Exhibit 10.2

 

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PROCUREMENT AGREEMENT

Contract No:                    

THIS PROCUREMENT AGREEMENT (the “Agreement”) is made and entered into as of the
date of 2013/5/3 (the “Effective Date”) by and between LITE-ON TECHNOLOGY
CORPORATION (“LITE-ON”) and its Affiliates (including without limitation the
entities set forth in Exhibit One, which list may be amended from time to time
in LITE-ON’s sole discretion) (hereinafter referred to as “BUYER”); and Diodes
Taiwan Inc. and its Affiliates (including without limitation the entities set
forth in Exhibit Two, which list may be amended only with BUYER’s and SUPPLIER’s
written consent) (hereinafter referred to as “SUPPLIER”).

In consideration of the mutual premises and covenants herein contained, the
parties to this Agreement (each a “Party” and collectively the “Parties”) agree
as follows:

 

1. DEFINITIONS AND APPLICATION

 

1.1. “Product(s)” means those goods specified in accordance with this Agreement,
any purchase order (“Order”), Vendor Delivery Schedule or weekly/daily/hourly
demand (“VDS”), or similar instruction or communication (“Instruction(s)”)
issued to SUPPLIER by BUYER, including all materials and components in such
goods.

 

1.2. “Affiliate(s)” means any business organization(s) directly or indirectly
controlling, controlled by, or under common control with, the entity.

 

1.3. Application of Agreement to Affiliate(s): Unless otherwise agreed in
writing by the Parties, SUPPLIER (including its Affiliates) agrees to conduct
business transactions with BUYER (including its Affiliates) pursuant to the
terms and conditions of this Agreement and to perform all of its obligations as
described herein; provided, that the actual entities of any particular business
transaction will be determined and set forth in each Order (including VDS or
Instructions) provided by the BUYER. LITE-ON is authorized on behalf of its
Affiliates to enter into this Agreement with SUPPLIER. LITE-ON will not be
responsible for any Order (including VDS or Instructions) issued by any of its
Affiliates, and shall not be liable for any sums allegedly owed due to any acts
or omissions of its Affiliates.

 

1.4. “Laws” means all statutes, ordinances, rules, regulations, orders or other
binding legal requirements promulgated by any government, administrative or
regulatory authority of any country or any international organization with
binding authority over the Parties hereto.

 

2. BUSINESS TRANSACTIONS

 

2.1 Purchase Order

 

2.1.1 An Order, VDS or Instruction shall be deemed confirmed if SUPPLIER fails
to respond to BUYER in writing within one working day from its receipt of such
Order, VDS or Instruction. SUPPLIER shall estimate all necessary parts and
components required for the Products and ensure that it will have sufficient
capacity to supply the Products in accordance with SUPPLIER’s confirmation as
mentioned above. A VDS or Instruction of BUYER shall not create any binding
obligation upon BUYER, including any obligation to issue an Order or purchase
any quantity of Products.

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2.1.2 BUYER reserves the right to adjust or cancel the whole or part of any
Order, VDS or Instructions at any time, without liability or compensation for
any costs allegedly incurred by SUPPLIER, or otherwise, unless explicitly agreed
by the Parties in writing.

 

2.2 Delivery

 

2.2.1 SUPPLIER shall deliver all Products pursuant to the terms set forth in the
corresponding Order, VDS or Instructions. Notwithstanding the foregoing, any
quantity set forth in a VDS is intended solely as a non-binding forecast and
SUPPLIER shall confirm with BUYER the types and quantities of Products before
each Product delivery.

 

2.2.2 SUPPLIER shall handle, pack and deliver all Products in conformance with
generally accepted industry standards, the Product specifications, relevant
government regulations and any other standards required by BUYER, so as to
protect the Products from loss or damages caused by heat, cold, moisture,
vibration, theft or other causes.

