SEC Filing | Diodes Incorporated

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e8vk

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

September 10, 2010
Date of Report (Date of earliest event reported)

DIODES INCORPORATED

(Exact name of registrant as specified in its charter)


Delaware	002-25577	95-2039518
(State or other	(Commission File Number)	(I.R.S. Employer
jurisdiction of		Identification No.)
incorporation)


15660 Dallas Parkway, Suite 850
Dallas, Texas		75248
(Address of principal executive offices)		(Zip Code)

(972) 385-2810
(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o		Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o		Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o		Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o		Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01. Entry into a Material Definitive Agreement.

Effective as of September 10, 2010, a wholly-owned subsidiary of Diodes Incorporated (the “Company”) entered into an Investment Cooperation Agreement and a Supplementary Agreement to the Investment Cooperation Agreement (collectively, the “Agreements”) with the Management Committee of the Chengdu Hi-Tech Industrial Development Zone (the “CDHT”). Under the Agreements, the Company has agreed to form a joint venture (the “JV”) with a Chinese semiconductor manufacturer (the “Partner”) to establish a semiconductor manufacturing facility (the “Facility”) for the purpose of providing surface mounted component production, assembly and testing, and integrated circuit assembly and testing in Chengdu, People’s Republic of China (the “Project”). The Company initially will own at least 95% of the JV. The Company is in the process of negotiating the definitive JV agreement, and the Agreements are subject to various conditions, including governmental approval of the environmental impact assessment and various other aspects of the Project.

The JV will develop the Facility in phases over a ten year period. The Company is expected to contribute at least US$47.5 million to the JV in installments during the first three years. The CDHT will grant the JV a fifty year land lease, provide temporary facilities for up to three years at a subsidized rent while the JV builds the Facility and provide corporate and employee tax incentives, tax refunds, subsidies and other financial support to the JV and its qualified employees. If the JV fails to achieve specified levels of investment, the Agreements allow for a renegotiation for an alternative solution as well as the option to refund a portion of such financial support.

The foregoing summary is qualified in its entirety by reference to the copy of the Agreements, which are being filed as Exhibits 99.1 and 99.2 to this Current Report on Form 8-K.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits


Exhibit
Number		Description
99.1*		Investment Cooperation Agreement effective as of September 10, 2010, between the Company and the Management Committee of the Chengdu Hi–Tech Industrial Development Zone.

99.2*		Supplementary Agreement to the Investment Cooperation Agreement effective as of September 10, 2010, between the Company and the Management Committee of the Chengdu Hi–Tech Industrial Development Zone.


*		Confidential treatment has been requested with respect to the omitted portions of both Exhibits, which portions have been filed separately with the Securities and Exchange Commission.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


Dated: September 16, 2010	DIODES INCORPORATED
	By	/s/ Richard D. White
		RICHARD D. WHITE,
		Chief Financial Officer

EXHIBIT INDEX


Exhibit
Number		Description

99.1*		Investment Cooperation Agreement effective as of September 10, 2010, between the Company and the Management Committee of the Chengdu Hi–Tech Industrial Development Zone.

99.2*		Supplementary Agreement to the Investment Cooperation Agreement effective as of September 10, 2010, between the Company and the Management Committee of the Chengdu Hi–Tech Industrial Development Zone.


*		Confidential treatment has been requested with respect to the omitted portions of both Exhibits, which portions have been filed separately with the Securities and Exchange Commission.

exv99w1

Exhibit 99.1

Investment Cooperation Agreement*

Parties to the Investment Cooperation Agreement:

Party A: Management Committee of the Chengdu Hi–Tech Industrial Development Zone (“Party A”)

Address: No.18, North Tianfu Avenue, Chengdu, People’s Republic of China

: 610041

Postcode: 610041

Party B: DIODES HONG KONG HOLDING COMPANY LIMITED (“Diodes” or “Party B”)


*		Confidential treatment has been requested with respect to all the redacted portions of the Investment Cooperation Agreement, which has been filed separately with the Securities and Exchange Commission.

