Document:

Exhibit 4.2

Plant Facility Service Agreement

[Translation]

This Agreement is made by and between Chimei Innolux Corporation (hereinafter “Party A”) and Himax Display, Inc. (hereinafter “Party B”) on April 22, 2010.  The parties agree to the following terms and conditions with respect to the use by Party B of a plant facility located in Tainan Science and Industrial Park and owned by Party A and the services to be provided by Party A to Party B.

	
Article 1

	
Location of the Premises

 

	
1.1 

	
Party A agrees to provide a certain area of a plant facility located at 12 Nanke 8th Road, Tainan Science and Industrial Park, for Party B to research, develop, design, experiment, and establish a clean room for the production of Liquid Crystal on Silicon (L-COS).

 

	
1.2 

	
The square measure provided by Party A to Party B is 2980 squaremeters.

	
Article 2

	
Administrative Management

 

	
2.1

	
Personnel of Party B shall obey and act in compliance with all the administrative, management and operational regulations and processing directives of the plant.

 

	
2.2

	
Party B shall pay a management fee of NT$708,000 (tax excluded) to Party A monthly, as prescribed in Appendix I.

 

	
2.3

	
Party B shall buy all necessary insurances, liability insurances, or arrange necessary risk management measures for the benefit of the properties located and personnel worked in the premises.

 

	
2.4

	
Party B represents and warrants that business operations and production activities engaged within the premises will not disturb Party A as a result of an argument and/or dispute between a third person and Party B or its personnel. In the event where Party A, its representative, or personnel suffers, Party B shall be liable for the damages. If the damage is substantial, Party A is entitled to terminate this Agreement immediately.

 

	
2.5

	
With respect to payments of management fee, the following, without limitation, shall be taken into account:

 

	
  

	
1.

	
cost of land used;

 

 

 

1

 

 

 

	
  

	
2.

	
cost of plant construction;

 

	
  

	
3.

	
cost of monthly water and electricity supply; and

 

	
  

	
4.

	
cost of special gas and high-pressure electricity.

 

	
2.6

	
The management fee mentioned above may be adjusted reasonably and fairly upon the agreement of the parties based on the actual usage and costs of the premises.

 

	
2.7

	
When Party B moves to another office, it shall compensate Party A for the expenses in connection with remaining interior design, physical facilities and damages.

	
Article 3

	
Clean Room

 

	
  

	
Area to be used by Party B: Party A agrees to provide an area prescribed in Appendix II for Party B.

	
Article 4

	
Supply and Management of Energy

 

	
4.1

	
Party A shall provide power and energy for Party B’s L-COS production. Party B shall collaborate with Party A, providing Party A necessary assistance (such as planning on water and power usage), so that Party A may provide Party B all the necessary power and utility.

 

	
4.2

	
Party B shall, depending on the actual volume of its usage, pay Party A every month a fee of energy supply and management. Computation of such fee is prescribed in Appendix III.

	
Article 5

	
Confidentiality

 

	
5.1 

	
During the term of this Agreement, the parties shall treat thisAgreement, the information provided by the counter party, and/or any and all information of the counter party which may be known or accessed due to this Agreement confidential and shall not disclose to the third parties for any usage for the benefits of itself or others; the confidentiality obligation set herein shall survive even if this Agreement is expired or terminated.

 

	
5.2 

	
The parties shall enter non-disclose agreement including the sameconfidentiality obligations as set forth above with their employees to ensure their employees shall not disclose the other party’s trade secrets. If there is any breach of the confidentiality obligations set herein, the breaching party shall indemnify the damages incurred to the other party.

	
Article 6

	
Work Safety

 

 

 

2

 

 

 

	
6.1

	
Hazard Prevention Center and emergency response: Party B shall share the costs of supporting the Hazard Prevent Center in accordance with the area of its lease, which is prescribed in Appendix IV. Party B shall establish an emergency response team, which shall collaborate with Party A in emergencies in accordance with the emergency response procedures of Party A.

 

	
6.2

	
Fire control examination: Party B shall conduct maintenance and repair of fire control facilities within the premises, and share the costs prescribed in Appendix IV.

 

	
6.3

	
Public safety and hygiene management: Party B shall be responsible for providing safety and hygiene within the premises in accordance with the applicable laws and regulations, conduct public safety examinations in collaboration with Party A, and share relevant costs in proportion to the area it used.

 

	
6.4

	
Management of Party B’s contractors: Party B and its contractors shall comply with the contractors’ management rules promulgated by Party A, as prescribed in Appendix V.

 

	
6.5

	
Waste disposal: Party B shall, in accordance with applicable laws and regulations, dispose wastes generated in the course of producing L-COS.

 

	
6.6

	
Party B shall not store any illicit or illegal goods at Party A’s plant.

 

	
6.7 

	
Party B shall comply with the standard of applicable laws when releasing the waste gas and sewage; if Party B is seized by the governing authorities, environmental protection bureau, or Party A of any illegal emission which is attributable to Party B, Party B shall pay the fine to the authorities and Party A may issue a penalty statement to Party B and claim the penalty in accordance with item 9.4 of Contract Safety and Sanitation Penalty Clauses attached hereto; the penalty amount shall be then upon further agreement by the parties.

 

	
6.8 

	
If Party B breaches Section 6.7 set above, Party A may increase the waste gas or sewage process fee based on the breach and the price shall be then upon further agreement by the parties; however, if Party B repeatedly fails to meet applicable environmental protection regulation standard, and does not improve upon Party A’s notice, Party A may have Party B cease emission, and Party B shall handle the waste gas and sewage incurred thereof properly in compliance with applicable environmental protection regulations.

 

 

 

3

 

 

 

	
Article 7

	
Changes of Fees

 

	
7.1

	
In the event where Party B increases its staff or expands its area usage, it shall pay Party A additional fees regarding the area, water and power utilities and other fees.

 

	
7.2

	
In the event where extra fees are incurred due to Party B’s requirement regarding equipment (such as telephones) or its maintenance, such amounts shall become payable in the first month of the following year.

	
Article 8

	
Payments

 

Party A shall provide the figure due and issue invoices to Party B within three business days after the 30th day of every month (or similar time). Party B shall, within 30 business days after receipt of Party A’s provision of figure notification and invoices, remit the amount payable to a designated bank account of Party A; such remittance shall be done no later than the 15th day of every month.

	
Article 9

	
Maintenance

 

	
9.1

	
With respect to the usage and entry of the premises specified in this Agreement, Party B shall exercise due care as a faithful manager to safekeep, maintain, and repair relevant facilities, and shall comply with the management rules promulgated by Party A. With respect to facilities out of Party B’s reach (such as air conditioning and fire control system), Party B may engage Party A to provide assistance.

 

	
9.2

	
Party B shall not alter or add structures and exterior of the premises and the internal office facilities without Party A’ consent.

	
Article 10

	
Representations and Warranties

 

	
10.1

	
The parties represent and warrant that this Agreement is executed by their duly authorized representatives.

 

	
10.2

	
The parties represent and warrant that execution of this Agreement will not breach another contract, agreement, or obligation in any form having been made by either party with a third party.

	
Article 11

	
Breach and Remedies

 

If there is any breach of this Agreement by Party B, Party B shall not only cease such breach immediately, but also indemnify the damages incurred to Party A (including but not limited to the attorney’s fee). Party B agrees that Party A may file petition of temporary distrait, 

 

 

 

4

 

 

 

temporary action, or other seizure procedure to protect its benefits or terminate this Agreement thereof if Party B’s breach of this Agreement causes any damages to Party A.

