Exhibit
10.12


 


Promoters Agreement of

Xurui Guangdian Co., Ltd.


 


 


December 25, 2009


 

















 


	
  Promoters Agreement

  	
  Executed
  Version

  



 


Promoters Agreement of Xurui Guangdian Co., Ltd.


 


For the purpose of the
development of China’s semiconductor lighting industry and close cooperation
among enterprises at upper, middle and lower streams of the semiconductor
lighting industry chain, all promoters hereby enter into this Agreement with
respect to vital issues involved during the establishment of Xurui Guangdian
Co., Ltd. (hereinafter referred to as “the Company”) through friendly
consultation and in accordance with the Company Law of the People’s Republic of
China (hereinafter referred to as the “Company Law”) and the Regulations on
Certain Issues Concerning the Establishment of Foreign-Invested Joint Stock
Company and relevant laws and regulations of China.


 


Chapter I. Promoters of the Company


 


Article 1. Parties
hereto, namely, the promoters of the Company, are as follows:


 


1.   First
promoter: SemiLEDs Corporation (hereinafter “SemiLEDs”)


Legal address: 999 Main Street, Suite 1010, Boise, ID 83702, USA 

Name of authorized representative: Trung Doan


Nationality: US


Address: 150 Columbia
Way, Vallejo, CA 94589


Post: Chairperson, CEO


 


2.   Second promoter: Beijing Aieryidi Investment
Co., Ltd. (hereinafter referred to as “Aieryidi”)


Legal address: No. 1
Tuan Quan, Tuan Quan Village, Jiuduhe Town, Huairou District, Beijing


Name of legal
representative: Zhang Bin Bin


Nationality: Chinese


Address: No. 7, 1st
Zone Middle, Longcheng Garden, Changping District, Beijing 


Post: Executive Director


 


Article 2.
Representation and warranty of each party to the other party:


 


1.   The said party is a duly established and
validly existing company.


 


2.  The said party has obtained all authorization
and consent necessary for the execution, delivery and performance of this
Agreement, including the internal authorization of the said party and the
consents and approvals of third parties, but excluding, on the signature date
hereof, the approvals of governmental departments for the preparation and
establishment of the Company. This Agreement has been duly executed and
delivered by the said party and constitutes the lawful, valid and binding
obligations of the said party.


 


3.   The execution, delivery and performance of
this Agreement by the said party will not conflict with or contravene any of
the following, or cause it to violate, go against or assume any debt burden: (1) any
contract, agreement, commitment or warranty to which the said party is a contracting
party or by which the said party is bound; (2) any law applicable to the
said party; or (3) any provisions of the institutional documents of the
said party.


 


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Chapter II. Establishment of the Company


 


Article 3. Promoters
of the Company, through full consultation, agree to establish Xurui Guangdian
Co., Ltd. in Foshan City, Guangdong Province in accordance with relevant
laws and regulations of China.


 


Article 4.
Chinese name of the Company: 


 


English
name of the Company: Xurui Guangdian Co., Ltd.


 


Article 5.
Registered address of the Company: Room 201, Tower B, Startup Business
Centre, Nanhai Information Technology Park, Shishan Town, Nanhai District,
Foshan City, Guangdong Province.


 


Article 6. Corporate
form: The organizational form of the Company is a joint stock company
incorporated in accordance with the Company Law. Any party only assumes
responsibility to the extent of the shares it has subscribed to in the Company.


 


Chapter III. Purpose and Business Scope of the Company


 


Article 7. Operating
purpose and objective of the Company:


 


The operating purpose of
the Company: to develop China’s semiconductor lighting industry supplying
high-quality and inexpensive high-brightness and high-power LED chips and
packaged products for China and the global semiconductor lighting industry.


 


The objective of the
Company is to promote the development of China’s semiconductor lighting
industry, become the best Chinese semiconductor epitaxial chips manufacturer
and the most influential and leading semiconductor lighting enterprise in the
world.


