1
REDACTED FOR CONFIDENTIALITY EXHIBIT 10.1
Dated 13 March, 1997
CHARTERED SEMICONDUCTOR MANUFACTURING LTD
- and -
HEWLETT-PACKARD EUROPE B.V.
- and -
EDB INVESTMENTS PTE LTD
---------------------------------
JOINT VENTURE AGREEMENT
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C O N T E N T S
CLAUSE HEADING PAGE
------ ------- ----
1. DEFINITIONS AND INTERPRETATION 1
2. FORMATION OF THE COMPANY 5
3. SHARE CAPITAL 6
4. COMPLETION 9
5. BOARD OF DIRECTORS 11
6. BUSINESS OF THE COMPANY 18
7. SHAREHOLDERS' OBLIGATIONS AND RIGHTS 20
8. MANAGEMENT OF THE COMPANY 23
9. GENERAL MEETINGS 24
10. TRANSFER OF SHARES 25
11. FINANCE 32
12. DIVIDEND POLICY 32
13. WARRANTIES AS TO AUTHORITY 33
14. DEFAULT 34
15. GENERAL OBLIGATIONS OF SHAREHOLDERS 35
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CLAUSE HEADING PAGE
------ ------- ----
16. PREVALENCE OF AGREEMENT 36
17. DURATION AND TERMINATION 36
18. CONFIDENTIAL INFORMATION 36
19. NOTICES AND GENERAL 37
SCHEDULE - COLLATERAL AGREEMENTS 42
APPENDIX A - FIRST COMPANY BUSINESS PLAN
APPENDIX B - ASSURED SUPPLY AND
DEMAND AGREEMENT 64-225
APPENDIX C - TERM SHEET FOR
MANUFACTURING AGREEMENT
APPENDIX D - LICENSE AND TECHNOLOGY
TRANSFER AGREEMENT ▇▇-▇▇▇
▇▇▇▇▇▇▇▇ ▇ - OPTION AGREEMENT
APPENDIX F - CSM SERVICE SUPPORT AGREEMENT
APPENDIX G - STPL GROUP MANAGEMENT AND
SUPPORT SERVICES AGREEMENT
APPENDIX H - MEMORANDUM AND ARTICLES
OF ASSOCIATION
APPENDIX I - JTC OFFER LETTER AND PLAN OF
THE SITE FOR THE COMPANY FAB
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THIS AGREEMENT is made on 13 March, 1997
BETWEEN:-
(1) CHARTERED SEMICONDUCTOR MANUFACTURING LTD ("CSM"), a company
incorporated in Singapore with its registered office at ▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇ ▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇;
(2) HEWLETT-PACKARD EUROPE B.V. ("HP"), a company incorporated in The
Netherlands with its principal place of business at ▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇; and
(3) EDB INVESTMENTS PTE LTD ("EDBI"), a company incorporated in Singapore
with its registered office at ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, #▇▇-▇▇, ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇.
WHEREAS:-
(A) CSM, HP and EDBI are desirous of establishing and operating a joint venture
company in Singapore for the purpose of undertaking the construction and setting
up of the Company Fab (as defined below) and carrying on the Business (as
defined below).
(B) To give effect to the intention of the parties as hereinbefore recited, and
to regulate their relationship inter se as shareholders in the joint venture
company in the conduct of the business and affairs of the joint venture company
in the spirit of mutual confidence and co-operation, the parties have agreed to
enter into this Agreement on the terms and conditions hereinafter set out.
IT IS AGREED as follows:-
1. DEFINITIONS AND INTERPRETATION
(A) Definitions
In this Agreement and the Schedule, unless the subject or context
otherwise requires, the following words and expressions shall have the following
meanings respectively ascribed to them:-
"Act" means the Companies Act of Singapore, Chapter 50;
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"Articles" means the Articles of Association for the time being of the
Company. The Articles upon incorporation of the Company shall be in the
form attached hereto as Appendix H;
"Assured Supply and Demand Agreement" has the meaning ascribed thereto
in item 1 of the Schedule;
"Auditors" means the auditors for the time being of the Company;
"Board" means the Board of Directors for the time being of the Company;
"Business" has the meaning ascribed thereto in Clause 6(A);
"Call Option Period" has the meaning ascribed thereto in the Option
Agreement;
"Collateral Agreements" means the agreements referred to in the
Schedule;
"Company" has the meaning ascribed thereto in Clause 2(A);
"Company Business Plan" has the meaning ascribed thereto in Clause
3(A)(i);
"Company Fab" means the fab to be constructed by the Company;
"Completion" means completion of the subscription for ordinary shares in
the capital of the Company by CSM, HP and EDBI pursuant to Clause 4;
"Completion Date" means the date falling 30 days after the date of
incorporation of the Company (or such other date as the parties may
agree in writing);
"CSM Fabs" means the fabs owned and operated by CSM;
"CSM Option Shares" has the meaning ascribed thereto in the Option
Agreement;
"CSM Service Support Agreement" has the meaning ascribed thereto in item
5 of the Schedule;
"Debt/Equity Ratio" means the ratio of External Bank Borrowings to Total
Shareholder Funds;
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"Directors" means the Directors for the time being of the Company;
"EDB" means the Economic Development Board, a statutory body established
under the Economic Development Board Act of Singapore, Chapter 85;
"External Bank Borrowings" means all and any liabilities of, or amounts
due from, the Company to banks, financial institutions or EDB, excluding
loans from Shareholders;
"Hewlett-Packard Company" means Hewlett-Packard Company, a company
incorporated in the State of California, United States of America with
its principal place of business at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ of America;
"HP Option Shares" has the meaning ascribed thereto in the Option
Agreement;
"JTC" means Jurong Town Corporation, a body corporate established under
the Jurong Town Corporation Act of Singapore, Chapter 150;
"JTC Offer Letter" means the letter from JTC to STPL in respect of the
grant by JTC of an offer to lease the Site to STPL, attached hereto as
Appendix I;
"License and Technology Transfer Agreement" has the meaning ascribed
thereto in item 3 of the Schedule;
"Memorandum" means the Memorandum of Association for the time being of
the Company. The Memorandum upon incorporation of the Company shall be
substantially in the form attached hereto as Appendix H;
"Module A" means Module A of the Company Fab;
"Module B" means Module B of the Company Fab;
"Option Agreement" has the meaning ascribed thereto in item 4 of the
Schedule;
"Option Shares" has the meaning ascribed thereto in the Option
Agreement;
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"Shareholders" means CSM, HP, EDBI and any other person holding shares
in the capital of the Company who shall have executed a deed of
ratification and accession pursuant to Clause 10(E);
"Shareholding Percentage" means the percentage of all ordinary shares
beneficially owned by the relevant Shareholder in the issued share
capital of the Company for the time being;
"Singapore Dollars" and the sign "S$" mean the lawful currency of
Singapore;
"Singapore GAAP" means generally accepted accounting principles in
Singapore;
"Site" means a site in Woodlands, Singapore, designated as private lot
number A12787(d) on the plan attached hereto as Appendix I;
"STPL" means Singapore Technologies Pte Ltd a company incorporated in
Singapore and the holding company of CSM;
"STPL Group Management and Support Services Agreement" has the meaning
ascribed thereto in item 6 of the Schedule;
"Sub-Lease Agreement" means a sub-lease agreement to be made between
STPL and the Company relating to the grant by STPL of a sub-lease of the
Site to the Company;
"Term Sheet for Manufacturing Agreement" has the meaning ascribed
thereto in item 2 of the Schedule;
"Total Shareholder Funds" means the share capital of the Company plus
capital reserves and retained earnings to date, of the Company; and
"U.S. GAAP" means generally accepted accounting principles in the United
States of America.
(B) Interpretation
(i) Any reference in this Agreement to:-
(a) "Clauses", "Schedule" or "Appendices" are to the clauses of, and
the schedule and the appendices to, this Agreement;
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(b) "financial year" means the period beginning on 1 January and
ending on 31 December of a given year, except that the first
financial year of the Company shall begin on the date of
incorporation of the Company and end on 31 December 1997;
(c) "fab" means wafer fabrication facility;
(d) "loadings" means orders for the supply of wafers;
(e) "wafers" means semiconductor wafers; and
(f) the headings are for convenience only and shall not affect the
interpretation of this Agreement.
(ii) Unless the context otherwise requires or permits, references to the
singular number shall include references to the plural number and vice versa;
references to natural persons shall include bodies corporate and vice versa; and
words denoting any gender shall include all genders.
(iii) The expressions "holding company", "wholly-owned subsidiary" and "related
corporation" shall bear the meanings respectively ascribed thereto in Sections
5, 5B and 6 of the Act.
2. FORMATION OF THE COMPANY
(A) Formation
Prior to the Completion Date, CSM shall procure the formation and
incorporation in Singapore of a private company limited by shares (the
"Company") under the Act and the Company shall be called "Chartered Silicon
Partners Pte Ltd".
(B) Memorandum and Articles
The Memorandum and the Articles upon incorporation of the Company shall
be in the form attached hereto in Appendix H.
(C) Initial Subscribers
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The Memorandum shall initially be subscribed by two persons and CSM
shall appoint two persons to act as its nominees for such purpose. Such nominees
will each agree in the Memorandum to subscribe for one share of S$1 each in the
capital of the Company. The shares to be so subscribed for and to be issued by
the Company to the two nominees shall be transferred to CSM in the manner
provided in Clause 3(H).
3. SHARE CAPITAL
(A) Module A Investment
(i) The Company Business Plan is an annual management process and document
which defines and updates the purpose and scope of the Company for a
three-year period. The first Company Business Plan which has been
approved by the parties is attached hereto as Appendix A. The General
Manager shall be responsible for overseeing the preparation of the
Company Business Plan and shall seek the advice of the Management
Committee (as defined in Clause 8(B)) in doing so.
(ii) Based on the first Company Business Plan, the total investment to be
incurred by the Company for Module A (the "Module A Investment") is
estimated at the date hereof to be the sum of S$1,794,000,000.
(iii) Unless otherwise unanimously agreed by the parties in writing, the
Module A Investment to be incurred by the Company shall be funded as
to:-
(a) S$720,000,000 by way of equity through the subscription for new
ordinary shares from time to time in the capital of the Company
in accordance with sub-Clauses (C), (D) and (E) below and Clause
4(C); and
(b) the balance of the Module A Investment by way of external loans
from EDB, banks or other financial institutions.
(B) Authorised Capital
The parties agree that the authorised share capital of the Company shall
on incorporation be S$1,000,000,000 divided into 1,000,000,000 ordinary shares
of S$1 each.
(C) Committed Capital Contribution
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Each of the Shareholders agrees and undertakes that it shall, at such
times and in such amounts as may be determined by the Board of Directors in
accordance with the approved Company Business Plan for each financial year, and
in accordance with sub-Clauses (D) and (E) below, make capital contributions by
way of subscription, in cash, for shares in the capital of the Company of up to
an aggregate of S$720,000,000 from all the Shareholders (the "Committed Capital
Contribution").
