Exhibit 10.1

 

SHAREHOLDERS AGREEMENT

 

 

AMONG

 

 

INFOCUS CORPORATION

 

A Cayman Subsidiary of InFocus Corporation

 

TCL CORPORATION

 

AND

 

TCL Optoelectronic Tech (Shenzhen) Co., Ltd.

 

 

Dated as of December 14, 2004

 

with respect to

 

 

SOUTH MOUNTAIN TECHNOLOGIES, LTD.

 

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TABLE OF CONTENTS

 

1.

DEFINITIONS

 

 

 

 

2.

DESCRIPTION OF THE COMPANY

 

 

 

 

3.

REPRESENTATIONS AND WARRANTIES

 

 

 

 

4.

ESTABLISHMENT AND STRUCTURE OF THE COMPANY

 

 

 

 

5.

DIRECTORS AND BOARD MEETINGS

 

 

 

 

6.

BUSINESS SCOPE AND BUSINESS MANAGEMENT

 

 

 

 

7. [a04-15042_1ex10d1.htm#Budgets]

BUDGETS, FINANCIAL INFORMATION AND AUDIT [a04-15042_1ex10d1.htm#Budgets]

 

 

 

 

8. [a04-15042_1ex10d1.htm#DistributionPolicyAndDeterminationOf]

DISTRIBUTION POLICY AND DETERMINATION OF NET PROFIT
[a04-15042_1ex10d1.htm#DistributionPolicyAndDeterminationOf]

 

 

 

 

9. [a04-15042_1ex10d1.htm#FinanceForTheCompany]

FINANCE FOR THE COMPANY [a04-15042_1ex10d1.htm#FinanceForTheCompany]

 

 

 

 

10. [a04-15042_1ex10d1.htm#TransferOfShares]

TRANSFER OF SHARES [a04-15042_1ex10d1.htm#TransferOfShares]

 

 

 

 

11. [a04-15042_1ex10d1.htm#AmendmentAndAlterationOfTheAgreemen]

AMENDMENT AND ALTERATION OF THE AGREEMENT
[a04-15042_1ex10d1.htm#AmendmentAndAlterationOfTheAgreemen]

 

 

 

 

12. [a04-15042_1ex10d1.htm#TerminationAndBuyOut]

TERMINATION AND BUY OUT [a04-15042_1ex10d1.htm#TerminationAndBuyOut]

 

 

 

 

13. [a04-15042_1ex10d1.htm#Duration]

DURATION [a04-15042_1ex10d1.htm#Duration]

 

 

 

 

14. [a04-15042_1ex10d1.htm#RightsToInformationAndConfidentialit]

RIGHTS TO INFORMATION AND CONFIDENTIALITY
[a04-15042_1ex10d1.htm#RightsToInformationAndConfidentialit]

 

 

 

 

15. [a04-15042_1ex10d1.htm#Remedies]

REMEDIES [a04-15042_1ex10d1.htm#Remedies]

 

 

 

 

16. [a04-15042_1ex10d1.htm#Time]

TIME [a04-15042_1ex10d1.htm#Time]

 

 

 

 

17. [a04-15042_1ex10d1.htm#Severability]

SEVERABILITY [a04-15042_1ex10d1.htm#Severability]

 

 

 

 

18. [a04-15042_1ex10d1.htm#Survival]

SURVIVAL OF RIGHTS, DUTIES AND OBLIGATIONS [a04-15042_1ex10d1.htm#Survival]

 

 

 

 

19. [a04-15042_1ex10d1.htm#Costs]

COSTS [a04-15042_1ex10d1.htm#Costs]

 

 

 

 

20. [a04-15042_1ex10d1.htm#EntireAgreement]

ENTIRE AGREEMENT [a04-15042_1ex10d1.htm#EntireAgreement]

 

 

 

 

21. [a04-15042_1ex10d1.htm#ConflictWithTheArticles]

CONFLICT WITH THE ARTICLES [a04-15042_1ex10d1.htm#ConflictWithTheArticles]

 

 

 

 

22. [a04-15042_1ex10d1.htm#NoPartnership]

NO PARTNERSHIP [a04-15042_1ex10d1.htm#NoPartnership]

 

 

 

 

23. [a04-15042_1ex10d1.htm#Notice]

NOTICE [a04-15042_1ex10d1.htm#Notice]

 

 

 

 

24. [a04-15042_1ex10d1.htm#FurtherAssurance]

FURTHER ASSURANCE [a04-15042_1ex10d1.htm#FurtherAssurance]

 

 

 

 

25. [a04-15042_1ex10d1.htm#NoImmunity]

NO IMMUNITY [a04-15042_1ex10d1.htm#NoImmunity]

 

 

 

 

26. [a04-15042_1ex10d1.htm#DisputeResolution]

DISPUTE RESOLUTION [a04-15042_1ex10d1.htm#DisputeResolution]

 

 

 

 

27. [a04-15042_1ex10d1.htm#GoverningLaw]

GOVERNING LAW [a04-15042_1ex10d1.htm#GoverningLaw]

 

 

 

 

28. [a04-15042_1ex10d1.htm#Counterparts]

COUNTERPARTS [a04-15042_1ex10d1.htm#Counterparts]

 

 

 

 

SCHEDULE 1: [a04-15042_1ex10d1.htm#Schedule1]

LIST OF RELATED CONTRACTS [a04-15042_1ex10d1.htm#Schedule1]

 

 

 

 

EXHIBIT A: [a04-15042_1ex10d1.htm#ExhibitA]

FORM OF DEED OF ADHERENCE [a04-15042_1ex10d1.htm#ExhibitA]

 

 

i

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THIS AGREEMENT is made as of December 14, 2004, by and among InFocus
Corporation, a corporation duly organized and existing under the laws of Oregon,
U.S.A., and a wholly-owned Cayman Island subsidiary of InFocus Corporation,
hereinafter “InFocus Cayman” as one party (hereinafter individually and
collectively referred to as “InFocus,” as applicable), and TCL Corporation, a
company limited by shares duly organized and existing under the laws of the PRC,
and TCL Optoelectronic Tech (Shenzhen) Co., Ltd. (“TCL Optoelectronic”), a
limited liability company duly organized and existing under the laws of the PRC
(hereinafter individually and collectively referred to as “TCL,” as applicable),
as the other party.

 

WHEREAS:

 

A.                                    InFocus Corporation is the worldwide
leader in the development, production and sale of thin displays, front and rear
digital projection systems, engines devices and related products;

 

B.                                    TCL Corporation, directly and through its
Subsidiaries, is a leading manufacturer and marketer of televisions,
telecommunication equipment (including fixed line and mobile telephones),
personal computers and peripheral computer equipment, consumer audio and video
products, home appliances and electrical components and products;

 

C.                                    The Parties have agreed to establish the
Company (as defined below) as a 50/50 joint venture business between InFocus
Cayman and TCL Optoelectronic, and that the Company will engage in (i) the
design, manufacture, manufacture outsourcing, sale and provision of after sales
service and support for Joint Venture Products (as hereinafter defined) thereof;
(ii) research and development in respect of Joint Venture Products ; and (iii)
contract manufacturing of Joint Venture Products for third parties (the
“Business”);

 

D.                                    The Parties have agreed that the Business
shall be conducted through South Mountain Technologies, Ltd., a limited
liability company organized under the laws of Cayman Islands (the “Company”) and
one or more Subsidiaries of the Company as provided herein. Design,
manufacturing, research and development, sales and operations of the Company
shall be conducted by a wholly-owned Subsidiary (the “WFOE”) of the Company to
be established in Shenzhen, PRC under the PRC’s Wholly Foreign-Owned Enterprise
Law as more particularly described herein.  Additional research and development
operations of the Company shall be conducted by Subsidiaries to be established
by the Company in Wilsonville, Oregon and Fredrikstad, Norway;

 

E.                                      The Parties have agreed that certain of
the Joint Venture Products designated as Committed Products and more
particularly described herein shall be manufactured exclusively by the WFOE;

 

F.                                      The Parties have agreed that the Company
shall have the opportunity to bid for the right to manufacture on an exclusive
basis other Joint Venture Products that are not Committed Products as more
particularly described herein;

 

 

 

Initialed by TCL

Initialed by INFOCUS

 

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G.                                    InFocus Corporation agrees to guarantee
the performance of obligations under this Agreement by InFocus Cayman, and to be
held jointly and severally liable for any non-performance of the obligations
under, or breach of this Agreement by, InFocus Cayman or its Permitted
Transferee hereunder;

 

H.                                    TCL Corporation agrees to guarantee the
performance of obligations under this Agreement by TCL Optoelectronic, and to be
held jointly and severally liable for any non-performance of the obligations
under, or breach of this Agreement by, TCL Optoelectronic or its Permitted
Transferee hereunder;

 

I.                                         The Company was incorporated in
Cayman Islands on December 13, 2004, and at the date hereof has an authorized
share capital of US$ 20 million divided into 200,000,000 Ordinary Shares of par
value US$ 0.10 each, of which 200 shares have been issued at a subscription
price of US$2.50 per share and held by InFocus Cayman and TCL Optoelectronic on
a 50/50 basis; and

 

J.                                      The Parties have agreed, subject to the
satisfaction of the conditions precedent in Article 4, to subscribe for “A” and
“B” Shares on the terms and subject to the conditions hereinafter contained.

