AU OPTRONICS CORP.
0 XX-XXXX XX. 0, XXXXXXX-XXXXX XXXXXXXXXX XXXX, XXXX-XXX 000,
XXXXXX, XXXXXXXX XX XXXXX
As of September 16, 2002
Citibank, N.A. - ADR Department
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
UMC Zero Coupon Exchangeable Bonds Due 2007
Ladies and Gentlemen:
Reference is made to the Deposit Agreement, dated as of May 29, 2002
(the "Deposit Agreement"), by and among AU Optronics Corp., a company
incorporated under the laws of the Republic of China (the "Company"), Citibank,
N.A., as Depositary (Citibank in such capacity, the "Depositary"), and the
Holders and Beneficial Owners of American Depositary Shares (the "ADSs")
evidenced by American Depositary Receipts (the "ADRs") issued thereunder. All
capitalized terms used, but not otherwise defined herein, shall have the meaning
assigned thereto in the Deposit Agreement.
United Microelectronics Corporation ("UMC") has sold, in a
transaction exempt from registration under the Securities Act of 1933, as
amended (the "Securities Act"), pursuant to Regulation S ("Reg S") Zero Coupon
Exchangeable Bonds due 2007 in the aggregate principal amount of US
$235,000,000.00 (the bonds so sold by UMC, the "Bonds"), each Bond exchangeable
at the option of the holder (such holder, an "Exchanging Bondholder") into (a)
the Company's common shares, par value NT $10 per share (the "Shares"), on or
after June 19, 2002, or (b) the Company's American Depositary Shares (the
"ADSs"), each ADS representing ten (10) Shares, on or after in each case upon
the terms and conditions set forth in (i) the Indenture, dated as of May 10,
2002 (the "Indenture"), by and between UMC and Citibank, N.A., in its capacity
as trustee (Citibank in such capacity, the "Trustee"), and (ii) the Paying and
Exchange Agency Agreement, dated as of May 10, 2002 (the "Agency Agreement"), by
and among UMC, the Trustee, the exchange agents, the paying agents, the
transfer agents and the registrar named therein.
The purpose and intent of this Letter Agreement is to supplement the
Deposit Agreement for the sole purpose of accommodating the issuance of ADSs
upon deposit of Shares by UMC upon the exchange of Bonds in accordance with the
terms and conditions of the Indenture (such Shares, the "Exchange Shares"). The
Company and the Depositary agree that this Letter Agreement shall be filed as an
exhibit to the next amendment to the Registration Statement on Form F-6 of the
Company filed with the Commission in respect of the ADSs and shall be filed by
the Company with governmental authorities in the ROC if required in accordance
with applicable ROC laws and regulations.
For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, UMC, the Company and the Depositary hereby agree,
notwithstanding the terms of the Deposit Agreement, as follows:
1. Authority to Accept Deposit of Shares and Issue ADSs. The Company
hereby confirms that the SFC has approved an increase to the size of its
depositary receipt facility to allow the deposit by UMC of Exchange Shares in
connection with the exchange of Bonds and authorizes and directs the Depositary
to accept the deposit of Exchange Shares by UMC on behalf of Exchanging
Bondholders upon the exchange of Bonds only upon receipt by the Depositary from
the Exchange Agent of a copy of the completed and signed Bond Exchange Notice
substantially in the form attached hereto as Exhibit A (the "Bond Exchange
Notice"), and to issue in respect thereof ADSs that are fully fungible with the
ADSs outstanding under the Deposit Agreement. Nothing contained herein shall
obligate the Depositary to treat the ADSs issued upon exchange of the Bonds
differently from ADSs issued under the Deposit Agreement except as specifically
set forth herein.
The Depositary agrees, upon the terms and subject to the conditions
set forth in this Letter Agreement, to establish procedures to enable the
deposit of Exchange Shares with the Custodian by UMC on behalf of the Exchanging
Bondholders upon the Exchanging upon the exchange of Bonds in order to enable
the issuance by the Depositary to the Exchanging Bondholders of ownership
interests in Exchange Shares in the form of ADSs issued pursuant to the terms of
the Deposit Agreement and this Letter Agreement and to issue and deliver ADSs to
the applicable Exchanging Bondholders, in each case upon the terms set forth
herein, but only upon payment to the Depositary of the charges of the Depositary
for accepting a deposit of Exchange Shares and issuing ADSs (as set forth in
Section 5.9 and Exhibit B of the Deposit Agreement).