(D) Issued Capital
The parties agree that the issued and paid-up share capital of the
Company shall on incorporation be S$2 divided into two ordinary shares of S$1
each. On the Completion Date and contemporaneously with the execution of the
Collateral Agreements, the issued and paid-up share capital of the Company shall
be increased, in accordance with Clause 4(C), from S$2 divided into two ordinary
shares of S$1 each to S$25,000,000 divided into 25,000,000 ordinary shares of
S$1 each which issued and paid-up share capital shall be held by the parties in
the following Shareholding Percentages:-
Percentage Number of Shares Paid in Capital
---------- ---------------- ---------------
CSM : 51 per cent. 12,750,000 S$12,750,000
HP : 30 per cent. 7,500,000 S$ 7,500,000
EDBI : 19 per cent. 4,750,000 S$ 4,750,000
(E) Calls for Capital Contributions
(i) Each of the Shareholders further severally agrees that, subject to the
aggregate Committed Capital Contribution, it shall make such capital
contributions required of it in proportion to its Shareholding Percentage as at
the date of the call for such capital contributions. If any Shareholder (the
"Defaulting Shareholder") fails to subscribe for its Shareholding Percentage of
the call, any one or more of the other Shareholders who have so subscribed for
their respective Shareholding Percentages of such call shall, without prejudice
to any other rights and remedies such Shareholders may have, be entitled (but
shall not be obliged) to subscribe for the Defaulting Shareholder's Shareholding
Percentage of such call in proportion (as nearly as practicable) to their
respective Shareholding Percentages. For the purposes of this sub-Clause (E), a
non-defaulting Shareholder's Shareholding Percentage shall not be deemed to be
increased if such increase is due solely to a
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Defaulting Shareholder's failure to subscribe for its Shareholding Percentage of
a call for capital contributions.
(ii) The initial schedule of calls for capital contributions beyond the capital
contribution to be paid on the Completion Date is as follows:-
Period 4Q1997 1Q1998 3Q1998 1Q1999 2Q1999 1Q2000
------ ------ ------ ------ ------ ------
Call Amount
(S$'000,000) 15 100 160 135 245 40
where "Q" means such consecutive period of three months in each calendar year.
In approving the annual Company Business Plan for each financial year, the Board
may approve such modifications to the above initial schedule as may be
necessitated by the Company's capital requirements, and such approved schedule
shall be incorporated into the annual Company Business Plan. All calls for
capital contributions in accordance with the approved schedule of calls shall be
made upon 7 days' written notice to the Shareholders. Any calls for capital
contributions other than in accordance with the approved schedule of calls shall
be made upon 30 days' written notice to the Shareholders.
(F) Increases in Capital
Each of the Shareholders shall exercise its voting rights for the time
being in the Company and take such steps as for the time being lie within its
powers to procure that (save for the shares to be subscribed for pursuant to the
provisions of this Agreement) the issue of any unissued shares or of any new
shares from time to time created in the capital of the Company shall before
issuance be offered for subscription in the first instance to such persons as at
the date of the offer are registered as shareholders of the Company in
proportion as nearly as practicable to their respective Shareholding
Percentages.
(G) Additional Capital
The Shareholders agree that if the Board of Directors shall, after
giving consideration to the provisions of Clause 11(A) determine that additional
capital is required by the Company in excess of the Committed Capital
Contribution, each Shareholder shall have the right to subscribe for additional
shares in proportion (as nearly as practicable) to its Shareholding Percentage
at the relevant time. If one or more of the Shareholders fails to subscribe for
their proportion of the additional shares, their additional shares will be
offered to the remaining Shareholders in proportion (as nearly as practicable)
to their respective Shareholding Percentages.
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(H) Nominee Shares
The restrictions on the transfer of shares contained in Clause 10 and in
the Articles shall not apply to the shares to be subscribed for and transferred
to CSM pursuant to Clause 2(C) and as soon as practicable after the allotment
and issue of such shares, the nominees appointed by CSM shall transfer their
respective shares to CSM.
(I) Ordinary Shares
Unless otherwise unanimously agreed by the Shareholders from time to
time, the issued share capital of the Company shall comprise ordinary shares
only and no other classes of shares will be issued.
4. COMPLETION
(A) Completion
Completion shall take place at the registered office of the Company (or
at such other place as the parties may agree in writing) on the Completion Date.
(B) Conditions precedent
Prior to the Completion Date:-
(i) the Company shall have received confirmation of the availability
of loan financing (including guarantee facilities) from banks or
other third parties (excluding EDB) in the amount of
S$500,000,000 on terms acceptable to the parties;
(ii) the Company shall have received a letter (in a form acceptable
to CSM, HP and EDBI) from EDB indicating the availability of a
loan in the amount of S$450,000,000;
(iii) the Company shall have received a letter from EDB indicating ten
year Pioneer Status under the Economic Expansion Incentives
(Relief from Income Tax) Act, Chapter 86 or under any tax
incentive scheme of the EDB or any other government authority;
and
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(iv) the Company shall have received a letter from EDB indicating the
availability of:-
(a) training and manpower grants of up to S$40,000,000 under
EDB's INTECH and Overseas Manpower Programme (OMP)
schemes, subject to a maximum of S$20,000,000 grant for
OMP; and
(b) a maximum of S$20,000,000 grant under the Innovation
Development Scheme.
(C) Application for Shares etc.
On the Completion Date:-
(i) CSM shall make an unconditional application in writing to the
Company for the allotment to CSM for cash at par for 12,750,000
ordinary shares of S$1 each in the capital of the Company and
CSM shall pay the sum of S$12,750,000 to the Company by way of a
cashier's order, or bank draft drawn on a licensed bank in
Singapore and made out in favour of the Company, or wire
transfer, or such other means acceptable to the parties;
(ii) HP shall make an unconditional application in writing to the
Company for the allotment to HP for cash at par for 7,500,000
ordinary shares of S$1 each in the capital of the Company and HP
shall pay the sum of S$7,500,000 to the Company by way of a
cashier's order, or bank draft drawn on a licensed bank in
Singapore and made out in favour of the Company, or wire
transfer, or such other means acceptable to the parties;
(iii) EDBI shall make an unconditional application in writing to the
Company for the allotment to EDBI for cash at par for 4,750,000
ordinary shares of S$1 each in the capital of the Company and
EDBI shall pay the sum of S$4,750,000 to the Company by way of a
cashier's order, or bank draft drawn on a licensed bank in
Singapore and made out in favour of the Company, or wire
transfer, or such other means acceptable to the parties;
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(iv) each of the parties shall procure the entry by the Company into,
HP shall procure the entry by Hewlett-Packard Company into, and
CSM shall enter into, the Assured Supply and Demand Agreement;
(v) each of the parties shall procure the entry by the Company into,
HP shall procure the entry by Hewlett-Packard Company into, and
CSM shall enter into, the Term Sheet for Manufacturing
Agreement;
(vi) each of the parties shall procure the entry by the Company into,
HP shall procure the entry by Hewlett-Packard Company into, and
CSM shall enter into, the License and Technology Transfer
Agreement;
(vii) each of the parties shall procure the entry by the Company into,
and CSM shall enter into, the CSM Service Support Agreement;
(viii) each of the parties shall procure the entry by the Company into,
and CSM shall procure the entry by STPL into, the STPL Group
Management and Support Services Agreement; and
(ix) CSM, HP and EDBI shall enter into the Option Agreement.
(D) Allotment of Shares
Each of the parties shall take such action as may be necessary to ensure
that the Company makes simultaneous allotments of the ordinary shares so applied
for pursuant to sub-Clause (C) above on the Completion Date and each of such
ordinary shares so allotted shall on allotment rank pari passu in all respects
with each other and with the existing issued ordinary shares of the Company.
5. BOARD OF DIRECTORS
(A) Number
Unless otherwise unanimously agreed by CSM, HP and EDBI, the Board shall
consist of not more than seven Directors.
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(B) Composition
(i) The Board shall initially comprise:-
(a) four persons appointed by CSM for the time being as Directors
(who shall be designated as "CSM Directors");
(b) two persons appointed by HP for the time being as Directors (who
shall be designated as "HP Directors"); and
(c) one person appointed by EDBI for the time being as Director (who
shall be designated as an "EDBI Director").
(ii) CSM shall be entitled to appoint as Director(s) four persons for so long as
CSM's Shareholding Percentage exceeds 50 per cent.; three persons for so long as
CSM's Shareholding Percentage exceeds 30 per cent., two persons for so long as
CSM's Shareholding Percentage is equal to or exceeds 15 per cent., and one
person for so long as CSM's Shareholding Percentage is equal to or exceeds five
per cent.
(iii) HP shall be entitled to appoint as Director(s) two persons for so long as
HP's Shareholding Percentage is equal to or exceeds 15 per cent., and one person
for so long as HP's Shareholding Percentage is equal to or exceeds five per
cent. In the event that HP's Shareholding Percentage is less than five per
cent., CSM and HP shall upon the written request of HP, enter into discussions
in respect of (1) the HP Percentage Commitment and the Company Percentage
Commitment (as defined in the Assured Supply and Demand Agreement), and (2) HP's
right to continue to appoint one person as a Director.
(iv) EDBI shall be entitled to appoint as Director one person for so long as
EDBI holds any shares in the issued share capital of the Company.
(v) In the event that either CSM or HP purchases all of the Option Shares (as
defined in the Option Agreement), then such purchasing party shall be entitled
to appoint as Director, one additional person in place of the EDBI Director.
(vi) In the event that CSM purchases all of the CSM Option Shares and HP
purchases all of the HP Option Shares, with the result that CSM's Shareholding
Percentage is equal to 60 per cent. and HP's Shareholding Percentage is equal to
40 per cent., then HP shall be entitled to appoint as Director, one additional
person in place of the EDBI Director.
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(vii) Upon the written request of the other Shareholders, a Shareholder shall
forthwith remove the relevant number of Director(s) from office upon a reduction
in its Shareholding Percentage in the event that the number of Director(s) it
has appointed exceeds its entitlement under any of the foregoing paragraphs of
this sub-Clause (B).
(C) Right of Appointment
The right of appointment conferred on a Shareholder under sub-Clause (B)
above shall include the right of that Shareholder to remove at any time from
office such person appointed by that Shareholder as a Director and the right of
that Shareholder at any time and from time to time to determine the period
during which such person shall hold the office of Director.
(D) Notice in Writing
Each appointment or removal of a Director pursuant to this Clause shall
be in writing and signed by or on behalf of the Shareholder appointing or
removing such Director and shall be delivered to the registered office for the
time being of the Company.
(E) Further Director
Whenever for any reason a person appointed by a Shareholder ceases to be
a Director, that Shareholder shall be entitled to appoint forthwith a Director
in his stead.
(F) Alternate Director
A Director shall be entitled at any time and from time to time to
appoint any person to act as his alternate and to terminate the appointment of
such person and in that connection the provisions of the Articles shall be
complied with. Such alternate director shall be entitled while holding office as
such to receive notices of meetings of the Board and to attend and vote as a
Director at any such meetings at which the Director appointing him is not
present and generally to exercise all the powers, rights, duties and authorities
and to perform all functions of his appointment as the Director appointing him.
Further, such alternate director shall be entitled to exercise the vote of the
Director appointing him at any meetings of the Board and if such alternate
director represents more than one Director such alternate director shall be
entitled to one vote for every Director he represents.
(G) Chairman
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For so long as CSM's Shareholding Percentage exceeds 50 per cent., the
Chairman of the Board shall be a CSM Director nominated by CSM, subject to the
approval of the Board. In the case of an equality of votes at any meetings of
the Board or at any general meetings of the Company, the Chairman shall be
entitled to a second or casting vote.
(H) Meetings of Directors
(i) Meetings of the Board shall be held at such times as the Board shall
determine. Unless otherwise agreed by the Shareholders, a meeting of the Board
shall be held at least once every three months during the first three years from
the Completion Date and thereafter, at least once every six months.
(ii) The quorum at a meeting of Directors necessary for the transaction of any
business of the Company shall be three Directors, including at least one CSM
Director, at least one HP Director and the EDBI Director. Not less than 30 days'
notice (or such shorter period of notice in respect of any particular meeting as
may be agreed by all Directors) specifying the date, place and time of the
meeting and the business to be transacted thereat shall be given to all
Directors.
(iii) In the event that a meeting of Directors duly convened cannot be held for
lack of a quorum, the meeting shall be adjourned to the same time and day of the
following week and at the same place or such other agreed upon date (within 30
days of the adjourned meeting date), place and time, and notice specifying the
date, place and time of such adjourned meeting shall be given to all Directors.