	
Article 12

	
Term and Termination

 

	
12.1

	
This Agreement shall become effective on January 1, 2010 and expire on December 31, 2010.

 

	
12.2

	
The term of this Agreement shall automatically extend by a period of one year unless with a written notice to terminate this Agreement within 60 days prior to its expiration.

 

	
12.3

	
This Agreement may be terminated if either party commits a breach or is financially exhausted, provided that the other party shall give such party a 60-days’ prior written notice.

 

	
12.4

	
This Agreement may be terminated at any time upon the written consent of both parties.

 

	
12.5

	
This Agreement shall terminate immediately in the event of liquidation, reorganization, or bankruptcy of either party.

 

	
12.6 

	
The detailed items of maintenances and maintenance fee may be amended annually upon the consent of both parties.

	
Article 13

	
Restoration

 

Upon the expiration or termination of this Agreement, Party B shall restore the premises at its own expense to its original condition. Fixtures and other property remaining on the premises shall be disposed of by Party A at Party B’s cost and expense.

	
Article 14

	
Amendment and Assignment

 

	
14.1

	
Amendment of this Agreement shall be done by duly authorized representatives of the parties.

 

	
14.2

	
Without prior written consent of the parties, this Agreement may not be assigned to any third person; provided, however, that in the event that Party B desires to terminate this Agreement as a result of a change in its business or an internal restructure, Party B shall notify Party A of such event immediately in writing. In the event of termination by the foregoing, Party B shall cause the new business affiliate to enter into an agreement with the same terms and conditions of this Agreement.  Until the new business affiliate enters into the aforementioned agreement with Party A, the termination of this Agreement pursuant to 

 

 

 

5

 

 

this Article 13.2 shall not be effective.

 

	
14.3

	
Party B shall not permit any third person to use the premises without consent of Party A.

	
Article 15

	
Governing Law and Jurisdiction

 

The Parties agree that any and all disputes arising out of this Agreement shall be brought to Tainan District Court, Taiwan, as the governing court. The governing law shall be the laws of the Republic of China.

	
Article 16

	
Partial invalidation

 

	
16.1 

	
The non-affected part shall continue valid and effective when any clause of this Agreement is determined invalid.

 

	
16.2

	
Any addition, deletion and amendments to this Agreement shall be done in writing by the parties.

 

	
16.3 

	
The heading of each article and item in this Agreement is for the parties’ conveniences of references and reading and shall not be used to explain, restrict, or affect the meaning that each article and item shall refer.

	
Article 17

	
Integration

 

	
17.1 

	
The content of this Agreement and the appendices attached hereto evidence the complete agreement between the parties. The parties shall not be restricted by any mutual agreement or commitment made prior to this Agreement, if it is not stated in this Agreement or the appendices attached hereto.

 

	
17.2 

	
This Agreement and the appendices attached hereto are in the same effectiveness; however, if there is any conflict, this Agreement shall prevail.

	
Article 18

	
Assignment and Transfer

 

Unless with Party A’s written consent, Party B shall not assign and transfer its rights and obligations under this Agreement, in whole or in part, to third parties.

	
Article 19

	
Copies of Agreement

 

This Agreement is executed in two copies, with Party A keeping one copy and Party B keeping the other for records.

 

 

 

6

 

 

Entered into by

 

	
/Seals/

 

Chimei Innolux Corporation

Representative: Liao Jin-xiang

Unified Code: 16130303

Address: 3 Section 1 Huan Xi Rd., Tainan Science and Industrial Park, Tainan County

Telephone: 06-505-1888

 

	
/Seals/

 

Himax Display Inc.

Representative: Wu Bing-sheng

Unified Code: 13111296

Address: 12 Nanke 8th Rd., Tainan Science and Industrial Park, Tainan County

Telephone: 06-505-6888

Dated this 22nd day of April, 2010

 

 

 

7

 

 

 

Appendix I - Management Fee for Himax Display Inc.

	
Category

	
Item

	
CHI MEI PLANT

	
Remarks

	
Cost

	
Depreciation

	
Unit Price (Depreciated)

	
Amount

	
Unit

	
Cost

	
Maintenance Cost

	
Total Cost

	
Location

	
Office Area 55%

	  	  	
151

	
410

	
n2

	
61,910

	  	
61,910

	
$500 per ping

	
Office Area Public Amenities 45%

	  	  	
151

	
335

	
n2

	
50,585

	  	
50,585

	
Clean Room 55%

	  	  	
151

	
1,047

	
n2

	
158,097

	  	
158,097

	
Clean Room Public Amenities 45%

	  	  	
151

	
857

	
n2

	
129,407

	  	
129,407

	  	
Outdoor Dock and Sewage Tank 55%

	  	  	
20

	
182

	
n2

	
3,636

	  	
3,636

	  
	  	
Outdoor Dock and Sewage Tank 45%

	  	  	
20

	
149

	
n2

	
2,975

	  	
2,975

	  
	  	
Sub-total

	  	  	  	
2,980

	
n2

	  	  	
406,610

	  

 

 

 

 

8

 

 

 

	
Interior Decoration

	
Office Desk/ Chair/ Partition

	
-

	
6

	
-

	
1

	
Set

	
0

	
0

	
0

	
Already paid

	
Major Interior Decoration

	
1,300,178

	
26

	
4,167

	
1

	
Month

	
4,167

	
0

	
0

	
Total 59 month (January 2010 – November 2014): 1,300,178 – 4,167*59 = 1,054,325

	
Light Partition

	
1,950,000

	
26

	
6,250

	
1

	
Month

	
6,250

	
0

	
6,250

	  
	
Ceiling

	
620,000

	
26

	
1,987

	
1

	
Month

	
1,987

	
0

	
1,987

	  
	
Seamless Flooring

	
400,000

	
26

	
1,282

	
1

	
Month

	
1,282

	
0

	
1,282

	  
	
Conference room Whiteboard/ Notice Board

	
-

	
6

	
-

	
0

	
Item

	
0

	
0

	
0

	
Already paid

	
Shoe Cabinet

	
-

	
6

	
-

	
0

	
Item

	
0

	
0

	
0

	
Already paid

	
Facility

	
Network Equipment

	
-

	
4

	
-

	
1

	
Month

	
0

	
0

	
0

	  
	
Telephone System

	
-

	
6

	
-

	
1

	
Month

	
0

	
0

	
0

	  
	
Air Conditioning

	
2,305,148

	
Equipment cost maintenance fee (effective from January, 2010)

 

	
21,344

	
1

	
Month

	
21,344

	
46,103

	
67,447

	  
	
Electrical Equipment

	
853,400

	
7,902

	
1

	
Month

	
7,902

	
17,068

	
24,970

	  
	
Firefighting Equipment

	
500,000

	
4,630

	
1

	
Month

	
4,630

	
10,000

	
14,630

	  
	
Kitchen Equipment

	
433,609

	
6,022

	
1

	
Month

	
6,022

	
8,672

	
14,694

	
NT.15,740,000 per 1815 uses * 50 people

	
ID Card System

	
234,250

	
3,253

	
1

	
Month

	
3,253

	
4,685

	
7,938

	
NT.9,370,000 per 200 sets * 5 sets

	
Surveillance System

	
409,655

	
5,690

	
1

	
Month

	
5,690

	
8,193

	
13,883

	
NT.19,800,000 per 145 sets * 3 sets

	
Projector Screen

	
-

	
6

	
-

	
1

	
Month

	
0

	
0

	
0

	
Already paid

	  	
Sub-total

	
9,006,240

	  	  	  	  	
62,527

	
94,721

	
153,081

	  