 

NOW, THEREFORE, it is hereby agreed as follows:

 

1.                                      DEFINITIONS

 

1.1                                 The following words and expressions shall
have the following meanings:

 

“A” Director means a director holding office appointed by holders of a majority
of the “A” Shares;

 

“A” Shareholders means the persons from time to time registered as holder(s) of
“A” Shares, initially TCL Optoelectronic or its Permitted Transferee hereunder;

 

“A” Shares means the Ordinary Shares to be designated “A” Ordinary Shares in the
capital of the Company;

 

Affiliate of a Party shall mean a legal entity that, directly or indirectly,
controls, or is controlled by, a Party. The term “control” means ownership of
fifty percent (50%) or more of the registered capital or voting stock, or the
power to appoint or elect a majority of directors or the power to direct the
management of such entity.  In respect of TCL, Affiliates shall include, but not
be limited to, TCL International Holdings Limited, the Component SBU division of
TCL Corporation and the joint venture between TCL International Holdings Limited
and Thomson S.A. named TTE Corporation (“TTE”).  The Affiliates of a Party shall
not include the Company and its Subsidiaries;

 

Annual Accounts has the meaning given such term in Article 7.2;

 

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Articles means the Memorandum and Articles of Association of the Company in a
form consistent with the terms of this Agreement and to be adopted pursuant to
Article 4.2.3;

 

Audited Accounts means the audit report and audited consolidated accounts of the
Company for the applicable fiscal year;

 

Auditors means Ernst & Young or such other internationally-recognized accounting
firm as shall be appointed by the Board in accordance with this Agreement;

 

“B” Director means a director holding office appointed by holders of a majority
of the “B” Shares;

 

“B” Shareholders means the persons from time to time registered as holder(s) of
“B” Shares, initially InFocus Cayman;

 

“B” Shares means the Ordinary Shares to be designated “B” Ordinary Shares in the
capital of the Company;

 

Board means the board of directors of the Company;

 

Business Day means any day, other than a Saturday, Sunday or a day on which
banks in the United States, the PRC or Hong Kong are required or authorized by
law to be closed;

 

Business has the meaning given such term in Recital C;

 

Committed Products has the meaning given such term in Article 6.2;

 

Company has the meaning given such term in Recital D;

 

Completion Date means the date when the Completion takes place or such later
date as the Shareholders may agree;

 

Completion means completion of the subscription for shares pursuant to Article 4
of this Agreement. Completion shall take place after fulfillment (or, at their
discretion, waiver by the Shareholders) of all the Conditions as specified in
Article 4 of this Agreement.  The Completion shall take place on the 5th
Business Day or on another day as agreed between the Parties following the
fulfillment (or, at their discretion, waiver by the Shareholders) of each of the
Conditions as specified in Article 4;

 

Directors means the “A” Directors and the “B” Directors;

 

Fair Market Value of the Company shall mean the price that a willing buyer would
pay to a willing seller for all of the equity capital of the Company in an arm’s
length transaction, with neither the buyer nor the seller being under any
immediate need to consummate the transaction.  It is agreed that the buyer and
the seller in arriving at such price would (1) consider, among other factors,
the past and present earnings of the Company, the initial public

 

3

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offering value of the Company if shares of capital stock of the Company were
offered to the public in a widely distributed initial public offering and listed
on one or more major stock exchanges if such initial public offering could
reasonably be expected to be successful at such time, and comparable stock
market valuation assuming that shares of the Company were listed on a major
stock exchange and publicly traded and widely distributed with no discount for
lack of liquidity if such listing and public trading could be reasonably
expected to be achieved at such time; and (2) ascribe no value to the patents
and technology licensed to the Company under the InFocus Technology License
Agreement or the TCL Technology License Agreement to the extent such licenses
would terminate as a result of a transfer of ownership interests and take into
account the potential effect of such termination and the termination of this
Agreement and other agreements between the Company and the shareholder
transferring its equity interests in the Company on the earnings and financial
position on the Company after such transfer as well as other effect on the
earnings and financial position of the Company resulting from or relating to
such transfer;

 

InFocus Technology License Agreement means the technology license agreement
between InFocus Corporation and the Company in substantially the form agreed by
the Parties;

 

Joint Venture Products has the meaning given such term in Article 6.1;

 

Landed Price means the actual cost of Joint Venture Products to a purchaser as
delivered to the purchaser or its customers, taking into account all costs from
production and delivery to the purchaser;

 

MFN means most-favored-nation terms, including pricing and other significant
terms that are at least as favorable as the terms offered to or agreed with
others;

 

Ordinary Shares means the “A” Shares and the “B” Shares;

 

Party means, as applicable, each of TCL Corporation, TCL Optoelectronic, InFocus
Corporation and InFocus Cayman, and any transferee in the transfer of all or
part of the interests of TCL Optoelectronic or InFocus Cayman made pursuant to
this Agreement upon the signing by such transferee of a Deed of Adherence
substantially in the form of Exhibit B, which are sometimes collectively
referred to as the “Parties;”

 

Permitted Transferee means, with respect to a Party, a parent company or other
entity owning, directly or indirectly, 75% or more of the voting equity
securities in such Party, or a Subsidiary (directly or indirectly) whose voting
equity securities are 75% or more owned by TCL Corporation (as to TCL) or
InFocus Corporation (as to InFocus);

 

PRC or China means the People’s Republic of China;

 

Related Contract means each of the other agreements listed in Schedule 1;

 

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Senior Officers mean the Chief Executive Officer (“CEO”), the Chief Operating
Officer (“COO”), the Chief Financial Officer (“CFO”), the Chief Technology
Officer (“CTO”), the head of each department of the Company or its Subsidiaries
and other senior officers designated by the board of the directors of the
Company or its Subsidiaries;

 

Shareholders means the “A” Shareholders and the “B” Shareholders;

 

Shares means the “A” Shares and the “B” Shares and any shares issued in exchange
therefor by way of conversion or reclassification and any shares representing or
deriving from such shares as a result of any increase in or reorganization or
variation of the capital of the Company;

 

Subsidiary means, with respect to any Party, a corporation or other entity of
which 50% or more of the voting power of the voting equity securities or equity
interest is owned, directly or indirectly, by such Party, provided that the
Subsidiaries of a Party shall not include the Company and its Subsidiaries;

 

TCL Technology License Agreement means the technology license agreement between
TCL Corporation and the Company in substantially the form agreed by the Parties;

 

Technology License Agreement means the InFocus Technology License Agreement
and/or TCL Technology License Agreement, as applicable;

 

TTE has the meaning as set forth in the definition of Affiliate.

 

1.2                                 Unless the context otherwise requires, any
reference to a statutory provision shall include such provision as from time to
time amended so far as such amendment applies or is capable of applying to any
transactions entered into hereunder.

 

1.3                                 References to Recitals, Articles, Paragraphs
and Schedules are to recitals, articles, paragraphs and schedules of this
Agreement.

 

1.4                                 The headings are for convenience only and
shall not affect the interpretation hereof.

 

1.5                                 Unless the context otherwise requires, words
importing the singular only shall include the plural and vice versa and
references to natural persons shall include bodies corporate.

 

2.                                      DESCRIPTION OF THE COMPANY

 

The Company has been formed as a newly established limited liability company
under the laws of the Cayman Islands with an authorized capital of US$20
million, divided into 200,000,000 shares of common stock of par value US$0.10
each, of which 200 shares have been issued at a subscription price of US$2.50
per share and held by InFocus Cayman and TCL Optoelectronic or its Permitted
Transferee on a 50/50 basis.

 

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3.                                      REPRESENTATIONS AND WARRANTIES

 

3.1                                 By TCL

 

TCL hereby represents and warrants as of the date hereof and on the Completion
Date (except for those as of a specified date) as follows:

 

3.1.1                        TCL Corporation is a company limited by shares duly
organized and validly existing with the status of a legal person under the laws
of the PRC.

 

3.1.2                        The execution and performance by TCL of this
Agreement and each Related Contract to which it is or will be a party (i) are
within its corporate power and business scope, (ii) have been duly authorized by
all necessary corporate action, (iii) do not contravene its articles of
association and (iv) do not contravene any law or contractual restriction
binding on or affecting it other than, in the case of performance of this
Agreement and each Related Contract, the Approvals required in the PRC prior to
the Completion Date, including the Approvals relating to overseas investment by
TCL, the establishment, registration and related matters of the WFOE, and any
required registration or approval of the InFocus Technology License Agreement
and other Related Contracts.

 

3.1.3                        All authorizations, consents or approvals or other
actions by, and all notices to or filings with, any governmental authority (the
“Approvals”) required for the due execution and delivery by TCL of this
Agreement and each Related Contract to which it is or will be a party have been
obtained, and all such Approvals will be obtained prior to the Completion Date.

 

3.1.4                        This Agreement is, and each Related Contract to
which TCL is a party is, or on execution thereof will be, the legal, valid and
binding obligation of TCL, enforceable against TCL in accordance with its
respective terms except as enforceability may be limited by applicable
bankruptcy, insolvency or other similar laws affecting the enforcement of
creditors’ rights generally and by general principles of equity relating to
enforceability.

 

3.2                                 By InFocus

 

InFocus hereby represents and warrants as of the date hereof and on the
Completion Date (except for those as of a specified date) as follows:

 

3.2.1                        InFocus Corporation is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Oregon, the United States of America.

 

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3.2.2                        The execution and performance by InFocus of this
Agreement and each Related Contract to which it is or will be a party (i) are
within its corporate power, (ii) have been duly authorized by all necessary
corporate action, (iii) do not contravene its Articles of Incorporation or
By-Laws and (iv) do not contravene any law or contractual restriction binding on
or affecting InFocus, other than, in the case of the performance of this
Agreement and each Related Contract, any consent or waiver required prior to the
Completion Date under the Credit Agreement between InFocus and its primary line
of credit lender, and in the case of the performance of this Agreement and the
InFocus Technology License Agreement, any government approval required prior to
the Completion Date.

 

3.2.3                        All authorizations, consents or approvals or other
actions by, and all notices to or filings with, any governmental authority (the
“Approvals”) required for the due execution and delivery by InFocus of this
Agreement and each Related Contract to which it is or will be a Party have been
obtained, and all such Approvals will be obtained prior to the Completion Date,
other than, in the case of the performance of this Agreement and the InFocus
Technology License Agreement, any government approval required prior to the
Completion Date.

 

3.2.4                        This Agreement is, and each Related Contract to
which InFocus is a Party is, or on execution will be, the legal, valid and
binding obligation of InFocus, enforceable against InFocus in accordance with
its respective terms except as enforceability may be limited by applicable
bankruptcy, insolvency or other similar laws affecting the enforcement of
creditors’ rights generally and by general principles of equity relating to
enforceability.

 

4.                                      ESTABLISHMENT AND STRUCTURE OF THE
COMPANY

 

4.1                                 Meeting or Unanimous Consent of the Board of
Directors

 

On or prior to the Completion Date, the Shareholders shall procure the holding
of a meeting of the Board and the passing thereat of a resolution convening an
Extraordinary General Meeting of the Company immediately following the
adjournment of the meeting of the Board for the purposes referred to in Articles
4.2 and 4.3 or alternatively, procure a unanimous written consent of the
Directors and a special resolution of the Company signed by all the
Shareholders.

 

4.2                                 Extraordinary General Meeting or Special
Resolution by Written Consent

 

Upon the calling of the Extraordinary General Meeting the Shareholders shall
give consents to short notice in respect of such Extraordinary General Meeting
and shall attend and vote thereat in favor of resolutions (in such form as shall
have been previously approved by the Shareholders) or alternatively provide
written consent to the adoption of a special resolution:

 

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4.2.1                        designating the issued Ordinary Shares in the name
of TCL Optoelectronic as “A” Shares and designating the issued Ordinary Shares
in the name of InFocus Cayman as “B” Shares.

 

4.2.2                        authorizing the Directors to issue and allot a
total of 1,999,900 “A” and 1,999,900 “B” Shares at the subscription price of
US$2.50 per shares to the Shareholders on the Completion Date in accordance with
this Agreement.

 

4.2.3                        adopting the Articles in substitution for the
existing articles of association of the Company.