In the event that a meeting of Directors is adjourned twice for lack of a quorum
because of the absence of a Director appointed by the same Shareholder at each
of such inquorate meetings, the quorum for the third adjourned meeting shall be
two Directors comprising one Director appointed by each of the other two
Shareholders.
(iv) The Directors may participate in a meeting of the Directors by means of a
conference telephone or a video conference telephone or similar communications
equipment by which all persons participating in the meeting are able to hear and
be heard by all other participants without the need for a Director to be in the
physical presence of another Director(s) and participation in the meeting in
this manner shall be deemed to constitute presence in person at such meeting.
The Directors participating in any such meeting shall be counted in the quorum
for such meeting and subject to there being a requisite quorum under paragraphs
(ii) or (iii) above (as the case may be) at all times during such meeting, all
resolutions agreed by the Directors in such meeting shall be deemed to be as
effective as a resolution passed at a meeting in person of the Directors duly
convened and held. A meeting conducted by means of a conference telephone or a
video
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conference telephone or similar communications equipment as aforesaid is deemed
to be held at the place agreed upon by the Directors attending the meeting,
provided that at least one of the Directors present at the meeting was at that
place for the duration of the meeting.
(v) In the case of a meeting which is not held in person, the fact that a
Director is taking part in the meeting must be made known to all the other
Directors taking part, and no Director may intentionally disconnect or cease to
take part in the meeting unless he makes known to all other Directors taking
part that he is ceasing to take part in the meeting.
(vi) Save as provided in sub-Clause (I) below, all resolutions of the Directors
at a meeting or adjourned meeting of the Directors shall be adopted by a simple
majority vote of the Directors present. Save as provided in sub-Clause (G)
above, each Director shall have one vote.
(vii) All resolutions to be passed by way of circulation among the Directors
(referred to as a "resolution in writing") shall be dispatched to each Director
contemporaneously. A resolution in writing of the Directors shall be as valid
and effectual as if it had been a resolution passed at a meeting of the Board
duly convened and held if the resolution in writing is approved and signed by at
least one CSM Director, at least one HP Director and the EDBI Director and may
consist of several documents in the like form each signed by one or more of the
Directors. The Company Secretary shall notify all the Directors in writing of
the effective date on which such resolution is passed.
(viii) None of the following actions shall be taken by the Company unless
approved by a simple majority vote of the duly represented Directors at a duly
convened meeting :-
(a) the incurring by the Company of any capital expenditure in
excess of S$10,000,000 unless included in an approved Company
Business Plan; and
(b) the exercise of the Company's borrowing powers in relation to
incremental loans carrying a loan tenure exceeding one year
(other than those included in an approved Company Business
Plan), or financing from new financial institutions.
(I) Important Matters Requiring Board's Special Approval
(i) Subject to any requirements specified by law or by the Act, none of the
following actions shall be taken by the Company unless with the affirmative
votes of not less than three-quarters of the duly represented Directors at a
duly convened meeting:-
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(a) the approval of any annual Company Business Plan of the Company
(other than the first Company Business Plan), provided however
that in the event that the annual Company Business Plan has not
been approved prior to the commencement of the new financial
year of the Company, until a new Company Business Plan is so
approved, the Company shall be operated in accordance with the
Company Business Plan most recently approved by the Board;
(b) the lease of any real estate for an amount in excess of
S$5,000,000 unless included in an approved Company Business
Plan, or the purchase of any real estate;
(c) the entry of the Company into new markets outside of the
Business unless contemplated in an approved Company Business
Plan;
(d) any sale, lease, transfer, or other disposition of the
properties or assets of the Company other than in the ordinary
course of business of the Company;
(e) the approval of, or change in, the method of computing the fee
payable under the CSM Service Support Agreement or the STPL
Group Management and Support Services Agreement unless
contemplated in an approved Company Business Plan;
(f) the termination of research and development services provided by
CSM pursuant to the CSM Service Support Agreement, or change in
the Fab Equalization policy specified in the CSM Service Support
Agreement;
(g) the exercise of any of the Company's borrowing powers equal to
or in excess of S$70,000,000 unless included in an approved
Company Business Plan;
(h) the entry into any major alliance unless contemplated in an
approved Company Business Plan. For the purposes of this
sub-paragraph (h) the expression "major alliance" means any
major transaction entered into by the Company other than in the
ordinary course of business (1) pursuant to which the Company
acquires or disposes of intellectual property or other
technology rights, (2) pursuant to which the Company is
restricted as a result of such transaction in the products or
services which it may provide to its customers,
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including HP, or (3) which creates or grants exclusive rights to
another party or parties;
(i) the issue by the Company of any guarantee to secure the
indebtedness of any person;
(j) the incurring by the Company of any capital expenditure in
excess of S$70,000,000; and
(k) a change in the Debt/Equity Ratio policy specified in Clause
11(B).
(ii) Subject to any requirements specified by law or by the Act, none of the
following actions shall be taken by the Company unless with the affirmative
votes of each of the CSM Directors, the HP Directors and the EDBI Director duly
represented at a duly convened meeting:-
(a) the change in the authorised, issued or paid-up capital of the
Company (unless pursuant to Clauses 2(C), 3(C), 3(D), 3(E) and
4(C)) or the grant of any option over the unissued share capital
of the Company;
(b) the listing of the shares in the capital of the Company on any
stock exchange;
(c) the winding-up, liquidation or dissolution of the Company or the
merger, consolidation or reorganisation of the Company with any
corporation, firm or other body;
(d) any transfer of shares held by a Shareholder in the capital of
the Company unless in accordance with Clause 10, Clause 14(B) or
the Option Agreement;
(e) the subscription for, or acquisition or disposal of, any shares
or interests in any corporation;
(f) the entry into any joint venture; and
(g) the declaration by the Company of dividends for any financial
year in excess of the lower of:-
(1) 70 per cent. of the profit after tax of the Company for
that financial year; and
(2) 50 per cent. of the retained earnings of the Company.
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6. BUSINESS OF THE COMPANY
(A) Business
(i) The Shareholders agree that the business of the Company (the "Business")
shall be the construction, ownership, operation and management of the Company
Fab as an independent dedicated foundry. The initial financial and business
plans for the Company Fab provide for Module A which will have an installed
wafer manufacturing capacity of up to 35,000 wafers per month based on 18 mask
layers. If the Company deems fit, it may construct Module B, which is also
expected to have an installed wafer manufacturing capacity of up to 35,000
wafers per month based on 18 mask layers.
(ii) The Shareholders agree that the Company shall not engage in the production
and sale of its own products with its own brand name. However, the Company may
undertake turnkey projects providing customers with manufacturing, assembly and
test services.
(B) Technology License and Development
(i) It is recognised that one of the values HP sees in this joint venture is the
ability to port HP's designs directly to the Company Fab. To this end, the
parties agree that the processes which the Company will run will include,
without limitation, 0.35um and 0.25um (and beyond) process flows that are
compatible with HP's design requirements (the "HP-Compatible Process
Technology").
(ii) HP and CSM shall each license certain intellectual property rights related
to the manufacture of semiconductor wafers and integrated circuits to the
Company on the terms and conditions of the License and Technology Transfer
Agreement.
(iii) The Company shall license certain intellectual property rights related to
the manufacture of semiconductor wafers and integrated circuits to CSM and HP on
the terms and conditions of the License and Technology Transfer Agreement.
(iv) The Company shall establish a Technology Committee comprising nominees of
CSM, HP and the Company. The Technology Committee shall meet at least quarterly
(a) to discuss and address the identification and development of appropriate
process technologies to meet the Company's business objectives, and (b) to
establish the commonality between those processes and ones running or planned in
CSM as well as HP-Compatible Processes (as defined in the License
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and Technology Transfer Agreement). In doing so, the Technology Committee will
make recommendations on the collaboration between CSM, HP and the Company on the
required development and implementation plans for process technologies and will
construct a process technology roadmap for the Company to be approved by the
General Manager of the Company. The Technology Committee shall communicate its
recommendations and any decisions within its scope to the General Manager, with
a copy to each of the CSM, HP and EDBI Directors. On an annual basis, working
with the Management Committee, this information, as appropriate, shall become
incorporated into the Company Business Plan.
(C) Assured Supply and Demand
(i) The Company shall make available to HP quantities of wafer manufacturing
capacity from the Company Fab on the terms and conditions of the Assured Supply
and Demand Agreement.
(ii) CSM shall provide bridge wafer manufacturing capacity to the Company from
CSM Fabs on the terms and conditions of the Assured Supply and Demand Agreement.
(D) Services
(i) CSM shall provide accounting services; general administration services;
information technology services; human resources management; legal services;
sales and marketing services; research and development services; customer
engineering and support services; facilities design and construction, and
facility system services to the Company on the terms and conditions of the CSM
Service Support Agreement.
(ii) In addition to providing the services set forth in paragraph (i) above, CSM
shall load the Company Fab in accordance with the Fab Equalization policy
specified in the CSM Service Support Agreement.
(iii) STPL shall provide services in the areas of treasury, investment risk
review, governmental relations, business development, human resources management
and development, corporate secretarial matters and internal audit to the Company
on the terms and conditions of the STPL Group Management and Support Services
Agreement.
(iv) HP may provide services to the Company on such terms and conditions as may
be agreed between the Company and HP.
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(E) Sub-Lease of Site
(i) STPL shall procure a lease of the Site from the JTC for the Company Fab. The
Company shall sub-lease the Site from STPL for the construction of Module A
pursuant to the Sub-Lease Agreement which will be substantially in accordance
with the terms set forth in the JTC Offer Letter. The Sub-Lease Agreement shall
be subject to the JTC's approval.
(ii) STPL shall reserve a part of the land adjacent to Module A for Module B
(the "Module B Site") for a period of three and a half years after the
groundbreaking date of Module A (the "Reserved Period") subject always to the
terms and conditions of the lease (or any other applicable agreement) to be made
between STPL and the JTC. The Company shall bear all costs associated with the
land for Module B during the Reserved Period (including, without limitation, all
fees payable to the JTC in respect of the reservation of the land for Module B).
(iii) In the event that CSM notifies the Company in writing during the Reserved
Period that it desires to utilise the Module B Site for CSM's own use or with
other joint venture partners, the Company shall respond to CSM's notice within
90 days thereof as to whether the Company agrees to release the Module B Site to
CSM. If the Company is not agreeable to such release, it shall groundbreak and
commence construction of Module B within 180 days of CSM's notice.
(iv) If the Company agrees to release the Module B Site to CSM, CSM shall pay to
the Company 50 per cent. of the associated costs (including, without limitation,
all fees paid to the JTC in respect of the reservation of the land for Module B)
during the Reserved Period and shall groundbreak and commence construction of a
CSM Fab on the Module B Site within 180 days of CSM's notice. CSM shall use its
commercially reasonable endeavours to secure on behalf of the Company other
sites in Woodlands, Singapore near the location of Module A as possible
expansion sites for the Company.