 


Article 8. Business
scope:


 


Design, research and
development, production and sales of LED epitaxial wafers, chips and packaged
products. Any business banned by laws, administrative regulations, decisions of
the State Council and state industrial policies for foreign investment shall
not be operated; any business that shall be permitted by laws, administrative
regulations and decisions of the State Council and limited by the state
industrial policies for foreign investment may be operated only with the
approval of the approving authority and the registration of departments in
charge of industry and commerce; with respect to business for which permission
is not required by laws, administrative regulations and decisions of the State
Council and which is not limited by state industrial policies for foreign
investment, the Company may select and launch operating activities at its own
discretion.


 


Chapter IV. Contribution and Registered Capital of Promoters


 


Article 9. The total
initial registered capital of the Company is RMB 112,660,000. The Company will
issue 112,660,000 ordinary shares in total, with the par value per share of RMB
1.


 


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Article 10.
Promoters subscribe for shares in cash according to the par value. SemiLEDs
subscribes for 100,370,000 shares with US dollars equal to RMB 100,370,000,
representing 89.09% of the registered capital, and Aieryidi subscribes for
12,290,000 shares with RMB 12,290,000, representing 10.91% of the registered
capital. Promoters shall fully pay the subscription amount in one lump sum
within ninety (90) days after the issuance of the foreign investment approval
certificate by the relevant government approval authority of the commercial
department.


 


Article 11. Relevant
expenses at the initial period of the Company’s establishment shall be paid by
Aieryidi in advance. After the establishment of the Company, such expenses will
be reimbursed out of the Company’s operation expenses upon the confirmation by
the Board of Directors of the Company.


 


Article 12.
Preemptive right: in the event that the Company issues any new shares in
accordance with the Articles of Association of the Company, the Company shall deliver
to each party a written notice, which specifies the terms of issue, proposed
issuing date, consideration to be collected by the Company and all other
important terms related to such issuance. Each party, within twenty (20)
business days after the receipt of the notice, is entitled (but not obliged) to
subscribe for all or part of the shares planned to be issued, for which the
said party has the right to subscribe according to the ratio (the
then-shareholding ratio of the said party in the Company), by service of a
written notice to the Company (if the said party fails to deliver such written
notice as provided above, such party shall be deemed to have refused to
exercise its preemptive right). Where any party exercises its preemptive right,
the Company shall issue and sell shares to the said party and such party shall
subscribe for the shares it chooses to purchase in accordance with the price,
terms and conditions specified in the notice. If any party refuses or is deemed
to refuse to exercise all or part of the preemptive right thereof, the other
party is entitled (but not obliged) to purchase any or all shares the said
party refuses to purchase.


 


Chapter V. Total Amount of Investment and Scale of Production


 


Article 13. The
total amount of investment in the Company is expected to be RMB 200 million and
the production scale to be 3 sets of MOCVD at the initial stage, producing
4-inch substrate epitaxial wafers and high-power and high-brightness LED chips;
the production capacity is expected to be 5 KK/month and the luminous
efficiency to be larger than 100 Lm/W; and it is expected that the factory
construction will be completed and the design capacity will be attained by the
end of 2010. The difference between the total investment of the Company and the
registered capital will be made up through legal means, such as a bank loan.


 


Chapter VI. Rights and Obligations of Promoters


 


Article 14.
Promoters shall be entitled to:


 


(1)   the right to jointly decide any relevant
issues during the preparatory period of the Company;


 


(2)   the right to receive notice and express
opinions upon any change of conditions 


 


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specified herein;


 


(3)   the right to obtain indemnification or
compensation upon the breach of this Agreement by the other promoter, or for
any losses caused by the other promoter;


 


(4)   other rights enjoyed by promoters and
shareholders after the establishment of the Company in accordance with laws and
the Articles of Association of the Company.


 


Article 15.
Promoters shall assume the following obligations:


 


(1)   the obligation to engage in the activities
related to the establishment of the Company in accordance with relevant laws
and regulations, any promoter is not allowed to engage in illegal activities in
the name of the establishment of the Company;


 


(2)   the obligation to pay the registered capital
subscribed by the promoters in accordance with this Agreement;


 


(3)   the obligation to bear joint and several
liability for the expenses and debts arising from the establishment of the
Company in the event that the Company fails to be established;


 


(4)   the obligation to indemnify and compensate
the observant party in the event that the promoter fails or is unable to
perform the contribution obligation according to the period and amount
specified;