 

4.3                                 Subscription for Shares

 

Forthwith upon the passing of the resolutions of the Company pursuant to
Article 4.2:

 

4.3.1                        the Shareholders shall each complete, sign and
deliver to the Company applications for the allotment to them of the number of
“A” or “B” Shares set against their names below (in addition to the 100 shares
initially issued to each of TCL Optoelectronic and InFocus Cayman) to be
subscribed for in cash at a price of US$2.50 per share, by wire transfer of
immediately available funds for the appropriate sum:

 

TCL Optoelectronic:1,999,900 “A” Shares at the Completion Date

 

InFocus Cayman: 1,999,900 “B” Shares at the Completion Date

 

4.3.2                        the Shareholders shall procure that the meeting of
the Board referred to in Article 4.1 is reconvened and that there are passed
thereat resolutions or alternatively, an unanimous written consent of the
director is obtained:

 

(i)                                     approving the Shareholders’ applications
for the “A” and “B” Shares and allotting those Shares at the Completion Date,
authorizing the Shareholders names to be entered in the Register of Members of
the Company as holders of the Shares so allotted and directing the sealing of
certificates in respect thereof;

 

(ii)                                  adopting the year ending December 31 as
the Company’s fiscal year;

 

(iii)                               appointing Ernst & Young or another
internationally recognized accounting firm agreed between the Parties as the
Company’s Auditors;

 

(iv)                              accepting the resignation of the initial
Secretary of the Company and appointing as Secretary of the Company an officer
of the Company nominated by the A Directors;

 

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(v)                                 approving agreements listed on Schedule 1
hereto, in substantially the forms initialed by the Parties; and

 

(vi)                              ratifying the articles of association (or
equivalent formation documents) for the WFOE and the wholly-owned Subsidiaries
of the Company in the United States of America and Norway.

 

4.3.3                        The Company shall issue a total of 2,000,000 “A”
Shares to TCL Optoelectronic and 2,000,000 “B” Shares to InFocus Cayman in total
with the remaining shares after the Completion Date being issued as the Board
deems appropriate pursuant to this Agreement and shall register the Shareholders
as the holders of such shares and shall prepare, seal share certificates in
respect and deliver to the Shareholders thereof in their names. TCL and InFocus
shall subscribe for, and the Company shall issue to them, Shares in the
remaining authorized share capital of the Company on a 50/50 basis (i.e. US$5
million each) at the same subscription price per Share within one (1) year of
the Completion Date with the exact timing of such further subscription to be
determined by the Board.

 

4.3.4                        The Parties have agreed upon the pre-establishment
budget of US$ 3 million by a separate agreement and shall contribute to such
budget by wire transfer of immediately available funds within five (5) Business
Days of the date hereof.  Expenditures made by a Party in accordance with such
budget, shall be credited against the Party’s subscription price for Shares,
subject to confirmation of the expenditures by the Board.

 

4.4                                 Conditions to the Completion

 

The obligation of the Parties to complete the purchase of Shares on the
Completion Date shall be conditioned upon the fulfillment (or, at their
discretion, waiver by the Shareholders), of each of the following conditions
precedent (“Conditions”) described below:

 

(a)                                  the passing of a resolution by the board of
directors of each of InFocus and TCL to approve this Agreement, the arrangements
contemplated herein and all ancillary matters relating hereto;

 

(b)                                 adoption of the Articles pursuant to
Article 4.2.3 of this Agreement;

 

(c)                                  approval by the Parties of the articles of
association of the WFOE to be finalized based on this Agreement;

 

(d)                                 approval by the Parties of the agreements
listed on Schedule 1 hereto;

 

(e)                                  registration and approval (if necessary) by
the PRC Ministry of Commerce or its authorized local government authorities and
any other government authorities of the technology license agreement between the
Company and the WFOE;

 

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(f)                                    approval of the WFOE by the competent PRC
approval authorities, which permits the unlimited sale of the Joint Venture
Products in the PRC;

 

(g)                                 approval of the WFOE’s articles of
association by the competent PRC approval authorities in the form submitted
without changes that are materially adverse to a Party’s interest in the Company
or the WFOE (unless waived by the Parties);

 

(h)                                 issuance of a business license to the WFOE
by the competent PRC industrial and commercial bureau for the WFOE to engage in
the business specified in the WFOE’s articles of association as approved by the
Board; and

 

(i)                                     written certification by the Parties
that their respective representations and warranties under Article 3 are true
and correct when made and on the Completion Date (except for those with a
specified date) in all material respects.

 

4.5                                 Satisfaction

 

InFocus and TCL shall in their own name or, where appropriate, on behalf of the
Company, use their respective commercially reasonable efforts to procure the
satisfaction of the Conditions. Each Party shall forthwith notify the other in
writing upon it becoming aware of the fulfillment of any of the Conditions. Upon
fulfillment (or at their discretion, waiver by the Parties) of all the
Conditions, the Parties shall proceed to Completion in accordance with this
Article 4.

 

4.6                                 Non-fulfillment

 

In the event that the Conditions have not been fulfilled (or, at their
discretion, waived by the Parties) on or before the date that is four (4) months
from the date hereof or such later date as the Parties may agree in writing, all
liabilities of the Parties hereunder shall cease, subject to all accrued rights
and obligations and subject to the obligations of the Parties under Article 14.2
of this Agreement remaining in force.

 

4.7                                 Completion

 

4.7.1                        Neither InFocus nor TCL shall be obliged to
complete the subscription of the Shares on the Completion Date unless
subscription for all the Shares scheduled for such Completion is completed
simultaneously.

 

4.7.2                        Subject to the terms of this Agreement, the Parties
shall subscribe for and the Company shall issue and allot on the Completion Date
the applicable number of Shares to the Parties pursuant to Article 4.

 

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5.                                      DIRECTORS AND BOARD MEETINGS

 

5.1                                 “A” Directors of the Company

 

Holders of a majority of the “A” Shares shall appoint the following three
persons as the initial “A” Directors:

 

Hu Quisheng

Bo Lianming

Shi Wanwen

 

5.2                                 “B” Directors of the Company

 

Holders of a majority of the “B” Shares shall appoint the following three
persons as the initial “B” Directors:

 

Kyle Ranson

John Harker

Mike Yonker

 

5.3                                 Resignation of Directors

 

Any Director may resign at any time by delivering his or her written resignation
to the Party which appointed him or her and to the Chairman or, in the case of
the resignation of the Chairman, to the Vice Chairman.  Such resignation shall
specify whether it will be effective at a particular time, upon receipt by the
relevant Party which appointed such Director or at the decision of the Board. 
If no such specification is made it shall be deemed effective at the decision of
the relevant Party which appointed such Director.

 

5.4                                 Vacancies and Removal of Directors.

 

Any vacancy on the Board shall be filled by the Party which appointed the
Director who vacated his or her seat on the Board and his or her replacement
shall serve out the remainder of the departing Director’s term of office.  A
vacancy on the Board shall be deemed to exist under this Article in the case of
the death, removal or resignation of any Director.  A Director can be removed
from the Board at any time, with or without cause, by the Party which appointed
him or her as a Director.  When appointing and replacing Directors, the Party
making such appointment shall notify the Company and the other Party in writing
and shall indemnify the Company from all of its losses and expenses resulting
from any claim by such Directors against the Company relating to such removal.

 

5.5                                 Chairman and Vice Chairman of the Board

 

The Chairman of the Board shall be appointed by TCL and the Vice Chairman shall
be appointed by InFocus. The first Chairman shall be Hu Quisheng and the first
Vice Chairman shall be Kyle Ranson.  The Chairman or Vice Chairman can be
removed at any time, with or without cause, by the Party which appointed him or
her.  When appointing and replacing the Chairman or Vice Chairman, the Party
making such appointment shall notify the Company and the other Party in writing
and shall indemnify the Company from all of its

 

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losses and expenses resulting from any claim by such Chairman or Vice Chairman
against the Company relating to such removal.

 

5.6                                 Board Meetings

 

5.6.1                        Meeting of the Board. The Board shall convene and
hold at least one regular meeting in each quarter.  Before each meeting, the
Chairman shall issue to all Directors a written notice setting forth the agenda,
time and place of the meeting.  Special meetings of the Board shall also be
convened by the Chairman (or, if the Chairman fails to do so, the Vice Chairman)
upon a written proposal made by any two of the Directors.  Meetings of the Board
may be held in any jurisdiction approved by the Board, provided that adequate
facilities are available for telephonic participation.  All board meetings shall
be conducted in English and Chinese with both Parties having interpreters
available in attendance.  Both Parties will be allowed to have guests attend
board meetings on an as-needed basis based upon the agenda of the meeting.  Such
attendance must be approved by the Chairman and Vice Chairman, and such approval
will not be unreasonably withheld.  Such allowed guests may be excused during
the meeting during any period in which confidential information is discussed or
conflict of interest information is discussed.

 

5.6.2                        Notice and Agenda; Waiver of Notice.  All regular
or special meetings of the Board shall be called upon ten (10) Business Days’
prior written notice (or upon such lesser period of time as the Directors shall
unanimously agree in writing from time to time) to all Directors.  Such notice
shall indicate the date, time, and place and agenda of the meeting together with
any related materials.  Extemporary and additional proposals can be included in
the agenda and discussed in the meetings with the agreement of the majority of
the Directors present with at least one A Director and one B Director included
in such majority.  Notice of meeting need not be given to any Director who
submits a written waiver of notice, signed by such Director, whether before or
after the meeting.  Neither the business to be transacted at, nor the purpose
of, any meeting of the Board need be specified in any written waiver of notice. 
Attendance of a Director at a meeting (whether in person, by proxy or by
telephone) shall constitute a waiver of notice of such meeting, except when the
Director attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened.

 

5.6.3                        Quorum.  The quorum for board meetings shall not be
less than five (5) Directors attending in person, by proxy or telephone. Any
resolution made in a board meeting without a quorum shall be of no effect.  A
majority of the Directors present, whether or not a quorum is present, may
adjourn any meeting to another time and place.  Notice of any adjournment of any
meeting of the Board to another time or place shall be given to the Directors
who were not present at the time of the adjournment in the manner specified by
Article 5.6.2 hereof and,

 

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unless such time and place are announced at the meeting, to the other
Directors.  The participation of the Directors in meetings of the Board is
critical to the success of the Company.  The failure of at least two (2) A or B
Directors to attend duly called regular or special meetings of the Board so as
to result in the failure to achieve a quorum for three consecutive meetings of
the Board shall constitute a material breach of the Agreement by the Party which
appointed such non-attending Directors. A board meeting (the “First Meeting”)
properly called hereunder that does not have the requisite quorum shall
automatically reconvene at the same time on the fifth (5th) Business Day (the
“Second Meeting”) from the original date of such meeting at the same place with
the same agenda.  If a quorum is again not achieved due to the absence of the
Directors appointed by the same Party, then a third board meeting (the “Third
Meeting”) shall automatically reconvene at the same time on the fifth (5th)
Business Day from the Second Meeting date at the same place with the same agenda
and the requisite quorum shall be deemed to exist at such Third Meeting unless
otherwise agreed by the written consent of all the Directors.