7. SHAREHOLDERS' OBLIGATIONS AND RIGHTS
(A) Shareholders' Obligations
Except as the Shareholders may otherwise agree in writing or save as
otherwise provided or contemplated in this Agreement, each of the Shareholders
shall use commercially reasonable endeavours to exercise its powers in relation
to the Company so as to ensure that:-
(i) the Company carries on its business and conducts its affairs in
a proper and efficient manner;
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(ii) the Company, and the Directors appointed by that Shareholder,
will comply strictly and expeditiously with the provisions of
this Agreement and the Articles;
(iii) the Business shall be carried on pursuant to the policies set
out herein or laid down from time to time by the Board, which
shall hold Board meetings in accordance with Clause 5(H) and the
Articles;
(iv) the Company shall cause to be kept full and proper accounting
records relating to the business, undertakings and affairs of
the Company, which records shall be made available at all
reasonable times for inspection by the Directors by prior
appointment during office hours;
(v) the Company shall prepare annual accounts, in each case in
accordance with Singapore GAAP and in compliance with all
applicable legislation in respect of each accounting reference
period (with reconciliation or restatements to U.S. GAAP to be
prepared by the Auditors at the expense of HP, which expense
shall not be incurred without the prior written approval of HP
or Hewlett-Packard Company), and shall procure that such
accounts are audited as soon as practicable and shall supply
copies of the same both in draft and final form, to each of the
Shareholders within 120 days after the end of the financial year
of the Company;
(vi) the Company shall prepare and provide to each of the Directors:-
(a) unaudited monthly profit and loss statements within four
business days after the end of each calendar month;
(b) updated profit and loss forecast for the following month
within 10 business days after the end of each calendar
month; and
(c) unaudited monthly profit and loss statements, cashflow
and balance sheet within 30 days after the end of each
calendar month;
in each case in accordance with Singapore GAAP (with
reconciliation or restatements to U.S. GAAP to be prepared in
accordance with guidelines provided by HP), and
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(vii) the Company shall do all that the Auditors may
reasonably require by way of keeping records and
accounts and provide the Auditors with all such
information and explanation as they may reasonably
require and otherwise assist the Auditors in all
reasonable ways.
(B) Shareholders' Inspection Rights
(i) The Company shall permit each of CSM, HP and EDBI (for so long
as its respective Shareholding Percentage is equal to or exceeds
15 per cent.) to send a certified public accountant (the
"Accountant"), at such Shareholder's expense, upon giving the
Company reasonable notice and during reasonable business hours,
to visit and inspect any of the properties of the Company, to
examine its books of account and records and to discuss the
Company's affairs, finances and accounts with its officers. The
Company shall also provide such other information concerning the
Company, its business, prospects, finances, employees, officers
and directors, as such Shareholder may reasonably request,
Provided, however, that the Company shall not be obliged
pursuant to this sub-Clause (B)(i) to provide access to any
information which it reasonably considers to be trade secret or
similar confidential information, the disclosure of which the
Company reasonably believes may adversely affect its business.
Each of CSM, HP and EDBI may only exercise this right of
inspection once every 12 months unless the purpose of such
inspection is to ensure compliance with any irregularities noted
in the inspection report of the Accountant, in which case such
Shareholder is entitled to exercise its right of inspection once
every calendar quarter, until the relevant remedial actions have
been taken, in which case such Shareholder's right of inspection
may thereafter be exercised only once every 12 months. The
Accountant shall be appointed from among the firms of ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, Coopers & ▇▇▇▇▇▇▇, Deloitte & Touche, Ernst & Young,
KPMG Peat Marwick, and Price Waterhouse or such other firm as
the relevant Shareholder and the Company may agree.
(ii) The Company shall further permit each of CSM, HP and EDBI (for
so long as its respective Shareholding Percentage is equal to or
exceeds 15 per cent.), at such Shareholder's expense, upon
giving the Company reasonable notice and during reasonable
business hours, to visit and inspect any of the properties,
facilities or operations of the Company, to examine its
operating records and to discuss the Company's operations with
its officers for the purposes of
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evaluating and auditing the same as regards environmental
protection, worker health and safety, risk management and loss
control and the Company's compliance with applicable laws with
respect thereto; provided, however, that the Company shall not
be obligated pursuant to this sub-Clause (B)(ii) to provide
access to any information which it reasonably considers to be
trade secret or similar confidential information, the disclosure
of which the Company reasonably believes may adversely affect
its business. An inspecting Shareholder shall be entitled to
have up to three representatives on the Company's premises at
any inspection and each such inspection shall be conducted so as
not to unduly disrupt normal business operations. With regard to
each of the following areas: (a) environmental protection, (b)
worker health and safety, and (c) risk management and loss
control, each of CSM, HP and EDBI may only exercise this right
of inspection once every 12 months unless such inspection
reveals any non-compliance with applicable laws, in which case
such Shareholder is entitled to exercise its right of inspection
once every calendar quarter, until the relevant remedial actions
have been taken, in which case such Shareholder's right of
inspection may thereafter be exercised only once every 12
months. For clarification, each of CSM, HP and EDBI may send
inspection teams in each of the areas listed above once every 12
months and such visits do not need to be simultaneous with
visits from the other Shareholders or from such Shareholder's
other inspection teams.
8. MANAGEMENT OF THE COMPANY
(A) General Manager
The General Manager of the Company shall be appointed by CSM in
consultation with HP. The General Manager shall be responsible for the day to
day running and management of the business of the Company within the limits
imposed by the Board, this Agreement and his contract of service, if any, with
the Company.
(B) Management Committee
The Company shall establish a Management Committee based in Singapore
comprising three members with one nominee of CSM, one nominee of HP and the
General Manager (the "Management Committee"). The Management Committee shall
review decisions on the allocation of loadings made by the CSM central planning
organization carried out between the CSM Fabs and the Company Fab, the timing of
technology introductions and the recommendations made by the
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Technology Committee to meet Company business objectives and to meet current and
future customer commitments and required qualifications. The Management
Committee will also review and make recommendations to the General Manager, as
appropriate, on pricing structure, capacity and mix of processes and other
operational issues relating to the Company. The Management Committee will also
provide advice to the General Manager in connection with the preparation of the
Company Business Plan.
(C) Employees
(i) CSM and HP shall each contribute such manpower resources, either on a
contract or secondment basis, as may be required by the Company on such terms as
may be agreed in writing with the Company. To promote installation and practice
of the HP-Compatible Process Technology at the Company, construct operational
links into HP and share best practices with HP, HP will locate a team of not
more than 15 persons at the Company.
(ii) The Company shall be responsible for the costs and expenses associated with
such manpower resources as described in sub-Clause (C)(i) above. In addition,
the Company shall be responsible for all employee costs and expenses (including
salaries and living allowances) of all HP employees, including administrative,
engineering, and research and development staff, requested or approved by the
Company on such terms as may be agreed in writing between HP and the Company.
(iii) Notwithstanding sub-Clauses (C)(i) and (ii) above, HP may at its own
expense from time to time, upon giving reasonable prior written notice to the
Company, locate HP's employees at the Company.
(iv) The parties presently do not envisage that the Company will establish an
employee share option scheme. However, in the event that the employees of the
Company participate in CSM's employee share ownership scheme, the Company shall
pay to CSM the cost of acquisition, if any (such as, where applicable,
compensation charges pursuant to U.S. GAAP, charges on the issuance of shares at
a discount) of such shares in CSM as may be allocated to such employees.
9. GENERAL MEETINGS
No business shall be transacted at any general meeting of the Company
unless a quorum of Shareholders is present throughout the meeting. The quorum
for all general meetings (other than an adjourned meeting) of Shareholders shall
comprise three Shareholders present throughout the meeting, comprising the
proxies or representatives of CSM, HP and EDBI respectively. In the
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event that a general meeting duly convened cannot be held for lack of a quorum,
the meeting shall be adjourned to the same time and day of the following week
and at the same place or such other agreed upon date (within 30 days of the
adjourned meeting date), place and time, and notice specifying the date, place
and time of such adjourned meeting shall be given to all Shareholders. In the
event that a general meeting is adjourned twice for lack of a quorum because of
the absence of the same Shareholder at each of such inquorate meetings, the
quorum for the third adjourned meeting shall be the other two Shareholders.
10. TRANSFER OF SHARES
(A) Moratorium on Transfer
Notwithstanding anything contained in this Agreement or the Articles but
subject to sub-Clauses (D) and (F) below and Clauses 3(H) and 14(B):-
(i) neither CSM nor HP shall transfer all or any part of its shares in the
capital of the Company to any person within a period of four years after
the Completion Date unless with the prior written consent of all the
other Shareholders; and
(ii) EDBI shall not transfer all or any of the Option Shares in the capital
of the Company to any person prior to the expiration of the Call Option
Period unless such transfer is pursuant to the Option Agreement or
unless with the prior written consent of all the other Shareholders.
(B) Restriction on Transfer
(i) No Shareholder shall create or have outstanding any pledge, lien, charge
or other encumbrance or security interest on or over any shares in the
capital of the Company or any part of its interest in such shares.
(ii) Subject to sub-Clause (A) above and sub-Clauses (C), (D) and (F) below,
no Shareholder shall transfer shares held by it in the capital of the
Company or otherwise sell, dispose of or deal with all or any part of
its interest in such shares unless and until the rights of pre-emption
conferred by this sub-Clause (B) have been exhausted or waived by each
of the other Shareholders. A waiver of its rights of pre-emption by a
Shareholder in respect of any transfer shall not be revocable in respect
of such transfer.
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(iii) Subject to sub-Clause (A) above and sub-Clauses (C), (D) and (F) below,
every Shareholder who desires to transfer any shares (the "Transferor")
shall give to the Company notice in writing of such desire (a "Transfer
Notice"). The Transfer Notice shall specify the number of shares offered
for sale (the "Sale Shares"), the proposed sale price thereof and
whether it is a condition that all (and not some only) of the Sale
Shares shall be purchased.
(iv) Subject as hereinafter mentioned, a Transfer Notice shall designate the
Company as the Transferor's agent for the sale of the Sale Shares to all
the Shareholders other than the Transferor and any Shareholder who has
waived its right of pre-emption (the "Other Shareholders") at the
Prescribed Price (as defined below). A Transfer Notice shall not be
revocable except with the sanction of the Board or in the events
specified in paragraphs (v) and (xi) below.
(v) The Prescribed Price shall be:-
(a) the price specified in the Transfer Notice, if it is agreed to
by all the Other Shareholders collectively (such agreement to be
evidenced by notice in writing to the Company within 60 days
from the date of the Transfer Notice) or failing agreement, the
Company shall appoint the Auditors or an appraiser (as the case
may be) within 14 days from the expiry of the said 60 days, and
the Prescribed Price shall be;
(b) the price which the Auditors shall, within 30 days (or such
other time period as the Auditors may reasonably require) of the
Company's written request to the Auditors, certify in writing to
be in their opinion the fair value thereof, or in the event that
the Transferor or any of the Other Shareholders do not agree to
the appointment of the Auditors for the purpose of determining
the fair value of the Sale Shares;
(c) such price determined by an appraiser jointly designated by the
Transferor and the Other Shareholders, within 30 days (or such
other time period as the appraiser may reasonably require) of
the appointment of such appraiser, or failing agreement on the
appointment of such appraiser;
(d) such price determined by a three-appraiser method as follows:-
The Transferor and collectively, the Other Shareholders shall
each appoint one appraiser and those two appraisers shall
appoint the third appraiser. The third
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appraiser shall determine the fair value of the Sale Shares
within 30 days (or such other time period as the appraiser may
reasonably require) of its appointment;
Provided that the Transferor has not notified the Company that
it rejects the Auditors' or the appraiser's (as the case may be)
determination of the Prescribed Price within 14 days after such
determination (and such rejection shall operate to revoke the
Transfer Notice and cancel the proposed transfer of the Sale
Shares); in the absence of such rejection the Auditors' or the
appraiser's (as the case may be) determination shall be final
and binding on the Transferor and the Other Shareholders.
(vi) In acting under paragraph (v) above, the Auditors and the appraiser (as
the case may be) shall make the following assumptions:-
(a) that the Sale Shares are sold on an arm's length basis between a
willing vendor and a willing purchaser; and
(b) that the Company would continue to carry on its business as a
going concern.
(vii) The appraisers shall be appointed from among the firms of ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, Coopers & ▇▇▇▇▇▇▇, Deloitte & Touche, Ernst & Young, KPMG Peat
Marwick, and Price Waterhouse (or such other firm as the Transferor and
the Other Shareholders may agree). The Auditors and the appraisers shall
act hereunder as experts and not as arbitrators and their determination
shall be final and binding on all persons concerned and in the absence
of fraud, the Auditors or the appraisers (as the case may be) shall be
under no liability to any such person by reason of their determination
or by anything done or omitted to be done by the Auditors or the
appraisers (as the case may be) for the purposes thereof or in
connection therewith.