 

 

 

9

 

 

 

	
Electricity & Water

	
Water Cost

	  	  	
27

	
65

	
Person

	
1,755

	
0

	
1,755

	
Excludes clean room

	
Lighting/Operational Equipment Electricity Cost

	  	  	
148.3

	
410

	
m2

	
60,803

	
0

	
60,803

	
Excludes clean room

	
Air Conditioning Electricity Cost

	  	  	
108.8

	
410

	
m2

	
44,608

	
0

	
44,608

	
Excludes clean room

	
Fees

	
MIS Service Fee

	  	  	  	
1

	
Month

	
0

	
0

	
0

	  
	
Office Cleaning

	  	  	
25,000

	
0.0

	
Man hour

	
0

	
0

	
0

	  
	
Public Area Cleaning

	  	  	
112

	
65

	
Person

	
7,280

	
0

	
7,280

	  
	
Green Belt Plants

	  	  	
41

	
65

	
Person

	
2,665

	
0

	
2,665

	  
	
Lobby Reception

	  	  	
19

	
0

	
Person

	
0

	
0

	
0

	  
	
Administration Service Fee

	  	  	
35,000

	
0

	
Person

	
0

	
0

	
0

	  
	
Garbage Cleaning and Disposal

	
40Kg/person * 2.65

	  	
106

	
65

	
Person

	
6,890

	
0

	
6,890

	
NT.2,605/ton

	
Security

	  	  	
315

	
65

	
Person

	
20,475

	
0

	
20,475

	  
	
Medical

	  	  	
50

	
65

	
Person

	
3,250

	
0

	
3,250

	  
	
Washroom Supplies (e.g. toilet paper)

	  	  	
17

	
65

	
Person

	
1,105

	
0

	
1,105

	  
	
Parking Space (13 basic parking spots)

	  	  	  	  	  	  	
0

	
0

	
For each space over 13, additional charge of NT.2300 per month

	
Fire Inspection

	  	  	  	  	  	  	
0

	
0

	  
	  	
Sub-total

	  	  	  	  	  	  	  	
148,831

	  
	
Total

	
Rent (excludes tax)

	  	  	  	  	  	  	  	
708,552

	  

 

 

 

10

 

 

Appendix II - Engineering schematic

[omitted]

 

 

 

 

 

11

 

 

 

Appendix III

	
C.M.O.

LCM Plant Himax Display Opto-Electronics Project

Compressed Dry Air (CDA) Cost Calculation Table

	
Fixed Cost

	
(1) Investment Cost

	
Name

	
Total Investment Amount

	
Monthly Cost (amortized over 5 years)

	
Remarks

	
Screw Air Compressor

	
NT.13345716

	
NT.185358

	  
	
Air Dryer

	
NT.8555144

	
NT.118822

	  
	
Pipeline

	
NT.39484094

	
NT.548390

	  
	
Sub-Total

	
NT.61384954

	
NT.852570 per month

	  
	
(2) Land and Infrastructure Investment Cost

	
Amortized Monthly Total

(852570)/0.7*0.3

	
NT.365387 per month

	  
	
(3) Equipment, Land and one-time Power Supply Work Total Investment Cost Monthly Interest

	
((1) + (2)) * 0.5% (annual interest rate 6%)

	

NT.6090 per month

	   
	
Sub-Total: (1) + (2) +(3) = 852570 + 365387 +6090

= NT.1224047 per month

	
Fixed Cost:    1224047/8752 CMH = NT.140/CMH–month) = NT.0.194 CMH-HR)

Note: 8752 CMH: (2188 CMH/SET * 4 SETS = 8752 CMH)

 

 

 

12

 

 

 

	
Operating Cost

	
(1) Electricity Cost

	
Equipment Name

	
Monthly Power Consumption per Set

	
Number of Sets

	
Total Monthly Power Consumption

	
Total Monthly Electricity Cost

	
Screw Air Compressor

	
246KWH*24*30

	
4

	
4*246*24*30

	
NT.1204416

	
Air Dryer

	
51KWH*24*30

	
3

	
3*51*24*30

	
NT.187272

	

Sub-total:    NT.160/month-CMH

	

(2) Maintenance Cost

	  

Equipment Name

	  

Monthly Cost per Set

	  

Number of Sets

	  

Total Monthly Cost

	  

Remarks

	  

Screw Air Compressor

	  

2043

	  

4

	  

8172

	 
	  

Air Dryer

	  

19165

	  

3

	  

57495

	 
	
Sub-total:     NT.7.5/month-CMH

Notes

1.The screw air compressor costs NT.2043/month for replacement of air filter, oil filter and lubricant.

2.The air dryer costs NT.19165/month for replacement of front filter, rear filter, final filter and activated carbon filter.

	
Sub-total: (1) + (2) = NT.167,5/month-CMH

	
Operating Cost:   NT.167.5/month-CMH/30/24=NT.0.23 CMH-HR

	
Total

Cost

	
Fixed Cost + Operating Cost

= NT.0.194 CMH-HR + NT.0.23 CMH-HR

	
Remarks:

The total capacity of the four screw air compressors:  8752CMH

(Each compressor rated at 2188CMH)

 

 

 

13

 

 

 

	
C.M.O.

LCM Plant Himax Display Opto-Electronics Project

DCC System Cost Calculation Table

	
Fixed Cost

	
(1) Investment Cost

	
Equipment Name

	
Total Investment Amount

	
Monthly Cost (amortized over 5 years)

	
Remarks

	
Pump (includes engineering)

	
NT.19000000

	
NT.263889

	  
	
Pipeline work

	
NT.39000000

	
NT.541667

	  
	
Sub-total

	
NT.58000000

	
NT.805556

per month

	  
	
(2) Land and Infrastructure Investment Cost

	
Amortized Monthly Total

(805556)/0.7*0.3

	
NT.345238 per month

	
(3) Equipment, Land and one-time Power Supply Work Total Investment Cost Monthly Interest

	
((1) + (2)) * 0.5%

	
 NT.5753/month

	
Sub-total: (1) + (2) + (3) = 805556 + 345238 + 5753

= NT.1156547 per month

	
Fixed Cost:   1156547/2410RT = NT.479/RT-month

Note:

2410RT: (heat exchanger 2430000Kcal/HR*3 SETS

= 7290000Kcal/HR/3024

= 2410RT)

 

 

 

14

 

 

 

	
Operating Cost

	
(1) Electricity Cost

	
Equipment Name

	
Monthly Power Consumption per Set

	
Number of Sets

	
Total Monthly Power Consumption

	
Total Monthly Electricity Cost

	
DCC refrigerated water pump

	
75kwh*24*30

	
3

	
75kwh*24*30*3

	
NT.91800

	
Sub-total:    NT.91800 per month

	
(2) Maintenance Cost

	
Equipment Name

	
Monthly Cost per Set

	
Number of Sets

	
Total Monthly Cost

	
Remarks

	
DCC refrigerated water pump

	
1666

	
3

	
4998

	  
	
Sub-total:    NT.4998 per month

Note: Pump maintenance (bearing lubrication, axel maintenance and calibration) is approximately NT.1666 per month.

