, and the other two parties shall have the
right to terminate the Contract in accordance with the stipulations in
Chapter 22. In addition, the Joint Venture Company and the non-
breaching parties shall have the right to initiate legal proceedings
against the breaching party in order to compel such payment.
Chapter 22 Resolution of Default
If any party defaults on their obligations under this Contract, the
Lease Agreement, the Equipment Leasing Agreement, or the Agreement of
Technology License and Technical Service and such default is of such
significance as to cause or threaten to cause material damage to the
Joint Venture Company or the interests of non-defaulting parties, the
defaulting party will be notified in writing by the other parties and
given thirty (30) days to remedy this default. If after thirty (30)
days the breach of contract is not remedied, the remaining parties may
elect to terminate the defaulting party. If this occurs the defaulting
party forfeits all voting rights on the Board of Directors, until the
remaining Board members exercise their options and resolve the default.
The remaining Board members may exercise the following options.
22.1 Offer additional time for the defaulting party to remedy the
breach;
22.2 Provide for the purchase by the Joint Venture Company or the
remaining parties of the defaulting party's equity less any amount
owed the Joint Venture Company;
22.3 Reduce the equity position of the defaulting party in proportion
to the amount owed the Joint Venture Company and increase the
equity share of the other parties proportionally;
22.4 If the amount owed the Joint Venture Company is equal to or
greater than the equity of the defaulting party, the remaining
parties may remove that party from the Joint Venture Company and
redistributed the equity in proportion to their equity or
liquidate the Joint Venture Company.
Chapter 23 Force Majeure
When any Force Majeure, such as earthquake, typhoon, flood, fire, war or
other unforeseen events of which the happening and consequences cannot
be prevented or avoided, causes direct effect on the fulfillment of the
Contract or the inability to fulfill the conditions of the Contract, the
party encountering the Force Majeure shall notify the other two parties
by fax without any delay. Within fifteen days thereafter the party
encountering the Force Majeure shall provide the detailed information of
the events and a valid document for evidence, issued by legal
authorities of the place where the Force Majeure occurred, giving
reasons for the failure to fulfill, for partial failure to fulfill, or
for deferring the fulfillment of the contract. All parties shall,
through consultations, decide whether to terminate the Contract or to
exempt part of obligations for implementation of the Contract or whether
to defer the execution of the Contract according to the extent of the
effects of events on the performance of the Contract.
Chapter 24 Environmental Matters
Party A represents and warrants that as of the date of this contract the
premises to be rented by the Joint Venture Company and the surrounding
areas are in full compliance with all relevant laws, regulations and
rules related thereto, and with all requirements of all relevant
government authorities for, land administration, environmental
protection, water and soil conservation and other relevant matters
concerning the land and the surrounding areas in effect as of the date
hereof. Neither the Joint Venture Company, Party B or Party C or any of
their affiliated companies or any of their affiliated companies (as
defined in Chapter 5.10.2) shall be responsible for any environmental
condition existing on or before the date of actual use of such premises,
or any problem arising therefrom. Neither the Joint Venture Company,
Party B or Party C shall be responsible for any environmental condition
existing at any time, prior to or after the execution of this Agreement,
with respect to any premises not used by the Joint Venture Company or
any other facilities surrounding such premises. Party A shall be
responsible for providing adequate and suitable means for disposal of
hazardous and other wastes generated by the Joint Venture Company at the
premises leased from Party A. Party A shall indemnify and defend the
Joint Venture Company, Party B and Party C and hold each of them
harmless against any claims that may be made against any of them which
result from the illegal or improper disposal of such wastes at such
premises, or from any condition at such premises constituting a
violation of the laws and decrees of the People's Republic of China on
environmental protection, unless Party A establishes by clear evidence
that the condition resulting in such claims or violation was caused
solely by the Joint Venture Company's operations. Details of the
utilization, limitations and fees associated with waste treatment are
included in Appendix 3.
Chapter 25 Applicable Law
25.1 The formation, validity, interpretation, execution of this
Contract and the settlement of disputes under it shall be governed
by the Laws of the People's Republic of China.
25.2 Parties B and C shall not be required by this Agreement to violate
any law of the United States of America.
Chapter 26 Settlement of Disputes
26.1 Any disputes arising from the execution of, or in connection with
the Contract shall be settled through friendly consultation among
all parties. In case no settlement can be reached through
consultation, the dispute shall be submitted to the Stockholm
Institute of International Commercial Arbitration for final and
binding arbitration under its Rules of Conciliation and
Arbitration by one or more arbitrators appointed in accordance
with such rules. Stockholm, Sweden shall be the site of the
arbitration.
26.2 The arbitration award is final and binding upon all parties.
26.3 During the arbitration the Contract shall be executed continuously
by all parties except for the matters in dispute. The award of
the arbitration shall be made by the arbitrator or a majority of
the arbitrators. The arbitration fee shall be born as designated
by the arbitrator(s).
Chapter 27 Language
This Joint Venture Company Contract shall be written in Chinese and
English versions. Both versions are equally valid.
Chapter 28 Effectiveness of the Contract and Miscellaneous
28.1 The contract and its Appendices shall come into force beginning
from the date of approval of the concerned competent authority of
the Shanghai Municipal government, the People's Republic of China.
Neither this contract nor any Appendix shall have any force or
effect prior to such approval, notwithstanding their execution and
delivery by the parties.
28.2 Should notice in connection with any party's right and obligations
be sent by either Party A, Party B, or Party C by fax, it shall be
confirmed by written letter notification.
The addresses of the parties are the legal addresses of the
parties which are written in the Contract.
28.3 The order of precedence of the documents and agreements shall be:
Joint Venture Contract
Articles of Association
Non-disclosure Agreement
Agreement of Technology Transfer and Technical Service
Lease Agreement
Equipment Leasing Agreement
Sales Representation Agreements
28.4 The Contract is signed in Shanghai, the People's Republic of China
by the authorized representatives of the parties on May 29, 1995.
Parlex Corporation Shanghai 20th Radio Factory
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ /s/ SUI ▇▇▇▇ ▇▇▇▇▇
---------------------------------- ----------------------------------
Authorized Signature Authorized Signature
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Sui ▇▇▇▇ ▇▇▇▇▇
---------------------------------- ----------------------------------
Name Name
President President
---------------------------------- -----------------------------------
Title Title
Mascon, Inc.
/s/ ▇▇▇▇▇ ▇▇▇▇▇
----------------------------------
Authorized Signature
▇▇▇▇▇ ▇▇▇▇▇
----------------------------------
Name
Executive Vice President
----------------------------------
Title
Appendix 1
Registered Capital Investment Schedule of Parties B and C
Appendix 1
Registered Capital Investment Schedule of Parties B and C
The following schedule details the intentions of Party B and Party C to
contribute their investment to the Joint Venture Company.
Months 1 to 3
Technology License
both immediate and ongoing *
Cash *
Cash for Materials(1) *
Training *
Technical Support *
Equipment *
Preco Automatic Punch *
Extra Screen Equipment *
Excellon Drill/Router *
Hytron Punch *
Corannard Press *
Napco Oven *
VWR Oven *
Shipping and Installation of Equipment *
Maintenance Package *
Total for first three months *
% of investment *
Months 3 to 6
Cash *
Cash for Materials(1) *
Training *
Technical Support *
Equipment *
TMP Lamination Press #1 *
VJ Electrical Tester *
SMVL Laminator *
Spartanic Punch *
CAD/CAM System *
Excellon Data Link *
ASI Drying Module *
ASI Preclean *
Shipping and Installation of Equipment *
Maintenance Package *
Total for first three months *
% of investment *
* Confidential information has been omitted and filed separately with the
Commission.
Appendix 1
Registered Capital Investment Schedule of Parties B and C
Months 7 to 9(2)
Cash *
Cash for Materials(1) *
Technical Support *
Equipment *
Excellon Drill *
Shipping and Installation *
Total for nine months *
% of investment *
Months 10 to 12(2)
Technical Support *
Equipment *
Hot Air Solder Leveling *
Shipping and Installation *
Total for twelve months *
% of investment *
Notes:
1) The cash contributed as Cash for Materials shall be used only to
purchase materials.
2) These items are subject to modification by mutual agreement during
the training period.
Total Investment of Parties B & C:
Technology Transfer
Cash
Equipment (including shipping)
Other
Total
* Confidential information has been omitted and filed separately with the
Commission.
Appendix 2
Registered Capital Investment Schedule of Party A
No. Process Description Specification Quantity
---------------------------------------------------------------------------------------
1 Shear Automatic Cutter 40" Commisheeter 1
Cutter Model #1110 1
Cutter Model #1035 1
2 D/R NC Drill EX-300 D/R 1
Hole Check Gauge 20A(0.25-0.55) 2
3 Pre-Clean Surface Preparation Pumi-flex-SHD 1
4 Image Laminator 360 1
Printer Optibeam 7120 1
Diazo Developer D-240 1
Developer Devmaster Miki 1
Oven 343 1
Static Remover System 1
5 Etch Acid Etcher (with Ink Stripper) 1
6 Dry Film Strip Stripper 1
7 Plating Semi-Automatic Ni/Au Plating Line 1
8 Coating Surface Preparation Machine 1
Roll Soldering Machine 24T 1
Vertical Hot Air Leveler PCL 6 1
Antioxidant Unit 1
Post Cleaning System SHD-2B 1
9 Steel Rule Die Steel Rule Die 1 Set
10 Quality Flex Ductility Tester 2FDF 1
Scanning Inspection System 104A 1
Microscope SVB-73 4
Magnifier Lovpe x 10 10
Round Magnifying Lamps 5" 4
Solderability Tester Nut x 10 1
Soldering Tip CT-5 6
Electric Powered Wire BF 1
Thermal Wire Stripper TWC-1 1
Handheld Heat Gun 46-021 1
Soldering Microscope EMF-210x 30x 4
Point, Wire, Fixture, Drive Board 1 Set
Metals Thickness Tester TC-2600 1
Ni Thickness Tester AIPT, ATOC 1
11 Assembly Pressing Connector (Single Core) 6S 6094-2 1
Pressing Connector (14 Core) 6S 7022-1 1
Totals
Total Investment
Cash *
Equipment and Installation *
Materials and Others *
Total *
Notes:
1) The final value of the equipment contributed by Party A, shall be
determined by Party B after examining the equipment prior to
signing the contract.
2) The depreciation factor is 84.67%.
3) The total investment will be transferred after the insurance of the
business license.
* Confidential information has been omitted and filed separately with the
Commission
Appendix 3
Lease Agreement
Lease Agreement
Shanghai 20th Radio Factory (Party A) together with Parlex Corporation (Party
B) and Mascon, Inc. (Party C) shall establish a Joint Venture Company within
Party A's existing factory. The following is the agreement reached by both
parties for leasing the building from Party A by the Joint Venture Company.
Chapter 1 The Premises
Party A hereby leases to the Joint Venture Company, and the Joint
Venture Company hereby leases from Party A, the following premises (the
"Premises"): Building J-22, the second (2nd) and a portion of the third
(3rd) floor at ▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇, Post Code 200233, which
represent 2,400 square meters of net usable space, to be used by the
Joint Venture Company for production operations and offices. Party A
also grants the Joint Venture Company the right to use, in common with
other parties entitled thereto, the hallways, stairways and elevators
necessary for access to the Premises and lavatories nearest thereto.
Chapter 2 Term
The term of this Lease Agreement shall be for three years, commencing on
the date hereof and ending on the third anniversary hereof. The Joint
Venture Company shall have the option to extend the term of this Lease
Agreement for two successive three-year periods (each hereinafter an
"extension term") following the expiration of the initial three-year
term, which option shall be exercisable by giving written notice to
Party A not less than 60 days prior to the end of the initial term or an
extension term, as the case may be.
Chapter 3 Rent
3.1 The Joint Venture Company shall pay to Party A rent at the rate of
* per square meter per month *, payable in advance
monthly. The rent for each extension term shall be at a fair
market rental rate determined by mutual agreement of the parties;
however, the rental rate for any such extension term shall not be
increased by an amount greater than 30% in any three year period.