2. UMC Assistance. UMC agrees to provide commercially reasonable
assistance to the Depositary upon the request of the Depositary (in each case,
within the terms and conditions hereof) in connection with the establishment of
procedures to enable the acceptance of the deposit by UMC on behalf of
Exchanging Bondholder(s) of the Exchange Shares with the Custodian, the issuance
of ADSs to the Exchanging Bondholder(s), the delivery of ADRs to the Exchanging
Bondholder(s), and the transfer of such ADRs (and the ADSs represented thereby)
by the Exchanging Bondholder(s).
3. Representations and Warranties. UMC hereby represents and
warrants, in lieu of the representations contained in Section 3.3(a) of the
Deposit Agreement, that the Exchange Shares to be deposited by UMC on behalf of
the Exchanging Bondholder(s) for the purpose of the issuance of ADSs will, at
the time of deposit, be validly issued, fully paid and non-assessable, and free
of any preemptive rights of the holders of outstanding Shares, and rank pari
passu with respect to the other Shares on deposit under the Deposit Agreement
that are not Exchange Shares. Such representations and warranties shall survive
the deposit of the Exchange Shares, the issuance of ADSs and the delivery of
ADRs in respect thereof.
4. Indemnity. UMC agrees to indemnify the Company, the Depositary
and the Custodian against, and hold each of them harmless from, any direct loss,
liability, tax, charge or expense of any kind whatsoever (including, but not
limited to, the reasonable fees and expenses of counsel) incurred by them that
may arise (a) out of, or in connection with, the
2
Issuance of ADSs upon the terms hereof, or (b) out of acts performed or omitted
in connection with this Letter Agreement, as the same may be amended, modified
or supplemented from time to time, in any such case (i) by the Company, the
Depositary, or the Custodian, except to the extent such loss, liability, tax,
charge or expense is due to negligence or bad faith of any of them, or (ii) by
UMC.
The obligations set forth in this Section 4 shall survive the
termination of this Letter Agreement and the succession or substitution of any
party hereto.
5. Governing Law. This Letter Agreement shall be interpreted under,
and all the rights and obligations hereunder shall be governed by, the laws of
the State of New York.
The Company and the Depositary have caused this Letter Agreement to
be executed and delivered on their behalf by their respective officers thereunto
duly authorized as of the date set forth above.
AU OPTRONICS CORP.
By: /s/ Max Xxxxxxx Xxxxx
------------------------------
Name: Max Xxxxxxx Xxxxx
Title: Chief Financial Officer
UNITED MICROELECTRONICS
CORPORATION
By: /s/ Xxxx Xxxx
------------------------------
Name: Xxxx Xxxx
Title: Chief Financial Officer
Agreed to as of the date set forth above:
CITIBANK, N.A.,
as Depositary
By: /s/ Xxxxx X. Xxxxxxx
--------------------------
Name: Xxxxx X. Xxxxxxx
Title: Vice President
3
Exhibit A
BOND EXCHANGE NOTICE
UNITED MICROELECTRONICS CORPORATION
US$235,000,000
Zero Coupon Exchangeable Bonds Due 2007
=======================================
PLEASE READ THE NOTES AT THE END OF THIS NOTICE BEFORE COMPLETING THIS
NOTICE.
=======================================
Please fax the completed Bond Exchange Notice to the following two recipients:
Citibank, N.A. - Exchange Agent
0 Xxxxxxxxx Xxxxxx
Xxxxxx XX0X 0XX
Xxxxxx Xxxxxxx
Fax No.: x00 000 000 0000
Attention: Exchange Desk
Copy to:
United Microelectronics Corporation - Issuer
Xx. 0 Xx-Xxxx Xxxx II
Science-Based Industrial Park
Hsinchu, Taiwan, the ROC
Fax No.: x000 0 0000 0000
Attention: Finance Division
=======================================
Please enter principal amount and serial or identifying numbers of Bonds to be
exchanged:
--------------------------------------------------------------------------------
Total principal amount of Bonds to be exchanged:
--------------------------------------------------------------------------------
Serial or identifying number of Bonds*:
--------------------------------------------------------------------------------
ISIN number of Bonds: USXS0147090533
--------------------------------------------------------------------------------
* Not required for Bonds represented by the Global Bond.
=======================================
A-1
TO: Citibank, N.A. - Exchange Agent
Citibank, N.A., Taipei Branch - Custodian
Citibank, N.A., New York - ADR Broker Services
United Microelectronics Corporation (the "Company")
I/We, being the holder of the Bonds specified above, hereby irrevocably elect to
exchange such Bonds or portion thereof (which is US$10,000.00 or an integral
multiple of US$10,000.00 in excess thereof) into (A) common shares of AU
Optronics Corp. ("AUO"), par value NT $10 per share ("Reference Shares"), or (B)
American Depositary Shares ("ADS(s)"), each ADS representing ten (10) Reference
Shares, in each case in accordance with Article 12 of the of the Indenture,
dated May 10, 2002 by and between the Company and Citibank, N.A. (the
"Indenture").