(viii) The Transferor and each of the Other Shareholders shall each bear
equally the fees and expenses of the Auditors or the appraisers (as the
case may be).
(ix) Upon the price being agreed or determined as aforesaid, the Company
shall forthwith by notice in writing inform each of the Other
Shareholders of the number and price of the Sale Shares and invite each
of the Other Shareholders to apply in writing to the Company within 14
days (or such other time period as the Transferor and the Other
Shareholders may agree) of the date of dispatch of the notice (which
date shall be specified therein) for
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such maximum number of the Sale Shares (being all or any thereof) as it
shall specify in such application.
(x) If the Other Shareholders shall within the said period of 14 days (or
such other time period as the Transferor and the Other Shareholders may
agree) apply for all or (except where the Transfer Notice provides
otherwise) any of the Sale Shares, the Board shall allocate the Sale
Shares (or so many of them as shall be applied for as aforesaid) to or
amongst the applicants and in case of competition pro rata (as nearly as
possible) according to the number of shares in the Company of which they
are registered or unconditionally entitled to be registered as holders
provided that no applicant shall be obliged to take more than the
maximum number of Sale Shares specified by it as aforesaid. The Company
shall forthwith give notice of such allocations (an "Allocation Notice")
to the Transferor and to the Shareholders to whom the Sale Shares have
been allocated and shall specify in such Allocation Notice the place and
time (being not earlier than 14 and not later than 28 days after the
date of the Allocation Notice or as otherwise agreed among the
Shareholders) at which the sale and purchase of the Sale Shares so
allocated shall be completed.
(xi) If it is a condition specified in the Transfer Notice that all (and not
some only) of the Sale Shares shall be purchased and if the Other
Shareholders do not, on a collective basis, apply to purchase all the
Sale Shares, the Transferor shall be entitled to sell all the Sale
Shares to any person or persons as the Transferor may choose, provided
that such sale takes place in accordance with the provisions of
paragraph (xiii) below.
(xii) The Transferor shall be bound to transfer the Sale Shares comprised in
an Allocation Notice to the purchasers named therein at the time and
place therein specified by the delivery of duly executed transfer forms
together with the relative share certificates in respect of such Sale
Shares and, if it shall fail to do so, the Chairman of the Board or some
other person appointed by the Board shall be deemed to have been
appointed attorney of the Transferor with full power to execute,
complete and deliver, in the name and on behalf of the Transferor,
transfers of the Sale Shares to the purchaser therefor against payment
of the price to the Company. On payment of the price to the Company the
purchaser shall be deemed to have obtained a good quittance for such
payment and on execution and delivery of the transfer the purchaser
shall be entitled to insist upon its name being entered in the Register
of Members as the holder by transfer of the Sale Shares. The Company
shall forthwith pay the price into a bank account in the Company's name
and shall hold such price in trust for the Transferor.
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(xiii) During the six months following the expiry of the said period of 14 days
(or such other time period as the Transferor and the Other Shareholders
may agree) referred to in paragraph (ix) above, the Transferor shall be
at liberty to transfer to any person approved by the Other Shareholders,
such approval not to be unreasonably withheld, and at a price not less
than the Prescribed Price and on the same terms:-
(a) any Sale Share not allocated by the Board in an Allocation
Notice; or
(b) if paragraph (xi) above applies, all of the Sale Shares.
(C) Right of First Refusal
(i) Every Shareholder (the "Transferor") who desires to transfer any shares
(the "Sale Shares") held by it in the capital of the Company to a third
party (the "Third Party") who has made a bona fide offer to the
Transferor shall give to the Company notice in writing of such offer and
shall state in its notice whether it is a condition that all (and not
some only) of the Sale Shares shall be purchased. The Company shall
forthwith by notice in writing inform each of the Other Shareholders of
the Third Party's offer (including the abovementioned condition, if
applicable) and shall on behalf of the Transferor first offer the Sale
Shares to the Other Shareholders at the price offered by the Third Party
and on terms no less favourable than that available to the Third Party.
The Other Shareholders shall apply in writing to the Company within 30
days (or such other time period as the Transferor and the Other
Shareholders may agree) of the date of dispatch of the Company's notice
(which date shall be specified therein) for such maximum number of the
Sale Shares (being all or any thereof) as it shall specify in such
application. In case of competition for the Sale Shares, the Sale Shares
shall be allocated among the Other Shareholders pro rata (as nearly as
possible) according to the number of shares in the Company of which they
are registered or unconditionally entitled to be registered as holders
provided that no applicant shall be obliged to take more than the
maximum number of Sale Shares specified by it as aforesaid. The Company
shall forthwith give notice of such allocations (an "Allocation Notice")
to the Transferor and to the Shareholders to whom the Sale Shares have
been allocated and shall specify in such Allocation Notice the place and
time (being not earlier than 14 and not later than 28 days after the
date of the Allocation Notice or as otherwise agreed among the
Shareholders) at which the sale and purchase of the Sale Shares so
allocated shall be completed. The provisions of sub-Clause (B) paragraph
(xii) shall apply mutatis mutandis in relation to such sale and
purchase.
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(ii) The Transferor shall be entitled to sell any Sale Shares not purchased
by the Other Shareholders, to the Third Party. In the event that the
Transferor states in its notice that it is a condition that all (and not
some only) of the Sale Shares shall be purchased by the Other
Shareholders, and if the Other Shareholders do not, on a collective
basis, apply to purchase all the Sale Shares, the Transferor shall be
entitled to sell all the Sale Shares to the Third Party.
(D) Permitted Transfers
(i)(a) For the purpose of this paragraph (i), the term "Permitted Transferee"
in relation to CSM and EDBI shall mean a wholly-owned subsidiary of such
Shareholder, and in relation to HP shall mean the following
corporations:-
(1) Hewlett-Packard Company, incorporated in California
(2) Hewlett-Packard World Trade, Inc., incorporated in Delaware
(3) Hewlett-Packard Ireland (Holdings) Ltd., incorporated in Ireland
(4) Hewlett-Packard (Manufacturing) Ltd., incorporated in Ireland
(5) Hewlett-Packard S.A., incorporated in Switzerland
(6) Hewlett-Packard Singapore Pte. Ltd., incorporated in Singapore
(7) Hewlett-Packard Holdings Singapore Pte Ltd, incorporated in
Singapore.
(b) Notwithstanding anything in sub-Clause (B) above but subject to
sub-Clause (E) below, a Shareholder being a corporation (the "Transferor
Corporation") shall be entitled to transfer all (and not some only) of
the shares held by it in the capital of the Company to a Permitted
Transferee.
(c) If however at any time after a transfer of shares is effected by the
Transferor Corporation to a Permitted Transferee pursuant to
sub-paragraph (b) above, the Permitted Transferee ceases to be a
wholly-owned subsidiary of the Transferor Corporation, (or in the case
where the Transferor Corporation is HP, Hewlett-Packard Company ceases
to own directly or indirectly at least 95 per cent. of the issued share
capital of the Permitted Transferee) it shall be the duty of the
Permitted Transferee to notify the Board in writing that such event has
occurred and both the Transferor Corporation and the Permitted
Transferee jointly and severally undertake to procure and ensure that
all (and not some only) of the shares held by the Permitted Transferee
in the capital of the Company are forthwith transferred to the
Transferor Corporation or another wholly-owned subsidiary of the
Transferor Corporation (or in the case where the Transferor Corporation
is HP, to another Permitted Transferee of HP).
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(ii) The provisions of sub-Clause (B) above shall not apply to a transfer of
shares in the capital of the Company made pursuant to the Option
Agreement.
(E) Supplementary Provision
It shall be a condition precedent to the right of any Shareholder to
transfer shares in the capital of the Company that the purchaser or transferee
(if not already bound by the provisions of this Agreement) executes in such form
as may be reasonably required by and agreed between the other Shareholders a
deed of ratification and accession under which the purchaser or transferee shall
agree to be bound by and shall be entitled to the benefit of this Agreement as
if an original party hereto in place of or in addition to the transferring
Shareholder (as the case may be).
(F) Change in Control of Shareholder
(i) In the event that there is a change in control of any Shareholder, such
Shareholder (the "Affected Shareholder") shall notify the Company and the other
Shareholders in writing of such change in control. Any of the Shareholders who
objects to such change in control shall be entitled by notice in writing to the
Affected Shareholder (the "Objection Notice") to require the Affected
Shareholder to dispose of all its shares in the capital of the Company at the
Prescribed Price. A copy of the Objection Notice shall be promptly delivered to
the Company and to the other Shareholders. Upon receipt of the Objection Notice,
the Affected Shareholder shall be deemed to have served on the Company a
Transfer Notice on the date of the Objection Notice in accordance with the
provisions of Clause 10(B)(iii) and the provisions of Clause 10(B)(iii) to
Clause 10(B)(x), and Clause 10(B)(xii) shall apply mutatis mutandis in relation
to such Transfer Notice, save that:-
(a) the Transfer Notice shall be deemed to be an offer to sell all
(and not some only) of the shares held by the Affected
Shareholder;
(b) the price of the said shares shall be mutually agreed among the
Affected Shareholder and all the other Shareholders, or failing
agreement within 60 days from the date of the Objection Notice,
the price of the said shares shall be deemed to be the
Prescribed Price determined in accordance with Clause 10(B)(v);
and
(c) the Affected Shareholder shall not be entitled to reject the
Auditors' or the appraiser's (as the case may be) determination
of the Prescribed Price.
The restriction on transfer of shares contained in Clause 10(A) and in the
Articles shall not apply to such disposal.
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(ii) For the purpose of this sub-Clause (F), a change in control of any
Shareholder shall be deemed to have occurred if more than 50 per cent. of the
issued voting shares of such Shareholder or of any holding company of such
Shareholder shall be acquired by any company or person, or by any two or more
persons acting in concert, other than by a related corporation of such
Shareholder. However, a change in control of a Shareholder pursuant to or after
a listing on a stock exchange of the shares in the capital of such Shareholder
or of the holding company of such Shareholder shall not be deemed to be a change
in control of such Shareholder for the purposes of this sub-Clause (F). Each of
the Shareholders undertakes to notify the other Shareholders in writing of any
change in control of such Shareholder within ten days of it becoming aware of
such a change in control.
11. FINANCE
(A) Loan Finance
Each of the Shareholders shall use its commercially reasonable
endeavours to procure that the Company's business is financed as far as
practicable by borrowing from banks, financial institutions and other similar
sources on commercially reasonable terms, but without allowing any prospective
lender a right to participate in the share capital of the Company as a condition
of any loan. Such financing shall be procured without any additional security by
way of guarantee or otherwise from the Shareholders.
(B) Debt/Equity Ratio
The Company shall maintain a Debt/Equity Ratio of no greater than 1.5 to
1, that is, for every S$1 of Total Shareholder Funds, there shall not be more
than S$1.50 of External Bank Borrowings. In the event that the Debt/Equity Ratio
exceeds 1.5 to 1, then the General Manager shall inform the Board of Directors
thereof at the next Board meeting.
12. DIVIDEND POLICY
Each of the Shareholders shall take such action as may be necessary to
procure that, subject to the appropriation of prudent and proper reserves and
the retention out of profits of funds to meet any requirements as to solvency or
otherwise applicable to the Company (whether under any statute, regulation or
ruling or any requirements for the Company's expansion program, loan commitments
and working capital needs, whether or not having the force of law in Singapore
or otherwise), the Company distributes to and among the Shareholders as
dividends such percentage
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of its net profits after provision for tax paid or accrued due in any financial
year as may be decided by a resolution of the Board provided that the aggregate
amount of such dividends does not exceed the lower of:-
(i) 70 per cent. of the profit after tax of the Company for that
financial year; and
(ii) 50 per cent. of the retained earnings of the Company.