 

2.2.3 Upon knowledge of any potential inability to deliver Products timely and
in accordance with any Order, VDS or Instructions, SUPPLIER shall immediately
notify BUYER of such matter. BUYER shall have the right, in its sole discretion
and without affecting any other remedies that may be available to it, to
(i) require SUPPLIER to expedite production and/or delivery of such Products at
SUPPLIER’s expense and pay one percent (1%) of the total purchase price of any
delayed Products per day to BUYER as a delay penalty until the delayed Products
are delivered, (ii) cancel such Order, VDS or Instructions with respect to the
delayed Products, (iii) withhold payment on the delayed Products, and/or
(iv) require SUPPLIER to indemnify BUYER for all losses, damages and expenses
incurred by BUYER in connection with such delay (including without limitation
relevant taxes, duties, air freight fees, litigation costs and attorney fees,
and losses arising from lost or cancelled business and sales).

 

2.3 Acceptance

 

2.3.1 SUPPLIER shall inspect all Products to ensure that they conform to the
Product specifications, samples, testing requirements, and Product criteria
required by BUYER (the “Acceptance Criteria”) before the Products are delivered
to BUYER. Upon BUYER’s request, SUPPLIER shall provide relevant certification(s)
evidencing the Product quality. BUYER or its designated agent may conduct
acceptance testing based on sampling inspection and BUYER’s Acceptance Criteria.
BUYER’s acceptance testing or acceptance of any Products will not be construed
as a waiver of any SUPPLIER obligation, including with regard to warranty, other
terms of this Agreement, BUYER’s requirements and relevant Laws.

 

2.3.2

In the event that BUYER discovers any non-conforming Products, BUYER shall have
the right, in its sole discretion and without affecting any other remedies that
may be available to it, to (i) require SUPPLIER to replace such non-conforming
Products with conforming ones, (ii) require SUPPLIER to provide new replacement
Products with equivalent functional performance of such non-conforming Products,
(iii) withhold or deduct payment for such non-conforming Products per BUYER’s
calculation, (iv) cancel any pending Order, VDS or Instructions with respect to
the types of Products that were found to be non-conforming and require SUPPLIER
to collect all non-conforming Products at its sole expense, (v) require SUPPLIER
to perform reasonable remedial actions concerning such non-conforming Products,
and/or (vi) require SUPPLIER to indemnify BUYER for all

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  losses, damages or expenses incurred by BUYER in connection with such
non-conforming Products (including without limitation costs related to sorting,
replacement, recall, repair, rework, storage, delivery, loss of sales and/or
business, litigation costs, attorney fees, and damages claimed against BUYER by
its customers or other third parties ).

 

2.3.3 The terms and conditions set forth in this section 2.3 shall apply to any
replacements of non-conforming Products as well as to the Products.

 

2.4 Price and Payment

 

2.4.1 After BUYER’s acceptance of any Products, SUPPLIER shall issue an invoice
and collect payment for such Products only in accordance with any mutually
agreed payment terms and BUYER’s required payment procedure. Without BUYER’s and
LITE-ON’s prior written consent, SUPPLIER shall not assign or transfer to any
third party (including without limitation any bank or other financial
institution) any rights concerning payment due, currently or in the future, with
respect to any Products. Any written consent from BUYER shall be valid only upon
being properly stamped or signed after BUYER’s due authorization.

 

2.4.2 Both Parties acknowledge and agree that the price of the Products is
inclusive of all taxes, duties and charges (including but not limited to,
tariff, value added tax, product and service tax, turnover tax, sales tax and
all other applicable taxes, social security fees and surcharges). Unless
otherwise agreed by the Parties in writing, this Agreement shall not be affected
by the terms of any import or export documents or international trade
regulations. If SUPPLIER is entitled to any tax refund with respect to any
Products, SUPPLIER shall promptly provide BUYER with all documents requested by
BUYER in order to transfer such tax refund to BUYER.