Such increase shall be prorated in the event that this Lease
Agreement is in effect with respect to only a portion of any
calendar year.
3.2 In addition to the foregoing rent, the Joint Venture Company shall
pay a fee for the leasehold improvements set forth in the Appendix
attached hereto at the rate of US$ * , payable in advance
in monthly installments of US$ * .
* Confidential information has been omitted and filed separately with the
Commission.
3.3 The rent and leasehold improvement fees will be fixed in US
dollars for the term of this agreement. The rent and leasehold
improvement fees shall be paid in RMB. The U.S. dollar figures
referenced above shall be converted from U.S. dollars to RMB at
the middle value of the exchange rate quoted by the People's Bank
of China on the date this Lease Agreement is executed. This RMB
fee will be recalculated annually on the anniversary date of this
agreement based on the average exchange rate quoted by the
People's Bank of China for the previous twelve months.
Chapter 4 Land Use Fees
Party A shall be responsible for paying all land use fees with respect
to the Premises and the building in which the Premises are contained.
In the event that Party A fails to pay such fees, the Joint Venture
Company may make such payment to the appropriate governmental
authorities and deduct the amount of such payment, plus interest, from
future amounts owed to Party A under Chapter 3 hereof.
Chapter 5 Maintenance and Repair
5.1 Party A's Obligations: Party A shall make all necessary repairs,
replacements and renewals to the Premises to keep the same in good
condition, reasonable wear and tear and damage by fire and other
casualty only excepted, provided that if such repair, replacement
or renewal is required because of the Joint Venture Company's acts
or omissions or the acts or omissions of those for whom the Joint
Venture Company is legally responsible, the Joint Venture Company
shall reimburse Party A for the cost of such repair, replacement
or renewal. Party A shall be responsible for maintaining fire and
casualty insurance on the Premises and leasehold improvements to
secure performance of its obligations hereunder.
5.2 The Joint Venture Company's Obligations: The Joint Venture
Company shall maintain the Premises and leasehold improvements in
good condition, damage by fire and other casualties only excepted.
The Joint Venture Company shall not make structural alterations or
additions to the Premises, but may make non-structural
alterations, provided that Party A consents thereto, which consent
shall not be unreasonably withheld or delayed. All such allowed
alterations shall be at the Joint Venture Company's expense. The
Joint Venture Company shall be responsible to insure its own
equipment in the Premises.
Chapter 6 Utilities
6.1 Party A shall install and maintain separately metered utilities
for the Premises at its own expense. The Joint Venture Company
shall pay, as they become due, all bills for electricity and other
utilities (whether they are used for furnishing heat or other
purposes) that are furnished to the Premises and are separately
metered and all bills for fuel furnished to a separate tank which
services the Premises exclusively. Party A agrees to provide at
its own expense all other utility services and to furnish
reasonable water and reasonable heat and air conditioning (except
to the extent that the same are furnished through separately
metered utilities or separate fuel tanks as set forth above) to
the Premises, the hallways and stairways during operating hours on
regular business days of the heating and air conditioning seasons
of each year, to furnish elevator service and to light passageways
and stairways during business hours, and to furnish such cleaning
service as is customary in similar buildings in said city or town,
all subject to interruption due to any accident, to the making of
repairs, alterations, or improvements, to labor difficulties, to
trouble in obtaining fuel, electricity, service, or supplies from
the sources from which they are usually obtained for the building
containing the Premises, or to any cause beyond Party A's control.
6.2 The standard charges for services provided to the Joint Venture
Company by Party A that are not included in the rent payments for
the Premises or the leasehold improvements are as follows:
1. Production Service
Compressed Air * /m3 x 1.03 x monthly consumption
Electricity * /kwh x 1.13 x monthly consumption
Water * /m3 x 1.24 x 1.9 x monthly consumption
(1.9 is the markup charged by the authorities for discharging water)
Steam * /ton x 1.03 x monthly consumption
Elevator * /month (including all maintenance)
The above charges for water and electricity are all in
accordance with the unified price of the government and they
are subject to change. All other fees above are set for a
period of three years. After three years, Party A and the
Joint Venture Company shall re-negotiate the fees based on
the current situation.
2. Living Service
Regular eating in the * /month
cafeteria
Medical treatment * once per person
and registration fee
Medical expenses shall be paid based on
actual consumption.
Bath * per person per use
* Confidential information has been omitted and filed separately with the
Commission.
Telephone (inside) * per extension per month (TDD
or DDD will be charged additionally
according to relevant regulations)
Parking: (1) Auto * /month each
(2) Bicycle * /month each
The living service fees are set for the first year. Each
year Party A and the Joint Venture Company shall re-
negotiate the fees based on the current situation with an
increase of no more than 12% per service per year.
6.2.3 Building Services
Environmental sanitation * /month
Fire prevention * /month
Cleaning of common areas * /month
The above fees are set for a period of three years. After
three years, Party A and the Joint Venture shall re-
negotiate the fees based on the current situation.
Chapter 7 Waste Treatment and Environmental Liabilities
7.1 Party A represents and warrants that as of the date of this
contract the premises to be rented by the Joint Venture Company
and the surrounding areas are in full compliance with all relevant
laws, regulations and rules related thereto, and with all
requirements of all relevant government authorities for, land
administration, environmental protection, water and soil
conservation and other relevant matters concerning the land and
the surrounding areas in effect as of the date hereof. The Joint
Venture Company shall not be responsible for any environmental
condition existing on or before the date of actual use of such
premises, or any problem arising therefrom. The Joint Venture
Company shall not be responsible for any environmental condition
existing at any time, prior to or after the execution of this
Agreement, with respect to any premises not used by the Joint
Venture Company or any other facilities surrounding such premises.
Party A shall be responsible for providing adequate and suitable
means for disposal of hazardous and other wastes generated by the
Joint Venture Company at the Premises. Party A shall indemnify
and defend the Joint Venture Company and hold it harmless against
any claims that may be made against any of them which result from
the illegal or improper disposal of such wastes at the Premises,
or from any condition at the Premises constituting a violation of
the laws and decrees of the People's Republic of China on
environmental protection, unless Party A establishes by clear
evidence that the condition resulting in such claims or violation
was caused solely by the Joint Venture Company's operations.
7.2 As the waste water and solution which will be generated during the
production of Contract Products by the Joint Venture Company will
need to be treated, Party A is trusted to treat the copper
containing wastewater, as well as acid and alkaline wastewater
produced by the Joint Venture Company. Other wastes are outside
the scope of this agreement. Party A agrees to provide this
service and treat the waste water and solution in order to make it
meet the permitted discharging standard of the government. For
this purpose the following conditions apply:
1. The discharged waste water by the Joint Venture Company shall
be drained off into the container designated by Party A to be
treated. Party A shall have the right to randomly measure
the waste water for toxic and harmful contents and the Joint
Venture Company shall pay additional fees for the treatment
by Party A if the concentration of the discharged waste water
exceeds that agreed to by the two parties.
2. The Penalty shall be borne by Party A if the treatment of
discharged waste water does not meet the permitted standard
of the government and found by the environmental authorities.
The Penalty shall be borne by the Joint Venture Company if
the waste water, that does not meet the permitted standard of
the government and has not been treated by Party A, is
drained by the Joint Venture Company and found by
environmental authorities.
3. The standard treatment fee for waste water is * per
cubic meter
(* ).
4. The fee for waste water treatment is calculated according to
the total amount of water consumed as reflected on the
incoming water meter.
5. Payment is at the end of each month.
6. In order to implement the environmental law of the government
and the related regulations of the factory, the concentration
of the waste water must be controlled. It is specified that
the contained copper in the drained rising water of CuCl2 by
the Joint Venture Company is not allowed to exceed 200 mg/l.
An additional fee of * for each additional 50 mg/l
increment exceeding 200 mg/l shall be charged to the Joint
Venture Company. The additional fee for each increment of 50
mg/l shall be determined based on the volume between the
first measurement of a particular level of non-conformance
and the first measurement of either conformance or a lower
level of non-conformance. The concentration of discharged HCl
is not allowed to have a pH less than two (2). An additional
* will be charged to the Joint Venture Company for
each one percent of pH exceeded of HCl in the waste water.
The total fee will be based on the total volume treated
between the non-conforming measurement and the last
conforming measurement.
7. The two parties concerned have to be governed and inspected
by environmental authorities from the government and the fees
incurred shall be borne as specified hereunder:
(1) The measurement fee for the discharged waste water
before treatment by Party A shall be borne by the Joint
Venture Company.
(2) The measurement fee for the discharged waste water
after treatment by Party A shall be borne by Party A.
8. The surplus waste of CuCl2 solution of the Joint Venture
Company must be put into the container specified by Party A
and Party A shall be responsible to trust a third party to
treat it and bear the fees for transportation and treatment.
9. The fees for the treatment of waste water will be incurred on
the date trial production commences.
10. Any other matters other than specifically addressed above,
shall be negotiated in good faith between Party A and the
Joint Venture Company as the situation arises.
11. The above terms are valid for three (3) years.
7.3 Party A guarantees the Joint Venture Company enough waste water
treatment capacity for three years in order to fulfill the
estimated production schedule described in Chapter 4 of the Joint
Venture Contract. Any cost associated with increasing waste water
treatment capacity during the first three years and within the
Joint Venture Company's estimated production volume shall be borne
by Party A. The responsibility for any costs associated with
increasing waste water treatment capacity due to production
volumes exceeding the Joint Venture Company's estimates in the
first three years or any need for increased capacity after the
first three years shall be determined through negotiations by the
parties.
Chapter 8 Assignment
Either party may assign this Lease Agreement and the rights and
obligations hereunder to any of its affiliated companies, as defined in
Chapter 5.10.2 of the Joint Venture Contract between the parties.
Chapter 9 Language
This Lease Agreement shall be written in Chinese and English versions.
Both versions are equally valid.
Chapter 10 Notices
Any notices concerning the parties rights or obligations hereunder which
is sent by fax shall be confirmed by written letter notification. The
addresses of the parties are the legal addresses of the parties which
are set forth in Chapter 2 of the Joint Venture Contract.
Chapter 11 Effectiveness
This Agreement shall become effective only at such time as the Joint
Venture Contract among the parties becomes effective as provided in
Chapter 28.1 thereof.
This Lease Agreement is signed in Shanghai, the People's Republic of China by
the authorized representatives of the parties on May 29, 1995.
Shanghai 20th Radio Factory
/s/ SUI ▇▇▇▇ ▇▇▇▇▇
----------------------------------
Authorized Signature
Sui ▇▇▇▇ ▇▇▇▇▇
----------------------------------
Name
President
----------------------------------
Title
Parlex (Shanghai) Circuit Co., Ltd. Parlex (Shanghai) Circuit Co., Ltd.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇▇▇▇
---------------------------------- -----------------------------------
Authorized Signature Authorized Signature
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
---------------------------------- -----------------------------------
Name Name
Director Director
---------------------------------- -----------------------------------
Title Title
Leasehold Improvements
--------------------------------------------------------------------------------------------------
No Process Description Spec Qty Cost Discounted Monthly
Dep/Fee
--------------------------------------------------------------------------------------------------
1 Distribution Electric box XGL 6 * * *
2 Air Condition Electric box XGL 2 * * *
Cold water system 30HR225 1
Heat changer 1
Air conditioner 5
Pump 2
Computer controlled system 1
Cooling tower OT1260T 1
3 Drilling Room Cabinet air condition CS-3BHV11 1 * * *
4 Window air condition CKT-3A 1 * * *
5 Humidity remover KFQ-3 1 * * *
6 Clean Room Air shower room FLS-10 2 * * *
7 Press Room Electrical box XGL 2 * * *
8 Air compressor IEC-439 1 * * *
Totals * * *
Notes:
1) Landlord is responsible for any taxes on the above equipment.
2) Joint Venture is responsible for maintenance of the above equipment.
3) If leasehold improvements cannot be maintained or repaired, the
landlord shall replace them at no cost to the Joint Venture.