Address: Unit 511 5/F Tower 1, Silvercord 30 Canton Road, Tsimshatsui, Kowloon, Hong Kong.

In accordance with the existing People’s Republic of China (“China”) laws, orders, policies and regulations, with regard to Party B’s proposed investment in a surface mounting component production and assembly and testing (“A&T”) and integrated circuit A&T project (hereinafter referred to as the “Investment Project” or “Project”) in Chengdu Hi-Tech Industrial Development Zone (hereinafter referred to as “CDHT”), both parties, based on the principle of mutual benefits, have reached an agreement and stated such an agreement in this Investment Cooperation Agreement (hereinafter referred to as the “Agreement”) after full consultation between both parties. Both parties shall abide by this Agreement.

1. Project Description

Diodes

1.1. Project Name: Diodes Surface Mounting Component Production and A&T and Integrated Circuit A&T Project.

1.2. Project Details: Party B will set up joint venture companies (hereinafter referred to as the “Project Company”) with Chengdu Ya Guang Electronic Company Limited (hereinafter referred to as “Yaguang”) inside and/or outside the Sichuan Chengdu Export Processing Zone (hereinafter referred to as “EPZ”) located in the west park of CDHT to invest and operate the surface mounting component production and A&T and integrated circuit A&T Project. The investment and the ownership proportion of Diodes and Yaguang in the Project Company shall be initially set at 95% and 5%, respectively. The investment proportion and ownership of the Project Company may, however, increase or decrease at any time between Diodes and Yaguang at both parties’ discretion even to a point in which the Project Company is 100% fully owned by Diodes and/or converted into a Wholly Foreign Owned Enterprise operated solely by Diodes without Yaguang’s investment.

1.3 The Total Project Investment and Registered Capital of the Project Company: At the end of the [REDACTED] year from the date of the establishment of the Project Company, the total investment shall be no less than [REDACTED], fixed assets investment shall be no less than [REDACTED], and the registered capital shall be no less than [REDACTED]. At the end of the [REDACTED] year from the date of the establishment of the Project Company, the total investment shall be no less than [REDACTED], fixed assets investment shall be no less than [REDACTED], and the registered capital shall be no less than [REDACTED]. Party A is obligated to assist Party B to set up an investment-oriented company, including, but not limited to, assistance in Party B’s application of government approvals and other related

administrative permits, which such investment-oriented company will be responsible for fulfilling the total investment and registered capital of the Project Company. If Party B is not qualified to set up an investment-oriented company by law, the total Project investment and the registered capital of the Project Company shall be directly invested by Party B.

1.4 Construction Area of Project: The area shall reach about [REDACTED] in the [REDACTED] years. From the [REDACTED] to [REDACTED] year, the area shall increase by about [REDACTED] each year. Among which,

	1)		Investment intensity shall be no less than [REDACTED].

	2)		Building density shall be no less than [REDACTED].

	3)		Plot ratio (gross area building density) shall be no less than [REDACTED] (If there is a demand for special processes/techniques, there will be an

appropriate reduction of the plot ratio upon the approval of the relevant government agencies.).

1.5 Construction Starting Time and Construction Period: The Project construction shall start in year 2010. The Project design by Party B shall be a one-time Project design, and Project applications filed and reported at multiple times by Party B or the Project Company. The Project will be constructed in phases in accordance with the Project design, with the construction period of each phase not exceed twelve (12) months.

1.6 Project Economic Indicators Forecast: In the [REDACTED] year after the establishment of the Project Company, the Project’s estimated annual production will be [REDACTED], with an annual output value of [REDACTED] and an annual tax payment of [REDACTED], respectively. In the [REDACTED] year after the establishment of the Project Company, the Project’s estimated annual production will be [REDACTED], with an annual output value of [REDACTED] and an annual tax payment of [REDACTED], respectively. Both Parties acknowledge and agree that the Project Economic Indicator Forecast as stated in this Agreement is not a definitive forecast and may be adjusted from time to time to meet any present or future local, state or world societal or economic developments, government and/or business requirements.