 

5.6.4                        Attendance and Voting.  Directors may be present
and vote at a meeting of the Board in person, by proxy or by telephone.  Each
Director shall have one vote.  The Chairman and the Vice Chairman shall each
have the same right of one vote accorded to each of the other Directors.

 

5.6.5                        Participation by Telephone.  Any member of the
Board may participate in a meeting by means of conference telephone or similar
communication equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting by such means shall
constitute presence in person at such meeting.

 

5.6.6                        Proxy.  Any Director who cannot participate in
person or by telephone at the meeting of the Board may present a proxy in
writing to the Board authorizing any other Director or a natural person with
legal capacity to participate at such meeting on such Director’s behalf.

 

5.6.7                        Action Without a Meeting.  Any action required or
permitted to be taken at any meeting of the Board may be taken without a meeting
by a written resolution if such resolution is sent to all members of the Board
and affirmatively signed and adopted by the number of Directors necessary to
make such a decision as stipulated in the Articles.

 

5.6.8                        Matters Requiring Board Approval.  The Board shall
have and exercise all of the final authoritative powers belonging or pertaining
to the Company, and shall decide all major issues concerning the Company. 
Except as specifically agreed to by the Parties, all decisions brought before
the Board shall require the approval of all the Directors present at a board
meeting. The matters that require the unanimous consent of the directors in a
meeting in which a quorum is present include, but are not limited to each of the
matters listed below:

 

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(1)                                  Any adoption of or amendments to the
Articles or the articles of association or other charter documents of any
Subsidiary of the Company;

 

(2)                                  Any winding up, liquidation or other
dissolution of the Company or any of its Subsidiaries;

 

(3)                                  Any change in the authorized share capital
of the Company, creation or issuance of additional Shares of or other equity or
equivalent interests in the Company or any of its Subsidiaries, transfer of the
issued Shares (other than a transfer to a Permitted Transferee), or redemption,
repurchase or cancellation of issued Shares or other equity interests in the
Company;

 

(4)                                  Any merger, consolidation, scheme of
arrangement, recapitalization or sale of all or substantially all of the assets,
of the Company or any of its Subsidiaries;

 

(5)                                  Any mortgage and pledge of, or grant of a
security interest in, the assets of the Company or any of its Subsidiaries to
any third party;

 

(6)                                  Any loan to, investment in, or guarantee of
the indebtedness of, a third party (other than a Subsidiary of the Company) by
the Company or any of its Subsidiaries;

 

(7)                                  Annual and any interim business plans, the
annual and any interim budget, including anticipated operating costs and
expenses, and the annual and any interim consolidated financial statements of
the Company and any significant change in any of the foregoing;

 

(8)                                  Significant changes to the Business of the
Company or any of its Subsidiaries, including engaging in any new line of
business or ceasing to carry on any existing line of business;

 

(9)                                  The approval and amendment of:

 

(a)                                  any contract, commitment or expenditure
which is not included in an annual or interim budget and which by itself, or
together with other contracts, commitments or expenditure which are not included
in the budget, involves total payments by the Company and its Subsidiaries that
exceed US$ 500,000 or its equivalent in any 12 month period;

 

(b)                                 any expenditure, contract or commitment
approved in the annual or interim budget which exceeds the amount provided for
in the budget by 10% or more or

 

14

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US$500,000 or its equivalent or such higher dollar amounts and such higher
percentage as the Board may determine from time to time;

 

(c)                                  any borrowing by the Company or any of its
Subsidiaries which would result in total debt of the Company and its
Subsidiaries exceeding US$500,000 or its equivalent other than those the
material terms of which have been specifically authorized in an annual or
interim business plan or budget of the Company; or

 

(d)                                 the disposition or transfer of assets owned
by the Company or its Subsidiaries with a value in excess of US$500,000 or its
equivalent;

 

(10)                            The commencement or settlement of arbitration,
litigation or conciliation by the Company or any of its Subsidiaries with any
third party;

 

(11)                            The appointment of a liquidation team and its
members to conduct the liquidation of the Company or any of its Subsidiaries;

 

(12)                            The appointment or termination of the Auditors;

 

(13)                            Appointment or removal of the CEO and other
Senior Officers, or the determination of the salary and benefits for the CEO and
the other Senior Officers of the Company and any changes thereto;

 

(14)                            Determination of the scale of wages, benefits
and allowances of the workers and staff of the Company or its Subsidiaries and
any changes thereto;

 

(15)                            Declaration or payment of any dividend or making
of any distribution on or with respect to the Shares or any other share capital
of the Company;

 

(16)                            Adoption of or amendment to any share option or
similar incentive plan of the Company, the determination of key terms of the
options granted under such plan, and the grant of options to the CEO and other
Senior Officers;

 

(17)                            Any disposal of, or grant of an exclusive
license (without any right of use by the licensor) for, any intellectual
property rights or trade secrets that are material to the Business;

 

(18)                            Entering into any transaction involving the
Company or any of its Subsidiaries, on the one hand, and any Shareholder or any
of its Directors or Senior Officers or any of their respective Affiliates, on
the other hand;

 

15

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(19)                            Effecting any increase or decrease in the number
of directors constituting the Board; and

 

(20)                            Determination of the plan of initial public
offering of the Shares, including the selection of lead underwriters and listing
venue and the determination of timing and key terms of such offering.

 

5.6.9                        Management.  The day-to-day operations of the
Company and its Subsidiaries shall be managed by executive officers appointed by
the Board.  The “B” Directors shall have the right to nominate the CEO and the
CTO of the Company and its Subsidiaries.  The “A” Directors shall have the right
to nominate the COO and the CFO of the Company and its Subsidiaries.  Under the
direction and authority of the CEO, these four executive officers shall manage
the day-to-day operations of the Company and its Subsidiaries as members of a
Management Committee.  The COO, CTO, CFO and director of sales shall each report
to the CEO.  The CFO shall work with InFocus to (i) adopt internal controls over
financial reporting of the Company and its Subsidiaries that are consistent with
international standards and enable InFocus to comply with U.S. GAAP in reporting
its investment in the Company, and (ii) maintain on his or her staff an
executive or director level individual who has experience, expertise or adequate
training in compliance with financial reporting requirements under U.S. GAAP,
the Sarbanes-Oxley Act of 2002, and the regulations of the U.S. Securities and
Exchange Commission.

 

6.                                      BUSINESS SCOPE AND BUSINESS MANAGEMENT

 

6.1                                 Business Scope

 

The business scope of the Company shall include the research, development,
design, manufacture, manufacture outsourcing or supply chain management,
component sale, OEM sale, and the provision of after-sales service and support
with respect to the following joint venture products (“Joint Venture Products”):

 

(a)                                  Optical engines for rear-projection
televisions (“RPTVs”) and such optical engines being the RPTV optical engines;

 

(b)                                 Optical engines for front projectors using
digital light processor, liquid crystal display (“LCD”), and other display
technologies; and

 

(c)                                  Front projectors;

 

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6.2                                 Committed Products

 

The Parties agree that the following Joint Venture Products shall be
manufactured by the Company or its Subsidiaries on an exclusive basis
(“Committed Products”):

 

(a)                                  Products under the Stingray, V1, V2 and
IROC projects (as further described in the InFocus Technology License Agreement)
which products shall be committed by InFocus to be manufactured exclusively by
the Company or its Subsidiaries; and

 

(b)                                 Products under the HD3 project (as further
described in the TCL Technology License Agreement) which products shall be
committed by TCL to be manufactured exclusively by the Company or its
Subsidiaries.

 

6.3                                 Manufacturing Schedule

 

The Parties intend that the Company will begin to manufacture the Committed
Products in the sequence as agreed between the Parties and shall use their
respective commercial best efforts to ensure that the Company will achieve its
production plan as agreed between the Parties.

 

6.4                                 Future Joint Venture Products

 

(a)                                  The Parties intend this Company to be
developed into a broad cooperation between the Shareholders on a worldwide basis
for the Business and the Joint Venture Products.

 

(b)                                 Each Party shall, and shall cause its
Affiliates to, provide the Company an opportunity to bid on all future proposed
requirements of Joint Venture Products, including a reasonable period of time to
prepare its bid and discuss the Requirements with such Party.  The Company shall
have the right to manufacture a future proposed product required by a Party
exclusively if the Company’s bid meets each of the following conditions
(“Requirements”):

 

(i)                                     the Landed Price of the product as
quoted by the Company are not less advantageous to such Party or its Affiliates
than bids received from other manufacturers for such product;

 

(ii)                                  the Company demonstrates an ability to
meet the technical specifications, production schedule, warranty and quality
specifications and terms of delivery for such product; and

 

(iii)                               manufacture of such product by the Company
is not prohibited under the terms of an agreement in effect prior to the date of
this Agreement.

 

(c)                                  In the event that a key customer of a Party
for a proposed product indicates that it will only purchase such product if it
is not manufactured by the Company, such Party shall use its commercial

 

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best efforts to arrange a meeting between the Company and such customer and to
resolve any concerns raised by such customer.  If the Party and the Company fail
to resolve the objection of such customer after thirty (30) Business Days and
commercial best efforts have been made by the Party to resolve such objection,
the Party may allow a third party to manufacture for such customer.

 

(d)                                 If the Company declines to bid or fails to
meet the Requirements for the future proposed product, the Party and its
Affiliates will be free to accept another bid on the product and source it at
their discretion from such bidder, provided that the notice by such Party
requesting for a bid and the accepted bid shall contain terms of Requirements
that are equivalent to those offered to the Company.

 

(e)                                  The Parties acknowledge that InFocus
currently utilizes and will continue to utilize other contract manufacturers to
manufacture certain Joint Venture Products on behalf of InFocus, subject to the
provisions of Articles 6.1, 6.2, 6.3 and 6.4, including specifically obligations
set forth in Articles 6.4(b).

 

6.5                                 Conduct of the Business

 

Each of the Parties agrees to exercise its respective rights hereunder and as a
shareholder of the Company (insofar as it lawfully can) so as to ensure that:

 

6.5.1                        the Company performs and complies with all
obligations on its part under this Agreement and complies with the restrictions
imposed upon it under the Articles; and

 

6.5.2                        the Business is conducted in accordance with sound
and good business practice and the highest ethical standards.

 

6.6                                 Management of the Business

 

6.6.1                        The Business shall be under the overall management
of the Board.  The Board shall be responsible for determining the overall
policies and objectives of the Company.

 

6.6.2                        The Parties shall procure that the Board and the
Company make the following business management arrangements for the WFOE:

 

(a)                                  Management of the WFOE.  Similar to the
Company, the day-to-day operation and management of the WFOE shall be under the
direction of the CEO of the WFOE and managed by a management committee of senior
officers.  The Parties shall nominate the Senior Officers of the Company to the
equivalent positions at the WFOE and shall cause the board of directors of the
WFOE to appoint and remove such Senior Officers of the WFOE at the same time as
they are appointed or removed as Senior Officers of the Company.