* Confidential information has been omitted and filed separately with the
Commission.
Appendix 4
Equipment Leasing Agreement
Equipment Leasing Agreement
--------------------------------------------------------------------------------------------------------------
No. Process Description Specification Quantity Cost Discounted Monthly
Dep/Fee
--------------------------------------------------------------------------------------------------------------
1 Screen Print Semi-Automatic Screen Printer F-700 2 * * *
UV Curing System UVC-24-3 1
Viscosity Tester PCIT/VS-1A 1
Ink Mixer X-1 1
Oven 343 1
2 Laminate Vacuum Press PC377 VO 1
Lamination Plates AIAI 4140 18
Lamination Plates TYPE 420 24
Laminar Flow Work Station 2534 4
Paper Cutter J57-2 3
Static Remover System 1
Oven 1
Cooling Tank 1
3 Profiling Press J23-25T 1
Press J23-3.15T 2
Arbor Press 0.1 ~ 0.2mm 1
Bench Precision Cutter J57-2 1
Fork Lift for Die SLE 40 10 150 1
Puncher SPM 01 1
Saw U500 1
Press J23-16 1
Press J23-16 1
Shear Q11 1200 1
Photo Projection Drill GZ 2 1
Paper Trace Cutter PYQ 20ZC 1
4 Electrical Test Bare Board Tester CTM 1092 1
5 Assembly Pneumatic Press J1305B 4
Pneumatic Press J1310B 1
6 D.I. Water Centrifugal Pump for Clean Water IS50-32-160 3
Purified Water System 1
Totals
Notes:
1) Landlord is responsible for any taxes on the above equipment.
2) Joint venture is responsible for maintenance of the above
equipment.
3) Joint venture has the option, at any time, to purchase equipment
and spare parts at the remaining book value.
4) The rental fee will be paid in RMB as defined in Section 3.3 of
the Lease Agreement.
* Confidential information has been omitted and filed separately with the
Commission
Appendix 5
Articles of Association
ARTICLES OF ASSOCIATION
OF
PARLEX (SHANGHAI) CIRCUIT CO., LTD.
May 29, 1995
Contents of Articles of Association
Chapter 1 General Provisions
Chapter 2 Purpose, Scope and Scale of Production and Business
Chapter 3 Total Amount of Investment and Registered Capital
Chapter 4 Sale of Products
Chapter 5 The Board of Directors
Chapter 6 The Function of Board of Directors
Chapter 7 Management Organization
Chapter 8 Tax, Finance and Audit
Chapter 9 Foreign Exchange
Chapter 10 Profit Distribution
Chapter 11 Staff and Workers
Chapter 12 The Trade Union
Chapter 13 Duration of the Joint Venture Company
Chapter 14 Termination of Contract
Chapter 15 Resolution of Default
Chapter 16 Liquidation
Chapter 17 Policies and Regulations
Chapter 18 Supplementary Articles
Articles of Association
In accordance with the laws and regulations concerned and the contract
signed by Shanghai 20th Radio Factory, Parlex Corporation., and Mascon,
Inc., the Articles of Association hereby is as follows:
Chapter 1 General Provisions
1.1 Parties of this contract are as follows:
Shanghai 20th Radio Factory, hereinafter referred to as Party A,
registered in Shanghai, China.
Legal address: ▇▇. ▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇,
Post Code 200233.
Legal representative: Mr. Sui Guanliang;
Position: Manager;
Nationality: Chinese.
1.2 Parlex Corporation, hereinafter referred to as Party B,
registered in the United States of America.
Legal address: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇
Legal representative: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇;
Position: President;
Nationality: United States of America.
1.3 Mascon, Inc., hereinafter referred to as Party C, registered in
the United States of America
Legal address: ▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, ▇▇▇
Legal representative: ▇▇▇▇▇ ▇▇▇▇;
Position: President;
Nationality: United States of America.
1.4 In accordance with the "Law of the People's Republic of China on
Joint Ventures Using Chinese and Foreign Investment" and other
relevant laws and regulations, the three parties agree to
jointly invest to establish a Joint Venture Company to produce
and engage in the business of printed circuits and related parts
and assembly products in the People's Republic of China.
The name of the Joint Venture Company is Parlex (Shanghai)
Circuit Co., Ltd.
The legal address of the Joint Venture Company is at ▇▇. ▇▇▇ ▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇, Post Code 200233.
1.5 The Joint Venture Company is a Chinese legal person and is
subject to the jurisdiction and protection of Chinese law. All
activities of the Joint Venture Company shall be governed by the
laws, decrees and pertinent rules and regulations of the
People's Republic of China. Parties B and C shall not in any
way be obligated to violate any laws of the United States of
America.
1.6 The organizational form of the Joint Venture Company is a
limited liability company. Each party to the Joint Venture
Company is liable to the Joint Venture Company within the limit
of the capital subscribed by it. The profits and losses of the
Joint Venture Company shall be shared by the parties in
proportion to their contributions of the registered capital.
1.7 Any person who at any time serves or has served as a Director,
officer, or manager of the Joint Venture Company, or in such
capacity at the request of the Joint Venture Company for any
other corporation, partnership, joint venture, trust or other
enterprise, shall have the right to be indemnified by the Joint
Venture Company to the fullest extent permitted by law against
(i) reasonable expenses, including attorneys' fees, actually and
necessarily incurred by him or her in connection with any
threatened, pending or completed action, suit or proceedings,
whether civil criminal, administrative or investigative, and
whether or not brought by or on behalf of the Joint Venture
Company, seeking to hold him or her liable by reason of the fact
that he is or was acting in such capacity; and (ii) reasonable
payments made by him or her in satisfaction of any judgment,
money decree, fine, penalty or settlement for which he or she
may have become liable in any such action, suit or proceeding,
provided, however, that no such right to indemnification shall
be available with respect to liability arising out of such
individual's acts or omissions not in good faith, intentional
misconduct, or knowing violation of the law.
The Board of Directors of the Joint Venture Company shall take
all such action as may be necessary and appropriate to authorize
the Joint Venture Company to pay the indemnification required by
this Chapter, including without limitation, to the extent
needed, making a good faith evaluation of the manner in which
the claimant for indemnity acted and of the reasonable amount of
indemnity due him and giving notice to, and obtaining approval
by, the Parties.
Chapter 2 Purpose, Scope and Scale of Production and Business
2.1 The purpose of the parties to the Joint Venture Contract is
in conformity with the wish of enhancing the economic
cooperation and technical exchange, to import know-how and
processing equipment of manufacturing circuits and other
related products, to change obsolete processed products with
new ones, upgrade quality of products, develop marketable
products, and gain competitive position in the world market
in quality and price, so as to ensure satisfactory economic
benefits for each investor.
2.2 The scope of the production and operation of the Joint
Venture Company are to manufacture and sell printed circuits
and related parts and assembly products.
2.3 It is estimated that the scale of production of the Joint
Venture Company shall reach the production plan within 4
years after beginning its production. The estimated
production plan is as follows.
USD 000
--------------------------------------
Product/years 1 2 3 4
--------------------------------------
SSF * * * *
DSF * * *
MLF * *
Rigid Flex *
Total * * * *
The sales of the Joint Venture Company is estimated to
reach * million in 4 years, equivalent
to * . The parties acknowledge that the foregoing
amounts are only estimates and are not warranties by any
party as to how the Joint Venture Company will actually
perform.
Chapter 3 Total Amount of Investment and Registered Capital
3.1 The total amount of investment of the Joint Venture Company (the
"Total Investment") is USD 4.5 million, of which the registered
capital is USD 3 million. The difference between the total
amount of investment and the registered capital shall be
borrowed from the bank by the Joint Venture Company.
3.2 The registered capital contributed by the parties will be as
follows:
3.2.1 Party A shall contribute USD 1.200 million, accounting
for 40% of the registered capital, consisting of the
following:
1) Equipment and Installation: USD *
2) Cash: USD *
3) Material and others: USD *
3.2.2 Party B shall contribute USD 1.503 million, accounting
for 50.1% of the registered capital, consisting of the
following:
1) Technology License Fee: USD *
2) Equipment and Installation: USD *
3) Cash: USD *
4) Training: USD *
5) Technical Support: USD *
* Confidential information has been omitted and filed separately with the
Commission.
3.2.3 Party C shall contribute USD * , accounting for
9.9% of the registered capital, consisting of the
following:
1) Equipment and Installation: USD *
2) Cash: USD *
3.3 The form of investment contributions:
3.3.1 The investment contributed by Party A shall be the
equipment and its installation, and cash;
3.3.2 The investment contributed by Party B shall be cash in
USD, technical know-how, technical training and support
and equipment and its installation;
3.3.3 The investment contributed by Party C shall be cash in
USD, and equipment and its installation.
3.4 The initial registered capital investment of Party A, Party B
and Party C is set forth in Appendix 1 and Appendix 2. At least
fifteen percent (15%) of the registered capital investment shall
be paid within the first three months after the date the
business license is issued. The balance of the registered
capital investment shall be paid in over the subsequent nine (9)
months according to the schedule in Appendix 1 and Appendix 2.
3.5 Any party delaying the payment of their investment in whole or
in part shall pay the Joint Venture Company interest on the
unpaid balance to the Joint Venture Company. The interest rate
shall be as set forth in Chapter 21 of the Joint Venture
Contract.
3.6 After the investment subscribed is paid by the parties to the
Joint Venture Company, a Chinese registered public accountant
shall verify it and provide a certificate of verification, in
accordance with which the Joint Venture Company shall issue
investment certificates which include the following items: name
of the Joint Venture Company; date of establishment; the
investment contribution; and date, and month and year of
issuance of investment certificate.
3.7 The Joint Venture Company shall not reduce its registered
capital during the life of the Joint Venture Company.
3.8 In the event that one of the parties (the "Seller") intends to
sell all or part of their interest in the Joint Venture Company,
the other two parties have a preemptive right to purchase it in
accordance with the following provisions:
* Confidential information has been omitted and filed separately with the
Commission.
3.8.1 The Seller shall first obtain a bona fide offer from a
third party (the "Third Party") to purchase such
interest in the Joint Venture Company (the "Offered
Interest"). The Seller shall disclose all pertinent
details of the offer to the other parties and shall
first offer the Offered Interest for purchase by the
other parties at the same price and upon the same terms
and conditions offered by the Third Party. The parties
to the Joint Venture Company receiving the offer shall,
within thirty (30) days after their receipt of such
offer, elect by written notice to purchase all, but not
less than all, of the Offered Interest, at the price and
upon the terms and conditions offered, in proportion to
their respective contributions to the registered capital
of the Joint Venture Company (exclusive of the Seller's
contribution), provided that if one of the parties
declines or fails to give written notice of its election
to purchase all of its proportion of the Offered
Interest, the remaining party or parties shall have the
right for the next thirty (30) days to elect by written
notice to purchase pro rata (exclusive of the interests
of the Seller and the party declining or failing to give
notice) the part of the Offered Interest not purchased
by the other party. If one or more parties shall have
elected to purchase all of the Offered Interest, payment
by and transfer to such party or parties shall be
completed no later than thirty (30) days after the last
notice of election to purchase. In the event that all
of the Offered Interest is not purchased pursuant to the
above provisions (whether or not one or more parties
have given notice of election to purchase a part, but
not all, of the Offered Interest), the Seller may sell
such Offered Interest to the Third Party at the same
price and upon the same terms and conditions offered by
the Seller to the other parties, provided that (i) the
Third Party agrees in writing to be bound by the terms
and conditions of this Joint Venture Contract and
executes copies of such other documents required
hereunder; (ii) the payment for and transfer of the
Offered Interest by and to the Third Party is effected
no later than ninety (90) days after the expiration of
all periods during which the other parties have the
right to give notice of their election to purchase the
Offered Interest; and (iii) such transfer is approved by
the Board of Directors under Chapter 3.10. To the
extent that the Offered Interest is not purchased
pursuant to the above provisions, then the Seller shall
not sell, transfer or dispose of such Offered Interest
without again complying with the provisions of this
Chapter 3.8.1.
