EXHIBIT 10.1
 
PEAK SEMICONDUCTOR PACKAGING PRODUCTS (SHENZHEN)
CO. LTD.
 
AND
 
PEAK PLASTIC & METAL PRODUCTS (INTERNATIONAL) LTD.
 
AND
 
SHENZHEN MUNICIPAL LONGGANG DISTRICT FOREIGN
ECONOMIC SERVICE CO.
 
 
PROCESSING AGREEMENT
 
 
June 2002

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This Processing Agreement is entered into this 24 day of June, 2002.
 
Peak Semiconductor Packaging Products (Shenzhen) Co. Ltd.    (Hereafter called
“Subcontractor”) located at Tower 21, Heng Hang 188 Industrial Estate, Shenzhen,
Bao An, China
 
Peak Plastic & Metal Products (International) Ltd.    (Hereafter called
“Contractor”) located at Unit 4, 5, 7, 37/F, Cable TV Tower, 9 Hoi Shing Road,
Tsuen Wan
 
Shenzhen Municipal Longgang District Foreign Economic Service Co.    (Hereafter
called “Business Unit”) located at 28 Sin Hau Hotel, Shenzhen.
 
Subcontractor, Contractor and Business Unit hereafter called “All Parties”
 
Background
 
Whereas:
 
Subcontractor, was established on 31st Dec 2001, to design, manufacture, market
and service semiconductor packaging products for a variety of applications.
 
Whereas:
 
Contractor intends to enter into a contract processing agreement with
Subcontractor. Under the agreement, the products are manufactured by
Subcontractor who will be paid a processing fee.
 
Whereas:
 
Business unit can facility the cooperation between Contractor and Subcontractor
 
Now therefore, to effect the foregoing, all parties agreed the following.
 
1.    Definition
 
Unless specially stated, the terms below should be defined as follows:
 

 
1.1
 
“China” defined as The People’s Republic of China

 

 
1.2
 
“Processing Fee” In accordance with section 6 and other provisions stated in the
agreement, this is defined as the amount the Subcontractor receives from the
Contractor for the manufacturing service provided.

 

 
1.3
 
“Know how” is defined as the knowledge, skill and experience in the
manufacturing of semiconductor packaging products including tapes, reels, trays
and tubes.

 
2.    Contract Period
 

 
2.1
 
This agreement shall commence on 1 July 2002 and end on 30 January 2003. This
Agreement may also extend or terminate sooner by unanimous consent of all
parties.

 
3.    Subcontractor’s Obligations
 

 
3.1
 
Manufacturing Service

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3.1.1
 
During contract period, the Subcontractor shall provide manufacturing service to
the Contractor. The work quality and quantity shall be mutually agreed between
the Contractor and the Subcontractor and set out in the processing order
document.

 

 
3.1.2
 
The Subcontractor shall furnish the Contractor with the finished products at the
time, quality and in the quantity ordered by the Contractor. Except for the
exception noted under Section 11, Subcontractor shall indemnity Contractor for
its failure to deliver the ordered products.

 

 
3.1.3
 
Subcontractor shall make all necessary arrangement to assist Contractor in
obtaining the required Government permits, including:

 

 
•
 
Import/Export permits

 

 
•
 
Permits for importing equipment

 

 
•
 
Visas for the expatriates appointed by Contractor

 

 
3.1.4
 
Subcontractor shall not disclose confidential information of Contractor to third
parties. Unless such disclosure is necessary for Subcontractor to perform its
obligations stated in the Agreement.

 

 
3.1.5
 
Subcontractor shall at its own expense make necessary arrangements for customs
clearance.

 
4.    Business Unit’s Obligations
 

 
4.1
 
Business Unit shall assist Subcontractor and Contractor in performing their
obligations, including coordinating with government departments and accepting
government’s inspection.

 

 
4.2
 
Business Unit shall perform its obligations under this agreement. During
contract period, Business unit shall not transfer its obligation, right or
liability to third party. Unless such transfer meets with prior written consent
from Subcontractor. Business unit shall indemnity Subcontract if there is such
wrongful transfer.

 

 
4.3
 
Business unit shall not disclose the confidential information of Subcontractor
or Contractor to third parties. Unless such disclosure is necessary for Business
unit to perform its obligations stated in the Agreement.

 
5.    Contractor’s Obligations
 

 
5.1
 
Contractor shall provide Subcontractor materials monthly in accordance with
production schedule. Contractor shall deliver such materials to Subcontractor at
least 1-day before production, Except for the exception noted in section 10,
Contractor shall indemnity Subcontractor RMB1 per day for each production day in
which there is inadequate production as a result of insufficient material
supply.

 

 
5.2
 
If Subcontractor fulfill its obligations, Contractor shall pay Subcontractor the
processing fee set out in Section 6.