It is not the intent of the Company to accumulate excess retained earnings
beyond what is required to fund the Company's expansion, loan commitments and
working capital needs.
13. WARRANTIES AS TO AUTHORITY
Each of the parties hereby represents and warrants to and undertakes
with the other parties as follows:-
(i) it is a corporation duly organised and validly existing under
the laws of its place of incorporation, and has full power and
authority to execute and deliver and perform all of its
obligations under this Agreement and any other agreements to be
executed by it hereunder;
(ii) all actions, conditions and things required to be taken,
fulfilled and done (including the obtaining of any necessary
consents) in order (a) to enable such party lawfully to enter
into, exercise its rights and perform and comply with its
obligations under, this Agreement and (b) to ensure that those
obligations are legally binding and enforceable have been taken,
fulfilled and done;
(iii) this Agreement is, and all other agreements and instruments of
such party contemplated hereby shall be, the legal, valid and
binding agreement of such party, enforceable against such party
in accordance with their terms; and
(iv) the execution, delivery and performance of this Agreement by it
will not conflict with any law, order, judgement, decree, rule
or regulation of any court, arbitral tribunal or government
agency, or any agreement, instrument or indenture to which such
party or any of its related corporations is a party or by which
any thereof is bound.
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14. DEFAULT
(A) Remedy of Breach or Default
Where a Shareholder fails to perform its obligations hereunder or to
comply with the terms and conditions of this Agreement, the other Shareholders
shall be at liberty to issue to the defaulting Shareholder (the "Defaulting
Shareholder") a notice specifying the breach or default and, in the case of a
breach or default capable of remedy, stipulating a period of not less than 60
days during which such breach or default shall be remedied or steps taken in
pursuance thereof. For the purposes of this sub-Clause (A), a breach or default
shall be considered capable of remedy if the Defaulting Shareholder can comply
with the term or condition in question in all respects other than as to the time
of performance.
(B) Disposal of Shares by Defaulting Shareholder
In the event that a material breach of this Agreement or a material
default by a Shareholder has been admitted or established following upon the
failure of that Defaulting Shareholder to comply or attempt to comply with the
terms of a notice under sub-Clause (A) above and the failure to resolve the
breach or default after following the dispute resolution process described in
Clause 19 (F)(i), any of the other Shareholders shall, without prejudice to any
other rights and remedies such a Shareholder may have, be entitled by notice in
writing to the Defaulting Shareholder (the "Disposal Notice") to require the
Defaulting Shareholder to dispose of all its shares in the capital of the
Company at the Prescribed Price. A copy of the Disposal Notice shall be promptly
delivered to the Company and to the other Shareholders not in default. Upon
receipt of the Disposal Notice, the Defaulting Shareholder shall be deemed to
have served on the Company a Transfer Notice on the date of the Disposal Notice
in accordance with the provisions of Clause 10(B)(iii) and the provisions of
Clause 10(B)(iii) to Clause 10(B)(x), and Clause 10(B)(xii) shall apply mutatis
mutandis in relation to such Transfer Notice, save that:-
(i) the Transfer Notice shall be deemed to be an offer to sell all
(and not some only) of the shares held by the Defaulting
Shareholder;
(ii) the price of the said shares shall be mutually agreed among the
Defaulting Shareholder and all the other Shareholders, or
failing agreement within 60 days from the date of the Disposal
Notice, the price of the said shares shall be deemed to be the
Prescribed Price determined in accordance with Clause 10(B)(v);
and
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38
(iii) the Defaulting Shareholder shall not be entitled to reject the
Auditors' or the appraiser's (as the case may be) determination
of the Prescribed Price.
The restriction on transfer of shares contained in Clause 10(A) and in the
Articles shall not apply to such disposal.
(C) Deemed Breaches
In the event that:-
(i) any Shareholder shall become bankrupt or insolvent; or
(ii) a resolution is passed for the winding up of any Shareholder; or
(iii) a proceeding has been instituted seeking a declaration that any
Shareholder is bankrupt or insolvent or seeking bankruptcy,
arrangement or composition with creditors, liquidation or the
appointment of a trustee, receiver or liquidator or analogous
procedure under any applicable law and such proceedings remain
undismissed and unstayed for a period of 60 days or are being
consented to by that Shareholder;
then a material breach of this Agreement or material default shall be deemed to
have been committed by the Shareholder concerned and the provisions of
sub-Clause (B) above shall apply mutatis mutandis as if a material breach of
this Agreement or material default has been admitted or established.
15. GENERAL OBLIGATIONS OF SHAREHOLDERS
Each Shareholder shall take all commercially reasonable steps necessary
on its part to give full effect to the provisions of this Agreement and to
procure (so far as it is able by the exercise of voting rights or otherwise so
to do) that the Company and the Directors shall perform and observe the
provisions of this Agreement.
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16. PREVALENCE OF AGREEMENT
In the event of any inconsistency or conflict between the provisions of
this Agreement and the provisions of the Articles, the provisions of this
Agreement shall as between the Shareholders prevail.
17. DURATION AND TERMINATION
(A) Duration
This Agreement shall take effect from the date hereof and continue
thereafter without limit in point of time but, upon the transfer by any
Shareholder of the entirety of its shares in the capital of the Company, it
shall have no further rights hereunder and shall be released from all its
obligations hereunder (other than under Clauses 10(D)(i)(c) and 18) but, if at
that time there are two or more Shareholders bound by the provisions of this
Agreement, this Agreement shall continue in full force and effect as between the
continuing Shareholders.
(B) Termination
The termination of this Agreement from any cause shall not release any
Shareholder from any liability which at the time of termination has already
accrued, or which thereafter may accrue.
18. CONFIDENTIAL INFORMATION
(A) Communications Confidential
All communications between the Company and the Shareholders or any of
them and all information and other material supplied to or received by any of
them from any one or more of the others in connection with the performance of
this Agreement which is either marked "confidential" or is by its nature
intended to be exclusively for the knowledge of the recipient alone, or to be
used by the recipient only for the benefit of the Company, any information
concerning the business transactions or the financial arrangements, including
without limitation, trade secrets, customer lists, know-how, designs, processes,
drawings and specifications, of the Company or of the Shareholders or any of
them, or of any person with whom any of them is in a confidential relationship
with regard to the matter in question coming to the knowledge of the recipient
shall be kept confidential by the recipient and shall be used by the recipient
solely and
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exclusively for achieving the purposes of this Agreement unless disclosure is
require by law; unless such information or materials were in the recipient's
possession before receipt from the discloser; unless such information or
materials are rightfully received by the recipient from a third party without a
duty of confidentiality on the third party; unless such information or materials
are provided by the discloser to a third party without a duty of confidentiality
on such third party; unless such information or materials are independently
developed by recipient; or unless or until any party can reasonably demonstrate
that it is or part of it is, in the public domain through no act or default on
the part of the recipient, its servants and/or agents, whereupon, to the extent
that it is public, this obligation shall cease. All parties shall be entitled to
use for any purpose (provided that such use is not, to the knowledge of such
party, in breach of this Agreement) confidential information in intangible form
that may be retained in the minds of a party's employees who have authorized
access to such confidential information.
(B) Shareholders' Obligations
The Shareholders shall procure the observance of the abovementioned
restrictions by the Company and shall take all reasonable steps to minimise the
risk of disclosure of confidential information, by ensuring that only their
employees and directors and those of the Company whose duties will require them
to possess any of such information shall have access thereto, and that they
shall be instructed to treat the same as confidential. The Shareholders shall in
addition procure that such employees of the Company whose duties will require
them to possess, or have access to, confidential information, shall sign
confidentiality agreements with the Company respecting the confidentiality of
such information.
(C) Obligations to Continue
The obligations contained in this Clause shall endure, even after the
termination of this Agreement, without limit in point of time except and until
any confidential information enters the public domain as set out above.
19. NOTICES AND GENERAL
(A) Notices
All notices, demands or other communications required or permitted to be
given or made hereunder shall be in writing and delivered personally or sent by
prepaid registered post
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(by air-mail if to or from an address outside Singapore) with recorded delivery,
or by facsimile transmission (provided that the receipt of such facsimile
transmission is confirmed by the dispatch of a hard copy of the facsimile sent
immediately thereafter by prepaid registered post) addressed to the intended
recipient thereof at its address or at its facsimile number set out in this
Agreement (or to such other address or facsimile number as a party to this
Agreement may from time to time duly notify the others in writing). Any such
notice, demand or communication shall be deemed to have been duly served, if
given or made by facsimile, immediately at the time of dispatch (provided that
the receipt of such facsimile transmission is confirmed by the dispatch of a
hard copy of the facsimile sent immediately thereafter by prepaid registered
post) or, if given or made by letter, immediately if delivered personally or 48
hours after posting or, if given or made by air-mail, ten days after posting and
in proving the same it shall be sufficient to show that personal delivery was
made or that the envelope containing such notice was duly addressed, stamped and
posted. The address and facsimile numbers of the parties for the purpose of this
Agreement are:-
CSM : CHARTERED SEMICONDUCTOR MANUFACTURING LTD
▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇ ▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile No. : (▇▇) ▇▇▇ ▇▇▇▇
Attention : Legal Department
HP : HEWLETT-PACKARD EUROPE B.V.
▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Facsimile No. : (31)(▇▇) ▇▇▇ ▇▇▇▇
Attention : Legal Department
With a copy to:
: HEWLETT-PACKARD COMPANY
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ 20BQ
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇
Facsimile No. : (01)(▇▇▇) ▇▇▇ ▇▇▇▇
Attention : General Counsel
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EDBI : EDB INVESTMENTS PTE LTD
▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
#▇▇-▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile No. : (▇▇) ▇▇▇ ▇▇▇▇
Attention : General Manager
(B) Remedies
No remedy conferred by any of the provisions of this Agreement is
intended to be exclusive of any other remedy which is otherwise available at
law, in equity, by statute or otherwise, and each and every other remedy shall
be cumulative and shall be in addition to every other remedy given hereunder or
now or hereafter existing at law, in equity, by statute or otherwise. The
election of any one or more of such remedies by any of the Shareholders shall
not constitute a waiver by such Shareholder of the right to pursue any other
available remedies. No failure on the part of any Shareholder to exercise and no
delay on the part of any Shareholder in exercising any right hereunder will
operate as a release or waiver thereof, nor will any single or partial exercise
of any right under this Agreement preclude any other or further exercise of it.
(C) Severance
If any provision of this Agreement or part thereof is rendered void,
illegal or unenforceable by any legislation to which it is subject, it shall be
rendered void, illegal or unenforceable to that extent and it shall in no way
affect or prejudice the enforceability of the remainder of such provision or the
other provisions of this Agreement.
(D) Entire Agreement
This Agreement embodies all the terms and conditions agreed upon between
the Shareholders as to the subject matter of this Agreement and supersedes and
cancels in all respects all previous agreements and undertakings, if any,
between the Shareholders with respect to the subject matter hereof, whether such
be written or oral. Any amendment to or variation of this Agreement shall be
effective only if it is in writing and duly signed and confirmed in writing by
the authorised representative of each Shareholder.
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(E) Governing Law
This Agreement shall be governed by, and construed in accordance with,
the laws of Singapore.
(F) Dispute Resolution and Arbitration
(i) In case any dispute or difference shall arise amongst the
Shareholders as to the construction of this Agreement or as to any matter or
thing of whatsoever nature arising hereunder or in connection herewith,
including any question regarding its existence, validity or termination, such
dispute or difference shall be submitted to a committee comprised of one Board
member from each of the Shareholders. If such committee is unable to resolve
such dispute, it shall submit the dispute to a committee comprised of one senior
manager from each Shareholder, being in the case of:-
CSM : the President
HP : the General Manager of Integrated Circuit Business Division
(or its successor division) of Hewlett-Packard Company
EDBI : the General Manager.