 


(5)   the obligation to provide all documents and
certificates necessary for the application and registration for the
establishment of the Company in a timely manner and to offer various services
and conveniences for the establishment of the Company;


 


(6)   each party bears the confidentiality
responsibility for the secret related to other parties or the transactions
hereunder known during the establishment of the Company (hereinafter referred
to as the “Relevant Secret”), unless otherwise stipulated by China’s laws and
regulations or allowed by relevant parties in writing, any party shall not
disclose the Relevant Secret to any other third party. The confidentiality term
shall commence on the date when this Agreement comes into force and ends on the
date when the Relevant Secret becomes public information;


 


(7)   all promoters shall know and understand that
they have the obligation and liability of maintaining the confidentiality of
all patents and proprietary technologies regarding the production and research
and development of the Company, which have come to their knowledge whether
during the process of the establishment of the Company or in future production
and operational activities. The Company and the other promoter shall have the
right to ask any party disclosing the technological secrets of the Company to
any other companies and persons outside of the Company to compensate the
Company and other promoter for all losses suffered as a result thereof, and to
claim compensation by legal means.


 


Chapter VII. Transfer of Shares


 


Article 16. Lockup
period: pursuant to the requirements of the applicable laws, the 


 


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shares held by the promoters may not be
transferred within one (1) year from the date of establishment of the
Company.


 


Article 17. Right of
first refusal: at any time after the expiration of the lockup period mentioned
above, if Aieryidi (hereinafter referred to the “Transferor”) proposes to
transfer all or part of the shares of the Company held by the Transferor, the
Transferor shall, prior to the transfer, deliver to the Company and SemiLEDs a
written notice, which shall describe the name and address of the transferee,
the number of shares to be transferred, the proposed date of transfer, the
proposed amount and form of consideration and other terms and conditions
related to such transfer. SemiLEDs is entitled (but not obliged) to exercise
the right of first refusal, namely, to buy the shares to be transferred
according to the price and terms and conditions set forth in the transfer
notice. SemiLEDs shall, within fifteen (15) days after the receipt of the
transfer notice, notify the Company and the Transferor of whether it will
exercise the right of first refusal or not. If SemiLEDs notifies the Company
and the Transferor of its waiver of the right of first refusal or fails to
notify the Company and the Transferor within fifteen (15) days, the Transferor
may transfer the shares to be transferred that are specified in the transfer
notice to the transferee, but the transfer price shall not be lower than the
price set forth in the notice, and other transfer terms and conditions shall
not be more favorable than the terms and conditions set forth in the notice
with respect to the transferee. This Article will become invalid
automatically upon the listing of the Company.


 


Article 18. Shares
issued prior to the public issuance of shares by the Company may not be
transferred within one (1) year after the date on which the shares of the
Company are listed for trading on a stock exchange. Promoters agree and
undertake to abide by any other lockup period provided under any applicable
laws, regulations and policies.


 


Chapter VIII. Organizational Structure and Procedural Rules of
the Company


 


Article 19. General
meetings of shareholders, the highest authority, shall perform their authority
subject to the Company Law and the Articles of Association of the Company.


 


Article 20. The
Board of Directors hereby established is the standing body of the Company,
which shall report to the general meetings of shareholders. Directors are
selected or replaced by the general meeting of shareholders by adopting the
system of cumulative voting. Each share holds the equal voting right to the
number of the candidate for directors during the selection and replacement of
directors. In addition, the voting right held by the shareholders can be
utilized in a centralized manner.


 


Six (6) directors
constitute the Board of Directors, where five (5) directors are nominated
by SemiLEDs and one (1) by Aieryidi. In case one or more candidate(s) nominated
by the above party is/are not selected as directors by the general meeting of
shareholders, the said party is entitled to renominate directors of
corresponding number. All promoters hereby undertake that each promoter votes
in favor of any candidate director nominated by one party as long as such
candidate director complies with the Company Law and other applicable laws and
regulations. In addition, where any director nominated by any party is
discharged or resigns prior to the expiration of the term, the said party
enjoys the exclusive right of nominating a substitutive director.