Please complete Item A or Item B below:
================================================================================
A. Check here |_| and complete items 1 and 2 below if you wish to receive
Reference Shares upon exchange of Bonds:
1. Name and address of the person in whose name Reference Shares are to be
registered upon exchange of the Bonds:
--------------------------------------------------------------------------
Name:
--------------------------------------------------------------------------
Address:
--------------------------------------------------------------------------
2. I/We hereby request that the certificate for the Reference Shares
(together with any cash) delivered upon exchange of the Bonds specified
above be registered in the name of the person specified in item 1 above
and be delivered to the local agent (custodian) in Taiwan whose name and
address is given below and to be credited to the account of such person
specified below:
--------------------------------------------------------------------------
Name of Agent:
--------------------------------------------------------------------------
Address:
--------------------------------------------------------------------------
A-2
--------------------------------------------------------------------------
Account Number of
Taiwan Securities
Central Depositary Co.
Ltd.
--------------------------------------------------------------------------
Contact Person:
--------------------------------------------------------------------------
Telephone No.:
--------------------------------------------------------------------------
Email of contact person:
--------------------------------------------------------------------------
Fax No.:
--------------------------------------------------------------------------
=======================================
OR
=======================================
B. Check here |_| if you wish to receive ADSs upon exchange of the above
Bonds and complete grid below.
Delivery Instructions for ADSs:
--------------------------------------------------------------------------
DTC Participant Account No.:*
--------------------------------------------------------------------------
Account No. for investor at DTC
Participant (f/b/o information):
--------------------------------------------------------------------------
Contact person at DTC Participant:
--------------------------------------------------------------------------
Daytime Telephone Number of
contact person at DTC Participant:
--------------------------------------------------------------------------
Email of contact person at DTC
Participant:
--------------------------------------------------------------------------
* The ADSs will be delivered to DTC participant specified above on
RVP/DVP basis against payment of Depositary's issuance fee of up to
US$0.05 per ADS issued.
================================================================================
Please read and complete Items C through H below:
C. The Bonds exchanged hereby and any documents required in relation to the
declarations below or to verify the same accompany this form.
A-3
D. I/we hereby declare that I/we have been notified by the Company that AUO's
register of shareholders may be closed from time to time. I/We hereby
declare that any applicable condition to exchange of the Bonds, if any,
has been complied with by me/us, that I/We am/are not acting on behalf of
the Company or any of its affiliated and that the Reference Shares issued
upon exchange have not been and, when received by the exchanging
Bondholder, will not be registered under the Securities Act of 1933, as
amended (the "Securities Act") or with any securities regulatory authority
in any state or jurisdiction of the United States.
E. I/We certify that either:
(a) I/We are, or at the time the Reference Shares issued upon exchange of
the Bond are deposited (and the ADSs issuable in respect thereof are
issued, if applicable) will be, the beneficial owner of the Reference
Shares (or of the ADSs, if applicable), and:
(i) I/We (i) are not a U.S. person (as defined in Regulation S under
the Securities Act) and we are located outside the United States (within
the meaning of Regulation S under the Securities Act), (ii) acquired, or
have agreed to acquire and will have acquired, the Bonds exchanged into
the Reference Shares in an offshore transaction (within the meaning of
Regulation S under the Securities Act), (iii) acknowledge the Reference
Shares to be received upon exchange of the Bonds (and to be deposited, if
applicable) have not been registered under the Securities Act or with the
securities regulatory authority of any state of the United States, (iv)
for a period of 40 days following the exchange of the Bonds for Reference
Shares or ADSs (the "Restricted Period") will sell, pledge, or transfer
the Reference Shares or ADSs only to, or for the account or benefit of,
persons other than U.S. persons or pursuant to a registration statement
under the Securities Act and (v) will advise any person to whom it sells,
pledges or transfers the Reference Shares during the Restricted Period of
the foregoing restrictions on transfer.
(ii) we are not an "affiliate" of the Company or a person acting on
behalf of such an "affiliate," and
(iii) we are not in the business of buying and selling securities
or, if we are in such business, we did not acquire the Reference Shares to
be deposited from the Company or any affiliate thereof in a "distribution"
of ADSs,
F. I/We hereby declare that all stamp, issue, registration or similar taxes
and duties payable on exchange of the Bonds in the jurisdiction where the
Bonds are delivered to the Exchange Agent have been paid.