 

3. WARRANTY AND LIABILITY

 

3.1 Product Quality Assurance

 

3.1.1 SUPPLIER warrants and agrees as follows:

 

  (i) All Products shall be free from any defects in design, materials,
workmanship, functional performance, and manufacturing process,

 

  (ii) All Products shall be new and unused,

 

  (iii) All Products shall be free of any claim or potential claim that they
infringe any third party’s intellectual property rights (including without
limitation patents, copyrights, trademarks, trade secrets, or otherwise),

 

  (iv) All Products shall be free from any defects in title and free from any
mortgages, pledges, security interests, encumbrances, or other such restrictions
or liabilities,

 

  (v) BUYER shall have full rights to directly or indirectly use, import,
export, sell, offer for sale, distribute, and lease the Products worldwide,
perpetually, without any additional restrictions, fees, or required consents
arising out of any contracts or intellectual property rights,

 

  (vi) When performing all acts required in connection with this Agreement,
SUPPLIER and the Products shall comply with all applicable Laws including
without limitation RoHS directive, EICC code and other Laws relating to the
environment, import/export, labor and employment, hazardous substances, BUYER’s
requirements, and any agreement entered into between the Parties, and

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  (vii) When performing all acts required in connection with this Agreement,
SUPPLIER shall acquire all necessary licenses, permits, certifications
(“Authorizations”), including without limitation certificates of origin,
registration, quality certifications, safety certifications, and other
Authorizations required to comply with any Laws and shall provide copies of the
same to BUYER upon its request.

 

3.1.2 In addition to the terms and conditions set forth above, BUYER may also
set forth in other agreements between the Parties other terms and conditions
with regard to warranties, quality assurance and identification of defects.

 

3.2 Defect and Warranty

 

3.2.1 In the event that SUPPLIER breaches any of the warranties set forth in the
above section 3.1.1 or otherwise delivers any non-conforming Products, SUPPLIER
shall promptly provide a written failure analysis report and corrective action
plan in accordance with BUYER’s requirements and within a timeframe as required
by BUYER. BUYER shall have the right to require SUPPLIER to resolve the breach
of warranty or non-conforming Product event pursuant to the terms and conditions
of this Agreement and other applicable Laws and agreements. SUPPLIER shall
indemnify BUYER for all losses, damages, or expenses incurred by BUYER in
connection with such breach of warranty or non-conforming Products, including
without limitation costs related to sorting, replacement, recall, repair,
rework, storage, delivery, loss of sales and/or business, fines, penalties,
litigation costs and attorney fees and any damages claimed against BUYER by its
customers or other third parties).

 

3.2.2 Unless otherwise agreed by the Parties in writing, all warranties
described at section 3.1.1 shall last for a term of eighteen (18) months from
BUYER’s acceptance of the Product and shall apply notwithstanding BUYER’s
receipt, acceptance and payment for the Products. After the warranty period
expires, SUPPLIER shall continue to use its best efforts to resolve all issues
concerning any non-conforming Product and shall take responsive actions in
accordance with BUYER’s instructions.

 

3.2.3 SUPPLIER shall issue a written last-buy notice to BUYER at least six
(6) months before the end of any Product life in order for BUYER to obtain
required quantities (“last-buy quantity”). All of SUPPLIER’s obligations
concerning quality, warranty and similar requirements concerning Products shall
survive the end of Product life. SUPPLIER shall continue to provide BUYER with
services relating to repairs, maintenance and provision of parts for a period of
two (2) years after the end of Product life.

 

3.3 Indemnification

 

3.3.1

SUPPLIER warrants that the Products and their manufacture, sale or use, alone or
in combination according to their specifications, will not (i) infringe any U.S.
or foreign patent, copyright, trade secret or other intellectual property rights
of others (“Third Party IPR”), or (ii) cause any personal injury (including
death) or tangible property damage . In the event of any lawsuit, claim, notice
or demand (each a “Claim”) asserting that any Product (“Accused Product”)
supplied by SUPPLIER infringes (“Third Party IPR”), or causes any personal
injury (including death) or tangible property damage of a third party or BUYER,
SUPPLIER shall promptly, at its sole expense and subject to BUYER’s sole
discretion, (i) indemnify, defend and hold BUYER harmless from such Claim on
behalf of BUYER if requested by BUYER, or under BUYER’s request provide all
requested documents and otherwise assist BUYER to defend such Claim,
(ii) acquire, at SUPPLIER’s sole expense, all licenses or rights necessary, and
grant to BUYER and BUYER’s customers the permanent, perpetual, worldwide right
to continually use, sell, offer for sale, import and export the Products,
(iii) replace all Accused Products with non-infringing Products of equivalent
functional performance, (iv) alter or modify the Accused Products in order