If such senior managers are unable to resolve such dispute, it shall be
submitted to a committee comprised of one senior officer from each Shareholder
being in the case of:-
CSM : the Chairman of the Board of CSM
HP : the General Manager of Measurement Systems Organisation (or
its successor organisation) of Hewlett-Packard Company
EDBI : the Chairman.
(ii) If such senior officers are unable to resolve the dispute, it shall
be submitted to a single arbitrator to be appointed by the Shareholders in
dispute or, failing agreement within 14 days after any Shareholder has given to
the other Shareholder(s) in dispute a written request to concur in the
appointment of an arbitrator, a single arbitrator to be appointed on the request
of any Shareholder by the Chairman of the Singapore International Arbitration
Centre ("SIAC") and such submission shall be a submission to arbitration in
accordance with the Rules of the SIAC as presently in force by which the
Shareholders in dispute agree to be so bound. The place of arbitration shall be
Singapore and the arbitration shall be conducted wholly in the English language.
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(G) Announcements
None of the parties shall prior to Completion divulge to any third party
(except to their respective professional advisers and to any stock exchange or
other regulatory body or except as required by applicable law) any information
regarding the existence or subject matter of this Agreement, or any other
agreement referred to in, or executed in connection with, this Agreement,
without the prior agreement of the other parties in writing.
(H) No Right To Bind Other Shareholders
No Shareholder has the power or the right to bind, commit or pledge the
credit of the other Shareholders or the Company.
(I) Costs
Each of the Shareholders shall bear its own legal and other professional
costs and expenses incurred by it in the negotiation and preparation of this
Agreement.
(J) Counterparts
This Agreement may be entered into in any number of counterparts, all of
which taken together shall constitute one and the same instrument. Any party may
enter into this Agreement by signing any such counterpart.
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S C H E D U L E
COLLATERAL AGREEMENTS
1. Agreement to be made between CSM, Hewlett-Packard Company and the
Company relating to the Company's capacity and loading arrangements
substantially in the form of Appendix B (the "Assured Supply and Demand
Agreement").
2. Term sheet to be made between CSM, Hewlett-Packard Company and the
Company relating to the supply of semiconductor wafers by the Company to
Hewlett-Packard Company substantially in the form of Appendix C (the
"Term Sheet for Manufacturing Agreement").
3. Agreement to be made between CSM, Hewlett-Packard Company and the
Company relating to the license of certain intellectual property rights
related to the manufacture of semiconductor wafers and integrated
circuits, substantially in the form of Appendix D (the "License and
Technology Transfer Agreement").
4. Agreement to be made between CSM, HP and EDBI relating to call options
for the sale of the shares held by EDBI in the capital of the Company
substantially in the form of Appendix E (the "Option Agreement").
5. Agreement to be made between CSM and the Company relating to the
provision of certain services by CSM to the Company substantially in the
form of Appendix F (the "CSM Service Support Agreement").
6. Agreement to be made between STPL and the Company relating to the
provision of certain services by STPL to the Company substantially in
the form of Appendix G (the "STPL Group Management and Support Services
Agreement").
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APPENDIX A
FIRST COMPANY BUSINESS PLAN
Please refer to the attached 69 pages.
The Company - CSM - HP Confidential
▇▇
▇▇▇▇▇▇▇▇ ▇
ASSURED SUPPLY AND DEMAND AGREEMENT
Please refer to the attached 28 pages.
The Company - CSM - HP Confidential
48
APPENDIX C
TERM SHEET FOR MANUFACTURING AGREEMENT
Please refer to the attached 60 pages.
The Company - CSM - HP Confidential
49
APPENDIX D
LICENSE AND TECHNOLOGY TRANSFER AGREEMENT
Please refer to the attached 26 pages.
The Company - CSM - HP Confidential
▇▇
▇▇▇▇▇▇▇▇ ▇
OPTION AGREEMENT
Please refer to the attached 16 pages.
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51
APPENDIX F
CSM SERVICE SUPPORT AGREEMENT
Please refer to the attached 31 pages.
The Company - CSM - HP Confidential
▇▇
▇▇▇▇▇▇▇▇ ▇
▇▇▇▇ GROUP MANAGEMENT AND SUPPORT SERVICES AGREEMENT
Please refer to the attached 9 pages.
The Company - CSM - HP Confidential
53
APPENDIX H
MEMORANDUM AND ARTICLES OF ASSOCIATION
Please refer to the attached 62 pages.
The Company - CSM - HP Confidential
54
APPENDIX I
JTC OFFER LETTER AND PLAN OF SITE FOR THE COMPANY FAB
Please refer to the attached 61 pages.
The Company - CSM - HP Confidential
55
REDACTED CONFIDENTIAL TREATMENT REQUESTED
The asterisked portions of this document have been omitted and
are filed separately with the Securities and Exchange Commission
OUTLINE FOR JV BUSINESS PLAN
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HP/CSM JV
BUSINESS PLAN
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MISSION
o Be the preferred supplier of foundry services to the semiconductor
industry. Along with CSM, become the most nimble, service-oriented foundry
to customers worldwide. Become a key value chain element to HP's
semiconductor requirements as a "virtual fab".
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SCOPE OF PRODUCTS & SERVICES
o Supply sorted and unsorted CMOS semiconductor wafers to a broad range of
semiconductor users. Provide "virtual fab" services to integrated
manufacturers to make outsourcing attractive, and "one-stop-shopping" to
fabless and semiconductor users switching from ASIC houses to internal
design with foundry manufacturing.
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GOALS AND OBJECTIVES
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REDACTED CONFIDENTIAL TREATMENT REQUESTED
The asterisked portions of this document have been omitted and
are filed separately with the Securities and Exchange Commission
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GOALS AND OBJECTIVES
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REDACTED CONFIDENTIAL TREATMENT REQUESTED
The asterisked portions of this document have been omitted and
are filed separately with the Securities and Exchange Commission
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GOALS AND OBJECTIVES (CONT'D)
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KEY STRATEGIES
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REDACTED CONFIDENTIAL TREATMENT REQUESTED
The asterisked portions of this document have been omitted and
are filed separately with the Securities and Exchange Commission
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KEY STRATEGIES
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JV CORE COMPETENCIES
o Customer service orientation
o Time to revenue
o C10 core competency
o Adaptability to changes in market conditions
o Yield engineering
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JV CORE COMPETENCIES
o CUSTOMER SERVICE ORIENTATION
o Customer service is a corporate culture that is difficult to build and
duplicate. It's a culture that recognizes there must be a delighted
customer at the end of every task in every delivery chain. It's supported
by both systems and the state of mind of every employee.
o TIME TO REVENUE
o Time to revenue is defined in terms of the customers' business. Shortening
time to revenue for customers means removing obstacles on their road from
product conception to production. Potential obstacles include time
availability of process technology, cell libraries, mega cells;
best-in-class proto and production cycle times; a single interface for
turnkey requirements (masks, wafers, sort, assembly & test). A
comprehensive program that provides solutions to these obstacles is
difficult to build and duplicate.
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JV CORE COMPETENCIES
o C10 CORE COMPETENCY
o An ASIC process for a wide range of markets.
o performance for graphics, computer electronics cores.
o density for system-on-a-chip applications.
o extension into mixed-signal applications with precision analog components.
o Process technology architecture leads into 0.25um.
o complementary Vt's
o planarity (CMP) for greater levels of interconnect with high yields.
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JV CORE COMPETENCIES
o ADAPTABILITY TO CHANGES IN MARKET CONDITIONS
o Adaptability includes a flexible infrastructure that can quickly respond to
the changing demands of the industry, a nimble management team that can
make timely and sound decisions and a well cross-trained workforce that can
be quickly redeployed.
o YIELD ENGINEERING
o Yield engineering (YE) is the ability to plan for good initial yield on a
new process and to accelerate the learning curve of a process based on both
theory and empirical findings. A key part of a successful YE program is a
core team of highly competent technical staff armed with best-in-class
tools.
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are filed separately with the Securities and Exchange Commission
--------------------------------------------------------------------------------
CSM
--------------------------------------------------------------------------------
****
69
[SINGAPORE TECHNOLOGIES LOGO] CHARTERED SEMICONDUCTOR MANUFACTURING
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MARKET
--------------------------------------------------------------------------------
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[SINGAPORE TECHNOLOGIES LOGO] CHARTERED SEMICONDUCTOR MANUFACTURING
--------------------------------------------------------------------------------
TOTAL SEMICONDUCTOR TAM
EXPECTED TAM IN YEAR 2000 = US$250 TO 350 BILLION
[CHART]
--------------------------------------------------------------------------------
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[SINGAPORE TECHNOLOGIES LOGO] CHARTERED SEMICONDUCTOR MANUFACTURING
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TAM/▇▇▇ ANALYSIS
--------------------------------------------------------------------------------
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[PICTURE] SEMICONDUCTOR FOUNDRY ON THE RISE - SO WILL ITS CONTRIBUTION TO
WWIC MARKET
WW FOUNDRY REVENUE FOUNDRY'S CONTRIBUTION TO
(U.S. $B) SEMICONDUCTOR MARKET
[CHART]
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--------------------------------------------------------------------------------
APPLICATION MARKETS
--------------------------------------------------------------------------------
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REDACTED CONFIDENTIAL TREATMENT REQUESTED
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are filed separately with the Securities and Exchange Commission
[SINGAPORE TECHNOLOGIES LOGO] CHARTERED SEMICONDUCTOR MANUFACTURING
--------------------------------------------------------------------------------
CSM GROWTH DRIVERS
****
--------------------------------------------------------------------------------
▇▇▇ ▇▇▇ CSM Confidential Page 8
75
[PICTURE] FABLESS COMPANIES GROWING IN SIZE AND NUMBER
[CHART]
76
[PICTURE] ESCALATING COST OF IC FABS
- MOST IMPORTANT TREND IN IC MANUFACTURING
[CHART]
77
[PICTURE] AS NEW FABS GET COSTLIER, FEW CAN AFFORD BUILDING THEM AND MORE
MUST RELY ON FOUNDRY
1985-1990 1991-1996 1997-2002
--------- --------- ---------
New fabs 258 202 approx. 175
Companies building
solely owned fabs 80% 50% approx. 30%
Companies relying
on foundry 20% 50% approx. 70%
78
[PICTURE] SUMMARY
o SCM Service Providers Will Play An Increasing Important Role In Semiconductor
Manufacturing
o All semiconductor companies are expected to use SCM services to some extent
o Dedicated foundries will take a growing share of SCM capacity
o Turnkey manufacturing expected to become the predominant business model
79
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COMPETITION
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[SINGAPORE TECHNOLOGIES LOGO] CHARTERED SEMICONDUCTOR MANUFACTURING
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INDUSTRY FORCES
--------------------------------------------------------------------------------
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REDACTED CONFIDENTIAL TREATMENT REQUESTED
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are filed separately with the Securities and Exchange Commission
[SINGAPORE TECHNOLOGIES LOGO] CHARTERED SEMICONDUCTOR MANUFACTURING
--------------------------------------------------------------------------------
****
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REDACTED CONFIDENTIAL TREATMENT REQUESTED
The asterisked portions of this document have been omitted and
are filed separately with the Securities and Exchange Commission
****
83
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are filed separately with the Securities and Exchange Commission
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--------------------------------------------------------------------------------
****
--------------------------------------------------------------------------------
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REDACTED CONFIDENTIAL TREATMENT REQUESTED
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are filed separately with the Securities and Exchange Commission
[SINGAPORE TECHNOLOGIES LOGO] CHARTERED SEMICONDUCTOR MANUFACTURING
--------------------------------------------------------------------------------
****
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--------------------------------------------------------------------------------
SWOT
--------------------------------------------------------------------------------
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are filed separately with the Securities and Exchange Commission
****
87
REDACTED CONFIDENTIAL TREATMENT REQUESTED
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are filed separately with the Securities and Exchange Commission
****
88
REDACTED CONFIDENTIAL TREATMENT REQUESTED
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are filed separately with the Securities and Exchange Commission
****
89
[SINGAPORE TECHNOLOGIES LOGO] CHARTERED SEMICONDUCTOR MANUFACTURING
--------------------------------------------------------------------------------
FUNCTIONAL STRATEGIES
--------------------------------------------------------------------------------
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[SINGAPORE TECHNOLOGIES LOGO] CHARTERED SEMICONDUCTOR MANUFACTURING LTD
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SERVING THE GLOBAL SEMICONDUCTOR CUSTOMERS
[MAP]
91
[SINGAPORE TECHNOLOGIES LOGO] CHARTERED SEMICONDUCTOR MANUFACTURING
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SYNERGISTIC OPERATIONS
----------------------
Singapore Technologies
Semiconductor
----------------------
------------------------ ----------------------- ------------------------
TriTech Microelectronics Chartered Semiconductor Singapore Technologies
International Pte. Ltd. Manufacturing Pte. Ltd. Assembly & Test services
(TriTech) (CSM) (STATS)
------------------------ ----------------------- ------------------------
IC PRODUCTS & ASIC WAFER FABRICATION ASSEMBLY & TEST
--------------------------------------------------------------------------------
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INFRASTRUCTURE AND FLEXIBILITY TO MEET CUSTOMER NEEDS
----------------------------------
Customer TriTech Design Services
Netlist/Spec
----------------------------------
-------------------------------------
Customer Mask Making Photronics etc.