	
Sub-total: (1) + (2) = 91800 + 4998 = 96798 per month

	
Operating Cost: 96798/2415RT/30/24 = NT.0.056/RT-HR

	
Total

Cost

	
Fixed Cost + Operating Cost = NT.479/RT-month + NT.0.056/RT-HR

 

 

 

15

 

 

 

	
C.M.O.

LCM Plant Himax Display Opto-Electronics Project

Nitrogen Gas Cost Calculation Table

	
Fixed Cost

	
(1) Investment Cost

	
Equipment Name

	
Total Investment Amount

	
Monthly Cost (amortized over 5 years)

	
Remarks

	
Pipeline

	
NT.3000000

	
NT.41667

	  
	  	  	  	  
	  	  	  	  
	
Sub-total

	
NT.3000000

	
NT.41667 per month

	  
	
(2) Land and Infrastructure Investment Cost

	
Amortized Monthly Total

(41667)/0.7*0.3

	
NT.17857 per month

	
(3) Equipment, Land and one-time Power Supply Work Total Investment Cost Monthly Interest

	
((1) + (2)) * 0.5% (Annual interest at 6%)

	
 NT.298 per month

	
Sub-total: (1) + (2) + (3) = 41667+ 17857 + 298

= NT.59822 per month

	
Fixed Cost:   NT.59822 per month

	
Operating Cost

	
1KG LN2 = 0.8M3GN2

 

Expended Cost

= (Actual cumulative nitrogen gas usage / 0.8) * NT.3.1/KG-LN2

	
Operating Cost:

(Actual cumulative nitrogen gas usage / 0.8) * NT.3.1/KG-LN2

	
Total

Cost

	
Fixed Cost + Operating Cost = NT.59822/month + (actual cumulative nitrogen gas usage/0.8)*NT.3.1/KG-LN2

	
Remarks:

 

 

 

16

 

 

 

	
C.M.O.

LCM Plant Himax Display Opto-Electronics Project

Refrigerated Water System Cost Calculation Table

	
Fixed Cost

	
(1) Investment Cost

	
Equipment Name

	
Total Investment Amount

	
Monthly Cost (amortized over 5 years)

	
Remarks

	
Refrigeration unit including engineering

	
NT.64254860

	
NT.892429

	  
	
Pump including engineering

	
NT.24270000

	
NT.337083

	  
	
Water Cooling Tower including engineering

	
NT.28607105

	
NT.397321

	  
	
Pipeline work

	
NT.67500000

	
NT.937500

	  
	
Sub-total

	
NT.184631965

	
NT.2564333

per month

	  
	
(2) Land and Infrastructure Investment Cost

	
Amortized Monthly Total

(2564333)/0.7*0.3

	
NT.1099000 per month

	
(3) Equipment, Land and one-time Power Supply Work Total Investment Cost Monthly Interest

	
((1) + (2)) * 0.5%

	
NT. 18317 per month

	
Sub-total: (1) + (2) + (3) = 2564333 + 1099000 +18317

= NT.3681650/RT-HR

	
Fixed Cost: 3681650/8880RT = NT.434.8/RT-month

= NT. 0.604 RT-HR

Note: 8880RT: (Heat recovery 460RT * 3 SETS + 1250RT * 6 SETS

=8880RT)

 

 

 

17

 

 

 

	
Operating Cost

	
(1) Electricity Cost

	
Equipment Name

	
Monthly Power Consumption per Set

	
Number of Sets

	
Total Monthly Power Consumption

	
Total Monthly Electricity Cost

	
1250RT refrigeration unit

	
812KWH*24*30

	
6

	
812KWH*24*30*6

	
NT.3507840

	
460RT refrigeration unit

	
360KWH*24*30

	
3

	
360KWH*24*30*3

	
NT.777600

	
Secondary refrigerated water pump

	
150KWH*24*30

	
4

	
150KWH*24*30*4

	
NT.432000

	
Cooling water pump

	
75KWH*24*30

	
6

	
75KWH*24*30*6

	
NT.324000

	
Cooling water pump

	
5 KWH*24*30

	
3

	
6 KWH*24*30*3

	
NT.120960

	
Refrigerated water pump

	
30KWH*24*30

	
6

	
30KWH*24*30*6

	
NT.129600

	
Refrigerated water pump

	
23KWH*24*30

	
3

	
23KWH*24*30*3

	
NT.49680

	
Water cooling tower fan

	
45KWH*24*30

	
6

	
45KWH*24*30*6

	
NT.194400

	
Sub-total:    NT.5536080 per month

	
(2) Maintenance Cost

	
Equipment Name

	
Monthly Cost per Set

	
Number of Sets

	
Total Monthly Cost

	
Remarks

	
1250RT refrigeration unit

	
12500

	
6

	
7500

	  
	
460RT refrigeration unit

	
1250

	
3

	
37500

	  
	
Secondary refrigerated water pump

	
1666

	
4

	
6664

	  
	
Cooling water pump

	
1666

	
6

	
9996

	  
	
Cooling water pump

	
1666

	
3

	
4998

	  
	
Refrigerated water pump

	
1666

	
6

	
9996

	  
	
Refrigerated water pump

	
1666

	
3

	
4998

	  
	
Water cooling tower fan

	
5000

	
6

	
30000

	  
	
Sub-total:   NT.179152 per month

	
Sub-total: (1) + (2) = 5536080 + 179152 = NT.5715232 per month.

Note:

 

1.     Maintenance for main refrigeration water unit (cleaning condenser, replace oil filter, clean distillation unit, replace refrigeration oil) costs approximately NT.150000 a year, or an average of NT.12500 per unit each month.

 

2.     Maintenance for the water cooling tower (cleaning basin, maintenance of speed reduction gear, replacement of speed reduction gear oil( costs approximately NT.60000 a year, or an average of NT.5000 per unit each month

 

3.     Maintenance for pumps (bearing lubrication, maintenance of axels and calibration) costs approximately NT.20000 a year, or NT.1666 per unit each month.

	
Operating Cost:  5715232/8880RT/30/24 = NT.0.893/RT-HR

	
Total

Cost

	
Fixed Cost + Operating Cost = NT.0.604/RT-HR + NT.0.893/RT-HR

= NT.1.497/RT-HR

 

 

18

 

 

C.M.O.

LCM Plant Electricity System Cost Calculation

(1) A total of 26 high and low voltage distributors are related to Himax Display

	
1.

	
Share in for one-fifth of the burden for the following distributors

3002-ESG-001~ 3002-ESG-005

3002-ESG-T01

3002-GT-001 ~ 005

3002-GR-001 ~ 3002-GR-005

Total: NT.3433800

One fifth is therefore NT.686760

	
2.

	
Share in one half of the burden for the following distributors

2002-SB-250

2002-SB-T50

2002-SB-150

2002-SB-242F

2002-SB-131H”

2002-ESB-T81

2002-ESB-191D”

2002-ESB-291d”

2002-ESB-281D

2002-ESB-T91”

Total: NT.3898099

One half is therefore NT.1949050

	
3.