2. Party A Promises

2.1. Under the preconditions that the Project meets the requirements of construction land plot ratio ([REDACTED]) and investment intensity ([REDACTED] applied to electronic equipment manufacturing) of Chengdu’s industrial projects, Party A promises to provide land (hereafter referred to as “the Land”) to the Project Company in phases according to Project construction progress to support Party B’s investment. The Land will be located in EPZ of the west park of CDHT, with an area of [REDACTED] (about [REDACTED], the final size of the area shall be determined by the Project Company’s total area requirement approved by CDHT Planning and Construction Bureau) for construction under this Project (please refer to the location block diagram attached to this Agreement). An additional Land with an area of approximately [REDACTED] (of which, approximately [REDACTED] shall be land located within the EPZ, and approximately [REDACTED] shall be land located outside

the EPZ) will be reserved for future construction and further development of the Project. The term of the Land use right is fifty (50) years. The Land will be provided by listing, and the reserve price for the Land will be calculated according to the net land area and the price of [REDACTED] (land transfer payment included), or the minimum land transfer price issued by the government at the time of the listing. The deed tax shall be paid by Project Company according to the law. After the Land use right expires, both parties shall negotiate and sign an agreement, containing reasonable and justified terms and conditions, to extend and continue the right to use the Land in accordance with the then existing laws and regulations and in accordance with the then fair market value.

2.2. Party A promises Party B that if Party B or the Project Company wins the listing for the Land, Party B or the Project Company shall sign the Land Use Right Transfer Contract of State-owned Construction Land with the Chengdu Land and Resources Bureau. With regard to the final land price, the agreed price shall prevail.

2.3. Party A shall ensure the Land provided to Party B or the Project Company has access to three (3) rights (i.e. water, power, and road) beyond the redline and a plain & normal feature of the land inside the redline (in other words, in the land there is no building or structure yet to be compensated, no young crops or other ground fixtures, and no obstruction in the air to affect construction). Party A promises Party B that Party A shall provide related municipal utilities and infrastructure of Seven Connections and One Leveling and ensure it meets the requirements of the Project Company (i.e. tap water, rainwater discharge, sewage, natural gas supply, telecommunication network, and electric power supply being connected to the same side of the adjacent municipal road of the land and proper land leveling).

2.4. Party A promises Party B that Party A will provide Party B and the Project Company with all-dimensional services for the Project construction and operation, and provide assistance regarding related procedural matters.

2.5. Party A agrees that the above-mentioned Land acquired by Party B or the Project Company can be transferred to a third party selected by Party B or the Project Company in its sole discretion. However, the usage of the land shall not be changed. Relevant taxes and fees resulted from the transfer shall be handled according to the laws.

2.6. Party B or the Project Company can, of its own accord, lease part of the factory buildings owned by Party B or the Project Company to Party B’s or the Project Company’s coordinated third party.

2.7. Party B or the Project Company shall enjoy incentives not less favorable than preferential treatments or subsidies granted to the [REDACTED] or [REDACTED]’s affiliated enterprises.

2.8. All preferential treatments or subsidies stated in this Agreement or its supplementary agreements are independent and separately calculated preferential treatments or subsidies.

3. Party B Promises:

3.1. After signing of this Agreement, Party B shall finish approval procedures, business registration, and tax registration of the Project Company in CDHT by October 31, 2010. The initial registered capital of the Project Company shall be no less than USD 50 million (such amount shall be invested into the Project Company in phases within two (2) years according to existing laws and regulations but, if necessary as solely determined by Party B, can extend one (1) more year before the full investment is made completely in accordance with existing laws and regulations), and the investment scale shall reach the amount and based on the schedule stated in Article

1.3 of this Agreement. The actual duration of operation of the Project Company in CDHT shall be no less than ten (10) years.

3.2. The Project Company shall sign the Chengdu Hi-Tech Zone Project Construction & Operation Agreement (hereinafter referred to as “Construction Promotion Agreement”) with CDHT Planning and Construction Bureau (on behalf of the Management Committee of CDHT) within thirty (30) calendar days after the Project Company has completed the approval procedures, business registration and tax registration. The Construction Promotion Agreement serves as a supplementary attachment to this Agreement.

3.3. Party B shall ensure the Project meets environmental and safety requirements in accordance with applicable laws and regulations.

4. Should any party to this Agreement default due to non-external factors, the other party is entitled to the right to invoke the defaulting party’s responsibilities for breach accordingly to the law only after giving the defaulting party ninety (90) calendar days to cure the default and the default party fails to cure such default. If Party B breaches the commitments stated in this Agreement, to the extent that the purpose of this Agreement cannot be realized, Party A shall give ninety (90) calendar days to Party B to cure the breach of such commitment stated in this Agreement, including both parties coming to an agreement of an alternative solution; thereafter, if Party B fails to cure the breach, Party A, upon prior written notification to Party B, shall then be entitled to stop continue to provide incentives and subsidies, and Party B and/or the Project Company should refund a portion of the enjoyed fixed asset investment subsidies to Party A equal to an amount of the total enjoyed fixed asset investment subsidies minus the [REDACTED] subsidy for the actual fixed asset investment. In no event, however, shall Party B and/or the Project Company refund Party A such enjoyed subsidies or incentives more than the amount Party B and/or the Project Company received from Party A.

5. Except as otherwise required by court orders, laws and regulations in China, the United States of America, or other countries, both parties agreed that without the approval by the confidential information provider, any confidential information

contained in communications between both parties shall not be disclosed to any non-affiliated third party (either individuals or organizations).

6. Both parties agree to interpret this Agreement according to the laws of China. Any dispute arising from this Agreement or matters related to this Agreement shall be resolved according to laws of China. Any dispute arising from the implementation of this Agreement shall be resolved through consultation. If consultation fails, the dispute should be resolved through the arbitration of the China Council for the Promotion of International Trade in Beijing, China (the “Arbitration Commission”) using its arbitration rules. The Arbitration Commission should compose of no more than three (3) arbitrators and include at least one arbiter of foreign nationality, with both Chinese and English languages being permitted at the arbitration hearings.

7. This Agreement takes effect after this Agreement is signed by both parties’ respective legal representatives or authorized agents and affixed with both parties’ official seals.

8. Any matter not mentioned under this Agreement can be otherwise consulted between the two parties and enter a separate supplementary agreement as an attachment to this Agreement. The supplementary agreement will form an integral part of this Agreement and has the same and equal legal validity and effect.

9. This Agreement is drafted and executed in both Chinese and English. Both versions are equally valid and enforceable. Should any discrepancy arises from both translations, the Chinese version shall prevail.

10. This Agreement is signed in Chengdu, China. There are 6 originals, and each party holds 3 originals.

11. Change of Law

After the signing of this Agreement, if new laws, regulations or rules are promulgated or any laws, regulations or rules are modified or cancelled, or such laws, regulations or rules are interpreted or implemented differently from when the Agreement is entered into, by the PRC government (including the central, provincial, municipal or local government and/or its departments), which render Party B or the Project Company hereto to sustain material losses in economic benefits provided for in this Agreement, Parties hereto shall, within sixty (60) calendar days after the occurrence of any of the above described events, make necessary adjustment through consultations between both Parties to ensure the economic benefits enjoyed by Party B or the Project Company to be no less than Party B or the Project Company would have enjoyed if such promulgation, modification or cancellation of such laws, regulations or rules had not taken place or the different interpretation or implementation had not been made.

12. Others

12.1. This Agreement shall constitute the entire agreement of the Parties hereto with respect to the subject matter hereof and supersede all prior understanding, communication, agreement and contract in respect of the subject matter hereof.

12.2. Failure or delay on the part of any Party to exercise any right or privilege under this Agreement shall not operate as a waiver nor shall any partial exercise of any right or privilege preclude any further exercise thereof. Any waiver by a Party at any time of a breach of any term or provision of this Agreement shall not be construed as a waiver by such Party of any subsequent breach, its rights under such term or provision, or any of its other rights hereunder.

12.3. Invalidity or avoidance of any part Agreement shall not affect the validity of the other parts hereof.

12.4. After negotiation by both parties, Party B shall have the full right to transfer or assign any of its rights, obligations and benefits under this Agreement and/or any amendment or supplement to this Agreement to any of Party B’s subsidiaries or affiliates.

The supplementary attachment to this Agreement: Location block diagram.

Party A: Management Committee of the Chengdu Hi–Tech Industrial Development Zone

Legal Representative (Authorized Agent)

(Signature):

DIODES HONG KONG HOLDING COMPANY LIMITED (CHINESE CHARACTER)

Party B: DIODES HONG KONG HOLDING COMPANY LIMITED

Legal Representative (Authorized Agent)

(Signature):

Signing Date: 2010

exv99w2

Exhibit 99.2

Supplementary Agreement

to the Investment Cooperation Agreement*

Party A: Management Committee of the Chengdu Hi–Tech Industrial Development Zone (“Party A”)

Address: No.18, North Tianfu Avenue, Chengdu

: 610041

Postcode: 610041

Party B: DIODES HONG KONG HOLDING COMPANY LIMITED (“Diodes” or “Party B”)


*		Confidential treatment has been requested with respect to all the redacted portions of the Supplementary Agreement to the Investment Cooperation Agreement, which has been filed separately with the Securities and Exchange Commission.

Address: Unit 511 5/F Tower 1, Silvercord 30 Canton Road, Tsimshatsui, Kowloon, Hong Kong.

In accordance with the Investment Cooperation Agreement signed on ____ 2010 under the relevant laws and regulations of the People’s Republic of China (“China”), after a full consultation, both parties have reached a supplementary agreement to the Investment Cooperation Agreement (the “Supplement”) to be observed and implemented by both parties.

1. Project Land

[REDACTED] after the Project Company pays for cost of each parcel of Land it acquires according to Article 2.1 of the Investment Cooperation Agreement. The deed tax shall be paid by the Project Company according to law.

2. Workshop

During the Project construction period, Party A will provide temporary workshops with a floor space of 5,000 square meters (m²) in the Sichuan Chengdu Export Processing Zone (hereinafter referred to as “EPZ”) of the west park of CDHT and with a rental subsidy of 5 RMB/m²/month for the first three (3) years from the start of the lease of the temporary workshops. Within five (5) years from the registration of the Project Company, Party A will build workshops, including plating workshop, electrical/power workshop, suitable waste water treatment facilities (construction area should be no more than [REDACTED]) in phases according to Project needs. Project Company shall buy back these workshops, including plating workshop, electrical/power workshop, suitable waste water treatment facilities at a price equal to the construction cost (initial investment + bank loan interest + 3% of Project management fee) in

phases within three (3) years (30% buyback for first year, 30% buyback for second year and 40% buyback for third year) since the Project Company leases the first batch of workshops and facilities.

3. Employee Dormitories

Party A will provide suitable employee dormitories inside west park of CDHT for the Project Company lease no later than the date when the Project Company begins to use the temporary workshop provided by Party A.

4. Tax and Financial Support

1) Based on the existing Corporate Income Tax laws and regulations, Project Company can enjoy a Corporate Income Tax (“CIT”) rate of 15% if qualified as a Hi-Tech Enterprise. According to the national “Go West” policies, foreign-invested

enterprises of encouraged industries and located in the western region will enjoy a reduced CIT rate of 15%. Party A will proactively help the Project Company to apply for Hi-tech Enterprise ratification. (If the government tax policies have some changes, the new tax policy shall apply.)

2) Regardless of whether the Project Company chooses to locate inside or outside the Sichuan Chengdu EPZ, for the [REDACTED] that are paid by the Project Company, the Project Company will [REDACTED] that are of CDHT for the [REDACTED] years starting with the first profitable year and a [REDACTED] from the [REDACTED] to [REDACTED] year. The Project Company will be [REDACTED] after the Project Company clears its [REDACTED] (the current ratio of the CDHT portion of [REDACTED] is [REDACTED], respectively.).

3) For the [REDACTED] years after the establishment of the Project Company, [REDACTED] of the CDHT portion of the [REDACTED] included) hired by Project

Company [REDACTED]. The [REDACTED] after the Project Company clears its [REDACTED] (the current ratio of the CDHT portion of [REDACTED]).

4) For the [REDACTED] years from the Project Company moves in its equipment, Party A will provide the Project Company with [REDACTED] equals to [REDACTED] of the amounts of [REDACTED]; for the [REDACTED] to the [REDACTED] year, Party A will provide [REDACTED] equals to [REDACTED] of the amounts of [REDACTED], including, but not limited to, expenditures used to lower the Project Company’s costs of utilities, logistics, loans, staff training, et cetera. The method of [REDACTED] to Project Company is that the Project Company provides Party A with audit reports issued by credible accounting firms in the first quarter of the second year, then Party A [REDACTED] corresponding with the amounts of [REDACTED] as shown in audit reports.

5. Large Municipal Supporting Infrastructure Charge

The current rate of Chengdu’s Large Municipal Supporting Infrastructure Charge (charged according to the actual floor space) is RMB 160/m². All Large Municipal Supporting Infrastructure Charges involved in the construction of the Project [REDACTED] by Party A.

6. Relocation Subsidy

Base on the Provisional Measures for Encouraging Enterprises to Introduce Urgently Needed High Level Talents in Chengdu (Chengdu Administration

Announcement [2007] No.21), after application and approval, Party A promises that the Chengdu city would give Project Company’s employees, with senior professional title or doctoral degree and have each signed a labor contract for at least three (3) years, a relocation subsidy of RMB 1,000/person/month continuously, for a period of three (3) years.

7. Employment Incentive

If the Project Company hires holders of Certificate for Re-employment of Relocated Farmers or Preferential Certificate for Re-employment of Laid-off Workers and with each a labor contract of one (1) year or above and with social security paid by the Project Company, Party A promises and will grant the Project Company an incentive of RMB 500/person.

8. Services

Party A will provide the Project Company with coordination services, including company establishment, construction, operation, Hi-tech enterprise ratification, recruitments and training, and is obligated to proactively assist the Project Company to go through government-related formalities.

9. Supporting Project’s Future Development

Party A will actively support Party B or it’s parent company to do implementation use of [REDACTED] product. The detailed implementation procedure will be discussed and decided by Party A and Party B.

10. Intellectual Property Rights Protection

Party A commits to fully protect the Project’s Intellectual Property rights (“IPR”). Any case related to the infringement of the Project Company’s IPR will be handled rapidly, transparently and fairly.

11. Except as otherwise required by laws and regulations in China, the United States of America, or other countries, both parties agreed that without the approval by the confidential information provider, any confidential information contained in communications between the parties shall not be disclosed to any non-affiliated third party (either individuals or organizations).

12. This Supplement is an integral part of the Investment Cooperation Agreement and has the same and equal legal validity and effect.

13. Both parties agreed that if there is any contradiction between this Supplement and the Investment Cooperation Agreement, the terms and conditions of this Supplement shall prevail. Other terms and conditions under the Investment Cooperation Agreement shall continue to apply.

14. This Supplement takes effect after it is signed by both Parties’ respective legal representatives or authorized agents and affixed with both parties’ official seals.

15. This Supplement is signed in Chengdu, China. There are 6 originals, and each party holds 3 originals.

16. This Supplement is drafted and executed in both Chinese and English. Both versions are equally valid and enforceable. Should any discrepancy arises from both translations, the Chinese version shall prevail.