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  to avoid infringement of Third Party IPR, (v) permit BUYER to cancel all
Orders, VDS or Instructions related to the Accused Products, collect all Accused
Products at SUPPLIER’s sole expense, and refund to BUYER all payments for the
Accused Products, (vi) compensate BUYER for all costs, damages and expenses
incurred in connection with the Accused Products (including without limitation
litigation fees, arbitration fees, attorney fees, expert fees, settlement
amount, and any losses arising out of suspension in BUYER’s production line and
sales operation), and/or (vii) pay any the judgment related to the Accused
Products.

 

3.3.2 Any replacement or modified Products supplied in connection with the above
paragraph shall comply with all Laws and the terms and conditions of all
relevant agreement between the Parties.

 

3.4 Default

 

3.4.1 In the event that SUPPLIER breaches or defaults in the performance of any
of its duties and obligations to BUYER, BUYER shall have the right to terminate
this Agreement, cancel the whole or part of any Order (whether confirmed or
not), VDS or Instructions that are related to the breach or default, request
SUPPLIER to refund BUYER all payments made for Products related to the breach or
default, and indemnify BUYER for all costs, damage and expenses related to the
breach or default, including litigation costs and attorney fees.

 

3.4.2 The exercise by BUYER of any rights as set forth in section 3.4.1 shall
not prejudice or affect any other rights and interests BUYER may be entitled to
under this Agreement and applicable Laws.

 

4. OTHERS

 

4.1 Term and Termination

 

4.1.1 This Agreement is effective from the Effective Date set forth above.

 

4.1.2 BUYER may terminate this Agreement, without cause, by a ninety (90) days
prior written notice to SUPPLIER.

 

4.1.3 This Agreement will be terminate automatically, without notice, if
SUPPLIER: (i) undergoes voluntary or involuntary bankruptcy, reorganization,
dissolution, liquidation, compulsory execution against its assets or other
provisional remedies, or (ii) transfers, sells, leases, exchanges or otherwise
substantially disposes of its business or assets, or (iii) consolidates or is
merged into another corporate entity with any feasibility of SUPPLIER’s
non-performance of or breach to any terms and conditions of this Agreement.

 

4.1.4 Notwithstanding any termination of this Agreement, SUPPLIER shall at
BUYER’s request fulfill all outstanding Orders, VDS or Instructions and all
duties and obligations owed under this Agreement or otherwise, unless otherwise
agreed in a signed writing by BUYER and SUPPLIER.

 

4.2 Confidentiality

 

   The existence and terms of this Agreement and any and all information or data
disclosed to SUPPLIER in connection with the negotiation and performance of any
of the terms of this Agreement, any Order, VDS or Instructions, in whatever
form, including without limitation with respect to Product design,
specifications, drawings, manufacturing, prices, customers, business
information, and competition information, shall be deemed BUYER’s confidential
information (“Confidential Information”). Confidential Information shall remain
BUYER’s property. SUPPLIER shall keep all Confidential Information strictly
confidential, protecting it with at least the same degree of care that SUPPLIER
uses to protect its own confidential information, and shall promptly return to
BUYER or completely destroy all Confidential Information and provide a written