	
Emergency Power Supply

Total construction cost is NT.50 million, with Himax Display Opto-Electronics’s share being:

50000000/5*0.4 = NT.4000000

 

 

 

19

 

 

 

(2)   From the above, if amortized over five years by LI-CHING Opto-Electronics, the fixed cost are:

4000000/6/12 = 55556

+

7457398.5/6/12 = 36609

NT. 92165

(3)   The above are the fixed costs, while the variable cost is calculated using the following equation:

LI-CHING Opto-Electronics’ monthly power consumption

* Taipower’s listed hourly rate

* 1.2

 

 

 

20

 

 

	
C.M.O.

LCM Plant Himax Display Opto-Electronics Project

Hot Water System Cost Calculation Table

	
Fixed Cost

	
(1) Investment Cost

	
Equipment Name

	
Total Investment Amount

	
Monthly Cost (amortized over 5 years)

	
Remarks

	
Heater (1000KW, 217RT)

	
NT.2593800

	
NT.36025

	  
	
Heater Pump

	
NT.105090

	
NT.1460

	  
	
Primary Hot Water Pump

	
NT.229163

	
NT.3182

	  
	
Secondary Hot Water Pump

	
NT.394755

	
NT.5483

	  
	
Pipeline

	
NT.3312709

	
NT.46009

	  
	
Sub-total

	
NT.6635517

	
NT.92159

per month

	  
	
(2) Land and Infrastructure Investment Cost

	
Amortized Monthly Total

(92159)/0.7*0.3

	
NT.39497 per month

	
(3) Equipment, Land and one-time Power Supply Work Total Investment Cost Monthly Interest

	
((1) + (2)) * 0.5% (Annual interest at 6%)

	
NT.658 per month

	
Sub-total: (1) + (2) + (3) = 92159 + 39497 +658

= NT.132314 per month

	
Fixed Cost: 132314/434RT = NT.305/RT-month = NT.0.424/RT-HR

Note:

434RT: (one heater hot water RT index

= (290 gallon * 3.785 liter) * 10 temperature difference * 1 specific heat capacity * 60 minute / 3025 Calorie-hour = 217RT) * 2 SETS

= 434RT

 

 

 

21

 

 

 

	
Operating Cost

	
(1) Electricity Cost

	
Equipment Name

	
Monthly Power Consumption per Set

	
Number of Sets

	
Total Monthly Power Consumption

	
Total Monthly Electricity Cost

	
Heater

	
1000KW*0.8*24*30

	
2

	
2*1000KW

*0.8*24*30

	
NT.1958400

	
Heater Pump

	
2.2KW*0.8*24*30

	
2

	
2*2.2KW

*0.8*24*30

	
NT.18957

	
Primary Hot Water Pump

	
5.5KW*0.8*24*30

	
3

	
3*5.5KW*0.8

*24*30

	
NT.16157

	
Secondary Hot Water Pump

	
22KW*0.8*24*30

	
3

	
3*22KW

*0.8*24*30

	
NT.6463

	
Sub-total:   NT.1999977 per month

	
(2) Maintenance Cost

	
Equipment Name

	
Monthly Cost per Set

	
Number of Sets

	
Total Monthly Cost

	
Remarks

	
Heater

	
1000

	
2

	
2000

	  
	
Heater Pump

	
1666

	
2

	
3332

	  
	
Primary Hot Water Pump

	
1666

	
3

	
3332

	  
	
Secondary Hot Water Pump

	
1666

	
3

	
3332

	  
	
Sub-total:  NT.11996 per month

Note:

Maintenance for pumps (bearing lubrication, maintenance of axels and calibration) is approximately NT.1666 per set each month.

Maintenance for heater and cleaning of electric heater is approximately NT.12000 a year, or around NT.1000 per set each month.

	
4. Sub-total: (1) + (2) = 1999977 + 11996 = NT. 2011973 per month

	
Operating Cost:  2011973/434RT/30/24 = NT6.4RT-HR

	
Total

Cost

	
Fixed Cost + Operating Cost = NT.0.424/RT-HR + NT6.4/RT-HR

	
Remarks

	
The total for two heaters: 434RT (217RT per set)

 

 

 

22

 

 

 

Himax Display Opto-Eletronics Hyperpure Water Charges

	  	
Year 2003

	  	  	  	
Year 2004

	  
	
Month

	
September

	
October

	
November

	
December

	
January

	
February

	
Hyperpure Water Usage (M3)

	
100

	  	  	  	  	  
	
Monthly Sewage Charge

	
0

	  	  	  	  	  
	
Cumulative Flow Rate at Start of Month

	
100

	  	  	  	  	  
	
Cumulative Flow Rate at End of Month

	
200

	  	  	  	  	  
	
Hyperpure Water Charge =

	
Monthly Volume (M3) * unit price

	
Unit price

	
Monthly Sewage Charge * 1.3

	
Monthly Sewage Charge

	  	  
	  	
100

	
40

	
1.3

	
5200

	  	  

 

 

23

 

 

 

	
C.M.O.

LCM Plant Himax Display Opto-Electronics Project

Sewage Treatment Charges Calculation Table

	
Fixed Cost

	
(1) Investment Cost

	
Equipment Name

	
Total Investment Amount

	
Monthly Cost (amortized over 5 years)

	
Remarks

	
Flow meter

	
NT.50000

	
NT.695

	  
	  	  	  	  
	
Sub-total

	
NT.50000

	
NT.695 per month

	  
	
(2) Land and Infrastructure Investment Cost

	
Amortized Monthly Total

NT.695/0.7*0.3 = 298

	
NT.298 per month

	
(3) Equipment, Land and one-time Power Supply Work Total Investment Cost Monthly Interest

	
((1) + (2)) * 0.5% (Annual interest at 6%)

	
NT.5 per month

	
Sub-total: (1) + (2) + (3) = 695 + 298 +5 = NT.998 per month

	
Fixed Cost:  NT.850 per month

	
Operating Cost

	
(1) Electricity Cost

	
Equipment Name

	
Monthly Power Consumption per Set

	
Number of Sets

	
Total Monthly Power Consumption

	
Total Monthly Electricity Cost

	
Sewage Pump

	
7.5KWH*24*30

	
2

	
10800kw.hr

	
NT.19440

	  	  	  	  	  
	
Sub-total:    NT.19440 per month

	
(2) Sewage Treatment Cost

	
Equipment Name

	
Monthly Cost per Set

	
Number of Sets

	
Total Monthly Cost

	
Remarks

	
Sewage 1 ton

	
NT.18/month

	
1

	  	
Calculated by volume

	  	  	  	  	  
	  
	  
	
Operating Cost: NT.19440 per month

	
Total

Cost

	
Fixed Cost + Operating Cost + Pipeline Charge

= NT.998/month + NT.19440/month

= 20438 + Pipeline Charge * 1.3

Pipeline Charge is calculated using actual sewage volume.

	
Remarks:

 

 

24

 

 

Appendix IV

I. Himax Display Opto-Electronics Fire and Maintenance Fees

	
Total Annual Cost

	
Floor Square Measure M2

	
Price/M2/Year

	
Rental M2

	
Rental Cost/Year

	
Interest 5%/Year

	
Monthly Cost

	
Average Cost/M2/Month

	
Average Unit Cost/Ping/Month

	
1,512,000

	
206,569

	
7.32

	
2,980

	
21,812

	
1,091

	
1,909

	
0.6

	
2.1

Remark I: Square measure of building A is the references for calculating unit cost.

Remark II: The main purpose of this cost is for fire control examination and maintenance.