3.8.2 Each party shall have the right to transfer all or part
of its respective rights and interests in the Joint
Venture Company to one or several of its affiliated
companies without following the procedure set forth in
Chapter 3.8.1 above. Each party hereby consents to any
such transfer by another party to an affiliated company
and waives any preemptive rights in respect of such
transfer.
3.9 In the event that one of the parties merges with or is acquired
by another company, all rights and privileges of this contract
shall be transferred to the resulting or acquiring company
without penalty.
3.10 Any increase or assignment of the registered capital or Total
Investment, other than as stipulated or excepted in Chapter 3.9,
shall be unanimously approved at a meeting of the Board of
Directors and submitted to the original examination and approval
authority for approval. In the case of a transfer effected in
compliance with Chapter 3.8.1 or Chapter 3.8.2, each party
agrees to instruct its representatives on the Board of Directors
to vote to approve the resulting assignment of the transferring
party's registered capital and total investment. Registration
procedures for change shall be dealt with at the original
registration and administration office.
Chapter 4 Sale of Products
4.1 The Joint Venture Company shall be responsible for the marketing
and sales of its products inside and outside the People's
Republic of China. A pricing policy will be proposed by the
General Manager, and approved by the Board of Directors,
designed to achieve pricing, on average, no less than the most
competitive international prices in order to maximize
profitability.
4.2 The Joint Venture Company shall be directly responsible for the
sale of products in all parts of the Peoples Republic of China
other than Hong Kong, Macau and Taiwan (hereinafter referred to
as "Territory A"), and shall develop the market in Territory A
through its direct sales force or its sales representatives,
making its best efforts to increase market share. Commissions
to the Joint Venture Company's sales representatives in
Territory A, if applicable, shall be determined by the General
Manager.
4.3 Party B and Party C shall be responsible for the sales of
products outside of Territory A. The contract or contracts for
the foreign sales of products by the Joint Venture Company to
Party B or Party C, as the case may be, shall be concluded
separately from this Joint Venture Contract and shall provide,
without limitation, that (i) the relationship between the Joint
Venture Company, on the one hand, and Party B and Party C on the
other hand, shall be that of independent vendor and vendee and
shall not be construed to constitute an agency relationship;
(ii) Party B or Party C, as the case may be, shall negotiate and
obtain orders for the products outside of Territory A and submit
orders to the Joint Venture Company for manufacturing and
shipment by the Joint Venture Company all in accordance with the
terms and conditions set forth in such orders. Party B and
Party C may use either of the following options for compensation
in the sale of the products.
4.3.1 Party B or Party C, as the case may be, may purchase the
products for resale to the third party. The Joint
Venture Company shall sell the products to Party B or
Party C, as the case may be, at a reasonable
distributor's discount from the prices set forth in the
Joint Venture Company's price list used in sales to
customers in Territory A. Party B or Party C, as the
case may be, shall resell the products at prices fixed
by them, and the Joint Venture Company shall retain no
control over such resale prices.
4.3.2 Party B or Party C, as the case may be, may sell the
products to a third party as agent on behalf of the
Joint Venture Company at the prices set forth in the
Joint Venture Company's international price list.
Party B or Party C shall be paid a reasonable
representative's commission from the Joint Venture
Company for the sales of those products.
The value of the foreign sales of products, either directly or
indirectly, is estimated to become at least * of the total
sales of the Joint Venture Company. For the purposes hereof,
the three parties agree that foreign sales of products shall
include sales of products made to customers in Territory A which
incorporate such products into their products manufactured for
resale outside of Territory A.
4.4 The Joint Venture Company shall be licensed to use the relevant
trademarks and patents owned by Party B subject to the terms and
conditions set forth in the Agreement of Technology License and
Technical Service.
Chapter 5 The Board of Directors
5.1 The Board of Directors of the Joint Venture Company shall be
established on the date of issuance of the business license to
the Joint Venture Company. The Board of Directors shall be
composed of five Directors of whom two shall be appointed by
Party A, two by Party B and one by Party C. The Chairman of the
Board of Directors shall be appointed by Party A, and the Vice-
Chairman of the Board of Directors shall be appointed by Party
B. The term of office for the Directors and the Chairman and
Vice-Chairman of the Board of Directors shall be four years and
they may be continuously reappointed by their respective
appointing parties. The appointing parties may change the
Directors whom they appointed at any time. If a director is
replaced prior to completing his term, the newly appointed
director shall serve for the remainder of that term. A notice
in writing shall be sent to other parties and the Board of
Directors when a party changes any Director.
5.2 The Board of Directors is the organization of the highest
authority of the Joint Venture Company and shall decide all its
major matters. The issues identified in Chapter 6.2 shall
require a unanimous vote by the Board. All other matters may
pass by a majority vote of the Board.
5.3 The Chairman of Board of Directors is the legal representative of
the Joint Venture Company. In case the Chairman of Board of
Directors may be unable to execute his duty for whatever reason,
the Vice-Chairman or other Director shall be authorized by the
Chairman as his temporary proxy.
5.4 The Chairman of the Board of Directors shall convene the Board
at least twice per year for the first five years and once per
year thereafter. The Chairman shall preside over each meeting.
The second meeting in the first five years may be waived if
agreed to by all three parties. The Chairman shall notify the
board members one month in advance of the meeting in writing and
provide a written agenda including the draft resolutions to be
voted on. If requested by more than one-third of the Board of
Directors, the Chairman shall convene a Board of Directors
meeting. This meeting shall occur no sooner than fifteen (15)
days and no later than thirty (30) days from the Chairman's
written notification of all members. If the Chairman fails to
convene the meeting after such request, then the Directors who
made the request may convene such meeting by written
notification to the Chairman and the other Directors.
At least two-thirds of the members of the Board of Directors
must be present for a meeting of the Board to convene.
All records of the Board of Directors shall be kept. The
minutes of meeting of the Board of Directors shall be kept in
both English and Chinese and shall be signed by all attendees of
the meeting. Each party shall be given one copy of the signed
minutes for their records. Both versions shall be certified to
be the same by an independent legal counsel. The meetings shall
normally be held at the legal address of the Joint Venture
Company.
5.5 Any Director may participate in a meeting of the Board of
Directors by means of conference telephone or similar
communications equipment by means of which all persons
participating in the meeting can hear each other or by any other
means permitted by law. Such participation shall constitute
presence in person at such meeting. All formal actions taken at
such meeting shall be confirmed by a writing delivered by fax.
5.6 Should any of the Directors be unable to participate in a
meeting of the Board, he may present a proxy in written form to
the Board of Directors. Upon receipt of notice of the meeting
and in the event that any Director neither attends nor entrusts
others to attend the meeting on his behalf, he shall be deemed
absent and shall forfeit all voting rights for the meeting he is
absent from.
Chapter 6 The Function of Board of Directors
6.1 The functions of the Board of Directors are as follows:
6.1.1 Responsible for executing the Joint Venture Contract,
the Articles of Association and their appendices;
6.1.2 Deciding on the increase or assignment of the registered
capital and/or total investment of the Joint Venture
Company;
6.1.3 Deciding on the termination of the Joint Venture Company
or merger with another economic organization;
6.1.4 Assuming the responsibility of liquidation at the time
of termination;
6.1.5 Adopting the major policies and regulations of the
management of the Joint Venture Company and any
revisions thereafter;
6.1.6 Examining and approving the annual financial statements,
annual business plan, distribution of profits and
contribution to the reserve fund, expansion fund, and
bonus and welfare fund presented by the General Manager;
6.1.7 Approving the appointment of the General Manager,
Financial Manager, Deputy General Manager, Chief
Engineer, and Manufacturing Manager and their salaries
and welfare;
6.1.8 Deciding the upper limit of working capital and bank
loan indebted by the Joint Venture Company;
6.1.9 Deciding the employee's welfare policy.
6.1.10 Other important matters which shall be decided by the
Board of Directors.
6.2 The following issues shall be unanimously passed and decided by
the Board of Directors:
6.2.1 Amending the Articles of Association of the Joint
Venture Company;
6.2.2 Deciding on an increase or an assignment of the
registered capital of the Joint Venture Company, except
as noted in Chapter 3.9 of these Articles of
Association;
6.2.3 Deciding the termination and dissolution of the Joint
Venture Company;
6.2.4 Merger of the Joint Venture Company with another
economic organizations.
6.3 The following issues shall be passed and decided by a majority
of the Board of Directors of the Joint Venture Company.
6.3.1 Approving annual financial reports and annual business
plan;
6.3.2 Deciding the upper limit of working capital and bank
loan;
6.3.3 Adopting the major policies and regulations of the
management of the Joint Venture Company and any
revisions thereafter;
6.3.4 Deciding employee's welfare;
6.3.5 Approval of the appointment of the General Manager,
Deputy General Manager, Financial Manager, Chief
Engineer and Manufacturing Manager;
6.3.6 Contribution to the reserve fund, expansion fund and
bonus and welfare fund;
6.3.7 Distribution of profits;
6.3.8 Any other matters which are appropriate for action by
the Board of Directors.
Chapter 7 Management Organization
7.1 All the parties have confirmed that the Joint Venture Company
shall implement the responsibility system under the leadership
of the Board of Directors. The General Manager is responsible
for the daily management and operation of the Joint Venture
Company.
7.2 The management organization shall have one General Manager
recommended by Party B and one Deputy General Manager
recommended by Party A. The General Manager and Deputy General
Manager shall be approved by the Board of Directors. The
General Manager and Deputy General Manager shall be appointed
for two year periods. The Board of Directors has the option to
renew the terms of the General Manager and Deputy General
Manager for additional two year periods thereafter. The
Chairman and Vice-Chairman of the Board of Directors and
Directors can hold posts as General Manager, Deputy General
Manager or other senior staff concurrently. The Joint Venture
Company shall be exclusively responsible for compensating the
General Manager, the Deputy Manager and all other managers and
employees of the Joint Venture Company.
7.3 The functions and responsibilities of the General Manager shall
be to carry out the decisions made by the meeting of the Board
of Directors, to organize and lead the daily management and
operation of the Joint Venture Company and to establish the
sales strategy and pricing of products sold by the Joint Venture
Company, inside and outside of the People's Republic of China.
The Deputy General Manager shall assist the General Manager in
his work. The major issues of the Joint Venture Company shall
be decided through consultations among the General Manager and
the Deputy General Manager. The General Manager and such other
officers appointed by the Board of Directors shall have the
authority to execute contracts and other instruments on behalf
of the Joint Venture Company and to act for the Joint Venture
Company in accordance with authority identified in a vote taken
by a majority of the Board of Directors, either generally or as
to specific matters.
Department managers shall be appointed by the General Manager in
consultation with the Deputy General Manager, shall be
respectively responsible for the work of the various
departments, shall handle the matters handed over by the General
Manager and Deputy General Manager and shall be responsible to
them. During the General Manager's absence, daily affairs of
the company shall be carried on by the Deputy General Manager or
other senior management staff.
7.4 The Joint Venture Company has a Chief Engineer, responsible for
technology, a Manufacturing Manager, responsible for production,
and a Financial Manager, responsible for finance and accounting,
all of whom shall be recommended by the General Manager for the
approval of the Board of Directors.
7.5 The Board of Directors may decide to dismiss the General Manager
and Deputy General Manager, Financial Manager, Manufacturing
Manager, or Chief Engineer at any time. If it is necessary, the
General Manager may suggest to the Board of Directors to dismiss
the Deputy General Manager, Financial Manager, Manufacturing
Manager, and Chief Engineer. Other than as previously provided
for, the General Manager may dismiss managers of other
departments or other staff at any time, as he deems necessary.
7.6 If they so desire, the General Manager, Deputy General Manager,
Chief Engineer, Financial Manager and Manufacturing Manager
shall submit their resignation to the Board of Directors in
writing at least ninety (90) days in advance.
7.7 In the case of graft or dereliction of duty by the General
Manager, Deputy Manager, Chief Engineer, Financial Manager, or
Manufacturing Manager, the Board of Directors may dismiss them
at any time, with no further obligations under the individual's
employment contract in force at the time.