 

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(b)                                 Term of Office.  The CEO, the COO the CTO
and the CFO shall, unless they became incapacitated, retire or are removed from
office earlier by the board of directors of the WFOE, hold office for a term of
three (3) years each and shall be eligible for appointment for further terms. 
The CEO, the COO, the CTO, and the CFO may serve consecutive terms if
reappointed by the board of directors of the WFOE.  The terms of service for the
other officers shall be specified in an employment contract.

 

(c)                                  Power of Board to Dismiss Officers.  The
board of directors of the WFOE may, by a resolution, remove the CEO, the COO,
the CTO or the CFO of the WFOE in accordance with the terms of their respective
employment contract and PRC law.  Unless decided otherwise by the board of
directors of the WFOE, the authority to appoint and dismiss the other Senior
Officers of the WFOE is delegated to the CEO, who shall consult with and obtain
consensus from the other members of the management committee on such decisions.

 

(d)                                 Responsibilities of the CEO and Other
Officers.  The responsibility of the CEO shall be to carry out the various
decisions of the board of directors of the WFOE and to organize and manage its
daily business.  Without the specific approval of the board of directors of the
WFOE, the CEO, the COO, the CTO and the CFO of the WFOE shall not simultaneously
occupy any operational position in any other economic organizations nor shall
such persons participate in any economic activity which may directly compete
with the interests of the WFOE.

 

(e)                                  Corporate Secretary.  The WFOE shall have a
corporate secretary who shall serve for a term of three (3) years and be
responsible for keeping the corporate books and records of the WFOE, including
the minutes of meetings of the board of directors.  The Parties will alternate
the right to appoint the secretary.

 

6.6.3                        TCL shall use all reasonable efforts to assist the
Company in the following matters related to the Company at the expense of the
Company except as otherwise provided hereinafter:

 

(a)                                  any matters involving PRC governmental
departments or agencies, including but not limited to tax holidays for the WFOE
and pending land lease;

 

(b)                                 working with local China banks to seek bank
financing for the WFOE;

 

(c)                                  working with TTE to secure additional
manufacturing space at other existing TTE manufacturing locations around the
world at reasonable lease rates;

 

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(d)                                 the establishment of both RMB and U.S.
dollar current and capital accounts of the WFOE;

 

(e)                                  the submission of applications for all
necessary approvals, permits, certificates and licenses required in connection
with the conduct of the WFOE’s business for domestic and export sale of product;

 

(f)                                    the completion of all import formalities
including obtaining any required PRC import licenses for, and transporting to
the WFOE’s facilities from the designated port of entry in China, all materials
and equipment to be imported by the WFOE;

 

(g)                                 on behalf of the expatriate personnel of the
WFOE, to provide assistance in arranging PRC entrance and exit formalities, work
permit certificates and assist in finding accommodations compatible with the
style and standard of living of such personnel in their respective home
countries and assist such employees in making all PRC domestic travel
arrangements;

 

(h)                                 application for and obtaining the maximum
benefit of all permitted reductions in, or exemptions from, PRC income taxes
(including withholding taxes), import duties, value added, business and
consumption taxes, local surcharges, real estate taxes, vehicle taxes or any
other tax reductions, rebates or exemptions to which the WFOE is currently or
may in the future become entitled;

 

(i)                                     WFOE certification as a “technically
advanced enterprise” and in applying for the appropriate confirmation
certificates and associated benefits for the sale of Joint Venture Products to
the Parties for domestic and export consumption;

 

(j)                                     obtaining from the appropriate PRC
authorities all necessary licenses and foreign exchange approvals to permit the
repatriation out of the PRC of all profits, dividends, return of capital,
proceeds of liquidation and sale of equity interest in foreign exchange, after
the payment of applicable PRC income taxes, if any;

 

(k)                                  obtaining from the appropriate PRC
authorities all necessary licenses and foreign exchange approvals to permit the
repatriation of the salaries and benefit payments in foreign exchange of the
expatriate personnel of the WFOE, after payment of applicable PRC income taxes;

 

(l)                                     helping the Company develop the
capability to design and manufacture the Committed Products as soon as
practicable; and

 

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(m)                               at TCL’s own expense, securing the land use
rights for the land to be leased to the WFOE pursuant to a lease agreement for a
reasonable fair market rate as approved by the Board.

 

6.6.4                        InFocus shall use all reasonable efforts to assist
the Company in the following matters related to the Company at the expense of
the Company:

 

(a)                                  to develop its financial planning,
corporate governance and reporting systems in accordance with SEC and SARBOX
regulations;

 

(b)                                 to utilize advanced computerized scientific
management systems;

 

(c)                                  to instruct and train selected PRC
technical personnel and staff of the Company in the PRC, including the
application and usage of intellectual property rights licensed to the Company
and other know-how necessary to manufacture the Joint Venture Products and
conduct the Business;

 

(d)                                 to prepare, submit and monitor applications
to obtain all required U.S. governmental approvals, including any required U.S.
export licenses or licenses covering the export of technology, equipment,
software, technical data or related materials from the U.S. to the PRC in
connection with the transactions contemplated hereby or under the InFocus
Technology License Agreement;

 

(e)                              to assist the WFOE in procuring equipment, raw
materials and supplies manufactured outside of the PRC;

 

(f)                                    to assist the relocation of expatriate
staff to their home countries;

 

(g)                                 to establish or assist in establishing the
U.S.A. and Norwegian Subsidiaries of the Company and complete the transfer of
adequate research and development assets and resources to those Subsidiaries and
to establish a world-class research and development capability for the Company;
and

 

(h)                                 to help the Company develop the capability
to design and manufacture the Committed Products as soon as practicable.

 

6.7                                 Sale of Joint Venture Products and Use of
Trademarks

 

6.7.1                        The Parties agree that the Company shall have full
authority in selling the Joint Venture Products worldwide as components or on an
OEM basis, including the pursuit of the following business models:

 

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(a)                                  Optical Engines: The Company will supply
Optical Engines to the Parties and other television and projector manufacturers
worldwide;

 

(b)                                 Front Projectors: The Company will supply
Front Projectors to the Parties and other manufactures on an OEM basis;

 

(c)                                  The Company shall carry out its own
sourcing activities and order components directly from the suppliers.

 

6.7.2                        Under a separately negotiated agreement, TCL shall
have the right to sell and distribute front projectors under the trademarks of
InFocus.  TCL may under separately negotiated terms become a distributor or
reseller of InFocus branded products in the PRC (which for purposes of this
agreement shall exclude the special administrative regions of Hong Kong, and
Macau and Taiwan province) and third countries as may later be agreed upon. 
InFocus may under separately negotiated terms become a distributor or reseller
of TCL branded products.

 

6.7.3                        The Parties may purchase the Joint Venture Products
from the Company on a non-exclusive basis except as otherwise described herein,
including Articles 6.2 and 6.4.  The pricing of the Joint Venture Products to be
supplied by the Company to either Party shall be equivalent to or better than
the pricing offered to any other customer on products of the same or equivalent
bill of materials, regardless of purchasing volume.  Such pricing to each Party
shall continue for ten (10) years and thereafter as long as the respective Party
maintains a ten percent (10%) or more equity ownership in the Company on a
fully-diluted basis.  In the event of supply shortage, the Company shall use its
commercial best efforts to allow the Parties to obtain preferred and sufficient
supply before orders from other customers are accepted or fulfilled unless the
Company is obligated to accept or fulfill such orders by contract.

 

6.8                                 Research and Development

 

6.8.1                        The Parties shall transfer certain research and
development (“R&D”) personnel (the “Transferred R&D Resources”) that are related
to the R&D, design or manufacturing of the Joint Venture Products as agreed
between the Parties as part of or prior to the Completion.  Under separately
negotiated agreements other assets of the Parties may be purchased or leased
from the Parties.  The Parties shall also make available on a consultancy basis
to the Company other R&D resources and otherwise cooperate with and support the
Company in optimizing its R&D activities.

 

6.8.2                        The Parties shall contribute the Transferred R&D
Resources being transferred from them respectively to the Company on the
Completion Date free and clear of any liabilities, obligations or expenses of
any kind, whether accrued, contingent or otherwise, including employee
retirement obligations or other employee benefits or obligations with

 

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respect to personnel being transferred to the Company that have accrued as of,
or are related to the period of their employment with the Party prior to, the
Completion Date unless such personnel has been specifically hired by the Party
for the Company.

 

6.8.3                        A Party may under its sole business discretion
allow the Company to test, utilize, license and purchase the Party’s Developed
Components (as defined below) and New Projection Technology (as defined below),
including the right to purchase certain quantities exclusively during an initial
period following the commercial launch of such components.  The Party shall
provide MFN pricing to the Company for licensing Developed Components and New
Projection Technology.

 

“Developed Components” include components, software, integrated circuits and
other parts and applications developed by the Party or any of its Subsidiaries
and Affiliates or jointly developed by the Party or any of its Affiliates and
Subsidiaries and any other person or entity from time to time that can be used
by the Company in connection with the development, design or manufacture of any
of the Joint Venture Products.

 

“New Projection Technology” of a Party means Intellectual Property (as defined
in the Technology License Agreements) discovered, made, conceived, reduced to
practice or developed by the Party or its Affiliates or Subsidiaries or jointly
developed by the Party or any of its Affiliates and Subsidiaries with any other
person or entity from time to time that can be used by the Company in connection
with the development, design or manufacture of any of the Joint Venture
Products.

 

Notwithstanding the foregoing, except as may be otherwise agreed or with respect
to those that are jointly developed, all intellectual rights of Developed
Components and New Projection Technology shall remain the property of the Party
that has developed it.

 

6.9                                 Future Ventures

 

Neither InFocus nor TCL shall create a joint venture with a third party
involving the Joint Venture Products that is comparable to the joint venture
arrangement contemplated herein in terms of scale and commitment from such Party
as long as such Party holds an equity ownership of more than ten percent (10%)
of the Company or the Company is not in bankruptcy, receivership or liquidation.

 

6.10                           TTE.  TCL agrees to use its commercial best
efforts to cause TTE to offer InFocus terms that are at least as favorable to
InFocus as those TTE offers to third party customers under similar circumstances
in connection with the purchase of RPTVs or other thin displays by InFocus from
TTE.