II. Emergency Services Center

Full-time-indirect personnel labor cost NT495/hr

Basic working hours 8.5hrs/day, 20days/month, 12 months/year, 2040hrs/year (240days/year)

Precaution labor cost per month 495*24*365/12=4336200/12=361350

 

	
Total Annual Cost

	
Floor Square MeasureM2

	
RentalM2

	
Unit Cost/M2/Month

	
Unit Cost/Ping/Month

	
361,350

	
206,569

	
2,980

	
1.7

	
6

 

 

 

25

 

 

 

Appendix V

CHI MEI ELECTRONICS CORP.

Contractor Safety and Sanitation Penalty Clauses

	
Category

	
Item

	
Violation

	
Disposal

	
Penalty Amount

(NT)

	
Work Permit

	
1-1

	
Did not return daily work permit on time (including emergency maintenance sheet, special operation checklist).

	
Review and Improvement

	
1,000 each

	
1-2

	
Work permit or Inter Link by-pass application not displayed at work site (ready for examination in case of display difficulty).

	
Improvement and then return to work

	
1,000 each

	
1-3

	
Use of equipment not verified for use by this company. (Such as arc welders); or alteration after verification without re-verification

	
No use of such equipment

	
5,000 each

	
1-4

	
Did not apply for work permit or a permit for special operations. (such as elevation, sealed space , use of naked flame, combination and allocation of construction frame, electricity transmission, disassembly/ dig of dangerous pipe, suspension, Inter Lock by-pass, open line operation...and etc.)

	
Suspension of work

	
5,000 each

	
1-5

	
Use of dangerous equipment regulated by applicable laws not performed by qualified certificate (including personnel involved in work)

	
Suspension of work

	
above10,000

	
1-6

	
Did not attend the work safty meeting held by the outsourcing contractor; or did not notify the personnel or subcontractors involved in work with the resolutions and meeting minutes made by such meeting.

	
Suspension of work

	
above10,000

	
1-7

	
Contractor did not hold workbox meeting prior to that day (or tomorrow’s) operations; did not hold a co-operation meeting to appoint a co-operation supervisor; did not pan and implement the auto check and keep records for examination.

	
Improvement and then return to work

	
3,000 each

 

 

 

26

 

 

 

 

	
Plant Maintenance and Security

	
2-1

	
Photographed or videotaped without permission (traditional camera-->confiscate film; digital camera-->delete memory).

	
Expel from the fab

	
3,000 each

	
2-2

	
Unauthorized removal or use of items such as the company’s electrical equipment and warning signs etc.

	
Improvement and then return to work

	
3,000 each

	
2-3

	
If causing equipment damages, the contractor is responsible for immediately arranging for its repair.  (including other contractors’ equipment)

	
Immediate repair

	
3,000 each

	
2-4

	
Personnel’s negligence that may result in the company’s asset or personnel damages and losses (Indemnification shall be made subject to the real price of damages and losses which may occur.)

	
Review meeting

	
3,000 each

	
2-5

	
Unauthorized use of electrical (must use authorized electrical distribution board), water or gas sources.

	
Improvement and then return to work

	
10,000 each

	
2-6

	
Operation without appropriate isolation or protection measures that activates the alarm system

	
Suspension of work

	
above 10,000

	
2-7

	
No appropriate protection measures taken against events with potential risks.

	
Suspension of work

	
above 10,000

	
Command and Control Operations

	
3-1

	
Personnel involved in work did not dress appropriately, wear badge on obvious place, or comply with the working rules to rest or dine in the rest area.

	
Improvement and then return to work

	
500 each

	
3-2

	
Did not wear safety hamlet when riding motorcycle on site (wearing working hamlet would be deemed as no wearing of safety hamlet.)

	
Expel from the fab

	
500 each

	
3-3

	
Personnel Management:

Personnel operated without working permit or wearing identification badge (such as working on site wearing a guest badge), or carried or drank alcoholic beverages. (such as Whisbih type drinks), betel nuts and other contraband goods.

	
Review and improvement

	
3,000 each

	
3-4

	
Vehicle Management:

Vehicle did not have identification badge, did not parked as directed, or blocked traffic;

drove a vehicle at a speed which caused risks of danger (exceeding the speed limit of each site; if there was no specific speed limit, the speed limit should be 20Km/hr).

	
Expel such personnel and vehicle from the fab

	
3,000 each

	
3-5

	
Contractor’s site supervisor and safety/sanitation personnel did not attend safety and sanitation related meeting held by this company without causes.

	
Review meeting

	
3,000 each

	
3-6

	
No personnel on site to command and coordinate when discharging of cargo.

	
Improvement and then return to work

	
3,000 each

	
3-7

	
Safety/Sanitation supervision personnel not appointed at site or such personnel did not wear identification vest/armband.

	
Improvement and then return to work

	
3,000 each

	
3-8

	
Personnel involved in work did not complete the safety and sanitation training course before starting work inside plant.

	
Expel from the fab

	
5,000 each

	
3-9

	
Special operations with less than two personnel in co-operation (such as elevation, sealed space , use of naked flame, combination and allocation of construction frame, electricity transmission, disassembly/ dig of dangerous pipe, suspension, Inter Lock by-pass, open line operation...and etc.)

	
Improvement and then return to work

	
5,000 each

	
3-10

	
Using other personnel’s identification badge to enter the site; personnel or vehicle entering or leaving the plant without the permission of the security staff.

	
Expel from the fab

	
10,000 each

	
3-11

	
Special operations, no commander/ supervisor or relevant operation manager appointed on site (such as elevation, sealed space , use of naked flame, combination and allocation of construction frame,...and etc.)

	
Suspension of work

	
10,000 each

	
3-12

	
Did not comply with relevant signed recycling field regulations (such as covering protection mask when carrying and delivery flakily waste, leaving fab records, ...and etc.)

	
Review meeting

	
5,000 each

 

 

 

27

 

 

 

 

	
Work Safety

	
4-1

	
Personnel did not wear or use safety equipment properly (e.g. helmet, harness, mask etc.) or used inadequate safety equipment;  personnel crossed or entered the restricted area not for operation purposes or otherwise without permission.

	
Improvement and then return to work

	
3,000 each

	
4-2

	
Improper lighting that may cause risks of danger during operation.

	
Improvement and then return to work

	
3,000 each

	
4-3

	
Did not retrieve the blind flange after operations on it, or did not put alarm device (triangular pyramid connecting rod warning tape fence) if not retrievable

	
Improvement and then return to work

	
5,000 each

	
4-4

	
Did not apply to remove safety equipment, or did not restore safety equipment immediately.

	
Improvement and then return to work

	
5,000 each

	
4-5

	
Open surface: no appropriate safety measure in digging operations; no warning signs; no sufficient safety protection to open surface.

	
Improvement and then return to work

	
5,000 each

	
4-6

	
Hazardous work sites that should regulate the movement of personnel not involved in the work (suspension, arc welding, cutting etc.) not displaying warning signs and area not properly closed off. (e.g. warning tape)

	
Improvement and then return to work

	
5,000 each

	
4-7

	
Elevated Operations:

Used movable stairs without co-operation; stood on the top of movable stairs to conduct construction; moved the construction frame(stairs) with personnel on it; did not use safety harness or vertical safety lines, vertical safety materials made from steel rope, nylon rope, synthetic fiber, or such materials permitted by applicable regulations; did not install safety nets, edge guard ropes or other similar safety facilities; used non-approved personnel transportation equipment; or did not take other safety measures required by applicable regulations.

	
Improvement and then return to work

	
5,000 each

	
4-8

	
Construction shelf:

Construction shelf without protection fence or armrests, or footrest overlaps without full coverage, scabbard, wall draw bar, cross link shaft or slanting support; construction with non-safety ladders (including dangerous slope); operation without constructing or fixing the safety shelf; no crosspiece at the end; did not completely fix the construction shelf brake; did not construct or use external extension shelf; or did not take other safety measures required by applicable regulations.

	
Forbidden use of such equipment

 

	
5,000 each

	
4-9

	
Crane Operations:

Crane or reel not fitted with safety latch; did not install/use reel over-speed device; wire rope broken, deformed or rope end not properly treated; iron holding rope (belt) with broken strand, erosion damages or other safety concerns; improper transportation of personnel; did not use appropriate framework to secure steel cylinders in place when hoisting them; hoisting materials without using appropriate framework to secure them in place with the potential of falling; did not take other safety measures required by applicable regulations; or equipments with safety latch which was out of order or fell off.

	
Forbidden use of such crane

Improvement and then return to work

	
5,000 each

	
4-10

	
Safety and Sanitation personnel appointed by the vendor did not supervise to implement each self examination and safety protections measures. .

	
Review

	
5,000 each

	
4-11

	
When conducting construction in limited, thin oxygen, closed space, did not take relevant safety protection measures as required by applicable regulations (such as, danger evaluation before construction, concentration of oxygen, danger materials, hazardous materials determination, ventilation implementation, ...etc.)

	
Suspension of work

	
10,000 each

	
4-12

	
High altitude work cart and power lifter:

Must mark on safety belt when conducting ascending and descending framework; climbed the protection fence; did not descend to the lowest site before any movement; did not turn on arrester or supporting shelf before ascending; or improper usage causing safety concern.

	
Improvement or forbidden use

	
3,000 each

 

 

 

28

 

 

 

	
Fire Prevention

	
5-1

	
Chemicals brought into the fab were not approved by relevant regulations or no mark of danger was attached to the obvious part of such containers.

	
Bring out of the fab immediately

	
1,000 each

	
5-2

	
1. Oxygen, acetylene and other steel cylinders not secured vertically or appropriately labeled.

2. Gas cylinders in use not placed on trolley.

3. Gas pipe lying across road.

	
Immediate improvement

	
1,500 each

	
5-3

	
Unauthorized use or damage of firefighting equipment in the absence of an emergency. (Such as using fire hose to hoist equipment, get water or displacement of firefighting equipment)

	
Immediate reinstatement and indemnity

	
3,000 each

	
5-4

	
No smoking in non-smoking areas.

	
Notice the supervisor and control

	
3,000 each

	
5-5

	
Insufficient protective measures in flammable and combustible liquid work area

	
Return to work after improvement

	
3,000 each

	
5-6

	
1. During open flame operations at least two fire extinguishers must be supplied by contractor within a five meter radius. (each at least 10 pounds, with CO2 extinguishers to be used in clean room)

2. Fire extinguisher pressure indicator should be normal, and still within the expiry date.

	
Return to work after

	
3,000 each

	
5-7

	
1. Electric arc welder casing not grounded.

2. Electric arc welder not fitted with an automatic electric shock prevention device; or

3. Other safety measures required by applicable regulations

	
Improvement or forbidden use

	
5,000 each

	
5-8

	
Oxygen, acetylene and other steel cylinders were not secured with pressure adjustment, pressure meter, anti-temper devices, or such devices were out of order, balata tube was broken, or joint was not constricted with special band or clip.

	
Improvement or forbidden use

	
5,000 each

	
5-9

	
1. Failed to remove all flammable materials in work area or cover them fully with a fire blanket.

2. Safety/Sanitation supervision personnel not present during use of open flame.

3. Cutting and welding tools in poor condition, with inadequate protective measures.

	
Improvement and return to work

	
5,000 each

	
Safe Electricity Use

	
6-1

	
1. Electrical wiring placed on wet surface.

2. Use of electrical wiring with broken sheath or poor insulation.

3. Naked wires plugged into power socket.

4. Did not correctly install fuse or circuit breaker.

5. Did not elevate crossover wires

6. Violation of the facility power usage, socket (including extension wires) usage or other power usage rules of the company.

	
Improvement or forbidden use

	
3,000 each

	
6-2

	
Electrical wiring not properly secured or placed in such a manner as to adversely affect personnel or operation safety.

	
Improvement and return to work

	
3,000 each

	
6-3

	
Generator: No sunshade device to cover outdoor fuel cans, no fire distinguisher, or no grounding device.

	
Improvement or forbidden use

	
3,000 each

	
6-4

	
Electricity divider tray did not use electric leakage broken circuit switch; no grounding device; power cord did not use wiring terminal; electric wire did no pierce through the box bottom to connect electricity; or electricity tray did not lock up.

	
Improvement or forbidden use

	
3,000 each

 

 

 

29

 

 

 

 

	
Environment Protection

	
7-1

	
1. Free blowing dust (did not spray water or take other effective dust suppression measures)

2. Build up of waste.

3. Other situations which cause environmental pollution.

4. Work site not cleaned up after completion of work.

	
Review Meeting

	
3,000 each

	
7-2

	
Tools and materials

1. Not placed in the designated storage area

2. Did not apply for temporary storage

3. Physically exceeded the designated storage area or exceeded the allowed time.

4. Stored in a disorganized manner.

5. Interfered with passage way or fire prevention facilities.

	
Improvement and return to work

	
3,000 each

	
7-3

	
Did not follow the park management office’s directives for contractors’ and their staff.

	
Punishment upon the situation

	
5,000 each

	
Regulatory Issues

	
8-1

	
Did not report occupational injury that occurred at work site (cumulative punishment upon situation).

	
Suspension of work

	
5,000 each

	
8-2

	
Hiring illegal labors; hiring female labors, child labors to conduct dangerous operation.

	
Suspension of work

	
10,000 each

	
8-3

	
Penalized by the examination authorities or environmental protection agency for labor safety and sanitation laws or environmental protection law violation.

	
Suspension of work

	
10,000 each

	
8-4

	
Fake or copy the company’s relevant execution or application documents (civil indemnity and criminal litigation would be claimed additionally).

	
Punishment upon situation

	
20,000 each

	
8-5

	
Other violations of relevant labors safety and sanitation regulations.

	
Punishment upon situation

	
5,000 each

	
Audit of Rectification

	
9-1

	
After being notified of a minor flaw to rectify, but later found to not have resolved the issue on time.

	
Review meeting

	
3,000 each

	
9-2

	
After being issued a financial penalty, did not pay the penalty or submit an appeal within 20 days.

	
Review and improvement

	
Withhold payment

	
9-3

	
Obstruct or did not follow the company’s personnel or delegate audit to process audit, or threat or harm such auditor (civil and criminal actions may be pursued additionally).

	
Suspension of work

	
20,000 each

	
9-4

	
Should there is any material damage and loss incurred to the company due to contractor’s negligence, the company will hold a meeting to decide the indemnity measures (the maximum indemnity amount is subject to the calculation of the company).

	
Punishment dependent on the circumstances 

	
30,000 each

 

 

 

30

 

 

 

	
Others

	
10-1

	
Did not use vacuum cleaner when using electric drill, electric saw or conducting any other operations that may produce dust in the clean room.