 
6.    Contract Processing Fee
 

 
6.1
 
In accordance with section 3.1.1, Contractor shall pay Subcontractor “processing
fee”

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The Fee is calculated as follows:

 
Processing Fee = sum of (quantity of each products x agreed rate)
 

 
6.2
 
Before 30th of each month, Subcontractor shall invoice Contractor for the
processing fee of the prior month.

 

 
6.3
 
Contractor shall settle the processing fee within 30 days from invoice date.
Payment shall be made through telegraphic transfer to the designated account of
Subcontractor.

 
7.    Quality Test
 

 
7.1
 
For the material mentioned in 5.1, Subcontractor shall perform quality check
after receipt. If the materials provided by Contractor have variation in
quantity or quality, Subcontractor shall provide Contractor with an inspection
report. Contractor shall take corrective action accordingly.

 

 
7.2
 
After receiving finished goods from Subcontractor, Contractor shall perform
quality check according to the agreeable standards. If the product defect is
caused by Subcontractor, Contractor shall provide subcontractor an inspection
report. Subcontractor shall take corrective action accordingly.

 
8.    Disclosure
 

 
8.1
 
All parties shall allow each other to access the information that is needed for
the purpose of carrying out this agreement, or for arbitration.

 

 
8.2
 
The agreement is non-transferable without the prior consent of all parties.

 
9.    Contract Validity, Amendment & Termination
 

 
9.1
 
This document, when signed by all parties and approved by the government, will
constitute a valid and binding agreement.

 

 
9.2
 
No amendment to this agreement shall be valid unless it is in writing and signed
by all parties.

 

 
9.3
 
Without any breach of the agreed terms, either party can terminate this
Agreement upon 3 months prior written notice to the other 2 parties.

 
If a party to the Agreement breaches any provisions, the other 2 parties
complaining of the said breach shall give the breaching party written notice of
the breach and 1 month to correct said breach before this Agreement is cancelled
in any way.
 

 
9.4
 
The cancellation shall not in any way affect the obligations and benefits of any
parties of the agreement.

 

 
9.5
 
In case of contract termination, all parties shall perform the following:

 

 
•
 
Business Unit shall return Subcontractor and Contractor the business information
received previously.

 

 
•
 
Within 30 days from cancellation, Contractor shall settle the outstanding
processing fee in full.

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10.    Force Majeure
 

 
10.1
 
Either party is not responsible for delay or non-performance of its contractual
obligations as a consequence of an event that is caused solely by the effect of
nature or natural causes and without any interference by humans whatsoever. It
includes but not limited: prohibition, law and decrees approved by government,
riot, protest, strike, break-off of transportation or public utilities, epidemic
disease, floods, fire, rainstorm, typhoon, earthquakes or other acts of God.

 

 
10.2
 
In the event that either party is affected in the performance of its obligations
by any of the foregoing causes, it shall give a fourteen-day prior written
notice to the other parties and all parties shall have take steps to remove such
cause of non-performance and to minimize its effects. The party suffering from
force majeure shall be exempt from any harm, cost or losses of non-performance
under this Agreement.

 
11.    Law Governance
 
This Agreement shall in all respects be interpreted in accordance with the Laws
of China
 
12.    Dispute Settlement
 

 
12.1
 
If there is a dispute, it should be settled by negotiation between all parties.
Such negotiation shall commence once there is a written notice from either
party. If all parties fail to agree after 90 days of negotiation, either party
can submit the case to arbitration (China Trade Arbitration Court), with prior
written notice to the other parties. The decision from the arbitration shall be
final to all parties.

 

 
12.2
 
During disputes, all parties shall continue to carry out the other provisions
the agreement

 
13.    Correspondence
 
All correspondence shall be made by mail, telegraphic, cable or fax to below
addresses:
 

 
1.
 
to Subcontractor:

Address: Block 21, Hang Geng 188 Industrial Estate, Shenzhen, Bao An, China
Name: Peak Semiconductor Packaging Products (Shenzhen) Co. Limited
 

 
2.
 
to Contractor

Address: Unit 4, 5, 7, 37/F, Cable TV Tower, Tsuen Wan
Name: Peak Plastic & Metal Products (International) Limited
 

 
3.
 
to Business Unit

Address: 28 Sin Hau Hotel, Shenzhen
Name: Shenzhen Municipal Longgang District Foreign Economic Service Co.
 
14.    Language
 
The Agreement is written in Chinese. Three copies of this Agreement have been
provided; one for Contractor, one for Subcontractor, one for Business Unit

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Agreed by
Peak Semiconductor Packaging Product (Shenzhen) Co. Limited
 
    /s/    JERRY MO

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Printed Name:    Jerry Mo
Job Title:    Chief Financial Officer
 
Agreed by:
Peak Plastic & Metal Products (International) Limited
 
    /s/    JERRY MO

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Printed Name:    Jerry Mo
Job Title:    Chief Financial Officer
 
Agreed by:
Shenzhen Municipal Longgang District Foreign Economic Service Co.
 
    /s/    WEN BIN LIAO

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Printed Name:    Wen Bin Liao
Job Title:    Chairman