7.8 The General Manager and Deputy General Manager, within his
employment term and for 12 months thereafter, shall not hold any
position in other organizations in the People's Republic of
China which would present a conflict of interest with the Joint
Venture Company.
Chapter 8 Tax, Finance and Audit
8.1 The Joint Venture Company shall pay taxes in accordance with the
stipulations of the related laws and regulations of China.
8.2 Staff members and workers of the Joint Venture Company shall pay
individual income tax according to the individual "Income Tax
Law of the People's Republic of China."
8.3 The accounting system of the Joint Venture Company shall be
formulated in accordance with the People's Republic of China's
relevant laws and procedures on financial affairs and
accounting, and in consideration of the conditions of the Joint
Venture Company, and to be filed with local financial
departments and tax authorities.
8.4 The fiscal year of the Joint Venture Company shall coincide with
the calendar year, i.e. from January 1 to December 31 on the
Gregorian Calendar. The Joint Venture Company shall maintain a
second set of books to accommodate the reporting requirements of
Party B.
8.5 The accounting of the Joint Venture Company shall adopt the
internationally adopted accrual basis and debit and credit
accounting system in their work. All vouchers, account books,
statistic statements should be prepared in Chinese, and reports
in English.
8.6 The Joint Venture Company shall adopt Renminbi as its
bookkeeping basis currency. The conversion of Renminbi to other
currency shall be in accordance with the middle value of the
exchange rate of the converting day quoted by the People's Bank
of China. This shall be the effective exchange rate for these
Articles of Association.
8.7 The Joint Venture Company should open Renminbi deposit accounts
and foreign exchange deposit accounts in banks approved by the
State Administration of Exchange Control and the Board of
Directors.
8.8 The Joint Venture Company shall employ an accountant registered
in China to be responsible for auditing and to forward the
reports to the General Manager and the Board of Directors. Any
party to the Joint Venture Company shall have the right to
employ an auditor at their own expense to perform an annual
financial audit and examination. This report shall be for
reference only to other parties.
8.9 The Financial Manager shall prepare the balance sheet, income
statement and statement of cash flows of the previous year by
the end of the first three months of the next fiscal year. The
General Manager shall present the financial statements and
proposal for profit distribution, if any, to the Board of
Directors for examination and approval. Unaudited monthly
financial statements, similar to those prepared yearly, shall be
submitted to all members of the Board of Directors within 30
days of the end of the month.
8.10 Subject to the "Detailed Rules and Regulations for the
Implementation of the Income Tax Law of the People's Republic of
China Concerning Enterprises with Foreign Investment and Foreign
Enterprises," the Board of Directors shall decide the
depreciation period of the fixed assets.
Chapter 9 Foreign Exchange
9.1 All matters concerning foreign exchange for Joint Venture
Company shall be handled according to the "Interim Regulations
on Foreign Exchange Control of the People's Republic of China"
and relevant regulations.
9.2 The Joint Venture Company shall make their best effort to
transact sales in foreign currency. To the extent that the
Board of Directors decides to distribute profits, the profits
shall be distributed to the parties in proportion to their
contributions of registered capital. Party B and Party C enjoy
the priority to have profits distributed in foreign currency if
profits in foreign currency exist.
Chapter 10 Profit Distribution
10.1 Profits cannot be distributed unless the Joint Venture Company
has a positive retained earnings that year
10.2 The profits of the Joint Venture Company cannot be distributed
unless the losses of previous years have been made up. Profits
remaining from previous fiscal year can be distributed together
with the current fiscal year.
10.3 The distribution of profits remaining after payment of taxes and
deduction of the reserve fund, expansion fund, and bonus and
welfare fund, shall be determined by the Board of Directors of
the Joint Venture Company. At the first Board of Directors
meeting, a schedule for profit distribution shall be determined
and agreed to. The Board of Directors may elect to retain a
part or all of the profits for business expansion. Any profits
that are distributed shall be distributed to the parties in
proportion to the amounts of their respective contributions to
the registered capital of the Joint Venture Company.
Chapter 11 Staff and Workers
11.1 A labor policy subject to the laws and regulations of China
shall be presented by the General Manager to the Board of
Directors for review and approval.
11.2 Concerning the recruitment, employment, dismissal and
resignation, wages, labor insurance, welfare, rewards, penalty
and other matters of the staff and workers of the Joint Venture
Company, these matters shall be executed by the General Manager
according to the "Regulations of the People's Republic of China
on Labor Management in Joint Ventures Using Chinese and Foreign
Investment" and "Regulations of Shanghai Municipality on Labor
and Personnel Management in Joint Ventures Using Chinese and
Foreign Investment."
11.3 The General Manager, Deputy General Manager, Financial Manager,
Chief Engineer and Manufacturing Manager shall be approved and
discharged by the Board of Directors. The staff and workers
needed by the Joint Venture Company may be recommended by Party
A, and hired, subject to the approval of the General Manager,
Any other professionals which may still be needed may be
recruited from the public, after obtaining the consent of local
labor and personnel department, through an examination and
selection process in which only the best will be hired.
11.4 The Board of Directors shall authorize the General Manager to
decide the wage, salary and remuneration after referring to the
relevant regulations and combining the specific circumstance of
the Joint Venture Company.
Chapter 12 The Trade Union
12.1 The staff and workers of the Joint Venture Company have the
right to establish a trade union and carry out the activities in
accordance with the stipulations of the "Trade Union Law of the
People's Republic of China".
12.2 The union in the Joint Venture Company represents the interests
of the staff and workers. The tasks of the trade union are: to
protect the democratic rights and material interests of the
staff and workers pursuant to the law; to assist the Joint
Venture Company to arrange and make rational use of welfare
funds and bonuses; to organize political, professional,
scientific and technical studies, carry out literary, art and
sports activities; and to educate staff and workers to observe
labor discipline and strive to fulfill the economic tasks of the
Joint Venture Company.
12.3 The Joint Venture Company shall allot an amount of money
totaling 2% of all the salaries of the staff and workers of the
Joint Venture Company (excluding allowances paid to foreign
employees) as union's funds, which shall be used by the union in
accordance with the "Managerial Rule for the Trade Union Funds:
formulated by the All China Federation of Trade Unions."
Chapter 13 Duration of the Joint Venture Company
The duration of the Joint Venture Company shall be fifty (50) years
commencing on the date of issuance of the business license to the
Joint Venture Company. An application for the extension of the
duration of the Joint Venture Company proposed by one party and
unanimously approved by the Board of Directors, shall be submitted to
the original authorities for approval six months prior to the end of
the initial fifty-year term.
If, after the establishment of the Joint Venture Company, the People's
Republic of China government, whether at the national, provincial,
municipal or local level, adopts any new law, regulation, decree or
rule, any amendment which results in more favorable treatment to the
Joint Venture Company or any party (without resulting in less
favorable treatment to any other party than the terms of the Joint
Venture Contract), the Joint Venture Company and the party concerned
shall promptly apply to receive the benefits of such more favorable
treatment and each of the parties shall use its diligent efforts to
facilitate such application.
If, after the establishment of the Joint Venture Company, the People's
Republic of China government, whether at the national, provincial,
municipal or local level, adopts any new law, regulation, decree or
rule, or any amendment which materially and adversely affects any
party's economic benefits under the Joint Venture Contract, then upon
written notice thereof from the affected party to the other parties,
the parties shall promptly consult and determine whether (i) pursuant
to Article 40 of the "People's Republic of China Foreign Economic
Contract Law," to continue to implement the Joint Venture Contract in
accordance with the original provisions thereof, or (ii) to effectuate
necessary adjustment in order to preserve each party's economic
benefits under the Joint Venture Contract on a basis no less favorable
than the economic benefit it would have received had such law,
regulation, decree or rule not been promulgated or amended.
Chapter 14 Termination of Contract
14.1 The termination of the Joint Venture Contract and its Appendices
shall come into effect only after the written agreement has been
signed by all parties and approved by the original examination
and approval authority.
14.2 In case of inability of the parties to carry out the Contract as
a result of Force Majeure or to continue operation due to losses
in successive years, the Joint Venture Contract and the Articles
of Association may be terminated with the unanimous decision of
the Board of Directors and approval by the original examination
and approval authority.
Chapter 15 Resolution of Default
If any party defaults on their obligations under this Contract, the
Lease Agreement, the Equipment Leasing Agreement, or the Agreement of
Technology License and Technical Service and such default is of such
significance as to cause or threaten to cause material damage to the
Joint Venture Company or the interests of non-defaulting parties, the
defaulting party will be notified in writing by the other parties and
given thirty (30) days to remedy this default. If after thirty (30)
days the breach of contract is not remedied, the remaining parties may
elect to terminate the defaulting party. If this occurs the
defaulting party forfeits all voting rights on the Board of Directors,
until the remaining Board members exercise their options and resolve
the default. The remaining Board members may exercise the following
options.
15.1 Offer additional time for the defaulting party to remedy the
breach;
15.2 Provide for the purchase by the Joint Venture Company or the
remaining parties of the defaulting party's equity less any
amount owed the Joint Venture Company;
15.3 Reduce the equity position of the defaulting party in proportion
to the amount owed the Joint Venture Company and increase the
equity share of the other parties proportionally;
15.4 If the amount owed the Joint Venture Company is equal to or
greater than the equity of the defaulting party, the remaining
parties may remove that party from the Joint Venture Company and
redistributed the equity in proportion to their equity or
liquidate the Joint Venture Company.
Chapter 16 Liquidation
16.1 Upon the termination of the Joint Venture Company according to
the law, the Board of Directors shall work out procedures and
principles for the liquidation, nominate candidates for the
liquidation committee, and set up the liquidation committee for
liquidating the Joint Venture Company's assets.
16.2 The tasks of the liquidation committee are: to conduct the
check of the property of the Joint Venture Company, its claim
and indebtedness; to work out the statement of assets and
liabilities and list of property; and to formulate a liquidation
plan. All these shall be carried out upon the approval of the
Board of Directors. During the process of liquidation, the
liquidation committee shall represent the company to ▇▇▇ and be
sued.
16.3 The liquidation expenses and remuneration to the members of
liquidation committee shall be paid on a priority basis from the
existing assets of the Joint Venture Company as determined by
the Board of Directors.
16.4 The remaining property after the clearance of debts of the Joint
Venture Company shall be distributed among the parties to the
Joint Venture Company according the proportion of each party's
investment in the registered capital. Party B and Party C enjoy
the priority to have the remaining assets distributed to them in
foreign currency if such foreign currency exists.
16.5 On completion of the liquidation, the Joint Venture Company
shall submit a liquidation report to the original examination
and approval authority, go through the formalities for
nullifying its registration in the original registration office
and return its business license. At the same time, a public
announcement shall be made.
16.6 After liquidation of the Joint Venture Company, its account
books shall be left in care of Party A. Any Party shall have
the right to view and the right to obtain a copy of these
account books at their expense.
Chapter 17 Policies and Regulations
The following policies and regulations shall be established by the
General Manager under the guidelines of the Board of Directors:
17.1 Management regulations, including the powers and functions of
the managerial branches and its working rules and procedures;
17.2 Rules for the staff and workers;
17.3 System of labor and salary;
17.4 System of work attendance record, promotion and awards and
penalty for staff members and workers;
17.5 Detailed rules of staff and worker's welfare;
17.6 Financial system;
17.7 Business trip system;
17.8 Other necessary policies and regulations.
Chapter 18 Supplementary Articles
18.1 These Articles of Association shall be written both in Chinese
and English versions. Both versions are equally valid.
18.2 The Articles of Association are an appendix of the Joint Venture
Contract. If the Articles of Association conflicts with the
Joint Venture Contract, the Joint Venture Contract shall
prevail. The amendments to the Articles of Association shall
be unanimously agreed upon, signed by Party A, Party B and Party
C, and submitted to the original examination and approval
authority for approval.
18.3 The Articles of Association shall be approved by the competent
authority of Shanghai Municipal government and shall come into
force beginning from the date of approval.
18.4 Should a notice in connection with any party's rights and
obligations be sent by either Party A, Party B, or Party C by
fax, it shall be confirmed by written letter notification.
The addresses of the parties are the legal addresses of the
parties which are written in the Contract
18.5 The Articles of Association is signed by the authorized
representatives of the parties on May 29, 1995 in Shanghai,
China.
Parlex Corporation Shanghai 20th Radio Factory
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ /s/ SUI ▇▇▇▇ ▇▇▇▇▇
---------------------------------- -----------------------------------
Authorized Signature Authorized Signature
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Sui ▇▇▇▇ ▇▇▇▇▇
---------------------------------- -----------------------------------
Name Name
President President
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Title Title
Mascon, Inc.
/s/ ▇▇▇▇▇ ▇▇▇▇▇
----------------------------------
Authorized Signature
▇▇▇▇▇ ▇▇▇▇▇
----------------------------------
Name
Executive V.P.
----------------------------------
Title
Appendix 6
Agreement of Technology License and Technical Service
Agreement of Technology License and Technical Service
Of
Parlex (Shanghai) Circuits Co., Ltd.
May 29, 1995, Shanghai
Contents of Agreement of
Technology License and Technical Service
1. Definitions
2. Scope of Contract Technology
3. Technical Documentation
4. Technical Service
5. Technology Value
6. Acceptance
7. Patents and Trademarks
8. Environmental Protection
9. Taxes and Duties
10. ▇▇▇-▇▇▇▇▇▇▇▇▇▇
▇▇. Applicable Law
12. Force Majeure
13. Proprietary Rights
14. Liabilities
15. Legal Compliance
16. Assignment and Sublicensing
17. Effectiveness of the Agreement
Appendix A General Specifications, Processes and Capacity of the Joint
Venture Company
Appendix B Content and Delivery of Technical Documentation
Appendix C Training and Treatment of the Joint Venture Company's Personnel
Appendix D Technical Service on Site
Appendix E Non-disclosure Agreement
Agreement of
Technology License and Technical Service
The following agreement is in consideration of the Joint Venture Contract
between the Shanghai 20th Radio Factory (Party A), Parlex Corporation (Party
B) and Mascon, Inc. Co. (Party C) to jointly invest to set up Parlex
(Shanghai) Circuit Co. Ltd., hereafter referred to as Joint Venture Company.
Whereas the Joint Venture Company needs new technology and accepts the
technology license and Technical Service from Party B, the Joint Venture
Company and Party B, through consultation, adhering to the principles of
equality and mutual benefit and in accordance with the principles specified
in the Joint Venture Contract, sign this agreement as an appendix and
integral part of the Joint Venture Contract. This agreement is effective
after the Joint Venture Contract is signed and the business license is
issued.
Party B, being a possessor of advanced printed circuits and related product
technology, agrees to license to the Joint Venture Company the above-
mentioned technology with associated design, marketing, manufacturing,
quality control and other related know-how;
The Joint Venture Company wishes to acquire the above mentioned technology
by license for manufacturing these products and selling both domestically
and abroad;
1. Definitions
1.1 Contract Products refer to the flexible single-sided, double-
sided, multilayer and rigid-flexible circuits as well as related
parts and assembly products.
1.2 Contract Technology refers to the patent, know-how and technical
knowledge owned by Party B for producing Contract Product
encompassing the design, manufacture, testing, quality control
and other related know-how as described in Chapter 2.1.
1.3 Technical Information refers to all drawings and technical
documents related to Contract Technology as used by Party B in
the manufacture of Contract Products and necessary and
sufficient for the manufacture of Contract Products by the Joint
Venture Company.
1.4 Technical Service is the necessary technical service concerning
technical training, installation of equipment and commissioning
provided by Party B to the Joint Venture Company to utilize the
Contract Technology.
2. Scope of Contract Technology
2.1 Party B hereby grants to the Joint Venture Company the
nonexclusive, paid up, royalty free, limited right and license
under Party B's rights in the Contract Technology, for the term
hereinafter set forth, to manufacture Contract Products in China
using the Contract Technology and Technical Information and to
sell such Contract Products anywhere in the world. The
foregoing license shall become effective with respect to each
category of Contract Products at the time that Technical
Information relating to such category is delivered to the Joint
Venture Company under Chapter 3.2, and shall thereafter extend
with respect to each such category for the term of this
Agreement.
2.2 The Contract Technology licensed by Party B to the Joint Venture
Company should include:
2.2.1 Patent and/or know-how related to design, manufacture,
control of raw and auxiliary materials, process control,
production management, environmental protection, quality
assurance, cost calculation and sales of flexible
single-sided, double-sided, multilayer, rigid-flexible
printed circuits and related assembly products.
2.2.2 Engineering design and drawing specifications.
2.2.3 List of raw and auxiliary materials including name,
type, specifications, manufacturer, alternatives,
quantities needed, storage condition, quality inspection
standards and test methods.
2.2.4 Additionally, any other technology possessed by Party B
related to and needed for production of contract
product.
2.2.5 This agreement is limited to technology which is owned
by Party B and specifically excludes the
PALFlex[Registration ▇▇▇▇] manufacturing technology, but
does not exclude the purchase by the Joint Venture
Company from Party B of pre-punched, metallized
PALFlex[Registration ▇▇▇▇] material.
2.3 Party B shall guarantee that the Contract Technology licensed to
the Joint Venture Company is legally owned by Party B. In case,
any part of the above technology is not owned by Party B, Party
B shall explain to the Joint Venture Company beforehand and
present the certificate showing that Party B has the right to
use.
2.4 If there are any articles or materials produced by a third party
for use in the Contract Technology transferred to Joint Venture
Company by Party B, Party B should provide the Joint Venture
Company with relevant Technical Information to the extent that
Party B is permitted to do so.
2.5 Through the license of Contract Technology and providing
Technical Service, Party B shall provide sufficient technology
and information to enable the Joint Venture Company to produce
the Contract Product to the standards referred to in Chapter
2.5.1 through 2.5.6 and revisions thereof. The Joint Venture
Company's achievement of these standards will depend on the
Joint Venture Company's manufacturing processes and quality of
raw materials and components, which are not Party B's
responsibility.
2.5.1 MIL-P-50884C Military Specification Printed-Wiring,
Flexible and Rigid-Flex
2.5.2 IPC-D-249 Design Standard for Flexible single and
Double-Sided Printed boards
2.5.3 IPC-RF-245 Performance Specification for Rigid-Flex
Printed Boards
2.5.4 IPC-FC-250 Specification for Single-and Double-
Sided Flexible Printed Wiring
2.5.5 Contract Products that have to obtain UL approval, Party
B shall assist The Joint Venture Company with the
formalities for approval.
2.5.6 Party B shall advise the Joint Venture Company about the
procedures to obtain ISO 9002.
2.6 During the term of this agreement any knowledge, information,
technical documents regarding the improvements in the Contract
Technology made by Party B, whether a patent has already been
acquired or not, shall be included as part of the technology
licensed under this agreement. To the extent applicable to the
Contract Products, this does not include improvements which
relate to products which are not Contract Products. No further
fees or royalties shall be required from the Joint Venture
Company. The ownership of the above-mentioned technology and
the right to apply for patents on that technology belong to
Party B. "Improvements" means improvements which relate to
efficiency and quality of manufacture. The foregoing
requirements do not apply to developments and inventions which
result in significant enhancement in the product's functions or
performance. The parties may negotiate a separate license
agreement for additional developments and inventions as they are
developed by Party B.
2.7 During the term of this agreement any knowledge, information,
technical documents regarding the basic improvement and
development in the Contract Technology made by the Joint Venture
Company, whether a patent has already been acquired or not,
shall be disclosed by the Joint Venture Company to Party B, and
Party B shall have the nonexclusive, royalty free, perpetual
right and license to use any such improvements and developments
in its own development, manufacturing and sales activities.
2.8 During the term of this agreement, the Joint Venture Company may
send its technical people to Party B with the consent of Party B
for a reasonable number of visits. All costs of such visits
shall be borne by the Joint Venture Company.
2.9 During the term of this agreement, Party B will assist, within
reason, at the Joint Venture Company's expense, the Joint
Venture Company to develop domestic sources for materials.
2.10 During the term of this agreement, the Joint Venture Company
will properly use the technology supplied by Party B. Party B
shall indemnify the Joint Venture Company against being involved
in legal proceedings for the right to use the technology to the
extent provided in Chapter 14.2.
3. Technical Documentation
3.1 Party B guarantees that the Technical Information provided to
the Joint Venture Company will be complete and reliable, correct
and entirely matching the requirements of manufacture of the
Contract Products.
3.1.1 Complete means that the Technical Information provided
by Party B shall be the complete materials stipulated in
Appendix B of this agreement, which is the same
technical documentation used and possessed by Party B in
producing the same products.
3.1.2 Reliable means that the Contract Products produced by
Party B using the Technical Information provided to the
Joint Venture Company under this Agreement are in
accordance with the specifications and performance index
as stipulated in Appendix A of this agreement.
3.2 Party B shall deliver the Technical Information listed in
Appendix B according to the Joint Venture Company's
requirements. The set of Technical Information for flexible
single-sided and double-sided boards shall be delivered to the
Joint Venture Company at Shanghai airport within two months
starting from the effective date of this Agreement. The date
stamped on the ▇▇▇▇ of lading by the Shanghai airport shall be
considered as the date of delivery. Subsequent Technical
Information shall be delivered in time according to the progress
requirements of the Joint Venture Company's products as
determined by the Board of Directors, and shall be delivered to
the Joint Venture Company at Shanghai airport within six weeks
from the date required by the Joint Venture Company in writing.
3.3 Within two days after dispatch of every set of Technical
Information, Party B shall notify the Joint Venture Company by
fax or express mail of the contract number, date of dispatch,
flight number, airway ▇▇▇▇ number, number of pieces, weight and
packing list of the technical documents.
3.4 After receiving the Technical Information dispatched by Party B,
the Joint Venture Company shall check the documents within two
weeks. In case of any inconsistency with the packing list or
during the process of implementation of the delivered Technical
Information, any shortages, errors, or non-conformance with
requirements stipulated in Appendix B of this agreement, the
Joint Venture Company may ask Party B to supplement the error or
omission . Party B shall send the supplement free of charge
within one month after requested by the Joint Venture Company.
Any delay shall be dealt with according to the provision of
Chapter 3.5.
3.5 Party B guarantees to provide Technical Information by the
scheduled time so as to ensure the construction progress of this
project. If the technical documents have not been delivered to
the Joint Venture Company at the fault of Party B within the
stipulated time in Appendix B of this agreement, at the
discretion of the Board of Directors, Party B shall pay
compensation to the Joint Venture Company at a rate of * of
the license fee for each month of delay starting from the fourth
week of delay. The maximum penalty incurred under such
conditions shall be * of the license fee.
3.6 Party B's payment of compensation in accordance with Chapter 3.5
shall not release Party B from obligation to continue to deliver
the technical documents.
4. Technical Service
4.1 The following Technical Services shall be the responsibility of
Party B
4.1.1 Party B shall be responsible to advise the Joint Venture
Company in designing a reasonable and correct process
layout for the contract factory space.
4.1.2 Party B shall be responsible for the recommendation of
equipment, chemicals and materials. Party B shall
recommend equipment whose performance is expected to be
in accordance with the requirements in Appendix A for
producing the Contract Products and shall be responsible
for advising on the feasibility of the finalized layout
of all the equipment.
* Confidential information has been omitted and filed separately with the
Commission.
4.1.3 Within the first year of the agreement and within
reason, Party B shall send experts to the Joint Venture
Company to provide Technical Service on site according
to the requirements of project progress. After the
first year, the Joint Venture Company will pay the cost,
including food, travel, lodging, and pro-rated annual
salary to Party B for additional Technical Services at
the Joint Venture Company. The details are included in
Appendix D.