	
Improvement and return to work

	
5,000~10,000

	
10-2

	
Operated in the clean room without application; entered the clean room without wearing the identification badge (or using other’s identification badge); left the clean room wearing the clean room dress; used the safety exit without authorization (did not use the entrance/exit gate as regulated).

	
Expel from the fab

	
5,000~10,000

	
10-3

	
Took clean room elevator without permission.

	
Notice supervisor and control

	
500~1,000

	
10-4

	
Lost clean room identification badge; did not attach back badge to or did not wash the clean room dress periodically as regulated.

	
Improvement and return to work

	
500~1,000

	
10-5

	
Brought non-clean room items into clean room (copy paper, cotton paper, drinks, food, cigarette, betel nuts, ...etc.).

	
Forfeiture or custody

	
1,000~10,000

	
10-6

	
Did not provide dust-proof or protection measures for the materials in the clean room (no PVC coating on the floor).

	
Improvement and return to work

	
5,000~10,000

	
10-7

	
Brought mobile phone with camera function and made phone call using the work phone in the clean room in accordance with each fab’s regulation; brought computer without anti-virus tag or portable storage device without permission; turned off the air conditioner without permission.

	
Immediate removal from the clean room/ Immediate improvement

	
1,000~10,000

	
10-8

	
Did not wear the clean room dress in accordance with the regulations (make-up/ pulling down the mask, take off the gloves/ clean room shoes); sat on the floor; did not rest on the chair; or did not wash the dirty clean room dress or did not change the clean room dress which had been torn out.

	
Improvement and return to work

	
1,000~5,000

	
10-9

	
Used or brought cutter, electric drill or electric tool with no mark or label without permission in the clean room.

	
Immediate removal

	
1,000~5,000

	
10-10

	
Took the company’s articles (tool/spare parts/ materials/ component) or equipments vendor’s articles (tool) or construction vendors’ articles (components/ materials) without permission.

	
Immediate reinstatement

	
1,000~3,000

	
10-11

	
Did not enter/exit in accordance with regulations (did not turn around when taking air shower/ did not wash hands/ did not wear net hat and mask).

	
Expel from the fab and improvement

	
1,000~5,000

	
10-12

	
Did not put clean room dress and shoes neatly in the locker room or put personal belonging (backpack/ tissues/ boxes...etc.)

	
Immediate improvement

	
1,000~5,000

	
10-13

	
Must return the alcohol cleaner bottle or vacuum cleaner on time if borrowing; must clean up the acid-alkali vacuum cleaner before returning; if there is any damage or loss, the borrower has to make indemnity to the company with full price.

	
Immediate reinstatement/ indemnity with full price

	
1,000~5,000

	
10-14

	
Fought, quarreled, defecated or urinated on the floor in the framework place.

	
Expel from the fab

	
15,000~30,000

	
10-15

	
Did not move in articles in accordance with regulations (did not wipe dry and without examination) or materials with permission to the clean room.

	
Improvement and return to work

	
1,000~5,000

	
10-16

	
Stood or walked on the equipment, pipe, or net.

	
Notice supervisor and control

	
1,500~5,000

	
10-17

	
Brought non-qualified pipe materials (rusty or too dirty without cleaning) into the clean room.

	
Immediate removal

	
5,000~10,000

	
10-18

	
Contractor did not save electricity during working hours (holidays and the nights of weekend) in accordance with regulations.

	
Review and improvement

	
500~1.000

	
10-19

	
Destroying airtight surrounding seal protection.

	
Reinstatement and indemnity

	
3,000~5,000

	
10-20

	
Took emergency clean room dress in the clean room toilet or rested or slept in the clean room toilet.

	
Notice supervisor and control

	
3,000~5,000

	
10-21

	
Violated regulations under the agreements of company’s other units.

	
Each unit shall dispose in accordance with penalty clauses under such agreements

	
Each unit shall dispose in accordance with penalty clauses under such agreements

 

 

 

31

 

 

 

Remarks:

 

	
1.

	
These penalty clauses are applicable to all those who have a direct or indirect contractor relationship with this company.

 

	
2.

	
Rights of audit and report may be exercised by CMO’s each unit . “Contractor’s penalty / penalty amount sheet (FMU316)”

 

	
3.

	
Each incident of violation is in principle limited to one penalty per day, with the exception of special or severe violations upon notice.

 

	
4.

	
The penalty for involved personnel or equipment is to be based upon the actual number of violations.

 

	
5.

	
Unless otherwise specified, all rectification of faults should all be completed before the next work period.  If faults are not rectified, work may not resume.

 

	
6.

	
Depending on the severity of the situation, the labor safety department may call for a meeting to decide how repeat offenders (multiple occurrences of the same violation or having been repeatedly penalized) will be dealt with.  Measures include doubling of penalties, dismissal of offending personnel, contractor’s signing of guarantee, offending personnel barred from working in the plant, termination of contractor status, and notification to relevant units that the contractor is prohibited from tendering.

 

	
7.

	
Unless plead conditions are satisfied, the basic penalty amount shall not be adjusted.

NO: FM-U0206-Ver.05

32exv10w1

Exhibit #10.1

May 25, 2010

Ms. Carolyn Aver

Dear Carolyn,

I am pleased to offer you the position of Chief Financial Officer, reporting to me. In this
position, you will receive a bi-weekly salary of $12,500, which equates to $325,000 on an
annualized basis (for computational purposes only). You will also have an annual bonus incentive of
$200,000 at target. Your 2010 bonus will be dependent on Harmonic’s achievement of certain
corporate financial objectives, and will be paid on a pro-rata basis calculated from your date of
hire. This salary and incentive compensation is subject to federal and state tax withholdings.

Upon commencement of employment, you will be eligible for stock options entitling you to purchase
220,000 shares of common stock, subject to approval by the Compensation and Equity Ownership
Committee of the Board of Directors. The exercise price will be the closing market price of the
company shares on the date of approval. The options will vest over a four (4) year period, with
twenty-five (25%) vesting occurring at the end of twelve (12) months of employment; the balance of
the options will vest over a three (3) year period with vesting occurring at the rate of 1/48th per
month. Also upon commencement of employment you will receive 110,000 restricted stock units
(RSU’s), each unit representing one share of Harmonic Common Stock, also subject to approval by the
Compensation and Equity Ownership Committee of the Board of Directors. These RSU’s will also vest
over a four year period. Additionally, you will receive Harmonic’s standard executive Change of
Control agreement. Details of this agreement will be communicated to you under separate cover.

Harmonic also offers you a comprehensive benefits package which includes our health and wellness
plan, ExecUCare benefit, 401K plan, employee stock purchase plan and flexible time off (FTO). You
will earn up to 15 FTO days per year with an accrued cap of 30 days. We will provide you with
additional information on these benefits during your orientation session.

Before starting, you must sign the company’s confidentiality agreement and bring documentation for
completion of the I-9 (employment verification) form. Your employment with Harmonic is at will,
which means either party can choose to terminate the relationship at any time for any reason
whatsoever, with or without cause.

Carolyn, I believe you will play a key role in the growth and success of Harmonic going forward; I
am looking forward to working with you. Please let me know of your acceptance by signing a copy of
this offer letter and returning it to me.

Sincerely,

/s/ Patrick Harshman

Patrick Harshman

President and CEO

Acceptance:

/s/
Carolyn V. Aver

Carolyn V. Aver

Date: May 27, 2010

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