G. I/we are providing the information below to enable the Company and AUO to
comply with its reporting obligations under the laws and regulations of
the Republic of China and understand that the Company and AUO will rely on
the
A-4
information provided herein for such purpose. I/we also agree that the
Company and AUO may provide or report such information for such purpose.
I/we certify that:
[tick one]
|_| (i) I am not/ None of we are a "Related Person" of the Company (as
defined below).
|_| (ii) I, or the person whose name and nationality is
_________________, is a "Related Person" of the Company or AU Optronics
Corp. (as defined below).
H. Exchanging Bondholder Information and Signature:
Please complete the following information with respect to the exchanging
Bondholder
--------------------------------------------------------------------------
Name:
--------------------------------------------------------------------------
Date:
--------------------------------------------------------------------------
Signature:
--------------------------------------------------------------------------
Nationality:
--------------------------------------------------------------------------
Address:
--------------------------------------------------------------------------
Contact Person:
--------------------------------------------------------------------------
Daytime Telephone No.:
--------------------------------------------------------------------------
Fax No.:
--------------------------------------------------------------------------
Email Address:
--------------------------------------------------------------------------
A-5
For Exchange Agent's use only:
1. (A) Bonds exchange identification reference: United Microelectronics Zero
Coupon Bonds Due 2007 (ISIN:___________________________) - CITIUS
(B) Deposit Date: __________________________
(C) Exercise Date: __________________________
2. (A) Aggregate principal amount of Bonds deposited for exchange:
__________________________
(B) Exchange Price on Exercise Date: __________________________
(C) Number of Reference Shares deliverable: __________________________
(disregard fractions)
(D) Number of ADSs deliverable: __________________________
(disregard fractions)
3. ADS issuance fees: __________________________
(only if ADSs being delivered)
4. (If applicable) amount of cash payment due to exchanging Holder in respect of
fractions of Reference Shares or of ADSs due to a consolidation or re-
classification of Reference Shares: __________________________
N.B. The Exchange Agent must complete items 1 and 2 and (if applicable), 3 and
4.
__________________________
Instructions to the Exchange Agent:
1. If Reference Shares are to be delivered, a copy of the Exchange Notice shall
be forwarded to the Company at:
United Microelectronics Corporation
0X, Xx. 00, Xxxxxxx 0
Xxxxxx Xxxxx Xxxx, Xxxxxx
Xxxxxx 106
Republic of China
Facsimile:
Attention:
2. If ADSs are to be delivered, copy of the Exchange Notice shall be forwarded
to:
a) the Company;
b) Citibank, N.A. -- Taipei
Facsimile: 886 2 2578 5292
Attention: Xxxxxxxx X.X. Xxx
Xxxxxx Xxxx
c) Citibank, N.A., New York - ADR Broker Services
Facsimile: (000) 000-0000
Attention: ADR Broker Services
A-7
BONDS
1. This Exchange Notice will be void unless the applicable Sections A
through H above are duly completed and must be deposited during the Exchange
Period.
2. Your attention is drawn to Section 1202 of the Indenture with respect
to the conditions precedent which must be fulfilled before the Bonds specified
above will be treated as effectively deposited for exchange.
3. If a retroactive adjustment of the Exchange Price contemplated by the
terms and conditions of the Bonds is required in respect of a exchange of Bonds,
certificates for the additional Reference Shares deliverable pursuant to such
retroactive adjustment (together with any other securities, property or cash)
will be delivered or dispatched in the same manner as the Reference Shares,
other securities, property and cash previously issued pursuant to the relevant
Exchange Notice.
4. A person or entity is deemed to be a "Related Person" of the Company or
AUO if the person or entity is:
(a) (i) a company of which the chairman of the board of directors or the
general manger serves as the chairman of the board of directors or the
chairman of the Company, or the spouse or member of the immediate second
family of the chairman of the board of directors or general manager of the
Company or AUO;
(ii) a non-profit organization of which the funds donated from the Company
or AUO exceeds one-third of the non-profit organization's total fund;
(iii) a director, supervisor or general manager, vice-general manager,
assistant vice-general manager, or a departmental head reporting to the
general manager;
(iv) the spouse of a director, supervisor or general manager of the
Company or AUO;
(v) a member of the immediate or second immediate families of the
Company's or AUO's chairman of the board of directors of general manager.
OR
(b) a person or entity that has control or influence over the Company or
AUO.
A-8