4.1.4 The technical documentation shall be shipped freight
prepaid by Party B to the Joint Venture Company;
4.2 Party B shall be responsible for providing technical training.
4.2.1 In order to implement the Contract Technology, Party B
agrees that the Joint Venture Company will dispatch
managerial and technical personnel to Party B, at the
Joint Venture Company's expense. Party B shall assist
the Joint Venture Company in obtaining food and lodging
for the Joint Venture Company's personnel during their
visit to Party B's facility. Party B shall be
reimbursed by the Joint Venture Company for these
expenses.
4.2.2 Within the first year of the agreement and within
reason, Party shall send experts to the Joint Venture
Company at Party B's expense to provide technical
training on site according to the requirements of
project progress. After the first year, the Joint
Venture Company will pay the cost, including food,
travel, lodging, and pro-rated annual salary to Party B
for additional technical training at the Joint Venture
Company.
4.2.3 The scope and requirements for training of Joint Venture
Company's personnel by Party B are stipulated in
Appendix C.
4.3 Party B shall provide technical instruction for installation and
commissioning of the equipment provided by Party B.
4.3.1 During the installation and commissioning of Joint
Venture Company's factory, Party B shall dispatch
experts to the Joint Venture Company at Party B's
expense to provide technical instruction and service.
4.3.2 Party B shall be responsible for the installation and
commissioning and make available designated special
tools and materials necessary for installation and
commissioning while this process is taking place.
4.3.3 Party B shall be responsible for installation and
commissioning in accordance with Appendix 1 of the Joint
Venture Contract.
5. Technology Value
5.1 In consideration of Party B's technology license and Technical
Service according to this agreement, in accordance with
Section 7.3 of the Joint Venture Contract the three investing
Parties of the Joint Venture Company agree the value of
technology is:
*
5.1.1 Both Parties agree that the value for the above
mentioned items B and C include all expenses incurred in
the implementation during the first year;
5.1.2 The cost for the technology license shall be borne only
once. The technology and information provided to the
Joint Venture Company by Party B as required by this
Agreement will subsequently be free of charge. The
technology, and information provided to Party B by the
Joint Venture Company as required by this Agreement will
subsequently be free of charge;
5.1.3 The value of the Technology License will be used by
Party B as investment in the Joint Venture Company;
5.1.4 The value of the Technical Training will be used by
Party B as investment in the Joint Venture Company;
5.1.5 The value of the Technical Support will be used by Party
B as investment in the Joint Venture Company.
6. Acceptance
6.1 The newly purchased equipment, after being installed, should be
first tested to determine that the new equipment together with
the existing equipment of Shanghai 20th Radio Factory meets the
stipulated requirements.
6.2 If the trial production is made in the Joint Venture Company's
factory and the Contract Products meet the standards specified
in Appendix A, the representatives from the three Parties shall
sign a certificate of acceptance of the Joint Venture Company's
factory. A copy of the certificate of acceptance shall be
submitted to each party.
6.3 Party B shall lead the other parties in identifying and
determining resolution. All of the parties shall provide the
required support to achieve acceptance of the Joint Venture
Company's production process.
* Confidential information has been omitted and filed separately with the
Commission.
7. Patents and Trademarks
7.1 During the term of this agreement, the Joint Venture Company has
the right and license to use Party B's patents and trademarks on
its Contract Products so long as Party B remains a part of the
Joint Venture Company.
7.2 Party B has the right to examine and supervise the quality of
the Joint Venture Company's products which use Party B's
trademarks and the manner in which such trademarks are displayed
and used on products and in packaging and marketing materials.
If reasonably requested by Party B, the Joint Venture Company
shall stop using Party B's trademarks for products which Party B
finds unsatisfactory or in a manner to which Party B objects.
8. Environmental Protection
The drainage of waste sludge, waste water and waste gas, and the
influence to the environment, while producing contract product in
accordance with the technology incorporated by the Joint Venture
Company shall meet the requirement of the laws and decrees of the
People's Republic of China on environmental protection. Compliance
with environmental laws and decrees shall be the responsibility of the
Joint Venture Company and Party A as provided in Chapter 24 of the
Joint Venture Contract.
9. Taxes and Duties
9.1 All taxes and/or duties arising outside of China in connection
with the transfer of technology shall be borne by Party B.
9.2 The Joint Venture Company shall pay taxes to the Chinese
government in accordance with the relevant laws of taxation of
the People's Republic of China. Party A shall help the Joint
Venture Company apply to the taxation authority of China for tax
reduction or exemption according to the appropriate regulations.
10. Non-Disclosure
Attached as Appendix E to this Agreement is the Non-Disclosure
Agreement agreed to by the Joint Venture Company and Party B.
11. Applicable Law
11.1 The formation, validity, interpretation, execution of this
Agreement and the settlement of disputes under it shall be
governed by the Laws of the People's Republic of China.
11.2 Party B shall not be required by this agreement to violate any
laws of the United States of America.
12. Force Majeure
When any Force Majeure, such as earthquake, typhoon, flood, fire, war
or other unforeseen events of which the happening and consequences
cannot be prevented or avoided, causes direct effect on the
fulfillment of this Agreement or the inability to fulfill the
conditions of this Agreement, the party encountering the Force Majeure
shall notify the other two parties by fax without any delay. Within
fifteen days thereafter the party encountering the Force Majeure shall
provide the detailed information of the events and a valid document
for evidence, issued by legal authorities of the place where the Force
Majeure occurred, giving reasons for the failure to fulfill, for
partial failure to fulfill, or for deferring the fulfillment of the
contract. All parties shall, through consultations, decide whether to
terminate this Agreement or to exempt part of obligations for
implementation of this Agreement or whether to defer the execution of
this Agreement according to the extent of the effects of events on the
performance of this Agreement.
13. Proprietary Rights
All proprietary rights in and to the Contract Technology and Technical
Information including, without limitation, all rights with respect to
patents, copyrights and trademarks and rights under the trade secret
laws or the Anti-Unfair Competition Laws of any jurisdiction, shall be
and remain the sole property of Party B. Neither the Joint Venture
Company, any affiliate of the Joint Venture Company nor any customer
of the Joint Venture Company or any affiliate of the Joint Venture
Company shall have any right, title or interest therein except as
expressly provided herein. The Joint Venture Company's rights
hereunder are nonexclusive, and Party B shall not be limited or
restricted in its use, sublicensing or transfer (subject to the Joint
Venture Company's rights hereunder) of any such proprietary rights, or
its manufacture, marketing and sale of products based upon or
embodying such proprietary rights, except as expressly provided
herein. The Joint Venture Company agrees to place on all units of the
Contract Products appropriate notice of any patent registration or
application of which it is given notice by Party B, all in accordance
with Party B's reasonable instructions as to the content of such
notices, and shall promptly notify Party B of any infringement of
Party B's proprietary rights of which it has knowledge.
14. Liabilities
14.1 Indemnification by the Joint Venture Company. The Joint
Venture Company hereby agrees to indemnify and defend Party B,
and hold it harmless, against any claims that may be made
against Party B by any person which result from the
manufacturing or sale of the Contract Products by Joint Venture
Company.
14.2 Indemnification by Party B. Party B agrees to defend, at its
expense, and to pay all costs and damages awarded against the
Joint Venture Company based on, any and all claims by third
parties arising from actual or alleged infringement by any of
the Contract Technology or Technical Information of any
enforceable copyrights, patents, trade secrets or other
proprietary rights, provided that Party B's obligation under
this Chapter 14.2 shall not apply to the extent that such
actual or alleged infringement arises out of (i) modifications
to the Contract Technology or Technical Information made by the
Joint Venture Company, (ii) the combination of the Contract
Technology or Technical Information together with other
information, technology or processes not supplied by Party B,
or (iii) the use of the Contract Technology or Technical
Information in a manner other than as instructed by Party B,
and provided that Joint Venture Company complies in full with
all of the provisions of this Chapter 14.2. In the event that
Joint Venture Company receives a claim or notice of a claim
that is subject to Party B's obligations under this Chapter
14.2, Joint Venture Company shall (i) give Party B prompt
written notice of such claim or notice of claim, (ii) cooperate
with Party B at Party B's expense in every reasonable manner in
the defense of such claim, and (iii) permit Party B to assume
and control the defense thereof at Party B's cost and expense,
provided that Joint Venture Company shall have the right, at
its option and at its expense, to participate in the defense of
such claim through counsel of its own choosing. If
infringement is held to exist, or if either party determines
that a finding of infringement is likely, the parties agree to
discuss in good faith alternative arrangements under which the
liability of the parties could be reduced, including possible
revisions to the infringing material so as to make it non-
infringing, or arranging to procure for Joint Venture Company
the right to continue using the infringing material to the
extent permitted by this Agreement.
14.3 Limitation. In no event shall either party be liable for any
indirect, special, incidental or consequential damages arising
out of or in any way connected with this Agreement, the license
granted hereby, the services performed hereunder, or any other
matter related hereto. In any event, each party's total
liability for damages, in contract, tort or otherwise, arising
out of or in any way connected with this Agreement shall be
limited to a maximum amount equal to the amount attributed to
the value of the Technology License set forth in Section 5.
15. Legal Compliance
The parties acknowledge and agree that the necessity of compliance
with all legal requirements, rules and regulations relating to the
manufacturing, packaging, labeling, distributing, marketing and/or
sale of the Contract Products by the Joint Venture Company, including
compliance with all U.S. export control and other requirements
relating to re-export of the Contract Technology or Technical
Information or Contract Products manufactured thereby, shall be the
sole responsibility and obligation of Joint Venture Company at its
entire cost. Joint Venture Company will indemnify and hold Party B
harmless against any and all claims, damages, penalties and other
actions and costs, including, without limitation, reasonable fees of
legal counsel, arising out of or related to a failure to wholly or
partially comply with the legal requirements and regulations relating
to the manufacturing, design, quality, safety, packaging, labeling,
advertising, distributing, marketing and/or sale of the Contract
Products by Joint Venture Company.
16. Assignment and Sublicensing
Except as hereinafter set forth, neither party may assign this
Agreement in whole or in part without the prior written consent of the
other party. Any assignment attempted otherwise than in compliance
with this Chapter 16 shall be void. Joint Venture Company shall not
have any right to sublicense any of the rights granted hereunder,
except to the extent sublicensing of distribution rights may be
required in connection with Joint Venture Company's distribution of
Contract Products through distributors, retailers, representatives and
other intermediaries.
17. Effectiveness of the Agreement
17.1 This agreement is signed by the representatives of three
Parties and shall become effective on the date of approval by
the relevant authorities as provided in Chapter 28.1 of the
Joint Venture Contract and will continue to be effective during
the term of the Joint Venture Contract.
17.2 The effective period of this agreement is the same as the
effective duration of the contract as indicated in Chapter 17
of the Joint Venture Contract.
17.3 The following appendices are an integral part of this
agreement:
Appendix A General Specifications, Processes and Capacity
of the Joint Venture Company
Appendix B Content and Delivery of Technical Documentation
Appendix C Training and Treatment of the Joint Venture
Company's Personnel
Appendix D Technical Service on Site
Appendix E Non-Disclosure Agreement
Parlex Corporation
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Name
President
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Title
Parlex (Shanghai) Circuit Co., Ltd. Parlex (Shanghai) Circuit Co., Ltd.
/s/ SUI ▇▇▇▇ ▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇▇▇▇
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Authorized Signature Authorized Signature
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Name Name
Director Director
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Title Title
Appendix A
General Specifications, Processes and Capacity of the Joint Venture Company
1 Production capacity
An annual production capacity of * after the 3 years shall
be the goal of the Joint Venture Company
Types of products: flexible printed circuits and related assembly
products
2 Working hours
The number of working hours and days shall be determine by the
General Manager in accordance with the operational and business
objectives of the Joint Venture Company.
3 Line width and spacing
Line width and spacing for normal production will be as follows:
Line width minimum: 0.2 mm (0.008 inches)
Space minimum: 0.15 mm (0.006 inches)
Feature tolerance shall be [+ or -] 20% of the master pattern, or that
specified by customer requirements.
4 Board thickness and number of layers
Board thickness and layer count shall be dependent on customer
design requirements and the specific technology selected for the
product. Training shall include the ability to produce products
in excess of fourteen layers and varying thickness.