 

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7.                                      BUDGETS, FINANCIAL INFORMATION AND AUDIT

 

7.1                                 The Company shall prepare and submit to the
Directors and to the Shareholders:

 

(i)                                     on or before December 1 in each fiscal
year a detailed draft operating budget for the Company and its Subsidiaries
(including estimated major items of revenue and capital expenditure) for the
following year, broken down on a monthly basis, and an accompanying cash flow
forecast, together with a balance sheet showing the projected position of the
Company and its Subsidiaries as at the end of the following fiscal year;

 

(ii)                                  within three weeks after the end of each
calendar month, unaudited management accounts, such accounts to include a
detailed profit and loss account, balance sheet and cash flow statement, an
analysis of revenue, a review of the budget, together with a reconciliation of
results with revenue and capital budgets for the corresponding month, and (if so
required by the Board) a statement of the source and application of funds for
such month; and

 

(iii)                               such further information as the Shareholders
may from time to time reasonably require as to any and all matters relating to
the business or financial condition of the Company or any of its Subsidiaries.

 

7.2                                 Annual Audit and Annual Accounts.  The
Auditors shall examine and verify the annual accounts (“Annual Accounts”) of the
Company and its Subsidiaries. Such Auditors shall submit its report to the
Board.  The Company shall submit to the Parties the Annual Accounts within
seventy-five (75) days after the end of the fiscal year, together with the audit
report of the independent Auditors.

 

7.3                                 Special Audit.  A Party may appoint on its
own behalf and at its own expense an accountant of its choice, who may be either
an accountant registered in the PRC or registered elsewhere to audit the
accounts of the Company and its Subsidiaries.  If the results of any such audit
are significantly different from that conducted by the independent Auditors of
the Company and are accepted by the Board, the expense shall be borne by the
Company.  Such accountant shall keep confidential all the documents audited by
him or her.  The Company will permit such accountant to have access to the books
and records of the Company and its Subsidiaries and will provide him or her with
office space and all other reasonable assistance to enable him or her to carry
out the audit.

 

8.                                      DISTRIBUTION POLICY AND DETERMINATION OF
NET PROFIT

 

The Shareholders shall take such action as may be necessary to procure that:

 

8.1                                 The Annual General Meeting of the Company at
which consolidated audited accounts in respect of the preceding fiscal year are
laid before the

 

24

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Shareholders is held not later than four months after the end of the relevant
fiscal year or such accounts are otherwise provided to and approved by the
Shareholders in accordance with the Articles;

 

8.2                                 The Auditors shall at the expense of the
Company be instructed to report as to the amount of the profits for each
accounting period which are available for distribution by the Company at the
same time as they sign their report on the Audited Accounts for the accounting
period in question;

 

8.3                                 The Board shall determine the amount of
distribution of profits (if any) to the Shareholders in each fiscal year
provided that such distribution may not exceed profits lawfully available for
distribution after the appropriation of such reasonable and proper reserves for
working capital, capital expenditure or otherwise as the Board may think
appropriate or called for by the business plan of the Company.

 

9.                                      FINANCE FOR THE COMPANY

 

9.1                                 The Shareholders acknowledge that, in
addition to capital to be subscribed pursuant to Article 4, the Company will
require further cash infusions in order to fund its operations through the
WFOE.  InFocus and TCL may, but are not obligated to, provide such further
finance by means of further capital injection or shareholder loans in proportion
to their respective holdings of shares in the Company and on such commercial
terms as they may agree with the Company.

 

9.2                                 If the Company requires additional financing
in addition to that provided by the Shareholders pursuant to Articles 4 and 9.1,
it shall endeavor to obtain such financing from a third party lender.  If
additional equity investment is required from the Shareholders or third parties,
the Shareholders will seek to complete such investment in a manner that
maintains their equal equity ownership in the Company.

 

9.3                                 It is the intention of the Parties to
complete an underwritten public offering of the Company’s securities at the
earliest practicable date subject to the development of the Business and market
conditions.

 

10.                               TRANSFER OF SHARES

 

10.1                           Except with prior written consent of the other
Party or as hereinafter provided, no Shareholder shall pledge, mortgage or
otherwise encumber its legal or beneficial interest in its Shares.

 

10.2                           Except as hereinafter provided, no Party may
transfer or sell all or any part of its Shares of the Company in any manner
whatsoever without the prior written consent of the other Party.

 

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10.3                           Notwithstanding the provisions of Article 10.2, a
Party may transfer or sell all or any part of its Shares of the Company to a
Permitted Transferee of that Party upon notification to the other Party.  With
respect to any such transfer or sale, such other Party hereby agrees to any such
transfer or sale and waives any right of first refusal with respect to such
transfer or sale and agrees to perform all such acts required to effect such
transfer or sale for which it is responsible; provided, that the Permitted
Transferee shall be required to become a party to this Agreement by signing a
Deed of Adherence substantially in the form of Exhibit A; and, provided further,
the Party making such transfer shall remain subject to all the terms and
conditions of this Agreement and shall guarantee the performance of all
obligations of the Permitted Transferee.

 

10.4                           If either Party shall desire to transfer or sell
its Shares of the Company to any third party other than a Permitted Transferee
of such Party, such Party (the “Transferring Party”) shall secure a binding
written offer from such third party (the “Third Party Offer”) to purchase some
or all of its Shares of the Company (the “Transferring Party’s Shares”) and the
other Party to this Agreement (the “Non-Transferring Party”) shall have an
option, exercisable within thirty (30) Business Days of receiving notification
of the Third Party Offer together with details of the identity, financial
condition and identity of the controlling shareholder or shareholders of such
third party, to purchase the Transferring Party’s Shares as specified in this
Article on the same terms and conditions as the Third Party Offer.  Such option
shall be exercised by such Non-Transferring Party giving written notice to the
Transferring Party of its exercise of such option.  If the Non-Transferring
Party exercises its option within such 30 Business Day period to purchase the
Transferring Party’s Shares, then, unless such Third Party Offer is withdrawn
within the first ten (10) Business Days of such period, the Transferring Party’s
Shares shall be sold to such Non-Transferring Party on the same terms and
conditions as the Third Party Offer.

 

10.5                           If the Non-Transferring Party does not exercise
its option within such 30 Business Day period, the Transferring Party may,
subject to obtaining the prior written consent of such Non-Transferring Party
(which consent shall not be unreasonably withheld), transfer the Transferring
Party’s Shares to such third party, provided that such third party shall not be
a competitor of the Company or the Non-Transferring Party, and provided further
that such third party shall sign a Deed of Adherence in the form of Exhibit A.

 

11.                               AMENDMENT AND ALTERATION OF THE AGREEMENT

 

11.1                           Amendments.  Any amendment to this Agreement must
be in writing and signed by the Parties.

 

11.2.                        Economic Adjustment and Change in Law.  If either
Party’s economic benefits are adversely and materially affected by the
promulgation of any new laws, rules or regulations of any jurisdictions, or the
amendment or interpretation of any existing laws, rules or regulations after the
date of this Agreement (a

 

26

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“Change in Law”), the Parties shall promptly consult with each other and use
their commercial best endeavors to implement any adjustments necessary to
maintain each Party’s economic benefits derived from this Agreement on a basis
no less favorable than the economic benefits it would have derived if such laws,
rules or regulations had not been promulgated or amended or so interpreted.

 

12.                               TERMINATION AND BUY OUT

 

12.1                           Termination Events.  This Agreement can be
terminated through the process in Article 12.2 beginning with the motion by the
Party indicated below if any of the following events or conditions (a
“Termination Event”) has occurred:

 

12.1.1                  Upon the motion of either Party, if the holders of the
“A” Shares and the “B” Shares agree in writing to terminate this Agreement;

 

12.1.2                  Upon the motion of either Party, if a Change in Law
occurs and the Parties are unable to agree upon necessary adjustments within a
90 day period after the occurrence of the Change in Law or are unable to
implement any such adjustments to give effect to the provisions of Article 11.2
within a 180 day period after the occurrence of the Change in Law;

 

12.1.3                  Upon the motion of the non-breaching Party, if a Party
shall commit a material breach of this Agreement the effect of which would have
a material adverse effect on the financial condition or business operations of
the Company, and such Party fails to remedy such material breach within a period
of sixty (60) days after notice in writing from the other Party or the Board to
remedy such breach;

 

12.1.4                  Upon the motion of the other Party, if any
representation or warranty made by a Party contained in Article 3 of this
Agreement shall have been incorrect in any material respect when made or on the
Completion Date;

 

12.1.5                  Upon the motion of either Party, if a bankruptcy or
similar proceeding has been commenced by or against the Company or the WFOE; or

 

12.2                           Notification Procedure.  Upon the occurrence of a
Termination Event described in Articles 12.1.2 or 12.1.5, either Party may
notify in writing the other Party and the Chairman of the Board that a
Termination Event has occurred.  Upon the occurrence of a Termination Event
described in Articles 12.1.3 or 12.1.4, the Party entitled to make a motion to
terminate may notify in writing the defaulting Party and the Chairman of the
Board that a Termination Event has occurred.  Within thirty (30) days of any
such notification, the Parties shall commence negotiations and endeavor to
resolve the reason for the Termination Event.  In the event matters are not
resolved to the satisfaction of the Parties within thirty (30) days after
commencement of negotiations or the non-notifying Party refuses to commence
negotiations within such thirty (30) day period or such Terminating Event is of
a nature that cannot be

 

27

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reasonably expected to be resolved, the notifying Party may give the other Party
and the Chairman of the Board written notice of termination (a “Termination
Notice”).

 

12.3                           Proceed to Liquidation.  If a Termination Notice
is given pursuant to Article 12.2 hereof with respect to a Termination Event
described in Article 12.1.2, unless the Parties agree at the time such
Termination Notice is given that the provisions of Article 12.4 should apply
with respect to such Termination Event (in which case the provisions of
Article 12.4 shall apply), the Company will be liquidated.

 

12.4                           Buy-Out Provision.  (a) If a Termination Notice
is given pursuant to Article 12.2 hereof with respect to a Termination Event
described in Articles 12.1.3 or 12.1.4, then unless otherwise agreed by the
Parties that the provisions of this Article 12.4 shall not apply (in which case
the Company shall either be sold on such terms and conditions agreed by the
Parties at such time, or failing such agreement, liquidated), or (b) if a
Termination Notice is given pursuant to Article 12.2 hereof with respect to a
Termination Event described in 12.1.2 hereof and the Parties agree at the time
such Termination Notice is given that the provisions of this Article 12.4 should
apply to such Termination Event, the Party entitled to provide a notice of
termination in Article 12.1 shall have the right to buy the other Party’s
interest in the Company at its Fair Market Value.