 


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The Board of Directors
has one (1) Chairman and one (1) Vice-Chairman. The Chairman and
Vice-Chairman are elected by affirmative votes of a majority of the entire
Board of Directors.


 


Article 21. The
Company shall establish a Board of Supervisors. The Board of Supervisors is
hereby established with three (3) supervisors, including one (1) worker
representative and two (2) shareholder representatives where the two (2) shall
be nominated by SemiLEDs and Aieryidi, respectively. The worker representatives
are elected and replaced by workers of the Company in a democratic manner while
the shareholder representatives are elected and replaced by the general meeting
of shareholders. Provided that any candidate supervisor nominated by any
foregoing party is not elected as the supervisor by the general meeting of
shareholders, the said party is entitled to renominate one candidate. All
promoters hereby undertake that each promoter votes in favor of the appointment
of any candidate supervisor nominated by one party with nomination right in the
general meeting of shareholders for the election of supervisors as long as such
candidate supervisor complies with the requirements and stipulations of the
Company Law and other applicable laws and regulations. In addition, where a
supervisor nominated by any party is discharged or resigns prior to the
expiration of the term, the said party shall have the exclusive right to
nominate a substitutive supervisor.


 


The Board of Supervisors
has one (1) Chairman of the Board and one (1) Vice-Chairman. The
Chairman and Vice-Chairman of the Board of Supervisors are elected by
affirmative votes of a majority of the entire Board of Supervisors.


 


The Board of Directors
and the Board of Supervisors shall exercise their powers in accordance with the
Company Law and the Articles of Association of the Company and enjoy the rights
and bear the obligations in line with the Company Law, the Articles of
Association of the Company and relevant laws and regulations. It is agreed by
all parties that all directors and supervisors will not be remunerated and all
the travel expenses of any director or supervisor shall be borne by the
corresponding nominating party.


 


Article 22. The
Company shall have an operation and management organization. The establishment
of the operation and management organization shall be subject to the
affirmative votes of a majority of all directors.


 


Chapter IX. Intellectual Property Rights


 


Article 23.
Development of new technologies and new products will be carried out after the
incorporation and a research and development center will be set up at an
appropriate time. The ownership of all the patents, know-how and other new
intellectual property rights developed by the Company are reserved by the
Company.


 


Article 24. Where
Aieryidi no longer holds the Company shares for any reason, it irrevocably
consents not to hold any rights on, and simultaneously waives any claim for,
the intellectual property rights held by the Company that were assigned by
SemiLEDs or which are licensed by SemiLEDs and enjoyed by the Company.


 


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Chapter X. Non-Competition and Related Transactions


 


Article 25. In order
to avoid horizontal competition, SemiLEDs hereby undertakes and guarantees:


 


1.  SemiLEDs shall not invest in any manufacturing
enterprises of LED epitaxial wafers and chips within the territory of China
except the investment projects agreed herein in a manner of sole
proprietorship, joint venture, merger and acquisition and the like without
prior written consent of the other promoter.


 


2.  Any third party to which SemiLEDs assigns or
licenses the technologies may not apply the technologies in the manufacturing
of LED epitaxial wafers and chips within Chinese territory.


 


3.  SemiLEDs may not engage in the production of
LED epitaxial wafers and chips in manner of OEM or outsourcing within Chinese
territory.


 


Article 26. For any
potential related transactions between the Company and shareholders, the
Company shall conform to the fair market pricing principle and abide by
relevant laws and regulations and regulatory rules, and shall procure the
Company to carry out strictly the decision-making process concerning the
related transactions so as to ensure the fairness, equality, justness and
impartiality of related transactions.


 


Chapter XI. Liability for Breach of Agreement


 


Article 27. Where (1) any
representation or warranty made by any party herein (hereinafter referred to as
the “Indemnifying Party”) is inaccurate, or (2) the Indemnifying Party
violates or fails to fully perform any undertakings, obligations or agreements
hereunder, thus directly or indirectly causing the other party or the Company
or their respective successors, transferees, affiliated parties or
representatives (collectively referred to as the “Indemnified Party”) to incur
or suffer any loss, debt, liability, depreciation, expense (including the
expense for investigation and defense and reasonable attorney fees and
accountant fees), as well as any harm of any manner or nature (whether it
involves any claim by the third party) (collectively referred to as the “Losses”),
the Indemnifying Party shall accordingly indemnify and hold harmless the
Indemnified Party from and against such Losses.