GDSII/PG
-------------------------------------
---------------------------------
Customer CSM Wafer Fabrication Untested
Masks Wafers
---------------------------------
---------------------------------
Customer STATS Wafer Probe Tested Wafers
Wafers Assembly & Test Tested Parts
---------------------------------
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BUSINESS CHARTER
o Efficient turnkey & wafer manufacturing service
o Superior service, cycle time and product reliability
o Long term commitment to meet the demand of global semiconductor companies
o Reliable supply
o Consistent yield
o Leading edge technology
o Continuous capacity growth
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FAB I FAB II FAB III
----- ------ -------
Year 1989 1995 1997
Investment S$360M S$1,300M S$1,800M
Clean room 35,000 ft(2) 70,000 ft(2) SMIF 92,000 ft(2) SMIF
Class 10 Mini Env. Class 1 Mini Env. Class 1
Capacity 24,000/month 6" 33,000/month 8" 40,000/month 8"
Technology 3.0 - 0.6 u.m. 0.6 -0.35 u.m. 0.5 - 0.18 u.m.
o Digital o Digital o Digital
o Analog o Analog o Analog
o SRAM o SRAM o Memories
o ROM o ROM o Others
o E(2)PROM o Flash EPROM
--------------------------------------------------------------------------------
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are filed separately with the Securities and Exchange Commission
[SINGAPORE TECHNOLOGIES LOGO] CHARTERED SEMICONDUCTOR MANUFACTURING
--------------------------------------------------------------------------------
****
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FIELD & CUSTOMER ENGINEERING SUPPORT
o Support new and existing customers in Technology assessment and qualification
o Ensure successful tape out and mask generation
o Provide technical interface with manufacturing to set up appropriate flow for
specific customer needs
o Assist customers in addressing ET and wafer sort testing requirements
o Initiate qual plans and keep customers informed of ongoing reliability and QA
monitoring results
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[SINGAPORE TECHNOLOGIES LOGO] CHARTERED SEMICONDUCTOR MANUFACTURING
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SUMMARY
o Commitment to leading-edge foundry service
o Investment in capacity, R&D, CIM, yield and quality
o Customer engineering in factory and at all sales offices
o Commitment to technology
o State of the art FAB 2 and sub-u technology
o Flexible business model
o Turnkey service to partial wafers
o Wafer-based pricing
o Die-based pricing
o Strong Infrastructure
o TriTech, STATS, CiNERGi, and mask shop in Singapore
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THE STS ADVANTAGE
The member companies of STS are each an independent entity with dedicated focus,
expertise and excellence in each of the critical process of a product
realization: Design, Wafer Fabrication and Assembly & Test.
The interdependent business model and the independent focuses provide the
advantages of economies of scale and efficiency of specialization, and the
flexibility and convenience of a vertically integrated environment.
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SYNERGISTIC OPERATIONS
[PICTURE]
--------------------------------------------------------------------------------
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are filed separately with the Securities and Exchange Commission
[SINGAPORE TECHNOLOGIES LOGO] CHARTERED SEMICONDUCTOR MANUFACTURING
--------------------------------------------------------------------------------
KEY STRATEGIES (CONT'D)
R/D Functional Strategies
****
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R & D
- ROADMAP
--------------------------------------------------------------------------------
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REDACTED CONFIDENTIAL TREATMENT REQUESTED
--------------------------------
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are filed separately with the Securities and Exchange
Commission
[Singapore Technologies Logo] CHARTERED SEMICONDUCTOR MANUFACTURING
*****
103
REDACTED CONFIDENTIAL TREATMENT REQUESTED
--------------------------------
The asterisked portions of this document have been omitted and
are filed separately with the Securities and Exchange
Commission
[Singapore Technologies Logo] CHARTERED SEMICONDUCTOR MANUFACTURING
KEY STRATEGIES (CONT'D)
*****
104
[Singapore Technologies Logo] CHARTERED SEMICONDUCTOR MANUFACTURING
--------------------------------------------------------------------------------
FINANCIAL ANALYSIS
--------------------------------------------------------------------------------
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--------------------------------
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are filed separately with the Securities and Exchange
Commission
--------------------------------------------------------------------------------------------------
FAB 4 (MODULE A ONLY) 1997 1998 1999 2000 2001 2002 2003 2004 2005 GRAND
P & L (SSM) TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL
-------------------------------------------------------------------------------------------------
Wafer Out(K)
ASP
GSB
MSB
*****
COST OF SALES
Material
Non-Depn
Depn
Subcon
Insty Chg
Tech Lic
Gross Margin
Pre-operating exp
G&A
R&D
CE
CSM Support Costs
OPERATING PROFIT
Interest expense
Interest income
Grants (royalty)
NET OF PROFIT bf PBMF
ST Mgt Fees
Profit Bonus
NET OF PROFIT af PBMF
TAX@
NOPAT
ROS
106
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are filed separately with the Securities and Exchange Commission
FAB 4
RAMP PLAN (38 mths) (REV 2D)
*****
107
REDACTED CONFIDENTIAL TREATMENT REQUESTED
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are filed separately with the Securities and Exchange Commission
FAB 4 PROJECT: (REV 2D)
ASP AND CAPACITY PLAN
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
*****
108
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are filed separately with the Securities and Exchange Commission
FAB 4 1997 1998 1999 2000 2001 2002 2003 2004 ▇▇▇▇ ▇▇▇▇▇
▇&▇ (S$M) TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL
*****
109
REDACTED CONFIDENTIAL TREATMENT REQUESTED
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are filed separately with the Securities and Exchange Commission
FAB 4 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 GRAND
CF(S$M) TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL
*****
110
REDACTED CONFIDENTIAL TREATMENT REQUESTED
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are filed separately with the Securities and Exchange Commission
FAB 4 1997 1998 1999 2000
CF(S$M) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
****
111
REDACTED CONFIDENTIAL TREATMENT REQUESTED
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are filed separately with the Securities and Exchange Commission
FAB 4 2001 2002 2003
CF(S$M) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
****
112
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are filed separately with the Securities and Exchange Commission
FAB 4 1997 1998 1999 2000 2001 2002 2003 2004 2005
BAL SHT (S$M) TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL
****
113
REDACTED CONFIDENTIAL TREATMENT REQUESTED
--------------------------------
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ARE FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
FAB4 1997 1998 1999 2000 2001 2002 2003 2004 2005
BS SCHEDULES (S$M) TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL
****
114
REDACTED CONFIDENTIAL TREATMENT REQUESTED
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omitted and are filed separately with the
Securities and Exchange Commission.
FAB 4 1997 1998 1999 2000
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
BS SCHEDULES (S$M) TOTAL TOTAL TOTAL TOTAL
****
115
REDACTED CONFIDENTIAL TREATMENT REQUESTED
--------------------------------
THE ASTERISKED PORTIONS OF THIS DOCUMENT HAVE BEEN OMITTED AND
ARE FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
2001 2002 2003
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
****
116
REDACTED CONFIDENTIAL TREATMENT REQUESTED
--------------------------------
THE ASTERISKED PORTIONS OF THIS DOCUMENT HAVE BEEN OMITTED AND
ARE FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
FAB4 1997 1998 1999 2000 2001 2002 2003 2004 2005 GRAND
TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL
******
117
REDACTED CONFIDENTIAL TREATMENT REQUESTED
--------------------------------
THE ASTERISKED PORTIONS OF THIS DOCUMENT HAVE BEEN OMITTED AND
ARE FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
FAB 4
CAPITAL EXPENDITURES BY PHASES (S$m)
****
118
REDACTED CONFIDENTIAL TREATMENT REQUESTED
--------------------------------
THE ASTERISKED PORTIONS OF THIS DOCUMENT HAVE BEEN OMITTED AND
ARE FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
FAB 4
CAPITAL EXPENDITURE B
****
119
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--------------------------------------------------------------------------
ISSUES & RECOMMENDATIONS
--------------------------------------------------------------------------
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are filed separately with the Securities and Exchange Commission
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--------------------------------------------------------------------------
ISSUES & RECOMMENDATIONS
*****
--------------------------------------------------------------------------
27 November, 1996
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--------------------------------------------------------------------------
ISSUES & RECOMMENDATIONS (CONT'D)
--------------------------------------------------------------------------
27 November, 1996
*****
122
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are filed separately with the Securities and Exchange Commission
[SINGAPORE TECHNOLOGIES LOGO] CHARTERED SEMICONDUCTOR MANUFACTURING
--------------------------------------------------------------------------
ISSUES & RECOMMENDATIONS (CONT'D)
POTENTIAL PROBLEM RECOMMENDATIONS
*****
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IN WITNESS WHEREOF the parties have entered into this Agreement as of the date
stated above.
CSM
SIGNED by TAN ▇▇▇▇ ▇▇▇▇ )
President & CEO )
for and on behalf of )
CHARTERED SEMICONDUCTOR )
MANUFACTURING LTD )
in the presence of:- ) /s/ Tan ▇▇▇▇ ▇▇▇▇
------------------------------
/s/ ▇▇▇▇▇▇ Hon
--------------------------------
Name: ▇▇▇▇▇▇ Hon, Senior Manager legal
HP
SIGNED by ▇▇▇▇ ▇. ▇▇▇▇▇ )
General Manager, Integrated )
Circuit Business Division )
HEWLETT-PACKARD COMPANY )
for and on behalf of )
HEWLETT-PACKARD EUROPE B.V. )
in the presence of:- ) /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
/s/ ▇▇▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇
EDBI
SIGNED by LIOW VOON KHEONG )
General Manager )
for and on behalf of )
EDB INVESTMENTS PTE LTD )
in the presence of:- ) /s/ Liow Voon Kheong
------------------------------
/s/ ▇▇▇▇▇▇▇ ▇▇▇ Keng
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇ Keng
The Company - CSM - HP Confidential
124
ACKNOWLEDGED AND AGREED TO
by ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ )
------------------------------ )
General Manager )
------------------------------ )
for and on behalf of )
CHARTERED SILICON PARTNERS PTE LTD )
Date:- July 4, 1997 ) /s/ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
in the presence of:- -----------------------------
/s/ ▇▇▇▇▇▇ HON
--------------------------------
Name: ▇▇▇▇▇▇ Hon
Senior Manager Legal
The Company - CSM - HP Confidential