* Confidential information has been omitted and filed separately with the
Commission
Appendix B
Content and Delivery of Technical Documentation
1.0 The following documents for manufacture of Contract Products shall be
delivered to the Joint Venture Company:
1.1 A complete set of Party B's standards and specifications for
designing, processing and controlling the quality of Contract
Product shall be delivered to the Joint Venture Company and
Party B shall notify the Joint Venture Company of any
significant procedural changes relevant to their process;
1.2 Descriptions, process formulations and operation methods of each
manufacturing process of Contract Product as well as
troubleshooting techniques;
1.3 Manuals for quality control, inspection and testing for commonly
used raw materials and standard products;
1.4 Standards and specifications of the base material for
manufacturing flexible printed circuits;
1.6 Specifications of chemical, physical and mechanical tests of
relevant, selected materials and their storage conditions;
1.7 Waste treatment specifications and analytical tests currently
performed by Party B.
2.0 The following process documents of existing products shall be
delivered to the Joint Venture Company:
2.1 Documents, including patents, for the Party B's impedance
matched shielding process;
2.2 Documents for manufacturing flexible printed circuits utilizing
PALFlex[Registration ▇▇▇▇] as a base material as indicated in
Chapter 2.2.5 of this Agreement.
2.3 Documents for the design and manufacture of Party B's
PALCore[Registration ▇▇▇▇] technology when multilayer capability
is achieved at the Joint Venture Company.
3.0 The following information for production technology management shall
be disclosed to the Joint Venture Company:
3.1 Raw material pricing;
3.2 Equipment performance expectations;
3.3 Performance expectations of tools, dies and fixtures;
3.4 Party B's safety processes and standards;
3.5 Process flow diagrams indicating the steps from order entry to
delivery.
4.0 Document delivery, language and quantity
4.1 Delivery time
Documents shall be delivered in accordance with Chapter 3 of
this Agreement.
4.2 Language
The language of all the technical documents in this Appendix
should be English.
4.3 Quantity
One (1) complete set of documentation shall be delivered to the
Joint Venture Company. Additional selected documents utilized
by the trainees may be brought back to the Joint Venture
Company.
Appendix C
Training and Treatment of the Joint Venture Company's Personnel
1.0 The training program in Party B's factory in the United States shall
include:
1.1 Party B agrees to receive 6 to 8 people sent by the Joint
Venture Company to be trained in Party B's factory for six
weeks.
1.2 The Joint Venture Company shall ensure all trainees are familiar
with the printed circuit board manufacturing process and that
they have communicative skills in English. Party B shall
designate qualified technical people to give instructions and
training to the Joint Venture Company's technical people.
1.3 Party B shall provide training designed to properly instruct
trainees in theory and in practice about the process, operation,
quality control and repair of flexible printed circuits in order
to introduce the technology to the Joint Venture Company. If
the trainees feel that the training has been incomplete, they
will submit to Party B a list of outstanding items before the
end of the training.
1.4 Party B shall provide access to all necessary equipment and
documentation in order to achieve the training objectives and
the trainees will be provided suitable administrative space
during the training period.
1.5 Party B shall submit an outline of the training program to Joint
Venture Company two months before the training starts. One
month before the start of training, Joint Venture Company shall
inform Party B of the name, birth date, education and specialty
of its staff to be trained. The final training program shall be
fixed by both parties through consultations according to the
stipulations of the contract and the actual needs of the
trainees after their arrival in Party B's factory.
1.6 Before the training starts, Party B shall explain in detail to
the trainees the operation regulations and other precautions.
1.7 Party B shall arrange for the trainees' accommodation,
transportation and meals, with the cost to be borne by the Joint
Venture Company. In case of illness, Party B shall take all
necessary measures to care for the trainees in the best way, and
the cost shall be borne by Joint Venture Company. Party B shall
take every measure to insure the safety and well-being of the
trainees; however, the Joint Venture Company shall hold Party B
harmless for any accident or incident that might occur.
1.8 Party B shall assist the trainees in dealing with all
formalities of obtaining of visas for entrance and exit, as well
as their stay in the United States.
1.9 Party B shall take necessary measures to ensure that the
trainees have good living and working conditions during their
stay at Party B. Subject to compliance with security and site
regulations, Party B shall ensure the trainees of The Joint
Venture Company will have reasonable access to the work site at
working time where they will undertake their training.
1.10 The trainees of Joint Venture Company shall observe the laws and
regulations of the United States of America and the rules and
regulations of Party B.
1.11 Should the training course at Party B be delayed through no
fault of the Joint Venture Company, the Joint Venture Company
and Party B will consult to find ways to remedy the delay
through friendly discussion in order to ensure the completion of
the training course at minimum cost.
2.0 Contents of training
2.1 Design of flexible circuit
2.1.1 Design rules and layout of various power conditions
2.1.2 Optimization of electromagnetic interference
2.1.3 Panelization techniques
2.1.4 Consideration of productivity
2.1.5 Definition and design of conductive line
2.1.6 Establishment of documentation for own use
2.2 Material
2.2.1 Compatibility
2.2.2 Produceability
2.2.3 Reliability
2.2.4 Flexibility
2.2.5 Testing
2.2.6 Consideration for assembly
2.3 Product/process design
2.3.1 IPC Specification
2.3.2 Standard construction
2.3.3 Density problem
2.3.4 Alternative construction
2.4 Processing technology
2.4.1 Material preparation
2.4.2 Imaging
2.4.3 Etch
2.4.4 Lamination
2.4.5 Drilling/routing
2.4.6 Plating
2.4.7 Exposure/developing
2.4.8 Inspection and testing
2.5 Intellectual property
2.5.1 What is being protected
2.5.2 Patent process
2.5.3 Invention management
2.5.4 Examination of current patents
2.6 Trainees, process position and time will be decided through
consultation.
3.0 Training in China
The people that have been trained in the USA, after they return back
to China, will train the other employees with the help of the
technical people from Party B. Party B shall provide technical
support in accordance with Chapter 4.2.
4.0 Continuous training
As the production capability increases, there should be a technical
interchange in the United States or other mutually agreeable location
between the Joint Venture Company and Party B once per year or as
mutually agreed necessary. The detailed requirements will be decided
through consultation, but as a minimum, aspects of design and
manufacturing technology for the next phase should be included.
Appendix D
Technical Service on Site
1.0 At the commencement of operations of the Joint Venture Company, Party
B shall send skilled and competent technical support personnel to the
Joint Venture Company site to provide Technical Services.
2.0 Technical Service by the technical personnel from Party B.
2.1 When the Joint Venture Company commences production, Party B
shall appoint one individual as a general technical
representative who shall visit the Joint Venture Company.
2.2 The technical personnel from Party B shall support equipment
installation, testing and commissioning of the production
equipment. They will provide maintenance and technical advice
to the Joint Venture Company's staff in accordance with the
Joint Venture Contract.
2.3 Party B's technical personnel will address problems raised by
the Joint Venture Company within the scope of the contract.
2.4 The technical personnel from Party B shall give Joint Venture
Company's personnel adequate technical instructions and
necessary demonstrations.
3.0 Coordination of the parties
3.1 The working progress and schedule will be decided through
consultation by both sides according to the technical training
by Party B in China.
3.2 The technical people from Party B shall observe the laws and
regulations of the People's Republic of China and the rules and
stipulations of the project site during their stay in China.
3.3 Each of the Joint Venture Company and Party B shall indemnify
the other against property damage or personal injury occurring
to the employees or agents of the other caused by the negligence
or misconduct of the indemnifying party or its employees while
personnel of one party are visiting facilities of the other.
3.4 The Joint Venture Company shall be responsible for making the
arrangements for accommodation, transportation and meals for the
visiting personnel from Party B. The party responsible for
these costs is defined in Chapter 4.2.2 of this agreement. In
case of illness, the Joint Venture Company shall take the
necessary measures to care for Party B's personnel in the best
way, and the cost shall be borne by Party B.
3.5 The Joint Venture Company shall assist Party B in dealing with
the formalities of Customs clearance for the entrance and exit
of personal belongings, technical documents, tools and
instruments in accordance with the regulations of the Customs of
the People's Republic of China.
Appendix E
Non-Disclosure Agreement
This agreement is effective May 29, 1995 between Parlex Corporation
and Parlex (Shanghai) Circuit Co., Ltd.
The following agreement is in consideration of the Joint Venture
Contract between the Shanghai 20th Radio Factory (Party A), Parlex
Corporation (Party B) and Mascon, Inc. Co. (Party C) to jointly invest
to set up Parlex (Shanghai) Circuit Co. Ltd.
Whereas Parlex Corporation and Parlex (Shanghai) Circuit Co., Ltd.
will have access to the proprietary facilities, and proprietary and
confidential information of each other party and will engage in the
exchange of proprietary and confidential information for the purposes
of their activities under the Joint Venture Contract and the Agreement
of Technology License and Technical Service, the parties agree as
follows.
All information legended or otherwise identified in writing as
"Confidential" and all Contract Technology and Technical Information,
whether or not legended or identified as "Confidential", shall be
deemed Confidential Information under this agreement.
Each party agrees to use the Confidential Information disclosed
hereunder only for purposes of the Joint Venture Contract, and not to
otherwise use or disclose to others any such information.
The Confidential Information disclosed hereunder shall be held in
confidence for a period of ten (10) years from the date of disclosure
unless and to the extent that:
1 Such information can be demonstrated to be already known to
the receiving party prior to disclosure by the submitting
party;
2 Such information at the time of disclosure is available to
the public or which after such disclosure becomes available
to the public through no fault of the receiving party;
3 Such information was acquired by the receiving party without
restriction on disclosure or use from a third party who was
not in violation of an obligation of confidentiality in
disclosing it to the receiving party;
4 Such information is independently developed by the receiving
party without use of the Confidential Information;
5 Such information is approved for use or disclosure by
written authorization by the submitting party.
Parlex Corporation
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Authorized Signature
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Name
President
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Title
Parlex (Shanghai) Circuit Co., Ltd. Parlex (Shanghai) Circuit Co., Ltd.
/s/ SUI ▇▇▇▇ ▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇▇▇▇
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Authorized Signature Authorized Signature
Sui ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
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Name Name
Director Director
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Title Title
Appendix 7
Non-Disclosure Agreement
Non-Disclosure Agreement
This agreement is effective May 29, 1995 among Parlex Corporation,
Shanghai 20th Radio Factory and Mascon, Inc.
Parlex, Shanghai 20th Radio Factory, and Mascon have entered into a Joint
Venture Contract contemporaneously with this agreement under which each
party will have access to the proprietary facilities, and proprietary and
confidential information of each of the other parties and under which the
parties will engage in the exchange of proprietary and confidential
information for the purposes of their activities under the Joint Venture
Contract.
All information legended or otherwise identified in writing as
"Confidential" and all Contract Technology and Technical Information,
whether or not legended or identified as "Confidential", shall be deemed
Confidential Information under this agreement.
Each Party agrees to use the Confidential Information disclosed hereunder
only for purposes of the Joint Venture Contract, and not to otherwise use
or disclose to others any such information.
The Confidential Information disclosed hereunder shall be held in
confidence for a period of ten (10) years from the date of disclosure
unless and to the extent that:
1 Such information can be demonstrated to be already known to the
receiving party prior to disclosure by the submitting party;
2 Such information at the time of disclosure is available to the
public or which after such disclosure becomes available to the
public through no fault of the receiving party;
3 Such information was acquired by the receiving party without
restriction on disclosure or use from a third party who was not
in violation of an obligation of confidentiality in disclosing
it to the receiving party;
4 Such information is independently developed by the receiving
party without use of the Confidential Information;
5 Such information is approved for use or disclosure by written
authorization by the submitting party.
Parlex Corporation Shanghai 20th Radio Factory
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Name Name
President President
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Title Title
May 29, 1995 May 29, 1995
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Date Date
Mascon, Inc.
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Executive V.P.
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Title
May 29, 1995
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Date