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  confirmation upon BUYER’s request. Without BUYER ‘s prior written consent,
SUPPLIER shall not disclose to any third party or use Confidential Information
for any purpose other than performance of this Agreement. SUPPLIER shall enter
into a confidentiality agreement, with terms and conditions at least as
restrictive as those specified in this Agreement, with any persons permitted by
SUPPLIER who have a legitimate need to access Confidential Information. In case
of SUPPLIER’s breach of any confidentiality obligation, upon BUYER’s request,
SUPPLIER shall return all Confidential Information immediately and pay a penalty
of Two Million NT Dollars (NT$2,000.000) plus the cost of any damage incurred by
BUYER as a result of such breach. SUPPLIER shall (i) be jointly and severally
liable for all costs, damages and penalties resulting from any breach of a
confidentiality obligation by a third party that obtains Confidential
Information from SUPPLIER (including without limitation the abovementioned
penalty and other damages), and (ii) hereby waives any right of plea for
preference claims (beneficium ordinis). The confidentiality obligations
described in this section shall survive perpetually notwithstanding any
(i) resignation, termination or severance of the relationship with any person
responsible for committing a breach, (ii) termination of this Agreement, or
(iii) any modification or change in the validity of any provisions described in
this Agreement.

 

4.3 Insurance

 

4.3.1 SUPPLIER shall maintain during the term of this Agreement appropriate
Insurance Policies in appropriate amounts, including but not limited to
(1) Marine Cargo Insurance and (2) Comprehensive General Liability Insurance
(including Products Liability Insurance and Premises & Operation Liability
Insurance) in full force and effect throughout the term of this Agreement. The
limitations of such Insurance shall not be less than US$1,000,000 per
occurrence, and BUYER shall be named as additional insured. SUPPLIER shall
deliver to BUYER copies of all certificates evidencing such insurance coverage
promptly after executing this Agreement and at any time upon request during the
term of the Agreement. If SUPPLIER or its insurer cancels or reduces the
coverage of such Insurance Policies, SUPPLIER shall provide BUYER with thirty
(30) calendar days’ prior written notice regarding such reduction or
cancellation and shall promptly ensure that its insurance coverage comes back
into full compliance with the requirements stated in this section.

 

4.3.2 In addition to the above requirements, SUPPLIER shall maintain during the
term of this Agreement appropriate and commercially reasonable insurance
coverage to protect against potential breach of its obligations under this
Agreement and product liability relating to the Products.

 

4.3.3 In no way shall any of the above terms regarding insurance coverage affect
any of SUPPLIER’s other duties, obligations and liabilities.

 

4.4 Force Majeure

 

4.4.1

In the event of any delay or failure in the performance of all or any part of
this Agreement due to war, riot, insurrection, national emergency, strike,
embargo, storm, earthquake, or other natural forces (“Force Majeure”), the
affected Party shall immediately inform the other Party of such Force Majeure
event and provide satisfactory documentary proof of the Force Majeure event and
inability to timely perform as a result, and such Party shall be excused from
performing during the duration of the Force Majeure event, provided that (a) in
the event SUPPLIER’s performance is affected by a Force Majeure event, SUPPLIER
shall also promptly provide BUYER with potential strategies for avoiding adverse
consequences from the Force Majeure event and an

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  estimate of the timeframe for resumption of its regular performance under this
Agreement, and (b) BUYER may in its sole discretion (i) terminate, modify or
suspend any Order, VDS or Instructions affected by the Force Majeure event, or
(ii) give other reasonable instructions in response to the Force Majeure event.

 

4.4.2 In the event any Force Majeure event continues over thirty (30) days,
BUYER shall have the right to terminate this Agreement immediately.

 

4.5 Non-assignment

 

   Without prior written consent from duly authorized representatives of BUYER
and LITE-ON, SUPPLIER shall not transfer, subcontract or assign the whole or any
part of this Agreement or any rights or obligations hereunder (including without
limitation, pledging or disposing of any Products, or assigning any rights in
the Products or any payment due currently or in the future) to any third party
including banking institutions or permit any third party to perform any part of
this Agreement on behalf of SUPPLIER.