 


Article 28.
Notwithstanding the provisions of Article 27, in case any promoter fails
to contribute according to the time limit and amount agreed herein, the party
in breach shall pay a default penalty of 0.1% of the amount of overdue
contribution or the shortfall on a daily basis to the performing party.


 


Article 29. The
rights and obligations of all parties provided in Article 27 and 28 herein
shall survive the termination of this Agreement.


 


Chapter XII Force Majeure and Dispute Settlement


 


Article 30. A
promoter shall, in case of force majeure which directly affects the fulfillment
of this Agreement based on the terms agreed upon, promptly notify all the other
promoter of the accident and shall, within 15 days, provide the details of the
force majeure, the reasons why the performance of this Agreement cannot be
fulfilled 


 


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or fully fulfilled or needs to be delayed,
and the valid certifying documents. The other  promoter
shall, based on the extent of the impact of the force majeure on the
performance of this Agreement, negotiate and agree on the performance of this
Agreement and decide whether to release the promoter involved in the force
majeure from the performance of this Agreement.


 


Article 31. This
Agreement is governed by the laws of the People’s Republic of China. In case of
any dispute arising from or concerning the performance of this Agreement, the
parties to this Agreement shall settle the disagreement through friendly
consultation. In case the relevant dispute cannot be settled through
consultations within thirty (30) days as from the date on which a party
delivers to all other parties a written notice of the existence of the dispute,
any party is entitled to initiate arbitration with the South-China
Sub-Commission of China International Economic and Trade Arbitration Commission
for resolution. The arbitration decision is final and binding upon all parties.


 


Chapter XIII. Modification, Alteration and Termination of
this Agreement


 


Article 32. The
effectiveness of the modification or alteration hereof shall be subject to the
consent and written agreement signed by all promoters.


 


Article 33. This
Agreement can be terminated in the following situations:


 


1.   Any party may terminate this Agreement by
written notice: in case the governmental authorities do not approve the
establishment of the Company or capital increase and the rejection is final and
cannot be reconsidered; or any competent governmental authority releases any
decision, ban, order, judgment or regulation that is final and cannot be
reconsidered to prohibit, or adopts any other action to prohibit or prohibits
in any other manner, the completion of the transaction under this Agreement or
the Capital Increase Agreement.


 


2.   Any party may terminate this Agreement by
written notice: in case the Company fails to be established within six (6) months
after the execution of this Agreement unless the party intending to terminate
this Agreement fails to comply with any covenant, obligation or agreement
thereof.


 


3.  Any party may terminate this Agreement by
written notice: in case the other party materially violates or fails to comply
with the representation, warranty, covenant or agreement herein; or


 


4.  All parties agree to terminate this Agreement.


 


In case of the above-mentioned termination,
this Agreement shall become invalid and all rights and obligations of the
parties under this Agreement shall terminate. However, such termination shall
not release any party from any liabilities arising from the violation of any
representation, warranty, undertaking, obligation or agreement thereof, and
this Article, together with Chapter XI and Chapter XII, shall survive the
termination of this Agreement.


 


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Chapter XIV. Effectiveness of this Agreement and
Miscellaneous


 


Article 34. This
Agreement shall become effective upon the signature and seal of the promoters
and the approval of the approving authorities. This Agreement may be  executed in any number of counterparts, and all counterparts signed by
all parties separately shall together constitute one and the same valid
instrument.


 


Article 35. This
Agreement has six (6) copies, with each signing party holding one, the
approving authority holding two, the Administration for Industry and Commerce
and the Company each holding one, and all copies shall have the same legal
effect.


 


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This Agreement is signed by the following
parties on the date indicated on the cover page, in Nanhai District, Foshan
City, Guangdong Province, PRC.


 


 


	
  SemiLEDs Corporation

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Name: Trung Tri Doan

  	
   

  
	
  Position: Chairman and CEO

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Beijing Aieryidi
  Investment Co., Ltd.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Name: Zhang Bin Bin

  	
   

  
	
  Position: Executive Director

  	
   

  



 


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