 

12.4.1                  Determination of the Fair Market Value.  The Fair Market
Value of the Company will be determined by an investment bank, accounting firm
or other appraiser with experience in valuing companies in the consumer
electronics industry of a comparable size (an “Appraiser”).  In the event the
Board fails to appoint an Appraiser within such thirty (30) days after such
Party elects to buy to the other Party’s interest period, each of TCL and
InFocus will appoint an Appraiser within fifteen (15) days thereafter.  Should
either TCL or InFocus fail to appoint its Appraiser within such 15 day period,
then the Appraiser appointed in a timely fashion by the other Party shall
determine the Fair Market Value of the Company alone.  Such Appraiser or
Appraisers, as the case may be, shall complete their assessment of the Fair
Market Value of the Company and notify the Parties thereof in writing within
forty-five (45) days of their appointment.  If more than one Appraiser is used
and the assessments of the Appraisers provide values such that the higher one is
not more than 15% greater than the lower one, the average of the two values will
be taken as the Fair Market Value of the Company.  If the valuations differ by
more than 15%, TCL and InFocus will jointly appoint an additional Appraiser to
perform a third valuation.  If the Parties are unable to agree on the selection
of the third Appraiser within fifteen (15) days, either Party may request the
Chairman of the Singapore International Arbitration Centre to appoint the third
Appraiser and the choice of such third Appraiser by the Chairman of the
Singapore International Arbitration Centre shall be binding on the Parties.  In
such circumstance, the Fair Market Value of the Company will be determined by
ascribing a weighting of 50% to the middle

 

28

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valuation of the three valuations and the other two valuations will be weighted
at 25% each.

 

12.4.2                  If a Party exercises the right to purchase the interest
of the other Party in the Company, the purchasing Party must complete such
purchase within ninety (90) days after the Fair Market Value of the other
Party’s interest in the Company has been determined.  The Parties agree to take
such steps as may be advisable to implement the sale of the selling Party’s
interest in the Company, including obtaining all necessary government approvals
for the transfer of all of the selling Party’s interest in the Company to the
purchasing Party (or its designee) and the selling Party agrees to take all such
action, including causing the members of the Board designated by it to approve
such transfer, and to execute all documents necessary or advisable to effect
such transfer.

 

12.4.3                  Until such time as the sale of the interest of one Party
in the Company to the other Party is completed, the Company will, to the fullest
extent possible, maintain the conduct of its Business in the ordinary course and
neither Party shall hinder the Company from the conduct of its Business.

 

12.5                           Deadlock Resolution.  If the Board is unable to
make a determination on any matter material to the operation of the Company
(provided that the continued failure or inability to resolve or otherwise
determine any such matter shall be of such a nature as could materially
adversely affect the financial condition or business operations of the Company)
after due consideration of such matter at two or more meetings of the Board held
within a period of not less than forty-five (45) days nor more than sixty (60)
days (hereinafter a “Deadlock”), either Party may declare the occurrence of a
Deadlock, by written notice thereof to the other Party setting out its position
on the matter in dispute and its reasons for adopting such position.  Each such
notice shall be considered by the CEO of each of the Parties, who shall
communicate with each other and shall each use reasonable good faith efforts to
resolve such Deadlock within sixty (60) days or within any mutually agreed
extension of such period.

 

12.5.1                  If the Parties cannot reach agreement on the Deadlock
and the issue has not been submitted for resolution pursuant to Article 26
hereof, either of the Parties (the “Pricing Party”) shall have the right,
exercisable for thirty (30) Business Days thereafter to indicate its intention
to sell the equity interest it holds in the Company to the other Party (the
“Deciding Party”) in writing in the form of a notice (the “Deadlock Notice”). 
The Deadlock Notice shall specify the price at which the Pricing Party is
willing, able and prepared to sell all (but not part) of the interest it owns in
the Company (the “Sale Interest”) to the Deciding Party (the “Deadlock Price”)
and may not be conditional on any term other than the receipt of the Deadlock
Price.

 

12.5.2                  The Deadlock Notice shall be deemed to:

 

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(i)                                     constitute an irrevocable offer by the
Pricing Party, open for acceptance by the Deciding Party for thirty (30)
Business Days from the date of service of the Deadlock Notice (the “Purchase
Period”), to sell all (but not less than all) of the Sale Interest owned by it
to the Deciding Party at the Deadlock Price; and

 

(ii)                                  constitute an alternative irrevocable
offer by the Pricing Party to purchase all (but not less than all) of the Sale
Interest owned by the Deciding Party within the Purchase Period at the same
Deadlock Price.

 

12.5.3                  The Deciding Party may at any time before the expiry of
the Purchase Period serve notice in writing upon the Pricing Party of its desire
to purchase the Sale Interest of the Pricing Party on the terms set out in this
Article 12.5 (a “Purchase Notice”) which may not be expressed to be subject to
fulfillment of any condition whatsoever (other than those conditions required by
the applicable Law).  Upon service of a Purchase Notice on the Pricing Party,
the Pricing Party shall be bound to sell (upon payment of the Deadlock Price),
and the Deciding Party who has served a Purchase Notice shall be bound to
purchase (at the Deadlock Price), all of the Sale Interest owned by the Pricing
Party, which the Pricing Party shall transfer, free from all claims, liens and
encumbrances, together with all rights attached thereto at the date of service
of the Deadlock Notice.

 

12.5.4                  If the Pricing Party has not received a Purchase Notice
before the expiry of the Purchase Period, the Deciding Party shall be deemed to
have declined the offer by the Pricing Party to sell referred to in this
Article 12.5.2(i) and the Deciding Party shall be bound to sell (upon payment of
the Deadlock Price), and the Pricing Party shall be bound to purchase (at the
same Deadlock Price), all of the Sale Interest owned by the Deciding Party,
which the Deciding Party shall transfer, free from all claims, liens and
encumbrances, together with all rights attached thereto at the date of service
of the Deadlock Notice.

 

12.5.5                  Either the Pricing Party or the Deciding Party, which is
to purchase all of the Sale Interest pursuant to this Article 12.5, shall have
the right to designate a third party who may, either alone or together with such
party, purchase the Sale Interest in the Company pursuant to this Article 12.5.

 

12.5.6                  The sale and purchase of the Sale Interest shall comply
with applicable law.  Unless otherwise agreed between the Parties, the sale and
purchase of the Sale Interest shall be completed within fourteen (14) Business
Days, when all of the relevant government approvals are received and the
registration of the transfer of such Sale Interest is completed.

 

12.5.7                  For the purposes of this Article 12.5, the Deciding
Party shall be deemed to have authorized the Company to take all actions
necessary on behalf of the Deciding Party to effectuate the sale of the Deciding

 

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Party’s Sale Interest if the Deciding Party does not timely serve a Purchase
Notice.  Time is of the essence and the receipt by the Pricing Party of any
Purchase Notice after the end of the Purchase Period shall have no binding force
and effect.

 

12.5.8                  Until such time as the sale or purchase of the Sale
Interest of one Party in the Company to the other Party is completed, the
Company will, to the fullest extent possible, maintain the conduct of its
Business in the ordinary course and neither Party shall hinder the Company from
the conduct of its Business.

 

12.6                           Termination of Other Agreements.  If the Company
is liquidated pursuant to Article 12.3 or upon one Party’s interest in the
Company being purchased by the other Party in accordance with Articles 12.4 or
12.5, the Related Contracts shall become terminable by any Party thereto,
provided that in the event of such purchase by a Party pursuant to Section
12.4(a), the other Party may not terminate its Technology License Agreement with
the Company as a result of such purchase hereunder.

 

12.7                           Remedies For Breach.

 

12.7.1                  The exercise of the right of a Party to terminate this
Agreement, as provided herein, does not preclude such Party from exercising
other remedies that are provided herein or are available for breach of contract
under Hong Kong law.

 

12.7.2                  Subject to the other provisions of this Agreement, a
Party shall be entitled to compensation for any loss, cost and expense which
such Party has suffered as a result of the breach of this Agreement by the other
Party.  No Party shall be liable to the other Party for any indirect, special,
incidental, consequential or punitive damages with respect to any claim arising
out of, under or in connection with this Agreement whether based upon contract,
tort (including negligence), strict liability or otherwise.

 

13.                               DURATION

 

13.1                           Except as otherwise provided herein, this
Agreement shall continue in full force and effect until the Shareholders agree
in writing to terminate this Agreement.

 

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14.                               RIGHTS TO INFORMATION AND CONFIDENTIALITY

 

14.1                           Rights of Inspection and Information

 

The Company shall permit any Director designated by a Shareholder in writing, at
the requesting Shareholder’s expense, to discuss the affairs, finances and
accounts of the Company and its Subsidiaries (provided such Director does not
have a conflict of interest with the conduct of business with the Company) with
the Company’s and its Subsidiaries’ officers and other principal executives all
at such time as may reasonably be requested, and all books, records, accounts,
documents and vouchers relating to the business and the affairs of the Company
and its Subsidiaries shall at such time be open to the inspection of any such
person, who may make such copies thereof or extracts therefrom as such person
may deem appropriate.  Any information secured as a consequence of such
discussions and examinations shall be kept strictly confidential by the
requesting Shareholder.

 

14.2                           Confidentiality

 

14.2.1                  Except in circumstances where the prior consent of the
other Party has been obtained and during the continuance of the Company and for
a period of six (6) years after its termination, no Party to this Agreement
shall, nor shall it permit any of its directors, officers, employees and agents
or the Directors of the Company to, divulge to any person any trade secret, or
secret process, method or means, or any other confidential information
concerning the business of the Company and its Subsidiaries or any Party that
comes to the knowledge of such Party or employee by reason of its or his being a
Party hereto or employee of the Company or any Party unless and to the extent
that the Party involved shall obtain such rights previously owned by the Company
and unless and to the extent that (i) the disclosure is required by law or stock
exchange rules or (ii) such information is or becomes public knowledge otherwise
than through the breach of this Agreement or (iii) such information was obtained
from a third party having no obligation of confidentiality with respect to such
information.  Each Party shall advise its directors, officers, employees and
agents receiving such information of the existence of and the importance of
complying with the obligations set forth in this Article, including by the
inclusion of confidentiality provisions in the employment or other contracts
entered into with such persons.

 

14.2.2                  At all times hereafter and unless required by applicable
laws of any jurisdiction, no Party shall issue any press release or an
announcement or other public statement with respect to this Agreement, the
Company or the transactions contemplated hereby which relates to (i) any dispute
or difference of opinion between the Parties, (ii) any information of a
confidential or proprietary nature concerning or relating to the terms of this
Agreement, or (iii) any information which could affect adversely the reputation
of the Company or any Party, without the prior approval of the Board,

 

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unless otherwise, and to the extent, required by law or stock exchange rules.

 

14.2.3                  Each Party shall consult with the other Party before it
makes, or permits any of its officers and representatives to make, any public
announcement or statement with respect to significant information or terms of
the transactions contemplated by this Agreement and the other related
agreements, and shall not make, or permit any of its officers and
representatives to make, such public announcement or statement without the
consent from the other Party except to the extent such Party is required by
stock exchange rules or other applicable Laws to make such disclosure, in which
case it shall give the other Party a reasonable opportunity to comment on the
proposed disclosure in advance.

 

14.2.4                  Notwithstanding Articles 14.2.1, 14.2.2 and 14.2.3, the
Shareholders may at any time disclose any such information and communications to
their Affiliates and professional advisors.

 

15.                               REMEDIES

 

15.1                           No remedy conferred by any of the provisions of
this Agreement is intended to be exclusive of any other remedy which is
otherwise available at law, in equity, by statute or otherwise, and each and
every other remedy shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law, in equity, by
statute or otherwise.  The election of any one or more of such remedies by any
of the parties hereto shall not constitute a waiver by such party of the right
to pursue any other available remedy.

 

16.                               TIME

 

16.1                           Time shall be of the essence as regards the
provisions of this Agreement, both as regards the times and periods mentioned
herein and as regards any times or periods which may, by agreement between the
Parties, be substituted for them.

 

17.                               SEVERABILITY

 

17.1                           If any provision of this Agreement or part hereof
is rendered void, illegal or unenforceable in any respect under any law, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.

 

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18.                               SURVIVAL OF RIGHTS, DUTIES AND OBLIGATIONS

 

18.1                           Termination of this Agreement for any cause shall
not release a Party from any liability which at the time of termination has
already accrued to another Party or which thereafter may accrue in respect of
any act or omission prior to such termination.

 

19.                               COSTS

 

19.1                           Each party shall bear its own costs and expenses
incurred by it in connection with this Agreement, whether or not the Parties
consummate the transactions contemplated under this Agreement,

 

20.                               ENTIRE AGREEMENT

 

20.1                           This Agreement (together with the Schedules and
Exhibits hereto) constitutes the entire agreement between the Parties and save
as otherwise expressly provided, no modification, amendment or wavier of any of
the provisions of this Agreement shall be effective unless made in writing
specifically referring to this Agreement and duly signed by the Parties hereto.

 

21.                               CONFLICT WITH THE ARTICLES

 

21.1                           In the event of any ambiguity or discrepancy
between the provisions of this Agreement and the Articles, then it is the
intention that the provisions of this Agreement shall prevail and accordingly
the Parties shall exercise all voting and other rights and powers available to
them so as to give effect to the provisions of this Agreement and shall further,
if necessary, procure any required amendment to the Articles.

 

22.                               NO PARTNERSHIP

 

22.1                           Nothing in this Agreement shall be deemed to
constitute a partnership between the Parties hereto nor constitute any Party the
agent of any other Party for any purpose.

 

23.                               NOTICE

 

23.1                           All notices or other communications under this
Agreement shall be in writing and shall be delivered or sent to the
correspondence addresses or facsimile numbers of the Parties set forth below or
to such other addresses or facsimile numbers as may be hereafter designated in
writing on seven (7) days’ notice by the respective Parties.

 

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If to InFocus:

Director of Legal Affairs

 

InFocus Corporation

 

Attn: Jennifer Yruegas

 

27700 SW Parkway Ave.

 

Wilsonville, Oregon 97070

 

 

With copy to:

CEO

 

InFocus Corporation

 

27700 SW Parkway Ave.

 

Wilsonville, Oregon 97070

 

 

If to TCL:

TCL Corporation

 

Attn: Yu Feng

 

Building A, 3rd Floor

 

5 Central Industrial Grand Avenue

 

Shekou, Shenzhen, PRC 518067

 

 

With copy to:

Paul, Weiss, Rifkind, Wharton & Garrison

 

Attn: Jack Lange

 

12/F, 3A Chater Road

 

Central, Hong Kong

 

23.2                           All such notices and communications shall be
effective (i) when delivered personally; (ii) when sent by telex, telefacsimile
or other electronic means with sending machine confirmation; (iii) ten (10) days
after having been sent by registered or certified mail, return receipt
requested, postage prepaid; or (iv) four (4) days after deposit with a
commercial overnight courier, with written verification of receipt.

 

24.                               FURTHER ASSURANCE

 

24.1                           Each Party shall cooperate with the others and
execute and deliver to the others such other instruments and documents and take
such other actions as may be reasonably requested from time to time in order to
carry out, evidence and confirm their rights and the intended purpose of this
Agreement.

 

25.                               NO IMMUNITY

 

25.1                           To the extent that any of TCL or InFocus may be
entitled in any jurisdiction to claim for itself or any of its property or
assets immunity in respect of its obligations under this Agreement from service
of process, jurisdiction, suit, arbitration, judgment, execution, attachment
(whether before judgment, in aid of execution or otherwise) or legal process or
to the extent that in any jurisdiction there may be attributed to it or all or
any of its property or assets immunity of that kind (whether or not claimed)
each of TCL and InFocus irrevocably agrees not to claim and irrevocably waives
that immunity to the fullest extent permitted by the laws of that jurisdiction.

 

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26.                               DISPUTE RESOLUTION

 

26.1                           Consultation

 

Any dispute or difference between the Parties arising out of or in connection
with this Agreement or as to rights or obligations hereunder shall initially be
referred to the CEO of InFocus and the CEO of TCL for resolution to the
satisfaction of the Parties, if possible.  The CEO of InFocus and the legal
representative of TCL may, if they so desire, consult outside experts for
assistance in arriving at a resolution.  Such persons shall make a bona fide
attempt to settle amicably through friendly negotiation any such dispute or
difference within thirty (30) Business Days after its submission and, if unable
to do so, the dispute or difference may be referred by any of them to
arbitration.

 

26.2                           Arbitration.

 

26.2.1                  Any dispute arising out of or in connection with this
Agreement, including any question regarding its existence, validity or
termination or as to rights or obligations of the Parties hereunder which is not
settled by friendly discussions pursuant to Article 26.1 shall be referred to
and finally resolved by arbitration in Singapore in accordance with the
Arbitration Rules of the Singapore International Arbitration Centre (the “SIAC
Rules”) for the time being in force which rules are deemed to be incorporated by
reference into this Article save and except for any modification made hereunder
or otherwise agreed by the Parties.  The arbitral award shall be final and
binding on the Parties.

 

26.2.2              The tribunal shall consist of three arbitrators.  TCL and
InFocus shall each appoint one arbitrator within thirty (30) days of the
referral of the dispute to arbitration.  The two arbitrators appointed by TCL
and InFocus shall appoint a third arbitrator.  If any Party fails to appoint its
arbitrator or such arbitrators are unable to agree upon the third arbitrator
within sixty (60) days of the referral of the dispute to arbitration, then the
Party’s arbitrator or the third arbitrator, as the case may be, shall be
appointed by the Chairman of the Singapore International Arbitration Centre.

 

26.2.3                  The English language shall be used in the arbitral
proceedings.  Unless otherwise agreed by the Parties, all hearing materials,
statements of claim or defense, award and the reasons supporting it shall be
written in English.

 

26.2.4                  To the extent this Article is deemed to be a separate
agreement independent from this Agreement, Article 27 concerning governing law
and Article 23 concerning notices are incorporated herein by reference.

 

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26.3                           Operation of the Company.

 

Throughout the pendency of any dispute or difference submitted to the legal
representative of TCL and the CEO of InFocus for resolution pursuant to
Article 26.1 or to arbitration pursuant to Article 26.2, the Company shall
continue to conduct its Business activities in accordance with the business
plans of the Company then in effect, and the Parties shall continue to perform
their respective obligations under this Agreement except and to the extent that
the performance of those obligations are the subject of the dispute or
difference.

 

27.                               GOVERNING LAW

 

27.1                           The formation of this Agreement, its validity,
interpretation, execution and settlement of any disputes arising hereunder shall
be governed by, and construed in accordance with, the laws of Hong Kong.

 

27.2                           Notwithstanding anything contained in
Article 27.1 to the contrary, the licenses granted by InFocus under the InFocus
Technology License Agreement shall be governed by the laws of the State of New
York, United States of America.  The licenses granted by TCL under the TCL
Technology License Agreement shall be governed by the laws of the PRC.

 

28.                               COUNTERPARTS

 

28.1                           This Agreement is executed in four (4) original
counterparts each of which shall have equal effect in law.

 

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IN WITNESS WHEREOF, this Agreement has been entered into on the day and year
first above written.

 

 

 

TCL CORPORATION

 

 

 

 

 

By:

 

 

 

Name:

 

Title:

 

 

 

 

 

TCL Optoelectronic Tech (Shenzhen) Co., Ltd.

 

 

 

 

 

By:

 

 

 

Name:

 

Title:

 

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INFOCUS CORPORATION

 

 

 

 

 

By:

 

 

 

Name: Kyle Ranson

 

Title: CEO & President

 

 

 

 

 

INFOCUS CAYMAN

 

 

 

 

 

By:

 

 

 

Name: Kyle Ranson

 

Title: CEO & President

 

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SCHEDULE 1

 

List of Related Contracts

 

1.                                       InFocus Technology License Agreement
between InFocus and the Company

 

2.                                       TCL Technology License Agreement
between TCL and the Company

 

3.                                       Technology License Agreement between
the Company and the WOFE

 

4.                                       Leases between InFocus and the Company

 

5.                                       Leases between TCL and/or TCL
Optoelectronic and the WFOE

 

6.                                       Support Services Agreement between
InFocus and the Company

 

7.                                       Support Services Agreement between TCL
and the WFOE

 

8.                                       Norway Engineering Services Agreement
between the Company’s Norway Subsidiary and the Company

 

9.                                       U.S. Engineering Services Agreement
between the Company’s U.S. Subsidiary and the Company

 

10.                                 InFocus Engineering Services Agreement
between InFocus and the Company relating to the mutual provision of engineering
services for fees by engineering staff or for the use of R&D equipment between
InFocus and the Company

 

11.                                 TCL Engineering Services Agreement between
TCL and the Company relating to the mutual provision of engineering services for
fees by engineering staff or for the use of R&D equipment between TCL and the
Company

 

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EXHIBIT A

 

FORM OF DEED OF ADHERENCE

 

Reference is made to the [transfer document], dated [•] between [transferor]
(the “Transferor”) and the undersigned, pursuant to which the Transferor shall
sell to the undersigned, and the undersigned shall purchase from the Transferor,
[number and type of shares] of [•], par value US$[•], for consideration equal to
[consideration].  It is a condition to the completion of such sale and purchase
that the undersigned become a party to that certain Shareholders Agreement,
dated December 14, 2004, by and among the shareholders of South Mountain
Technologies, Ltd., a Cayman Island company (the “Shareholders Agreement”).

 

Accordingly, by execution of this Deed of Adherence, the undersigned ratifies
and shall become a party to the Shareholders Agreement, and shall be fully bound
by, and subject to, all of the covenants, terms and conditions of the
Shareholders Agreement applicable to or binding on the Transferor (including
without limitation Article 10 thereof) as though it is an original party thereto
and shall be deemed a Shareholder (as defined in the Shareholders Agreement) for
all purposes thereunder.  The undersigned authorizes this signature page to be
attached to and made part of the Shareholders Agreement.

 

This Deed of Adherence shall be governed by and construed in accordance with the
laws of Hong Kong.

 

The address of the undersigned for purposes of all notices under the
Shareholders Agreement is: [•]

 

 

 

[NAME OF NEW SHAREHOLDER]

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

Title:

 

 

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