 

4.6 Joint and Several liabilities

 

     Each and all of SUPPLIER’s Affiliate(s) listed in Exhibit 2 shall be
jointly and severally liable for all of SUPPLIER’s obligations, debts and
responsibilities arising under this Agreement and any other agreement(s) entered
into by the Parties, and agree to waive their/its right of plea for preference
claims (beneficium ordinis).

 

4.7 Governing Law and Venue

 

     This Agreement shall be construed and governed in accordance with (mark one
per actual practice)

 

  x the laws of the Republic of China.

 

  ¨ the laws of the People’s Republic of China.

 

  ¨ the laws of         

 

   The Parties shall attempt to resolve any disputes arising out of this
Agreement through mutual good faith negotiations. In the event that a resolution
can not be reached through such informal means, the Parties agree to submit the
dispute to (mark one per actual practice)

 

  x Taiwan Taipei District Court shall have sole and exclusive jurisdiction to
resolve the disputes

 

  ¨ the Court where BUYER is located shall have sole and exclusive jurisdiction
to resolve the disputes

 

  ¨ arbitration held in China International Economic and Trade Arbitration
Commission South China Sub-Commission, whose award shall be final and binding
upon the Parties.

 

4.8 Severability

 

   In the event that any provision of this Agreement is held by a court of
competent jurisdiction or judicial determination to be invalid in whole or in
part, the other provisions shall remain in full force and effect.

 

4.9 Notice

 

   All notices under this Agreement shall be in writing delivered to the
receiving Party’s business address. Notices are validly served upon the earlier
of (i) confirmed receipt by the receiving Party, (ii) three (3) days for
domestic notices, or seven (7) days for international notices, after dispatch by
courier or certified mail, postage prepaid, properly addressed to the receiving
Party, or (iii) one (1) day after confirmed transmission by e-mail, fax or
telefax. Either Party may change its mailing address by written notice to the
other Party.

 

4.10 Waiver

 

   Either Party’s failure to timely require the other Party’s performance of any
provision hereof shall not affect in any way the full right or power to require
such performance at any time thereafter.

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4.11 Survival

 

   The Parties acknowledge and agree that their respective rights and
obligations hereunder, which by their nature are intended to remain continually
effective, shall survive after expiration or termination.

 

4.12 Entire Agreement

 

   This Agreement and all the Exhibits thereto constitute the entire agreement
between the Parties, and fully supersedes any and all prior or contemporaneous
written or oral agreements between the Parties. No amendment, deletion or
modification to this Agreement shall be effective unless such amendment,
deletion or modification is agreed in writing by the Parties with signatures.
Each Order, VDS, VMI Agreement, and Buyer’s Instruction or document shall be
treated as a whole supplement to one another. In the event that any Order or VDS
is in conflict with the terms of this Agreement, the terms of this Agreement
shall prevail in principal unless BUYER in its sole discretion explicitly states
to the contrary.

This Agreement, including Exhibit(s), shall be executed in two counterparts and
each Party shall receive one fully executed counterpart.

IN WITNESS WHEREOF this Agreement has been executed by the Parties.

BUYER: LITE-ON TECHNOLOGY CORPORATION

 

Sign:   /s/ Raymond Soong Print:   Raymond Soong Title:   Chairman

Business License Registration No.:        

SUPPLIER: Diodes Taiwan Inc.

 

Sign:   /s/ Evan Yu Print:   Evan Yu Title:   General Manager

Business License Registration No.:        

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Exhibit One

 

No.   List of Lite-On Technology Corp.’s Affiliates               
1                                              2                              
               3                                             
4                                              5                              
               6                                             

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Exhibit Two

 

   List of Supplier Affiliates No.    Name of Supplier’s Affiliates    Signature
1    Company Name:               

By:            

Name:            

Title:            

Date:            

2    Company Name:               

By:            

Name:            

Title:            

Date:            

3    Company Name:               

By:            

Name:            

Title:            

Date:            

4    Company Name:               

By:            

Name:            

Title:            

Date:            

5    Company Name:               

By:            

Name:            

Title:            

Date: